Corporate Strategy for Tesla: Opportunities, Threats, and Competitive Advantage

This report discusses the corporate strategy of Tesla, focusing on external analysis to identify opportunities and threats, Porter's five forces analysis to assess industry attractiveness, and the VRIO model to evaluate competitive advantage. It also examines the impact of political, economic, social, technological, environmental, and legal factors on Tesla's strategy.

Corporate Strategy

Table of Contents
INTRODUCTION .........................................................................................................................3
External Analysis and its conclusion on the basis of opportunities and threats..........................3
Porter's five force for Tesla.........................................................................................................6
VRIO model for Tesla and its links with competitive advantage...............................................7
SWOT analysis of TESLA..........................................................................................................9
Strategy and test for the organisation........................................................................................10
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Corporate strategy is a subset of organisation plans which is used to choose and develop
the particular market through implementing a desired set of action and goals. This is defined as a
firm's corporate action with the aim of achieving organisational goals and objectives. In simple
terms corporate strategy can be defined as a clear and long term vision which is set by
organisation to generate more corporate value in the organisation. This report is written from the
perspective of Tesla which is one of the leading manufactures of electric cars. Its headquarter is
situated in California (Channon and Jalland, 2016). Moreover, this report highlights on various
factors external and internal environment in order to identify opportunities and threats and
strength and weakness of the organisation. Along with Porter's five forces will also be included
to understand about industry attractiveness. In the last, an effective corporate strategy will also
be chosen that also be evaluated on the SAFe test.
1External Analysis and its conclusion on the basis of opportunities and threats
PESTLE can be defined as an effective framework or tool that is used by marketers for
analysing the external environment of organisation. It is mandatory for Tesla to implement this
model as it helps management to identify the upcoming opportunities and threats for
organisation. It governs that external environment directly or indirectly impacts on operations
and functions of organisation. Implement of PESTLE tool for the respective organisation is
mention as follow:
Political factor- This aspects of the PESTLE analysis leads the organisation to identify the
changes related with politics, government and country rules which are mandatory to follow by an
organisation in order to perform their business effectively. This determines governmental entities
are one of the major aspect that impact on the business and industry performance. Companies is
performing their business in auto-mobile industry (David and David, 2019). So it is mandatory
for them to perform their operations according to industry rules and regulations. Moreover, in
UK the political conditions of government are stable and its incentives in terms of electric auto-
mobile works as an opportunity for companies. On the other side, companies is increasing their
business size by generating new global trade agreements so it also works as a positive factor or
opportunity for organisation because it helps them to attract more number of customer's. In the

last, political stability of the major market and countries helps organisation to generate more
effective strategies for the operations and functions of companies.
Economic factors- The impact of the organisation through economic policy such as
interest rate, value of currency, market growth and trade activities are considered in the
economic PESTLE of an organisation. As per the present economic conditions of UK, Brexit
impacted on the business due to which business policies must generated by automative industry
that helps them to make find economic value in their products. Car manufactures face challenges
because of low factors it governs that as per the present scenario, management see as a threat to
the economic conditions of PESTLE (Dodgson, 2018). So to overcome from this Tesla and
other car manufacture introduces new methods such to reduce waste from their process. It leads
organisation to reduce the cost of their process. Moreover, the wide area of the UK market also
provides high opportunities to market. Such as low battery cost and renewable energy cost works
as opportunities for manufactures of cars. So with the implement of this management easily
reduces the possibilities of decreasing their performance by maintaining economic stability for
organisation. With the growth of the economy the income of the people also increase which
offers opportunity for the industry as they will be able to purchase the cars.
Social factor- Social conditions such as trend, emerging market, change in consumer
demands are some of the most important factor that are undertaken under the social factor.
Moreover, this part of the organisation leads the management to complete their work by ensuring
that its products impact on the target market. This refers that it helps for performing and
managing work performance of car manufactures. to provide their vehicles according to the
needs of customer's. On the other side, there are various task are also performed that leads team
to improve their work productivity as it is directly satisfy the demand of customer's. In the
context of automative industry various opportunities increase in the popularity to decrease the
carbon lifestyle and advertising towards wealth distribution are one of the major opportunities
that leads management to enhance their work (Jenkins and Williamson, 2015). Along with this
the distribution trend related with business performance helps organisation to satisfy the demand
of customer's. The major advantage of social aspect as it helps company to grow their business at
international level.
Technological factor- The technological conditions of the UK are well managed and
improved. It determines that the major advantage which are gained by the car manufactures is

