Business Strategy - Tesla Assignment Sample

Business strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1 Appropriate framework analyse the impact and influence of the macro environment..........1
Task 2...............................................................................................................................................4
P2 Analyse of internal environment and capabilities of the organisation...................................4
Task 3...............................................................................................................................................6
P3 Evaluation and application of competitive forces by using Porter's five force model...........6
Task 4...............................................................................................................................................7
P4 Application of models, concepts and theories that help to make strategic planning for given
company......................................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is the main management function that help to run a business
successfully in market place. A business concern should have good strategy or planning which is
used to understand the changes and implement them within organisation in order to attract the
customers. In other words, it is a master plan which is prepare by managers for carrying out
operations and administration functions in order to achieve goals and objectives (Chang, 2016).
For understanding the importance of business strategy Tesla has been selected which was formed
in the year 2003 by Martin Eberhard, Elon Musk, J.B. Straubel and Marc Tarpenning. It is
loacted in Palo Alto, United state and Califoria. It manufacture electric car through SolorCity,
gasoline cars with Solar panel in order to attract customers. The report discusses about impact
and influences with macro environment, internal environment capabilities of selected
organisation and outcomes of an analysis using porter's five forces model to a given market
sector. Moreover, report will cover models, theories and concepts that help to make a strategic
direction within organisation.
Task 1
P1 Appropriate framework analyse the impact and influence of the macro environment
Macro environment considers external factors that are uncontrollable that affects the
manager's decision within business entity. This is the condition that exists in economy as a whole
rather than specific sector or region. In general, it contains trend in gross domestic product,
inflation, spending, inflation, monetary, employment and fiscal polity that affects a business
positively or negatively. To analysing such environment PESTLE analysis is used by managers
within business entity. Such as manager of Tesla uses PESTLE analysis to know the impact of
external factors. It includes different factor such as political, economic, social, technological and
environmental which impacts on Tesla's business (Grant, 2016). The description of such analysis
are defined as:
Political: This includes political stability, government stability, trade agreements,
government policies, legislation and administrative policies which influences business
organisation and its strategies. Such as government play a key role to provide incentives to Tesla
for development and further growth of business.
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 Positive impact: By UK's government stability Tesla make strong business
strategy that help to purchase raw material and car parts from other country. It
impacts business strategy such as Tesla can increase the productivity and
profitability within organisation by following the UK's government trade policy.
 Negative impact: If UK's government change the trade policy and tax rate then it
impacts on Tesla's business strategy such as it has to pay more money in order to
purchase raw material and tax amount. As result, Tesla has to face to low
productivity because of changing business strategy (Khanagha, Volberda and
Oshri, 2014).
Economical: It considers inflation rate, currency exchange, interest rate and trade levels
which influences business strategy of Tesla organisation. The impacts are defined as:
 Positive impact: Tesla manufacture electric and gasoline cars by following the
inflation rate. Decline in inflation rate of UK help Tesla to manufacture car at low
cost that help to maximize the production so it is beneficial for Tesla's that it can
manufacture more products.
 Negative impact: If inflation rate UK is increased then it impacts on Tesla's
strategy such as it can not achieve it target as it decided because customer will
switch the product after increasing the inflation rate.
Social: This factor considers income level, buying behaviour, cultural, experience and
taste of people that affects business organisation. It impacts business strategy such as Tesla make
plans to introduce new product according to customer taste and income level that influence
customers in United Kingdom or other place by focusing on customer preference.
 Positive impact: Tesla focuses on customer's taste and preference that help to
generate more profits by selling the electronic or gasoline car. Additionally, it
consider income level as manufacture cars at reasonable cost that increases the
number of customers.
 Negative impact: Changes in customer taste and preference impacts negatively
strategy of Tesla such as it has to spent high amount to research the market and
manufacture products as customer wants. As result reduction in profitability.
