Strategic Analysis of Tesla: Global Expansion, Ethics, and CSR

This report provides a comprehensive analysis of Tesla's global strategy and sustainability initiatives. It examines Tesla's internal and external environment using SWOT and PESTEL analyses, identifying key factors influencing its business. The report evaluates Tesla's competitive advantages, such as its supercharger network and software updates, and explores strategies for global market entry, including franchising. It also analyzes corporate strategies like horizontal and vertical integration, outsourcing, and strategic alliances, offering recommendations for maximizing profitability. Furthermore, the report delves into Tesla's CSR strategy and discusses ethical issues faced by the organization, providing recommendations for managing these concerns. The analysis covers Tesla's expansion into markets like Germany and China, its focus on renewable energy, and its efforts to reduce carbon emissions. This document is available on Desklib, where students can find a wide range of past papers and solved assignments.

GLOBAL
STRATEGY AND
SUSTAINABILITY

Table of Contents
INTRODUCTION.........................................................................................................................3
PART A.......................................................................................................................................3
TASK 1- INTERNAL AND EXTERNAL ENVIRONMENT...................................................3
Internal and external environment of Tesla.................................................................................3
Three critical factors from examining business environment......................................................6
Evaluation of source of competitive advantage of Tesla and define how they maintain
competitive advantage.................................................................................................................7
TASK 2- STRATEGY IN GLOBAL ENVIRONMENT............................................................8
With appropriate framework, define how company can enter in global market and outline
motives of Tesla while international expansion and its impact on business strategy..................8
Recommendation for various strategies for Tesla to compete in global business environment..8
TASK 3- CORPORATE STRATEGY.........................................................................................9
Analyze and outline use of horizontal integration, vertical integration, outsourcing and
strategic alliance..........................................................................................................................9
Recommendations for Tesla for maximizing their business profitability.................................11
TASK 4- STRATEGIC PURPOSE- ETHICS AND CSR........................................................12
Analysis of CSR strategy of Tesla.............................................................................................12
Discussion on ethical issues faced by organization currently and recommendations for
managing such concerns............................................................................................................12
CONCLUSION............................................................................................................................14
REFERENCES............................................................................................................................15
APPENDIX 1................................................................................................................................18
PART B.....................................................................................................................................18

INTRODUCTION
Global sustainability is the condition where nature, society, biosphere, humans and world
coexist which will support in enabling productive, harmonious stability and resilience to support
present and future generations (Cuervo‐Cazurra, Mudambi and Pedersen, 2018). Tesla Inc. is and
American automotive company which was started by group of engineers in 2003. The primary
focus on company is to stop relying on fossil fuels and make a move towards zero-emission
future for the betterment of environment and whole community (Tesla, About Us, 2021). Tesla is
one of the leading brands within the automation industry and through their green car market, the
target market of the company has been segmented which makes them different from other brand
operating within the same industry (Tesla’s position in market, 2015). This facilitates companies
to strengthen their position in the industry and have wider customer base. Some of the challenges
which are faced by Tesla is lack of local production of components, touch screen failure, poor
paint finish on products and defects in door, windows and trunks and poor camera quality
(Challenges in tesla, 2021). This report will outline various internal and external business
environment through which better insight can be gained. The study will define strategic purpose
which will outline ethics and corporate social responsibility of Tesla and recommendations for
overcoming such challenges faced by the business.
PART A
TASK 1- INTERNAL AND EXTERNAL ENVIRONMENT
Internal and external environment of Tesla
SWOT analysis
A detailed SWOT analysis of Tesla has been briefly discussed below:
STRENGTHS
 Innovative- Tesla focus on bringing
innovation to their products which
helps them in getting attention of
customers through which they can
lead to incline in sale of their products
WEAKNESS
 Complication in manufacturing-
The complications in manufacturing
of products has been a weakness of
Tesla. The demand driven
manufacturing has been a