because of highly improved technology. It determines technologies influences organisation so
with the constant monitoring of technology. This is easy for the management of industry to boost
their performance and works as one of leading organisation in auto-mobile industry. On other
side, Technological aspect also generates various challenges for organisation which works for
them as opportunities as well as threats. Like high rate of technology change and increase in the
prices of raw-materials impacts on the performance of organisation. So with managing factors of
technology management easily boost improves their work performance and productivity.
Environmental factor- The macro environment related with global business and its subject such
as environment safety, consumption of low gases, increase in the renewable energy works as a
positive factor for organisation. As it leads management to improve their work capabilities by
managing their work according to the environmental conditions (Johnson, 2016). From the recent
years positive factors for safety of geographical conditions is increasing on daily basis. Due to
which performance manufactures must utilise all this factor uses this aspects as an opportunity
for their products. Industry is changing with rapid and it is well-known for their electric cars so
its beneficial for climates. It governs that this works as an opportunity for the manufactures.
The electric car reduces the pollution as they are operated with electricity instead of fuel.
Reduction in pollution helps to save the environment.
Legal factor- Legal aspects for the automative industry increase and analysis all the regulatory
factors and rules under an organisation must perform their work. Law as well as legal system
impact on the managerial decisions and business development because it helps local government
to protect the interest of their local firms. Manufacture in automative industry is performing their
work by enhancing their work possibilities to consider the work possibilities as per rules of
organisation. The opportunity related with the legal aspect is expanding their business at the
global level with the implement of international patent protection. All organisations in auto-
mative industry has opportunities to expand their business overseas, considering and expanding
the promoting electric vehicles at global level. The legal conditions of the UK market is
beneficial to expand their business as per the growth opportunities that is beneficial for existing
market conditions. In the last, legal factors also helps the organisation to boost the performance
by satisfying the needs of customer's.
In the last, by all the above factors it is concluded that there are various functions such as
production, marketing and increasing business are performed by the organisation. This

operations take place in the internal as well as external environment (Karami, 2016). Therefore,
it is mandatory to monitor external environment with the implement of PESTLE in organisation.
In the last, it is beneficial for Tesla as it helps management to identify opportunities as well as
threats for organisation. This results with proper implement of PESTLE model. Tesla improves
their performance which enhances productivity and profitability in their products.
2Porter's five force for Tesla
Porter's five force works as an effective model which is used to analyse and identifies
five different competitive forces that helps organisation to determine industry attractiveness. Five
forces analysis is frequently used to analysis industry structure in order to maintain corporate
strategy. Porter's five forces model is implemented to identify all forces by which an organisation
is surrounded. The main motive to establish Porter's five forces for Tesla is to understand the
level of competition and to enhance the long term profitability in the market. Five steps related
with Tesla motor is mention as below:
Illustration 1: Source(http://panmore.com/tesla-motors-inc-five-forces-
analysis-recommendations-porters-model)
Threat of new entrants- It is most difficult for the new player to enter in the Auto-manufactures
industry. Therefore, the approach for the new organisation to enter in market is high. As they