Technological: It contains technology advancement, capabilities and new technology
which impacts on strategy as well as business organisation. Tesla introduce from new features in
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cars by accepting new technology that influence customers (Klettner, Clarke and Boersma,
2014).
 Positive impact: Adopting new technology by Tesla impact positively such as it
can create customer interest and achieve goals as it want. So it help Tesla to
increase number of customer by making solid business strategy in order to accept
new technology.
 Negative impact: In Auto mobile industry, technological changes are increasing
speedily which impacts business strategy such as it need to hire high technical and
experienced person who can adopt new technology. To find such person may be
difficult for Tesla as result low production and less profit margin.
Legal: This is related with laws determinants, regulatory framework and other legislation
that impacts on business strategy. It is essential for organisation to follow legislation in order to
operate business appropriately.
 Positive impact: The manager of Tesla follows equal pay and health and safety laws that
help to attract the employees and they make more efforts in order to maximize the
production as it decided. By following Tesla can manufacture new model of car in order
to influence customers.
 Negative impact: If Tesla do not follow equal pay or health and safety act then manager
of Tesla has to face employee turn over situation. As result Tesla can not attain goals and
objects of business industry (Lawton, 2017).
Environmental: It includes corporate culture management, climate and corporate social
responsibility as environmental factors which may impacts on business strategy of business
industry. It is very important for Tesla to follow the environmental laws and produce less pollute
vehicle that help to contribute in healthy environment.
 Positive impact: Tesla manufacture less pollute vehicle and focuses on corporate social
responsibility that increase buying purchasing power. As result large number of customer
and high productivity that help Tesla to maximize profitability.
 Negative impact: If Tesla do not follow environmental safety rules and not contribute
for corporate social responsibility then it be out from market place, because it is the duty
of every organisation to follow environment safety rules. So it impacts on Tesla's strategy
such as it can be out from market if managers do not follow environment safety rules.
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Task 2
P2 Analyse of internal environment and capabilities of the organisation
Internal environment: This is collection of multiple factors which is arises within
organisation that can be control. It is required to focused by managers of the industry to know the
strength and weakness of business entity. Company adopts different types of tools to analysis the
internal environment (SWOT analysis of Tesla 2019). SWOT analysis is one of them which is
followed by Tesla to analysis the strength and weakness.
SWOT analysis: This is a technique that suggests managers to know the strength
weakness, opportunities and threats of company. Tesla inc. is an automotive and energy
company which was founded in 2003 by Martin Eberhard and Marc Tarpenning in Palo Alto,
California. The company is involved in a business of manufacturing of electric cars and solar
panels. Such as Tesla's manager uses this techniques and analysis the strength and weakness that
is defined below:
Strengths Weaknesses
 The US government supports Tesla's
growth. Company obtains a huge
amount from US department of energy
 The company is providing a highly
innovative technology. Tesla is known
for introducing first fully electronic car.
 Tesla is a largest automotive industry
that manufacture energy and hybrid
vehicle such as solar powered and
electric cars.
 Tesla has much smaller force for
manufacturing process than its rivalry
companies.
 The company is focusing on research &
development so much that it is
evaporating a huge amount on R&D.
Opportunities Threats
 Tesla is currently developing its giga
factories which will help in increasing
and fulfilling auto mobile production.
 Company is focusing on manufacturing
of future drives which will ease stress
 Tesla is a well known name in auto
mobile industry still it is facing a lot of
competitions like ford, Toyota etc.
 A major threat for Tesla is the debt. It
significantly decreased a lot of debt
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of environmental issues. currently but it is still a shadow
looming over the company.
