P4 Application of models, theories and concepts

Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Application of framework to analyse impact and influence of macro environment.........1
TASK 2............................................................................................................................................3
P2 Analysis of internal environment and capabilities of the company..................................3
TASK 3............................................................................................................................................6
P3 Determination and application of Porter's five force model.............................................6
TASK 4............................................................................................................................................7
P4 Application of models, theories and concepts...................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy can be defined as the plan which is developed to obtain objectives of
company that relates to long term as well as short term (Moseley III, 2017). Through these
business strategies business can analyse growth and development. All the companies take
appropriate decision to find out available opportunities of market and on the grab to improve
business. To understand the concept of the report selected organisation Tesla, which is American
automotive and energy company based in Palo Alto, California. The company manufacturing of
electric car, solar city as well as solar panel. It was founded in July 2003, by engineers Martin
Eberhard and Marc Tarpenning under the name Tesla Motors.
This report will emphasis on appropriate frameworks to analyse the impact and influence
of the macro environment on selected organisation. To understand the capabilities of company
analysis internal environment and for competitive market apply porter five models which can
help to analysis market sector. In addition, apply a range of theories, concepts and models to
interpret and devise strategic planning gor selected organisation.
TASK 1
P1 Application of framework to analyse impact and influence of macro environment
Macro Environment – A macro environment is defined as condition that exist in the
economy as a whole, rather than in a specific sector or region. There are including external and
uncontrollable factors that influence to organisation growth and development such as inflation,
employment and trends in gross domestic product. In order to identify all the components
PESTLE analysis is being conducted for Tesla.
PESTLE Analysis – It is a framework or tool that use to evaluate and monitor of macro
environment factors. These factors influence to organisation performance in positive and
negative manner. PESTLE analysis can help to new business to enter foreign market. Through
PESTLE analysis identify appropriate factors that show impact on Tesla -
Political – Political factors plays important role in any organisation and influence to long
term profitability of Tesla. The company dealing into electric cars in a certain country or market.
So there is required to follow political rules and regulation according to products otherwise it can
show negative impact.
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 Advantage – Tesla has major advantage of getting government incentives as its
technology is insignificant carbon emission from the vehicle. The market for company is
targeting are very stable political markets and it will help them boost up business.
 Disadvantage – Changes in the political markets can affect to performance of Tesla
because it can target to stable political market (Nohria, 2017).
Economic – There are consisting of inflation rate, interest rate, economic cycle and
foreign exchange rate. Low battery costs can help to Tesla to grab opportunity regarding to
electric parts. As it gets popular at an exponential rate. Advantage – Tesla provides vehicles on affordable price and much more attractive style
to general public. They can keep in mind the economic environment in reference to
developing countries as it can be unstable sometimes.
 Disadvantage – The main disadvantage of company that economic condition can not
stable that can affect to automotive market in direct manner.
Social – Society culture and conditions affects to business and including demographic
characteristics and culture. Through analysis Tesla focus on the business aligns with the social
trends in its target market. Advantage – The company mainly focus on low carbon lifestyle and renewable energy
source is a big advantage for the company. As a result it reflect in positive manner and
increase demand of electric vehicles.
 Disadvantage – In present time people like to new things and wants to in electric car. It is
not easy for Tesla to apply quickly in manufacturing process.
Technological – There are analysing of the innovation in technology that will affect the
operations of the industry and define about market. The company keep an eye on newer
technology that used to make new cars with specific technology. For this Tesla conduct research
and development regarding to technology awareness. Advantage – Tesla can adopt new technology and manufacture advanced based
technology cars as well as eco friendly. The selected company take advantage of
automation and AI (Artificial Intelligence). These are connected with system of car then
creating and continue the demand of unique cars.
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 Disadvantage – Many time company can not easily apply new technology so as a result
car will be defected. To operate new technology need to experts which can not easily
available into market (Ocasio and Radoynovska, 2016).
Legal – An enterprises must know about their legal activities that allows within the
territories they operate in. there are including factors such as consumer law, employment
legislation, health and safety and international regulation that will important for Tesla to trading
in foreign market. Advantage – To promote their business in other countries they can follow rules and
regulations of other countries with energy consumption regulation. It directly affects to
sales and as a result direct sales is allowed in a country and spread out business very well.
 Disadvantage – Many times company can not aware about other countries rules and
regulation so as a result it can influence to business in negative manner.
Environmental – These factor relates to the impact of the surrounding environment and
the impact of ecological aspects. Tesla manufacturing electric cars so they focus on climate,
recycling procedures, carbon foot print and sustainability. Advantage – The biggest strength of the Tesla that their main theme is environment
friendly cars. These electric cars helps to save environment due to insignificant carbon
emission and follow all rules and regulations of environmental. Disadvantage – The changes in environment can affect to battery power and they can not
easily survive their business in effective manner. To understand different environmental
condition need to conduct programs which can take much more time.