needs to bring innovation, new ways to perform business, reduce the cost of vehicles are some of
the major challenges that are faced by Tesla (Martinez-Simarro, Devece and Llopis-Albert,
2015). Therefore, it is important for the organisation to make essential changes such as improve
their economics of scale which helps to build those policies through which management
overcome from the barriers and achieve competitive edge in market. On the other side,
management build new capacities and invest large amount in research and development due to
which better results in the context of the organisation and industry will be improved. It helps
Tesla to increase their standards so new players face major challenge to enter in similar segment
and industry. The threat of new entrant is low as to enter in this industry the requirement of the
investment is very high.
Bargaining power of Suppliers- Mostly all the organisation and companies in the Auto-
manufactures industry buy their raw-materials form different suppliers. Along with this most of
the suppliers are dominant in position so they sale their products as per the rates on which they
are able to earn high margin. It governs that the power of bargaining power of supplier due to
which the profits for the organisation such as Tesla will be decrease. On the other side,
management also formulates new policies in order to reduce the negative impact from the
organisation. Efficient supply chain is one of the major strategy which is utilised by Tesla to
increase their sale (Moseley III, 2017) The another factor is to improve the product design so it is
easy to implement new tools in them. It helps organisation as if the prices of one raw-material
increases management is able to replace them with other.
Bargaining power of buyers- Buyer's are the king of present market all most in every industry.
So they demand a lot about different products as they focused to undertake best offering and pay
for the minimum price of organisation. As per the present market conditions, buyer bargaining
power is high in market. This refers buyers put pressure on Tesla so to maintain profitability for
long run. Management is focusing to generate large customer's base as it helps organisation in
two different methods. One is to deal with the bargaining power of buyer and another is to
streamline their sales as well as production process by innovating the products for firm on
regular basis (Marx, 2015). Moreover, it is mandatory for organisation to make changes as it
helps to deal with all factors by considering all works possibilities in efficient manner such as
fuel efficient car with more power.

Threat of substitute products- Their are large number of products and service are offered by
various organisation. The main motive of them is to meet with needs of customer's and needs in
different ways so the sale of their products will be increases. But in the context of the Tesla the
threat of substitute product is low. As the electric cars manufactured by Tesla are new due to
which it is difficult for other organisation to launch similar products. Along with this Tesla also
improve their work productivity through performing their work not as only product oriented but
also service oriented.
Rivalry among existing competitors- The competition among the organisation is auto-
manufacture industry is too intense. So it is difficult for the management to deal with all changes
through considering the work and its possibilities because it directly impacts on the sale of
products. The rivalry force for the organisation is high as it governs management faces to many
challenges due to which their products are directly impacted. Sustainable differentiation is one of
the step which helps Tesla to deal with the challenges and competitors of industry.
On the basis of this five force model it is analysed that the threat of competitors and the
bargaining powers of the buyers is high but the threat of new entrants and the threat of substitute
is low. While the bargaining power of the suppliers is moderate as they have other suppliers
which they can switch to. Overall the industry is attractive for Tesla but for new entrant it is
difficult to enter because of high investment requirement.
3VRIO model for Tesla and its links with competitive advantage
VRIO analysis works as an analytical technique that is used to evaluate organisational
resources (Marx, 2015). VRIO stands as an acronym which name starts through various
dimensions that includes Value, Rareness, Imitability and organisation. In context of Tesla, this
tool helps the organisation to identify the strength and weakness about the organisation due to
which better results will be gained by introducing their products in the market.
Particular Valuable Rare Imitate Organisation
Green market
trend
Yes No Yes Yes
To decrease gas
price
No No No Yes
Supercharger Yes Yes No Yes

network
Vehicle
Accessories
Yes Yes Yes Yes
Tesla is currently utilising this resources as per the needs which helps management to identify
all resources which leads organisation to gain competitive advantage in market. By utilising the
valuable and rare resources as the strength for organisation (Sirén and Kohtamäki, 2016). This
helps the management of Tesla to achieve high position in market by considering all factors as a
systematic tool for organisation. Some of the major tools related with VRIO is as follow:
Valuable- Tesla is manufacturing electric cars in order to satisfy the demand of customer's. It
determines that there are various task are performed by management which undertakes high
value in organisational products. Innovation is one of the best feature of Tesla which leads
management to gain competitive edge in the market by considering or generating more value in
electric cars of organisation.
Rare- The process of Tesla for making new products and work process to manufacture their cars
works as a rare factor for them. It governs that there are various tools are also recognised to
enhance company performance by increasing use of those products which are not easily availavle
to other competitors. Such as the management accomplish all works through managing the task
by utilising work capabilities as a tool for management.
Imitable- Most of the work performance related with management need to be accomplished as
per needs and demands of customer's. This governs it is essential for management to undertake
all the work possibilities that are not easily copied by other organisation (Smith, 2017). Tesla
electric cars are first introduced as a new feature. Whereas, other cars are operated through other
natural resources. Therefore, electric cars works for them as a competitive advantage for Tesla.
Organisation- In the present scenario, there are various tools need to be managed to develop an
effective product. Whereas, various resources are used by management to perform the work
capabilities as per needs to society. In the context of Tesla, all departments of organisation
performs their work in effective manner due to which better results or outcomes are gained from
organisation.
Along with this the Tesla has various resources which helps them to meet up with the
opportunities and threats. The resources such as human resources, financial resources etc. helps

