Implementing Frameworks for Macro Environment Impact on Tesla
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This report discusses the implementation of appropriate frameworks to analyze the impact of macro environment on Tesla, evaluates the capabilities and internal environment of Tesla using SWOT and VRIO analysis, and applies Porter's five forces model to assess the competitive forces in the automotive industry.
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INTRODUCTION Business strategy exists as the combination of various decision that are taken by the organisation to make effective decisions. All the decisions that are taken by the organisation are formulated in a way that can leads the management to ensure a competitive position in the market. An effective business strategy states as the backbone of business by working them as a roadmap which leads organisation to achieve their goals in predetermine period. This reports is based from the perspective of TESLA which is one of the leading organisation of automotive industry. Along with this they are the larger manufacture of electric cars. Further, this report highlightsonmacroenvironmentandtheframeworksforvariousstrategies.Internal environment and capabilities will also be covered in the report. In the last, Porter's five forces and various theories, concepts and models related with strategic planning will also be covered in this report. TASK 1 P1Implementofappropriateframeworksanditsimpactonmacroenvironmentonthe organisation Macro environment undertakes all the external factors that are beyond the control of the organisation and impacts on the decision-making as well as goal of the organisation. It is mandatory for the organisation to monitor this changes on regular basis because its directly affect the performance of the firm. So with the implement of the appropriate framework it is easy for organisation to deal with changes by developing effective strategies for the organisation. Macro environment factors and its impact on the influence of TESLA and its strategies is as follow: Political factors-Political factors related with organisation and industry policies and a country regulation in which a firm is operating their business. Governmental policies, taxation rates, trade restrictions and many more are some aspects of organisation by which organisational strategies will be influenced. Political conditions of the UK are stable which makes business strategies favourable for the organisation. On the other side Brexit, generates a few instabilities in the country, so to overcome from political factors TESLA formulates new strategies in order to perform their operations in complex environment(Buckley, Burton and Mirza, 2016). Economic Factors-Economic factors are one of the crucial part of the organisation as they are directly related with organisational profits and financial aspects. In context of macro
environment, interest and inflation rate, GDP rates etc. are some of the major aspect of economical factor. In the present scenario, UK provides sources such as raw-materials, cost and other essential resources within minimum time period(Dodgson, 2018).So it works as one of the major advantage for TESLA as it leads them to complete their production at a minimum cost. So large profits are earned by the organisation as it helps them to complete their work in appropriate manner due to which large profits are earned by TESLA. Socio-cultural Factors-The social factor reflects the lifestyle, preference, taste and the culture factors that leads organisation to perform their operations according to the society of a country. In the context of UK market, there are large number of consumers belongs to different culture, religion and race exists. Therefore, the existing demand of the market is unique. Moreover, the increased concern about the redemption of natural resources works as a positive factor for Tesla motors. Further, there is high inequality exists for the market of UK as compare to developed countries. So to decide the pricing strategies for organisation is one of the major decision which impacts on the market(Drnevich and Croson, 2013). TechnologicalFactors-Thetechnicalaspectsoftheorganisationrelatewith technological advancements, innovations and automated process of a country. In the context of UK, there are various countries present in the market that are high in technology. Due to which its directly impacts on the business strategies of the organisation. Moreover, the major benefits which is gained by the organisation as it is easy for management to grab the upcoming opportunities in the market. Like Tesla introduces electric cars at its initial stage and later with the impact of technology. Management started to develop electric sports cars in the organisation. As the major influence which relates with organisational performance is due to constant changes in society(Hoejmose, Brammer and Millington, 2013). Legal Factors-They are various laws and order are present in the country which prevails an organisation to complete their work in a discipline manner. The main motive of UK laws is to protect the interest of local organisation, so it is easy for them to perform their work in minimum time period. It is related with organisational performance. So it is easy for the management of TESLA to perform their work by considering all the laws in an appropriate manner. On the other side, there are various laws related with pollution works as an advantageous factor for the organisation. However, TESLA needs to follow the legislations in order to ensure as a legal framework for country(Johnson, 2016).