VRIO model: This is a tool which is used to know the capabilities of a entire
organisation. It contains various resources which is available within entity and analysis the
capabilities. This states four aspects like valuable, rare, inimitable and organised that help to run
a business successfully. The VRIO analysis for Tesla organisation is defined as:
Capabilities Valuable Rare Inimitable Organised
Raw material ✔ ✗ ✗ ✗
High man power ✔ ✔ ✗ ✗
High technology ✔ ✔ ✔ ✗
Brand image ✔ ✔ ✔ ✔
Valuable: Tesla has number of valuable items like raw material, high man power, high
technology and brand image. All are the valuable aspects as they help Tesla to maintain the
operational and manufacturing activities within organisation by using these resources. It is also
important for all companies such as it help to perform operational activities in order to increase
the financial growth of business entity (Martinez-Simarro, Devece and Llopis-Albert, 2015).
Rare: Raw material is not rare for Tesla because another company can use raw material
within organisation to manufacture the cars and other products. So, it may be difficult for Tesla
to use unique raw material in order to manufacture cars. High manpower is rare because for all
the company it is not possible to hire talented employees and retain them. High technology and
brand image is rare because Tesla is updating up to knowledge and uses new technology for
manufacturing gasoline and electric cars which is creating a creating a brand image by offering
good quality of products to its customers.
Inimitable: High manpower are not inimitable because by making efforts Tesla can hire
skilled employees who help to achieve goals within organisation. High technology and brand
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image is inimitable because by focusing on new technology and upgrading knowledge other
organisation can introduce new product in competitive market (Spender, 2014).
Organised: High technology of Tesla is not organised because by using new technology
other organisation can manufacture same kind of cars that can increase the profitability for other
organisation. Brand image of company is organised because offering qualitative or attractive cars
at low cost organisation can capture large market share. As result, it focus on financial growth of
company (Patel and Chrisman, 2014).
Task 3
P3 Evaluation and application of competitive forces by using Porter's five force model
Porter's five force model: This is competitive analysis model that was developed by
Michael E. Porter in 1979 to know the competition in market. It contains five elements that
guides managers to focus on such elements such as competitors, rivals and substitutes (Rugman
and Verbeke, 2017). The porter's five forces model for Tesla is as follows:
Existing rivalry among competitors: The competitive rivalry for Tesla is high because
there are large number of competitors who are trying to capture the market share of company by
providing new product and services. Some of the competitors of Tesla are Audi, Volkswagen,
BMW and more who manufactures cars as Tesla doing, that create large competition. So, Tesla
need to build attractive strategy that is to promote the product through social and print media
which will help to face the competition and would become multinational company.
Bargaining power of suppliers: In Auto mobile industry, the bargaining power of
supplier is low because there are ample number of suppliers in this industry. Such as, if one
supplier is selling at high prices then Tesla has option to purchase raw material from other
suppliers that help to manufacture cars at low prices. So the bargaining power of supplier for
Tesla is low hat is beneficial as it can purchase raw material at low cost.
Bargaining power of buyers: The bargaining power of buyers in Auto mobile industry
is very low because there are less number of suppliers who keeps its prices fix. Customer can not
purchase at low cost as they wants because they do not have lack of purchasing option. So it give
a benefit to Tesla as it can charge high prices from customer and customer has to pay due to lack
number of customers (Scholes, 2015).
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Threat of new entrants: It is not easy for all organisation to enter in to competitive
market easily. For entering in to new market there is need to arrange high investment or capital
to enter in to competitive market. So threat of new entry in to market for Tesla is low. As it has
enough financial and human resources that help to run a business effectively and also will help to
crack the competition.
Threat of substitutes: This means substitutes of products which are available in market
place that reduces the sale of original products. The threat of substitutes for Tesla is low because
it has taken the copy right or patent. By using copyright and trademark no one can not easily
manufacture same kind of cars as Tesla manufactures. So it beneficial for Tesla to maximize the
production by manufacturing electric and gasoline cars (Shuen, 2018).
Task 4
P4 Application of models, concepts and theories that help to make strategic planning for given
company
Ansoff Matrix: It was formed by H. Igor Ansoff in 1957 in an article of “strategies for
diversification”. This is used to define its product and marketing growth strategy in market place.
