Pestle and Swot Analysis Tesla

Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Impact and influence of macro environment on Tesla......................................................1
TASK 2............................................................................................................................................4
P2 Internal Environment and capabilities to using suitable framework.................................4
TASK 3............................................................................................................................................7
P3 Evaluation and application of Porter's Five model...........................................................7
TASK 4............................................................................................................................................8
P4 Application of models, theories and concepts...................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
A business Strategy can be defined as the combination of all the decision taken and
actions performed by the business to acquire the company goals and to secure a competitive
position in the market (Prajogo, 2016). The report based on Tesla, which was founded in 2003 by
group of engineers. Tesla develop not only electric vehicles but also infinitely scalable clean
energy generation and storage products. The company based of America and objective of the
company to manufacturing best car in its class in each category. The vision of the company to
produce the most compelling of 21st century in order to transition to electric vehicles and mission
to accelerate and sustainable energy. This report focused on macro environment where consist of
PESTLE and SWOT of an organisation. There are including various types of strategic directions
for a company and recommendations to get growth at suitable platform and strategies. In
addition, develop strategic plan with specific objectives and tactics to define various strategies.
TASK 1
P1 Impact and influence of macro environment on Tesla
A macro environment is the condition where major external and uncontrollable factors
that impact an organization's decision making. As a result it affects to performance of business as
well as their strategies. There are including factors such as legal, political, social conditions,
technological changes and natural forces.
PESTLE analysis is a framework which is used by large organisation to evolute to those
factors which can impact on the performance and growth of the organisation. These elements
available in an enterprises may leave negative impact on the growth of the company. In order to
analysis of all components related to macro environment conduct PESTLE analysis is being
conducted foe Tesla.
Political Factor – There are analysing that which Government policies and regulation
affect to organisation performance. This would consist of political policy and stability as well as
trade, fiscal and taxation policies too. For Tesla it is critical to take all of them into consideration
so that their negative effect can be reduced.
 Strength – Tesla has the Strength of its financial performance with the help of incentives
from Government. New global trade agreements provide open opportunities to expand
their business on international level (Paulus-Rohmer, Schatton and Bauernhansl, 2016) .
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 Weakness– If company can not follow all rules and regulation which is set by political
parties so it will create problem to sustain market.
Illustration 1: PESTLE Analysis, 2013
(Source: PESTLE Analysis, 2013)
Economical Factor – These factors include exchange rate, inflation, deflation and
interest rates influence to the economy. These are show impact on organisation performance and
growth in negative and positive manner. In present time economic factors important for Tesla
because it can influence to various operation activities.
 Strength – In reference to Tesla identified Strength that they are decreasing costs of
battery as well as renewable energy costs.
 Weakness– The company face issues of economic stability so raw material affect by
inflation rate. As a result it will affect to manufacturing process and easily can not get
raw material on time (Lloret, 2016) .
Social Factor – There are focusing on social environment, customer taste and preference,
social trends and culture. This helps to marketer to understand changing family demographics,
attitude so it will affect to business entities of Tesla. The manager to prepare effective strategy
after analysis of social environment to reduce negative impact on company.
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 Strength – In present time mostly people take interest in low carbon lifestyles which is
provided by Tesla and improving health arrangement in developing markets.
 Weakness– There are company can not sure about to popularity of low carbon lifestyles
and market demand of electric vehicles on Tesla based on the market demand.
Technological Factor – There are considering those factors which relate to technological
innovation and development. It can affect to Tesla so need to focus changes in digital or mobile
technology to acquire advantage in competitive environment.
 Strength – Tesla has growth opportunities with the help of advance automation of their
business processes. It can increase popularity of online mobile system which can
accelerative to systems in auto mobiles.
 Weakness – Tesla have high rate of technological change so it will affect to production
process and huge reduction of profitability. In addition Dealership sales regulation in the
united states considering as Weakness for the business which can affect to growth of the
sales and do not allow for direct sales (Wieland, Hartmann and Vargo, 2017) .
Legal Factor – The government set rules and regulation to every organisation as per the
industry. There are including taxation policies, consumer law, employment legislation and trade
regulation. For Tesla required to follow all regulation to achieve their target and maintain
profitability in high manner.