Stakeholder analysis – Stakeholders of Tesla focus on the PESTLE analysis and analysis
of different factors that impact on the business activities in direct manner. On the basis of they
take appropriate decision and keep mind that prepare effective strategies to prevent business
from external factors.
TASK 2
P2 Analysis of internal environment and capabilities of the company
Internal Environment – An internal environment is set of different factors that will
describe about the condition with in the business structure. It will define about the way of
different activities and relationships which are brought out inside the business.
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SWOT Analysis – It is a framework that will use to analysis of internal activities of an
organisation to know position of the company in competitive market and create strategic
planning. Through SWOT analysis examine internal and external factors and also current and
future potential (Oldman and Tomkins, 2018).. There are analysing of internal activities of Tesla
-
Illustration 1: SWOT Analysis, 2019
(Source: SWOT Analysis, 2019)
Strength Weakness
 Tesla have political and government
support because company manufacture
eco friendly products which can help to
maintain climate.
 The strength of the company great
leadership and team spirit that makes
equally proficient in the engineering as
 Company have poor customer
awareness because they are
manufacturing environment based
products but people can not about this.
So they can not assure to invest in new
technology.
 They have capacity issue because
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well as the commercial side of the
business.
company have only one plant for
manufacturing process. So company
can not easily target to high volume.
Opportunity Threat
 The big opportunity for the company
that keep an eye on new technologies.
When in market any new technology
come that time adapt in company and
starting to work on this. Such as hybrid
vehicles, electric cars, battery operated
cars.
 The main threat for the company is
tough competition because in auto
mobile market many companies dealing
in same technology. The competitors of
the company Ford, general motors so
they can face lot of competition.
VRIO model – It is a framework that can analysis of internal resources and capabilities
of the business. In the model considering four factors which can use by company like valuable,
rare, inimitable and organised (Orna, 2017).
Capabilities Valuable Rare Inimitable Organised
Long battery
life
✔ ✗ ✗ ✗
Customer
service
✔ ✔ ✗ ✗
Adapt New
technology
✔ ✔ ✔ ✗
Brand image ✔ ✔ ✔ ✔
Valuable – There are identified four valuable items of Tesla such as long battery life,
customer service, adapt new technology and brand image. All of them are recognised as valuable
aspects because it can help to conduct different operational activities of company. These factors
are play significant role for any company and perform executional activities in effective manner.
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Rare – Long batter life is not rare because other manufacturing companies of same sector
also utilise these type of capabilities. Customer service consider as rare because every company
can not provide same services and not easy to treat in same manner to their customers. Adapt
new technology consider as rare for other business because it is not possible for every company
to understand their uses. Brand image of business is rare due to it has been set as per the quality
of products and services (Peng, 2017).
Inimitable – Better customer service is not imitable because any company apply same
services to engage with customers. New technology and brand image are inimitable due to
maintain these elements long period because it can help to attract new customers. They aware for
single mistake because it can harm the brand image of the company.
Organised – Adapt new technology is not organised because any company apply new
technology at same time. As a result they can cover large market and give competition. Brand
image of the business is organised because it takes long period of time to set positive image at
market in between different types of customers.
TASK 3
P3 Determination and application of Porter's five force model
Porter's five force model – The model related to competitive analysis which was
introduced by Michael E. Porter in year 1979. Porter's five force model can help to examine the
competitive market place regarding to organisation. There are described five different factors
which can help to analysis of market and provide direction to manager these are competitors,
substitutes etc (Razak and et.al., 2016). A five force analysis of Tesla is as follows:
 Existing rivalry among competitors – Competitive rivalry for Tesla is very high
because in auto mobile industry recognise many number of competitors at market and
they trying to cover market in proper way. Some of them are Ford, general motors etc. it
is very important for company to develop effective strategy in order to compete their
competitors. There is analysing of competitors who is giving competition in the market in
direct manner.
 Bargaining power of suppliers – In manufacturing industry bargaining power of
suppliers is high because there are few number of suppliers who can provide every type
of part regarding to electric car. In the context to Tesla analysis different suppliers then
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select low price supplier. Many times it can show negative affect on the profitability of
the company. It can help the business to purchase material for electric car from suppliers
on low price. As Tesla is a part of retail industry where they set positive point for a
company.
 Bargaining power of buyers – As per the observation it is getting that in the market
different types of customers who can take interest into company's products. The
bargaining power of company very hight which can show negative impact on the
productivity as well profitability of the business. In reference to deal with customer while
they bargain with Tesla that time focus on pricing strategy (Wirtz and et.al., 2016). In the
context of Tesla crack deal with customers during to bargaining and concentrate on the
pricing strategy in order to set effective price of different electric cars to attract more
customers.
 Threat of New Entrant – In the manufacturing industry, it is not possible to entrance
and for this need to much more investment which is reason of new entry of Tesla is very
low. It is considering as positive manner and help to increase profitability and get long
time growth (Schaltegger, Hansen and Lüdeke-Freund, 2016). In the big market field
covered the business because it is hard to conduct business activities in new market.