(Delgado, 2018).
 Leading automotive company- Tesla
is one of the leading automotive
companies which has strengthened its
root in the industry and strong brand
image with their innovative range of
products.
complication for Tesla to meet their
organizational objectives on time.
 Lack of high-volume production-
Due to high production volume, this
has been a weakness for Tesla to
effectively manage inventory
(Arefieva, Miahkykh and Shkoda,
2019). Other challenges which has
been faced by Tesla due to high
volume of production can be seen in
their cost and financial position of the
business within the industry.
OPPORTUNITIES
 Expansion of sale in untapped
market- To expand the business in
untapped market, this will be an
advantage for Tesla through
international expansion.
 Bringing battery production
technology in-house- Tesla can gain
advantage through manufacturing
batteries as they currently use battery
from Panasonic (Ismail and
Kuivalainen, 2015).
THREATS
 Lack of regulations for self-driving
cars- Due to government interventions
and regulations for self-driving cars,
this can create an adverse impact in
the sale of such products sold by tesla.
 Defects in goods- Due to defects in
goods manufacture by Tesla, this can
hinder the brand image of business.
The touch screen of Tesla car has been
defective which has been a threat for
the profitability and goodwill of the
company (Defects in Tesla products,
2021).
PESTEL analysis
A detailed PESTEL analysis of Tesla is mentioned underneath:

Political factors- Tesla can improve their position and financial performance by
government incentives which will be helpful in reducing carbon emission performed in the
business operations. Some of the political factors, such as- political stability and trade
agreements which offers major market share for the organization and the political factors also
support in business growth of the automotive company Tesla (Kuznetsova and et.al, 2017). The
interest of government in reducing carbon emission and focus towards economic stability has
driven opportunities and advantages for the brand to invest in stronger research and development
and ensure high quality products and services are offered by the company.
Economic factors- Economic factors such as economic instability is responsible for
creating an impact on financial performance of the organization. In context of Tesla, the
company can gain advantage from government tax as this will offer incentives to electric car
manufacture at certain level (Pestel analysis of Tesla, 2021). By providing low battery cost and
low-cost renewable energy this will be helpful for Tesla to maximize greater profits.
Social factors- Some of the social factors such as incline in low-carbon lifestyle and
increase in demand for renewable energy and by improving wealth distribution in developing
markets, this has driven many opportunities for Tesla to expand their business and attract higher
number of customers. On the basis of survey, it can be understood that 66% of respondents focus
on making decision and purchase on the basis of suitability (Consumer driving sustainability,
2021). In context of Tesla, the company offers sustainable products which supports in
minimizing the use of such resources which can be distant to the environment and reduce the
wastage.
Technological factors- The Rapid increase in technological changes is responsible for
creating positive as well as negative impact on operations of Tesla which enhances product
technology and leads to rapid obsolescence (Lin and et.al, 2020). Some of the other
technological factors such as incline in demand of mobiles systems and automation in business
acted as opportunity for Tesla to face obstacles in the business environment and continuously
drive opportunities for business growth and expansion (Tesla PESTEL analysis, 2019).
Environmental factors- Some of the environmental programs organized by Tesla acted
as advantage for the company. Battery solar panel and incline in standards on waste disposable
were also helpful in gaining advantage for the organization. Tesla aims to manufacture their own

batteries which will b offered at lower prices, will have greater energy capacity and will be made
of more sustainable material. The batteries which will be manufactured by Tesla will ensure
higher safety.
Legal factors- Some of the legal factors which has been helpful for Tesla for their
business expansion are International Patent Protection which was helpful in promoting electric
vehicle that are based on Energy Conservation Regulation in global countries markets (Ropianto
and et.al, 2017). Moreover, other legal factors such as Dealerships Sales Regulation in US has
also been an opportunity as well as threat for Tesla to transact with their buyers in the
automotive market of US (Tesla rights to sell cars, 2018).
Three critical factors from examining business environment
 Technological factor- Due to the rapid growth of technology, Tesla now has an
opportunity in the online mobile systems and automation sector, since this advancement
can lead to product upgrades.
 Social factor- Tesla focuses on identifying the growing demand for renewable and
environmentally friendly products (Zhang, Cui and Zheng, 2016). This has assisted Tesla
in meeting customer demands by providing energy efficient products, solar panels, and
renewable energy sources that can facilitate them in meeting the company's socio-cultural
responsibility.
 Highly innovative- This has been Tesla's strength, since the brand employs creative and
constructive concepts that aid in bringing creative change to society, allowing them to
create a sustainable environment via the usage of renewable and energy-efficient goods
and services.
Evaluation of source of competitive advantage of Tesla and define how they maintain
competitive advantage
Some of the sources of Tesla for gaining competitive advantage and how they maintain
such sources have been mentioned below:
 Tesla supercharger network- Tesla has gained a competitive advantage from their
operations and maintained their competitive position by introducing superfast charging
stations for their electric vehicles (Zinovieva and et.al, 2016). This has taken innovation