 Strength – Tesla has Strength to safely spread out to international patent protection and
focus on energy consumption regulations.
 Weakness– Many times company can not follow rules and regulation as per the
requirement so it will affect to operational activities. It will show negative impact and
influence to whole sector.
Environmental Factor – There are considering various environment factors which
relates to environment protection act, changes in climate. The Government of UK take
appropriate steps regarding to environment. In order to Tesla focused on the CSR (corporate
sustainability responsibility) to become more important.
 Strength - Tesla has opportunities to promote their electric vehicles due to change in
climate and spread out environmental programs to reduce wastages. They can set
standard of their vehicles to link business sustainability and focus on batteries and solar
panels (Laguna and Marklund, 2018) .
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 Weakness– If Tesla is not able to adopt all mentioned environmental rules that may leave
negative impact on their customers as well as on market shares.
TASK 2
P2 Internal Environment and capabilities to using suitable framework
Internal Environment – It is a factor of the business environment which includes
several elements like members, culture, events and factors in reference to an organisation. These
factors can influence to decision making process as well as behaviour of human resources. To
analyse performance of Tesla apply SWOT analysis which is part of internal environment
(Haans, Pieters and He, 2016) ).
SWOT Analysis – It is a strategic management tool to assist an organisation in reference
to know their internal strength, weakness, Strength and Weaknessin competitive market. All
these four elements of this tool, for Tesla are as following -
Illustration 2: SWOT Analysis, 2019
(Source: SWOT Analysis, 2019)
Strength Weaknesses
 Tesla is an American company which  They have not experience of new
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deals in electric car and apply
technology of power train.
 To promote their product in US market
apply strong marketing policies and
strategies so as a result increase
customer base.
product development so easily can not
handle different models of products.
 Tesla can not gain much more profit so
it will affect to assets and debt liabiliti
in increasing way.
Opportunities Threats
 Tesla have Strength to reduce
consumption of fuel and apply carbon
life styles.
 To gain market opportunities focus on
eco friendly product to increase sales.
 It is consider as major Weaknessthat
exit of UK from European union. So it
will impact on the profitability.
 Tesla face of much more competition in
auto-mobile industry.
 They have not base of the network
regarding to products to sold out their
products at global platform.
VRIO Model – It is an analytical technique apply in an organisation for analysis
resources and capabilities. There are four element as per the manager like valuable, rare,
inimitable and organised (Mian, Lamine and Fayolle, 2016). For Tesla analysis of all four
element is as follows -
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Illustration 3: VRIO Model, 2016
Capabilities Valuable Rare Inimitable Organised
Long Battery
Life
✔ ✗ ✗ ✗
Customer
services
✔ ✔ ✗ ✗
Competitive
Parity
✔ ✔ ✔ ✗
Brand Image ✔ ✔ ✔ ✔
Valuable – There are taken four favourable item such as Long battery power,
competitive parity, customer services and brand image. All of them are reasoned as valuable
factors because they help to survive with business activities in effective way. These capabilities
are considering as essential for implementation activities which can perform efficiently.
Rare – Long Batter life is not including as rare because any company of this industry
may produce this type battery. Customer services includes as rare because every company can
not provide same customer services as Tesla to engage for long time. Competitive Parity of Tesla
is rare because company give competition to their competitors and captured a large area of
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market. Brand image also consider as rare due to company constituted of quality products and
services to customers (Buckley, Burton and Mirza, 2016) .
Inimitable – Customer Services are not inimitable because any organisation apply same
strategies and services which is provided by Tesla. Competitive Parity and brand image
inimitable due to arrange these capabilities in effective manner. A small mistake can affect to
quality of products so it will directly affect Competitive Parity and brand image.
Organised - Competitive Parity of Tesla is not organised because company can not
compete long time in market and cover big area. Brand image of an organisation is organised due
to it takes long period of time to stay in market and present positive image in the mind of
customers and any small mistake can not easily harm it.
TASK 3
P3 Evaluation and application of Porter's Five model
Porter's five model – It is a framework of five model to recognise and analyse of five
competitive forces that provide shape to each company. The model can help to know inner
qualities and weakness of an industry. Porter's five model can be applied to any section of the
economy to find out for profitability and attractiveness.