 Threat of substitute – It means to use other product as alternatively of original product.
There are considering threat of substitute that Tesla is can focus on other things and now
people focus on the advance feature and technology. So it is considering as positive
manner because selected organisation focus on manufacturing process regarding to new
product by using new technology and help to stay in competitive market. The substitutes
of Tesla public transport and other type of car who have good market image and trust
between customers. It supports the business to retain customers and implement them in
brand loyal customers.
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”. Through the matrix examine about the products and
market growth strategies of company. There are defined market growth strategies like market
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penetration, market development, product development and diversification. From these growth
strategies company apply one of best strategy to achieve growth for long time and it can help to
achieve long term goals. There are defined four aspects of this matrix that has been analysed for
Tesla - Market Penetration – It is considering as growth strategy because it is depended on the
selling of existing products in the existing markets. Any company applied different types
strategies to make changes in the existing products and considering like taste &
preference of customers. Tesla can apply the specific strategy in order to cover market
share with the help of existing products in existing market. For this company can apply
several strategies such as deduct amount of products to attract customers and increase
promotional activities of present products. Product Development – It is a strategy which consider introduction and development of a
new product in the existing market. After focus on different factors then understand of
related risk of new product that will introduce by company in future to their customers.
So Tesla apply particular strategy in order to attract much more customers with the help
of quality of products, acquiring and merging resources to give competition of its
competitors. After all these implement all improvements which are based on technology
and provide new and attractive products in the existing market (Sia, Soh and Weill,
2016). Market Development – Market development is an approach where organisation can
prepare effective strategies then implement in business to capture new market in
reference to existing product. After execution, recognise of several risk regarding to
strategy. Tesla can implement market development strategy in order to sold out their
products in every type market to increase profitability. With the help of particular
strategy can expand their business at geographic locations.
 Diversification – The particular approach formulated by an organization to enter in a new
market with the new product at a same time. The specific strategy can adopted by Tesla
in order to enter into new market to introduce new product. It can help tp attract more
customers and help to cover market share with the help of innovative products. It can
help to increase profitability as well as market demand.
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Tesla can focus on the Product development strategy in reference to acquiring large
market in effective manner. There is no need to analyse market for promotion because company
already know about existing market so it is easy to promote to new products. With the help of
particular strategy can attract much more customers.
Justification – Product development should be adopted by Tesla in order to engage with
new customers because there is no need to promote new product on large level. The company
know about market so easy to prepare strategy as per the new product. As per the company have
good image in market as well as brand image so it is less risky method of development because
manufactures have proper information regarding to customers.
Strategic management plan – It is defined as detailed plan which can provide proper
information about company such as objectives, mission, vision, tactics etc. To introduce new
product in market need to prepare strategic management plan for the company - Objective – There are considering main objective of the company to manufacturing
unique cars with advance technology and increase profitability with 25%. Vision – The vision of the company to stay as leading company in manufacturing
industry to produce as electric cars (Soltanizadeh, and et.al., 2016).
 Mission – Mission of the Tesla to increase productivity, profitability then attain
competitive advantage for the betterment of the company.
Strategies – There are defined several type of strategies in order to introduce new
product in existing market for Tesla - Promotion – The particular strategy has been implemented by Tesla to aware of large
number of customer in reference to introduce new product in existing market. The
strategy prepare as per the product and helps to reach maximum number of prospects and
gain much more profit (Uhl and Gollenia, eds., 2016).
 Research & Development – As per the strategy Tesla can research about the purpose of
identifying interest of customer and which type features they like mostly. It can help to
engage with existing clients and attract for the business.
Tactics – It is considering as set of strategies which can execute to gain long term goals
of the business. There are considering some tactics for Tesla -
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 Arrangement of funds – Every company wants to fund when they are introducing new
product in the market. It can implemented by the company to manage funds from external
as well as internal sources.
STP – It is a set of three different strategies which can help in decision making process
regarding to launch new products in the market. These elements of STP are focus on the Tesla
which can as follows - Segmenting – As per the strategy divide into different segments but there are selecting
only one segment to introduce new product in market. So Company has been based on
America so there are selected Mexico for sale out product. Targeting – In the process target to those people who can buy products of Tesla So the
company target to youngsters.
 Positioning – In this procedure try to attract customers on the basis of good brand image
and provide test drive and campaign to attract customers (Whittle and Myrick, 2016).
CONCLUSION
As per the above report it has been concluded that business strategy important part of any
organisation which can help to implement new plan in organisation and help to develop effective
performance. Through the strategies business can analysis of their internal and external activities
which can affect in positive and negative manner. There are focusing on porter five model to
know about competitive market and develop strategies for introduce new product through
product development strategy.
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REFERENCES
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Schaltegger, S., Hansen, E. G. and Lüdeke-Freund, F., 2016. Business models for sustainability:
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Online
VRIO Model. 2019. [Online]. Available Through:
<https://www.marketing91.com/vrio-analysis-and-vrio-framework/>
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