Environmental Factors-There are various environment factors related with the country, along with this from the several past years, NGO, government and also organisation are aware about the environment policies. As per the UK environment policies it is based on various principles of the command as well as control. Like the pollution standards, release of harmful gasesastoreleasethemasperthelimitsdecidedbygovernment.Teslamanufactures environment friendly products such as solar-energy batteries, electric used vehicles which are beneficial to reduce global warming from the world. So the factors related with environment leads the management to increase their efficiency by reducing the pollution from the world (Langabeer and Champagne, 2016). M1 Analyse of the macro-environment factors to determine strategic management decisions Macro environment reflects all those external factors that are not able to change and controlled instead of businesses. This strategic management decision is able to deal with the modifications in external environment of organisation. Business strategies are developed in order to reduce the impact of external factors. So it is easy for management to achieve organisational goals and objectives in an appropriate manner. Tesla must improve their business strategies in order to deal with instability political and economic conditions of the UK. Further, technological advancements work as a positive factor for Tesla. Environment conditions of the UK are also a favourable aspect for the organisation which can enhances the performance for Tesla as it formulates all policies in favour of Tesla. TASK 2 P2 Analysis of the capabilities and internal environment of the organisation Internal capabilities work as a positive factor for Tesla because it assists management to analysis strength and weakness of the organisation. One of the major positive factor for organisation is to make modifications through controlling and managing them towards the goals and objectives of Tesla(Lehmann, 2016).Its includes organisational structure, employee’s values, physical resources, technological aspects and all those factors which are control by the organisation. Some of the effective frameworks that are related with internal environment and capabilities are mention as follow: SWOT Analysis:SWOT analysis provides a detailed analysis of internal factors of Tesla. The strengths so analysed can be enhanced whereas the weaknesses are to be dealt with so that the
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company can remain successful in the dynamic and ever-changing environment. Also, it helps in realising opportunities for the company which can be captured and also potential threats in the markets can be analysed so that a proactive approach can be formulated to deal with the threats. SWOT analysis in the context of the organisation is mention as follow: Strengths Utilisationofupdatedtechnologyto design their electric cars. Excellent position and awareness about Tesla brand by providing good quality of products of them. Bymanufacturingproductsthatare environmentfriendly.LikeTesla electric cars, solar-energy panel etc. are major strength for them. Weaknesses Low market share that directly impacts on the presence of market. Low investment due to which various challenges are faced by organisation. LikeR&Drequireshugeamountof financetoidentifynewmethodsfor completing their work. The present share of electric cars is too low due to less number of power supply sources. Opportunities Theenvironmentaspectsand awareness about global warming works as a opportunity for them. By expanding their market areas on a global level and to diversify the product in order to attract potential customer’s among all over the world. Threats Thecompetitionamongtheauto- mobileindustryistoohigh.So consumers has large number of cheap resources irrespective of their harmful gases. Brexit reduces the value of market and money. It results the prices of Tesla products is increased. The next tool which is used to analyse the internal environment for an organisation is VRIO.The main motive to implement VRIO model is to determine the competitive advantage which are holds by the organisation. It leads TESLA to retain at the top position in the market by utilisingtheirresourcesineffectivemannerandtouplifttheirpositionascompareto
competitors. The VRIO analysis for this report is also relates with SWOT aspects of the organisation. Value-The value factor considers all those products and services that are provided by the organisation by adding more value to customers. In order to generate more value in their electric cars management of Tesla focuses on comfort, power and most important fuel efficiency. So it is easy for them to provides high value to the customer’s as compare to their price. This results it is for organisation to maintain sustainable competitive advantage in market(Marx, 2015). Rare-With the implement of rare factor it is easy for organisation to analyse whether management is able to offer various products and services to customers. It governs that rare factors show that their products are hard to replicate. Tesla provides electronic cars with two motors and single speed gear box. There are various parts related with 17 moving parts compared to internal combustion drivetrain. It results this is easy for Tesla to take more advantage as it not easy for other companies to complete the products effectively. Imitable-With the analyses of imitable factors Tesla analysis whether their products or services are able to imitated or not. This determines it provides unique/futuristic design that be tough to imitate. It determines that other organisation requires enough time and large amount of funds. So it is very difficult for other companies to imitate their products. Moreover, most of the technological aspects related with Tesla are already patent. So by the time Tesla product will be imitated it covers large market area(Maté, Trujillo and Mylopoulos, 2012). Organisation-The organisational factors analyse various policies, management system, culture and policies that is followed by the organisation. In the context of Tesla, they implement costly and unique resources that enhances capabilities of organisation. This results it is easy for organisation to gain sustainable competitive advantage in the market or industry. M2 Evaluation of the internal environment and capabilities with its structure and skills set With the internal environment evaluation or analysis, it is easy for Tesla to identify their strength and weaknesses. This results management is able to complete their work by considering their factors that is related with their actions and decisions. It governs that there are various factors need to be implemented so they deal with the potential threat that are impacting on the performance of organisation. Along with this VRIO model also helps the organisation to generate effective policies and process that helps the organisation to gain sustainable competitive advantage in market.