and services to a new level, and customers have become more customer friendly,
allowing them to increase product sales and enhance profitability.
 Tesla's software updates- By regularly updating the software, the company is able to
provide improved traffic updates, a better backup camera, new language support, an
improved dash camera viewer, improved walkaway door locks, improved cabin camera
quality, and many other updates, all of which have helped the company increase sales and
gain a competitive advantage from their business operations.
TASK 2- STRATEGY IN GLOBAL ENVIRONMENT
With appropriate framework, define how company can enter in global market and outline
motives of Tesla while international expansion and its impact on business strategy
 Exporting- Direct exporting is another method for a business to join a foreign market,
since it establishes a link between the shop and the consumer, retailer, or vendor,
allowing them to export goods to various nations, potentially increasing sales and
income.
 Franchising- By establishing a branch, also known as a franchise, in a different country
or market, a company can contribute in its worldwide growth.
 Joint ventures- Establishing a joint venture will assist firms in extending their businesses
into global markets and providing their products and services to as many nations and
customers as possible (Biscop, 2015).
 Partnership- The company can form a partnership with other businesses to form an
agreement with other businesses operating in other regions and nations, which would
allow the company to expand globally.
Tesla must use franchising approach for their business expansion in global markets as
this will help them in gaining numerous advantages. By establishing their franchise in global
markets will boost the dealership of car industry and will helps them in strengthening their brand
name in international markets. This approach will support Tesla to maximize the profitability of
business by widening their target market and will help the brand to tap greater market share.
Tesla international expansion an its impact on business strategy

Tesla is emphasizing on worldwide development and increasing their company
operations in Germany and China, as well as developing their business in Asia to earn more
income (Katsioloudes and Abouhanian, 2016). Tesla's worldwide strategy is based on
distinctiveness, limited buyer bargaining power, and inelastic demand.
Recommendation for various strategies for Tesla to compete in global business environment
 Form strategic partnerships- Tesla will be able to expand in the country and function
efficiently in global markets by forming strategic partnerships with other firms. It will not
only give insight into the country, but it will also assist in the creation of job possibilities
and the efficient functioning of businesses.
 Source emerging markets- Taking advantage of the growing economy may help Tesla
get a competitive advantage while expanding its operations in the worldwide market
(Surijah, 2016). Tesla can make use of its alliance in new countries to assist and to speed
up the development of highly creative goods in the emerging economy.
TASK 3- CORPORATE STRATEGY
Analyze of horizontal integration, vertical integration, outsourcing and strategic alliance
BASIS HORIZONTAL
INTEGRATION
VERTICAL
INTEGRATION
OUTSOURCING STRATEGIC
ALLIANCE
Meaning Horizontal
integration is the
merging of two
or more firms
that are at the
same level in the
manufacturing
and supply chain
and can operate
in two distinct
industries.
Vertical
integration is the
ability to be a
bear firm on and
control the
location of their
suppliers in order
to manage the
value of their
supply chain
activities
(Hernandez and
Menon, 2021).
Outsourcing is a
commercial
technique that
involves the
engagement of a
party outside of a
firm to perform
and deliver
services.
A strategic
alliance is an
agreement
between two
firms to work
together on a
project that will
benefit both
companies
while
maintaining
their
independence.

Strengths Horizontal
integration offers
opportunity of
target market
share and greater
customer base
(Horizontal
integration
benefits and
drawbacks,
2021).
Vertical
integration
improves
profitability of
business, lead to
lower cost of
transportation
and minimizes
quality problem
from suppliers
(Vertical
integration,
2021).
Outsourcing
supports business
in reducing cost,
saving time and
increasing
efficiency of
business (Pros
and cons of
outsourcing,
2017).
Strategic
alliance
supports
business to
speed up their
entry into the
market which
will also benefit
the in terms of
incline in sale
of the company
(Strategic
alliance, 2020).
Weakness Due to horizontal
integration, the
flexibility of
business will be
decreased and
will create
adverse impact
on business
turnover
(Horizontal
integration:
meaning, pros
and cons, 2021).
Vertical
integration
involves
significant initial
cost and this can
lead to incline in
debt for capital
expenditure.
Due to
outsourcing, the
company can lose
control and face
many quality
issues related to
their products and
services.
Strategic
alliance can be
responsible for
risking the
brand image of
the company
and can create
barrier in wo9rk
culture of
organization.
Tesla employs vertical integration, which adds value to the company and enables them to
recognize the automotive industry's complicated supply chain and become the industry's
revolution. Vertical integration was used by the firm, which combined numerous manufacturing
stages from battery manufacture to electrical motor protection and self-driving algorithm, as well