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Existing Rivalry among competitors – Competitive Rivalry for Tesla in electric vehicles
has become highly qualifier. Current time Tesla known as highly brand for electric vehicles so
all major auto mobile companies declared to increase their plans. There are identified
competitors of Tesla such as GM, BMW and Volkswagens. Tesla can operate in competitive
manner to in Auto manufactures to major industry (Langabeer and Champagne, 2016) .
Bargaining power of suppliers – In auto mobile industry bargaining power is very high
by suppliers where companies selling out products on high price to end users. In the context to
Tesla, can loss margins and powerful suppliers in consumer goods sector use its activity to
increase higher prices as per the auto mobile industry.
Bargaining powers of buyers – There are considering price sensitivity as significant
factor of buyers bargaining power. There are increasing price of electric vehicles from several
established and new auto mobile companies. Buyers can get that Tesla products price are
actually high. As per the option of selection buyers may exercise their bargaining power to make
reckon their prices.
Weakness of new entrant – It is considering in moderate form to enter new company in
manufacturing industry. There are recognising one of the significant challenge for electric Chile
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that cooperation between performance and cost. Tesla able to build new model like model X and
model 3 cars that fully electric and boasts with advanced technical characteristics like long
mileage in a single charger. So as a result it is costly with advance technology and become
reason of low profitability.
Weakness of substitute – When any company manufacturing same products was well as
Tesla that time decrease profitability. It will give competition into market and reduce number of
buyers. For Tesla Weakness of substitute goods that services is high and they provide high value
proportion. To tackle these situation Tesla prepare effective strategies and present their products
as per the customer requirement (Dranove and et.al, 2016).
TASK 4
P4 Application of models, theories and concepts
Ansoff Matrix – It was introduced by H. Igor Ansoff in the year of 1957 through an
article Strategies for Diversification. The particular matrix can use to measure growth of the
product and strategies at the market place. In the context to growth strategies consider Market
penetration, market development, product development and diversification. To achieve long term
business goals apply best growth strategy in business. There are defined dour elements related to
matrix in reference to Tesla -
Market Penetration – It is known as growth strategy which is related to selling existing
products in particular market. Any organisation implement different strategies to improve their
position and market share in existing market through changes in products according to customer
perception. Tesla can apply effective growth strategy to achieve good position in market and
improve quality of their existing goods. There are implemented several strategies such as price
deduction to attract customers, focus on promotional activities (Sanden, 2016) .
Product Development – It is recognising as growth strategy where includes development
of new products. When company identify several risks in their existing products that time
provide new products to customer and engage with them. Tesla apply product development
strategy in their business to engage with customer long time. Time to time modify and develop
quality of products and apply new technology to compete with their competitors.
Market Development – Market development is a strategy of growth where strategies
applied in organisation to enter into new market with their existing product. Different moderate
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risks connected with the execution of such strategy. Tesla can follow the strategy in order to
develop strategy for those market where can not sold out model of these company. It will help to
spread out business at geographical locations.
Diversification – This approach implemented by an enterprise in order to enter into
market with new product. Tesla can apply this strategy to launch their new model of electric
vehicle and implement diversification strategy to enter into new market with their new product.
It will help to covered whole market in effective manner and attract to customer to purchase their
products.
Tesla can focus on product development strategy in order to cover whole market and
launching new product at existing market. It will help to attract more customers and increase
profitability of company (Sloman, 2017) .
Justification – Product development strategy apply by Tesla because it can help to gain
competitive advantage in existing market and promote to their products. After market analysis it
is getting that company have good brand image as well as customer loyalty. The beneficial of
this method that it is less risky and produce goods as per the customer requirement.
Strategic Management plan – It is considering as elaborate plan where providing
information regarding to business like objectives, mission, vision, tactics etc. To apply product
development strategy follow strategic management plan by Tesla - Vision – The organisation to become as leading company in auto mobile industry. Mission – There are defining main mission of the company to increase their profitability,
productivity.
Strategies – Tesla wants to launch new electric car into market so they can apply these strategies
in its current market -
1. Promotions – It is very important strategy in order to promote their new product into
market. Tesla follow the strategy in order to alert for their customers and introduce of
products as per the requirement of customer. With the help of this reach maximum
people and introduce their product to gain maximum profit.
