Analyzing Impact and Influence of Macro Environment on Business Strategy: A Case Study of Tesla

Unit 32
Business Strategy
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Deadline for
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Executive Summary
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INTRODUCTION
Business strategy is defined as the achievement of desired ends or objectives. This is
also called long term business planning usually period of 3 to 5 years. It is also knows
actions and moves of competitors that is used by firms for attracting large number of
consumers, improving performance, competing and achievement of organization’s goal
and objectives. It is the master plan of any organization to carry out their activities and
operations in proper manner. The business strategy can be of different types such as
competitive, corporate and strategy in general.
The company chosen for assignment is Tesla which is American start-up powered by
Silicon Valley which is specialized in manufacturing of electric cars. This was founded
by Elon Musk in 2003 and reached to its success as a dynamic automotive and energy
solution organization. The company became famous for its innovativeapproach in the
market and the dominant position worldwide.
This report highlights about impact and influence of macro environment on business
and internal capabilities and environment. The porter's five force model and use of
different theories, concept, models for understanding strategic directions available for
business.
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TASK 1
LO1 Applying appropriate frameworks in order to analyze impact and influence of
macroenvironment and its strategies
It is essential for business to make proper plans and strategy in order to accomplish set
goals and objectives in an effective and efficient manner. This provides guideline to
business to work as per their mission and vision of organization. Therefore, it is
imperative to first understand the strategic context of any organization.
1.Strategic Contextof Tesla
1.1Mission- The mission of Tesla is to speed up world's transition for sustainable
energy (Mission and vision of Tesla. 2019).
1.2Vision- “The future is electric” to be thecompany of 21st century through driving
world's to electric vehicles (Mission and vision of Tesla. 2019).
1.3Objectives- The main objectives of Tesla is to manufacture, design and market for
luxurious electric powered 360,000 - 400,000 vehicles this year as predicted by Tesla
CEO . (Wayland,2019)
2.Meaning of Strategy
It is defined as high level plan in order to accomplish one or more goals and objectives
under uncertainty conditions. This is scope and direction which assist in achievement of
organization advantage through configuration of resources having challenging
environment for meeting stakeholder and consumer expectations. (Pahwa 2019)
2.1Role of strategy
Strategy plays different roles for business to achieve goal and objectives, their strategic
intent and different strategic direction. They helps in providing direction to business to
go to right path and make strategy for business in order to achieve set outcome or
desired results. (Pahwa 2019)
2.2 Different strategic planning techniques
There are different types of strategic planning techniques which helps in proper
planning of enterprise activities and operation. As per size and nature of business,
respective organization has to adopt techniques for positive outcomes. This includes
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benchmarking, budget planning, business analysis, business models, competitive,
financial analysis & market analysis and so on. (Pahwa 2019)
3.Macro Environment
The conditions of the environment which the business operates to influence its
operation for better performance. Consumers’ ability and willingness, to spend
fluctuations in spending, price levels have a direct impact in macro environment
The trends of macro environment are GDP, employment, spending, monetary policies,
government tax policies. .(Chappelow, 2019)
Various frameworks and models have been looked into to analyze the macro
environment of Tesla. Key frameworks such as SWOT, PEST and Stakeholder Analysis
has been conducted with examples.
3.1Tesla SWOT Analysis
Figure 1 SWOT analyses (TESLA motor 2019)
Strength –
The Leading automotive company innovate, develop, competitive and profitable
electric vehicles. And the best In Electric Cars – traveling up to 600km with single
battery charge. Also Tesla engaged in cross sell and diversification- eg: Tesla
insurance program with Liberty Mutual Insurance Company
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The CEO Elon Musk oversees all the product developments, engineering and
design of the company’s products.
Weaknessescould be highlighted withmanufacturing complications with production risk
factors, delays in distribution and also extreme troubles while manufacturing Model X
battery assembly at Giga factory 1 and also unable to meet the customer demand –
( this might affect the brand value.) Battery shortage is also another weakness as this
will have direct impact on the company revenue. On the other hand CEO Musk is the
sole representative of Tesla and there is no other immediate person trained to take his
position in his absence.
Opportunities
Expand its business to the Asian market which is still new to the automotive and
renewable energy market and to make their own battery cells to reduce the production
cost. Currently the primary supplier is Panasonic.
Threats
Aggressive competition from many automotive brands such as Mercedes, BMW, Audi,
Lexus for both self-driven technology and alternative fuel vehicles (Hybrid, Plug-in-
hybrid) and at the same time Often have product defects due to manufacturing designs.
This will affect the company image as all the organizations named above are able to
provide electric and sustainable products (High competition for Tesla. 2019).
Product liability claims over autopilot vehicles which is not very successful.
(Shewen 2019)
Environmental Analysis- The environmental analysis can be performed through PEST
(Political, Economical, Social and Technological) and Porter's Five Forces Model.
Tesla design, manufacture and distribute environmental friendly electric cars to the
market. This reduces the carbon footprint in the environment. Also Tesla has excellent
reputation on environmental impact on their electric vehicles and other energy saving
products, it is also important to work on their product and supply chain more energy
efficient if they expect for higher popularity/demand.
Political:
Any business environment has an impact with the political situation directly or indirectly
in its operating country. The political environment is effects the regulatory environment
too. Economic instability due to political instability will lead to business operational
disruption and therefore financial losses. Political disruptions between nations and
terrorism will also effects business environment.
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