the company to achieve the objectives as they help them to adapt the technology etc. Other
intangible resources such as goodwill will help them to make gather funds and make their
customers satisfied.
Value chain analysis : With the help of this analysis the processes of the companies can
be improved which will help them to enhance the profit margins of the company. Both the
activities such as primary and supportive activities are analysed. The analysis of various primary
activities will help the Tesla to identify the problems in the inbound logistics, outbound
logistics , their operations, marketing and sales, services. While it will also help to identify the
problems in the supporting activities such as infrastructure, human resources, technology and the
procurement. With the help of this analysis the profit margins of the company can be increased
as the improvements can be made which will help them to save the cost.
4SWOT analysis of TESLA
SWOT helps the Tesla to focus on various factors through which management completes
their work by determining those factor which increases strength for organisation (Suarez, Calvo-
Mora and Roldán, 2016). Similarly this tool also helps management to determines loop holes
which states as a weaknesses for organisation.
Strength in context of Tesla
 Position of Tesla products in market is unique and its relates with management as per the
deliver and innovation of products leads organisation to achieve top position in market.
 Strong control on the organisation leads management to complete their work with in an
appropriate manner.
 The innovation about the innovation related with Tesla is high and it accomplish
management to increase their market.
 Brand awareness about Tesla is too high which works as one of the positive factors for
teams.
 The process control for Tesla is controlled and monitored with more efficiency due to
which its range is increased on day to day basis.
 Factory process of Tesla is very improved due to which it is easy for them to make new
products at reasonable cost.
Weaknesses

 Price of the Tesla electric cars is too high as compare to other existing products. This
decreases customer base for organisation.
 The investment make by Tesla in R&D is too high which works as one of the major
weakness for organisation.
 Overall presence of Tesla product is too low due to which it works as a negative factor
for organisation.
 Supply chain of Tesla product is too small due to which it is difficult for organisation to
manage deliver about their products.
 Prices decided by Tesla for their electric cars is too high due to consumer’s face
challenges to make efficiently.
 Profit margin of Tesla products is too low as because of their low sales.
Strategy and test for the organisation
Strategy works as one of the major part for the organisation which leads organisation to
complete their work in effective manner. This refers it is essential for Tesla to increase their
business size with the implement of diversification strategy. Moreover, the SAFe test is also
included which helps management to boost the performance.
Suitability- In the present scenario, product development strategy is beneficial but to increase
the business size at global level. Tesla needs to focus on all the aspect related with organisation.
So diversification strategy is most beneficial for management as it increases business size at the
international level (Thompson, Strickland and Gamble, 2015).
Acceptability- To perform the work in an effective way it is beneficial for management to
implement strategy in all functions as well as departments. So with the diversification strategy
acceptability need to be manage and accept by all employee's in order to complete their work in
accurate manner.
Feasibility- Feasible portion of the SAF strategy must be implemented to make and occurrent all
factors which are related with business resources and abilities of organisation. In the context of
Tesla with the implementation of price factor and financial aspect diversification strategy
focused on completion of work.

CONCLUSION
In the end, by the above report it is concluded that strategy is one of the major part for the
organisation that leads management to complete their work in effective way. Along with this
micro and macro environment is also covered in this report which helps management to
understand market in effectively. PESTLE and SWOT are some of the tools which enhances
performance by determining all parts of environment. In the last, diversification strategy and test
related to this are also included for increasing business size at global level.

REFERENCES
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