TASK 3 P3 Implement of Porter's five force model to evaluate the competitive forces of organisation Porter's five force model works as one of the most effective tool that is utilised by the business. This is used that is used to analysing various degree related with competitiveness from the market. M. Porter developed this model in the year 1979.This is useful for planning and implementing various strategies in order to increase the potential about the business concern. Five forces model is used to analyse the entry of new players, bargaining power of buyers and suppliers, threat of substitutes and existing competitor in market. The Porter's five force model in context of Tesla is mention as follow: Threat of new entrant- The competition among the automotive industry is intense due to the various range of products availability and profits. In the context of electric cars, the threat of new entrants is low due to which innovative technology. This governs that it is easy for auto- mobile manufacture to provide their goods at global level in order to earn high profits. On the other side, the major benefit earned by the Tesla is relates with innovation. Moreover, it is beneficial to complete their work by determining their goals related with existing customer’s and attraction of new clients. Secondly, this is beneficial to construct new economics policy by which it is easy to control the cost of organisation(Moseley III, 2017). Bargaining power of supplier-There are many suppliers of auto-manufacturing is present in the market that provides goods in bulk in order to manufacture goods at large scale. Along with this most of the productsare formed by the organisation to completetheir manufactures process with in minimum time period. It governs the power of supplier is too high, so to overcome from this Tesla need to develop positive relations with different supplier. So it is easy for management to increase the sales of their products. It is beneficial to focus on needs of supplier that is fully depend on organisation. This is useful to focus on suppliers that is fully depend to manage the power of distributors(Sirén, and Kohtamäki, 2016). Buyer's power-According to the modern era, customer’s is the king of market. The main motive of buyer's is to purchase all offerings about product. So they are able to get high quality of goods at low prices, Demands of products is high so this factor works as a beneficial part for the profitability of business. In this context this approach is high. Therefore, to overcome from this process managers of Tesla provides free services and accessories to its customers in order to deal with their power(Suarez,Calvo-Mora, and Roldán, 2016).
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Threat of substitutes-In the present scenario, the entry about the new substitute products is high, as most of the existing customer’s and government prefer those products which are environment friendly. Like the Fortwo electric as well as Ford are focusing to develop electric cars because of their upcoming demands of products(Barberá and et. al., 2012).Therefore, to deal with them management improves the services about the organisation. The company directs their production towards needs of customer instead of their purchase factors by accelerating various barriers to deal with existing customer’s. Competitive rivalry-The competition in the automotive industry is increasing with a rapid speed, this determines that the rival organisation is focusing on all factors which are related with market players and profits. Tesla manufactures new electric cars, this determines that with the implement of Auto-manufactures organisation. It results in the downfall for the overall productivity of organisation. On the other side, to overcome from this factor management needs to establish product differentiation and establishing scale in order to deal strategically with in the market(Drnevich and Croson, 2013). By monitoring all the above factors, it is analysed that with the implementation of Porter's five force model. It is easy for the organisation to undertakes all those aspects which are related with stakeholders of Tesla. On the other side it is also beneficial for organisation to assess all the changing trends in the industry for utilising favourable opportunities. In the last, with implement of this model it is easy for organisation to make effective strategies that helps to assist them to achieve their goals in short intervals(STRATEGIC CAPABILITIES.2019). M3 Appropriate strategies to improve competitive edge in the market Strategies works as an effective roadmap that is followed by the organisation in order to make appropriate decisions and actions. Porter's five forces leads an organisation in order to determine five external factors for relating them with the organisational strategies. This helps in identifying the organisational strength for enhancing weakness in order to deal make effective strategies. In the last, possible threats are overcome through making proactive actions and decisions by managers.
