Business Strategy: Analysis of Tesla Inc.

Feedback Unit 32
Business Strategy
STUDENT NAME

INTRODUCTION
Business strategy is a firm's working plan under which decisions are taken and actions
are performed in such a way which attracts customers and helps the firm in competing
successfully in the marketplace so as to accomplish its visions and missions (Amran and et. al.,
2016). A business strategy helps the firm in achieving its vision and mission statements. It is a
long-term business plan which includes two types of strategies i.e. generic or general strategies
and competitive strategies. These strategies help the companies in identifying product strengths,
adjusting prices, acquiring new businesses, differentiate products etc. To understand in detail
about the concept of business strategy, Tesla Inc. is taken in this report. It is an American
company that deals in automobiles and energy. It is based in Palo Alto, California. It has an
expertise in electric car manufacturing and it also manufactures solar panels through its
subsidiary SolarCity. This report covers an internal and external analysis of the company which
will provide the basis for strategic planning. Also, recommendations are given in to formulate
appropriate growth strategies.
TASK 1
P1
A macro environment involves external factors which are uncontrollable and influence an
organisation's decision-making under various circumstances affecting its performance and
strategies. These factors if left unchecked can destroy a business (Chiang, Chen and Ho, 2016).
The organisations are bound to change according to the changing external environment so that
the adverse effects can be neutralized by formulating strategies. Following are the external
environmental factors that can impact and influence Tesla and its strategies:
PESTLE analysis Political factors: Political factors such as the governmental policies, taxation system,
trade restrictions, fiscal and monetary policies etc. of a country tend to have influence on
the business strategies. UK is politically stable which makes business for Tesla in the UK
favourable. However, Brexit may cause instability and uncertainty in UK so Tesla needs
to formulate its strategies in a way that this does not affect its operations in UK. Although
the UK government is providing incentives on electric auto mobiles which can be an
opportunity for Tesla. Also, initiatives are being taken by the government to reduce usage

of oil and adapt to more eco-friendly energy resources to reduce global warming. Also,
UK is a prosperous nation in terms of application of order, controlling corruption,
government effectiveness and regulation of quality (Kabakova and Plaksenkov, 2018). Economic Factors: Economic factors such as GDP trend, interest rates, inflation rate,
unemployment level etc. determines the performance of an economy and affects the
strategies of a business (Guillén and Capron, 2016). In the UK cheaper technologies and
batteries are available which can be used by Tesla to manufacture electric auto-motives
thus reduces its operating costs and the products can be made affordable to the customers
by reducing prices. Use of electric energy instead of oil makes the product more
attractive and more customers are ready to purchase the products. However, due to Brexit
there can be a depreciation of the value of pound which might force Tesla to increase its
prices. Brexit might also result in fast trade deals between US and UK which will affect
the strategies of company so that prices can be controlled. Socio-cultural Factors: These factors reflect the lifestyle, tastes. Preferences, trends,
culture, demographic etc. factors of the population of a country. UK has a large consumer
market belonging to various cultures, races and religions with variety of needs and wants.
Increased concern about global warming and more preference towards eco-friendly
products gives a vast opportunity to Tesla for its electric automobiles. However, there is a
high-income inequality in UK as compared to other developed countries which might
influence company strategies in pricing strategies of its products (Hopp and Stephan,
2012). Technological Factors: These factors are related to technological advancements,
innovations, automation, and new ideas etc. that prevail in the country (Irtaimeh, Al-
Azzam and Al-Qura'an, 2016). UK come under those countries that are technologically
advanced which helps in providing opportunities to companies to bring changes in their
products so as to achieve a competitive advantage. Tesla has a huge opportunity to
expand its business in UK as technologies for advances in renewable energy are available
in UK. However, frequently changing technology can also lead to fast obsolescence of
products of the company and increases costs of innovation to the company. This in turn
increases the prices for customers making it unaffordable for the customers.