2. Research and development – Through this strategy search out about customer taste
and preference regarding to electric vehicles. As a result it can help to manufacturing
product to attract more customers.
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Objective – The main objective of company to increase market share of their products at global
market platform.
Tactics – It is recognised as set of strategies which can be implemented to attain long
term goals of business. There are focused on particular tactics of Tesla - Arrangement of funds – This is considering as significant requirement of the company
and managers are arranging funds from internal and external resources. These are defined
as bank loan, selling of old assets etc.
 Technological Improvement – To attract customers in huge numbers need top focus on
technology because every customer wants new technology in cars. It will attract them to
purchase and help to an organisation to increase profitability. For instance in company
apply different approach of technology so as a result improve technology.
STP – There are including set of three strategies which can help to decision making
process to introduce new product in market. These all three factors can help to Tesla to introduce
new product - Segmentation – As per the particular strategy Tesla focused on different markets as per
the segmentations. To introduce new product in the market need to select one segment of
market. For example – If any company wants to launch new product in UK so there is
London select as segment to introduce new product (Tsai and Liao, 2017). Targeting – The particular process has been used to target customer regarding to new
product. The target market for Tesla will be men who like cars in London so it will be
launched into London for men.
 Positioning – In the procedure to set good brand image need to apply effective strategies
for customers. To launch their new car Tesla has applied effective promotional strategy
like free test drive, cost deduction etc. to aware clients regarding to product.
CONCLUSION
As per the mentioned report it has been concluded that business strategy is important
process for any organisation which is related to implement plans and strategies in effective
manner. To apply strategies in business need to analysis operational activities through PESTLE
and SWOT analysis which can help to gain detailed information regarding to business. There are
using porter's five model to know position of company in competitive market.
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REFERENCES
Books and Journals
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
Paulus-Rohmer, D., Schatton, H. and Bauernhansl, T., 2016. Ecosystems, strategy and business
models in the age of digitization-How the manufacturing industry is going to change its
logic. Procedia CIRP. 57. pp.8-13.
Lloret, A., 2016. Modeling corporate sustainability strategy. Journal of Business Research.
69(2). pp.418-425.
Wieland, H., Hartmann, N. N. and Vargo, S. L., 2017. Business models as service strategy.
Journal of the Academy of Marketing Science. 45(6). pp.925-943.
Laguna, M. and Marklund, J., 2018. Business process modeling, simulation and design.
Chapman and Hall/CRC.
Haans, R. F., Pieters, C. and He, Z. L., 2016. Thinking about U: Theorizing and testing U‐and
inverted U‐shaped relationships in strategy research. Strategic Management Journal.
37(7). pp.1177-1195.
Mian, S., Lamine, W. and Fayolle, A., 2016. Technology Business Incubation: An overview of
the state of knowledge. Technovation. 50. pp.1-12.
Buckley, P. J., Burton, F. and Mirza, H. eds., 2016. The strategy and organization of
international business. Springer.
Langabeer, J.R. and Champagne, T., 2016. Exploring business strategy in health information
exchange organizations. Journal of Healthcare Management. 61(1). pp.15-26.
Dranove, D. S. and et.al, 2016. Economics of Strategy.
Sanden, G. R., 2016. Language: the sharpest tool in the business strategy toolbox. Corporate
Communications: An International Journal. 21(3). pp.274-288.
Sloman, M., 2017. A handbook for training strategy. Routledge.
Tsai, K. H. and Liao, Y. C., 2017. Sustainability strategy and eco‐innovation: A moderation
model. Business Strategy and the Environment. 26(4). pp.426-437.
Online
PESTLE Analysis. 2013. [Online]. Available Through:
<http://www.performance-works.co.uk/2013/03/27/change-management-why-change/>
SWOT Analysis. 2019. [Online]. Available Through:
<https://www.marketingdonut.co.uk/marketing-strategy/swot-analysis/swot-analysis>
VRIO model. 2019. [Online]. Available through:
<https://www.business-to-you.com/vrio-from-firm-resources-to-competitive-advantage/>
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