TASK 4 P4 Implement of strategic planning in the context of organisation Strategic planning works as one of the organisation activity that aids management to make effective strategy and direction. This results it is easy for organisation to allocate the resources within the organisation. Along with this strategic planning is defining various purpose in order to relate with the mission that is related management so it is easy to gain effective results. There are various theories, models which is used to make effective strategic plan. This results with the making of strategic plan in order to formulate the organisational culture, organisational size and environment(Grover and Kohli, 2013). In order to implement this, Ansoff matrix works as a strategic planning tool that was developedbyIgorAnsofftoprovidestheframeworkinordertohelpmanagementof organisation. There are various strategies are developed to make effective strategies in future. Some of this theories are mention as follow: Marketpenetration-Thisstrategyinvolvesvariousfactorsrelatedwithexisting products and markets. In this it works as the last strategy because its relates with products and market. There are various goals is also considering through making effective strategies as it related with customer’s. On the other side, it is beneficial for Tesla because it leads management to sale their products in the existing market(Wang and Verma, 2012)... Product development-The strategy related with product development is beneficial to make strategies which are related with the development of management strategies. In the present scenario, it works as one of most effective strategies as it leads the organisation to perform their work in effective way. Tesla is manufacturing their products with this strategy to make an effective approach in order to increase the sale of their electric cars(Köseoglu,and et. al., 2013). Market development-In the present scenario, large number of organisation are selling their products into new markets. It works as the strategy that helps the management to increase the area of market. Moreover, with the implement market development strategy, Tesla sales their existing products into new market due to which the performance of organisation increases. Further, the main benefit achieved by Tesla is to increase their market share(Oestreicher-Singer and Zalmanson, 2013). Diversification-This works as the last strategy which enhances the performance of organisation through expanding the size of their businesses. In order to implement diversification
strategy effectively, Tesla needs to introduces and expand their market area by considering and introducing new markets and products(Scholes, 2015). In the context of Tesla, market development strategy works as one of the growing strategy that is related with market area. This governs the broader area of market is untapped, so the organisation focuses on formulating new strategies that helps them to cover more number of potential customer’s. M4 Formulation of effective strategic plan Strategic plans help the organisation to develop vision and mission for organisation through analysing internal and external factors. This results it is for management to manage their long term goals in order to evaluate the performance of organisation. Vision-For making the most effective electric car that leads to bring drastic change in the society. Mission-To make changes in the organisation by directing them towards sustainable transport. Strategies-Market development is one of the major strategy which helps organisation to increase their market base. Objectives-The main objective of organisation is to increase market share within a year. Tactics: Tesla offers its products by direct marketing through its stores rather than through any other agencies. Tesla offers their products by using all marketing methods which are online, offline and E-commerce store. D1 Strategic directions objectives and tactical actions along with their interpretation In the present scenario, detail analyse of the organisation is related with external as well as internal aspects that is related with growth of a firm. Moreover, with the analysis of organisational factor it is essential for management to develop those approaches which are related with business goals. Along with PESTLE, SWOT also works as one of the major factor that provides information about the internal and external aspects of the organisation. The overall benefits which is gained by organisation is to boost profitability and sustainability of business operations.
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CONCLUSION In the last, from the above report it is evaluated as well as concluded that, an organisation evaluates its environmental factors by utilising effective tools in order to understand the micro as well as macro environment of organisation. Moreover, it is beneficial for organisation as it leads the management to improve their business strategies. So it is easy for organisation to deal with various problems and to achieve their goals in predetermine period. Tools and techniques are also used by organisation to make an effective strategic plan by utilising key components and resources that are present in the organisation.
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