The analysis of Ansoff matrix for Tesla has been stated as:
Market penetration: It is based on growth strategy that is used to selling existing
product in existing market. Organisation can use this strategy to increase the market share by
modifying existing product in existing market. Tesla can use this strategy to make changes in
existing product that will help to increase the interest of customers.
Product development: This means build a market strategy for customer by introducing a
new product in existing market that influences customers. Tesla can adopt this strategy by
manufacturing new model of car, Roadster truck in already exist market that will help to attract
existing customers.
Market development: This is a theory or approach where strategies can be established
for the purpose of entering in to new market with existing market. For application of this
approach organisation faces multiple risk such as location, area, customer preference and
competitors in market place. Tesla may adopt this strategy by selling the vehicles in another
market where yet not sold. This strategy will help to expand the business and its profits by
selling in more location.
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Diversification: This is effective approach which is used by organisation to enter in to
new market with new products. Tesla can use this strategy by developing new product in new
market that will help to capture more market share and will help to grow the business activities.
From the above mentioned strategy it has been analysed that Tesla should use product
development strategy that will be feasible or more effective for organisation. Such as it has
enough financial and human resource that can help to manufacture new car with new technology.
By manufacturing new product it sustain in competitive market (Švárová and Vrchota, 2014).
Justification: The product development strategy will be beneficial for Tesla such as it
can increase the market share by introducing the new product. The manager of Tesla research the
market and will get the need of customer and then will produce new product like Roadster and
pick up truck that will help to increase the number of commercial customer and profits (New
product development for Tesla 2019).
Strategic management plan: This is used to make planning for running a business
independently. This plan involves company's objectives, mission, vision and tactics to maintain
the operating activities within organisation. Such as the manager of Tesla prepares a strategy
management plan that will help to run business activities at different market place in order to
maximize the profits.
Objectives: The main object of Tesla is to raise its profits by 60% in upcoming 2 years
by launching new model or car and adding some attractive features.
Vision: Tesla is looking to be on the top of auto motive industry and want to maximize
the productivity.
Mission: It mission is to maximize the productivity and profitability by achieving the
targets. Additionally to get high advantage for better formation of company.
Strategy: Tesla will use following strategy in order to launching new car and promote
this product. The strategies are follows by Tesla:
 Promotion: Tesla will promote the product by using print media, social media
and advertisement that will help to influence customers and emphasis them to
purchase the products.
 Research and development: The marketing manager of Tesla will analysis the
market and will get needs of customers that will help to manufacture that kind of
products as customer wants.
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Tactics: Tesla is following some tactics in order to manufacture product and increase the
number of customers. The tactics are defined as:
 Availability of funds: This is basic requirement for company that help to
manufacture products. Tesla is internation car manufacturing company that can
arrange funds through loan, family and by issuing of shares.
 Technology enhancement: Tesla will introduce a new product by accepting the
new technology. Technology will help to manufacture new product in competitive
market.
STP: This is the combination of different strategy that help to make decision by
launching the product and services. The STP of Tesla are as follows:
 Segmenting: By using this strategy Tesla classify the market in to different
segments and select best location to launch the new products. Such as Tesla has
selected London location that will help to expand the business.
 Targeting: The target market for Tesla is men who are interested to buy new cars
with new features in order to live a standard life (Thompson, Strickland and
Gamble, 2015).
 Positioning: Tesla is looking to use attractive promotion strategy such as it
discount, advertisement and free services which help to attract the customer as
well as will maintain the top position in competitive market.
CONCLUSION
From the above report it can be concluded that business strategy help to promote a
business and run a business in competitive market. It is the process of formulating the plans that
help to achieve goals and objectives within organisation. PESTLE analysis is used to know the
influencing factor which impacts on business strategy. SWOT analysis states the strength and
weakness of business industry that give opportunities to grow a business by overcoming on
threat. Additionally, porter's five forces model help to analysis the competition in different
market place.
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