as a highly centralized control system (Kim, 2015). Tesla's growth strategy has been vertical
integration in order to improve profit, maintain a reliable supply chain, and acquire more control
over the entire organization. Tesla has also formed a strategic collaboration with two well-known
corporations, Daimler and Toyota.
Recommendations for Tesla for maximizing their business profitability
 Improved customer service quality- Tesla should focus on providing excellent
customer service in order to achieve the highest levels of customer expectations and
satisfaction (Tanriverdi and Du, 2020). In order to improve customer service, Tesla can
measure and analyze feedbacks of their customers, hire more experienced staff who can
effectively communicate with their customers which will be helpful in meeting customer
demand and satisfaction.
 By managing and controlling all operational activities- Tesla must create divisions
and teams based on projects, each of which requires specific specialized people and team
members who can effectively manage the entire project (Strategies to improve business
profitability, 2020). In context of Tesla for enhancing the efficiency of team-based
model, Tesla must clarify the roles and responsibilities of all individuals in a team which
will be helpful in bring clarity and working towards meeting organizational objectives.
 Staff cost optimization- By setting suitable working hours will aid in improving
employee performance and raising motivation, which will increase overall business
efficiency and assist the company generate more profits and sales (Steps to improve
business profitability, 2020). For example, Tesla must have maximum 9 hours of working
shifts of their employees which will be helpful in maintaining employee motivation level
and performance standards.
TASK 4- STRATEGIC PURPOSE- ETHICS AND CSR
Analysis of CSR strategy of Tesla
Tesla has initiated a number of corporate social responsibility projects and initiatives
(Tesla Inc’s CSR, 2018). Some of the CSR followed by Tesla has been discussed below:
 Tesla's water usage- As the company has been using huge amount of water and in order
to minimize the usage of water, Tesla improved design of their plants for reducing water
withdrawal on their manufacturing sites (Tesla water withdrawal, 2021).

 Tesla's carbon emissions- In order to minimize the carbon emission, Tesla uses
sustainable energy which helped the company in avoiding 5.0 million metric tons of
CO2e emission (Tesla impact report, 2020).
All of Tesla's efforts and programmes assist the firm in providing several advantages to
its employees while also maintaining a happy and safe working environment. In addition, the
firm cut its yearly water use by up to 45 percent in a year (Tesla CSR policy, 2021). In 2019,
Tesla recycled 1000 tonnes of nickel, 320 tonnes of copper, and 110 tonnes of cobalt as part of
their waste reduction and recycling effort (Swiatkiewicz, 2017).
Discussion on ethical issues faced by organization currently and recommendations for managing
such concerns
Ethical issues
Tesla is challenged with a number of ethical concerns, some of which are mentioned
below:
 Lack of testing- The testing method for the items was harmed due to a lack of testing
and ineffective actions taken by the firm (Ethical issues in automation industry, 2020).
For example, due to lack of testing and poor management the company has faced touch
screen defects in their cars which has been responsible for hampering their brand image.
 Increased production faults- The firm has had several unintentional and significant
difficulties as a result of the high inclination and manufacturing flaws (Is Tesla really
ethical, 2017). Tesla lacks an accurate and dependable accidental proofing service, and
this shortcoming, along with production flaws, has resulted in a slew of ethical concerns
and problems that have harmed the company's brand image and goodwill.
 Poor working climate- One of the primary causes of ethical difficulties is a poor and
negative working climate, which resulted from higher workplace injuries, a bad working
environment, a lack of collaboration, demotivated employees, and increased work stress
(Unethical practices of Tesla, 2020).
Recommendations
 Strategic planning and ensuring that all activities are carried out- By strategically
planning programmes and initiatives and ensuring that all activities and corporate social

responsibility programmes are carried out, Tesla will be able to maintain their brand
image in the industry while also reducing ethical issues (Strategies to improve ethics at
company, 2016). By strategically planning business values and stakeholder participation
can be helpful in ensuring that all operations are performed effectively and will be helpful
for maximizing business profitability.
 Maintain a positive workplace culture- Focusing on keeping a positive workplace
culture will aid in the resolution of difficulties (Kiessling, Isaksson and Yasar, 2016). By
implementing various health and safety programs for employees, such as- emergency
action plans, effective workspace inspection and employee assistance programs will be
helpful for Tesla to follow all ethical standards.
 Use new production tools and processes- Using new tools and techniques may assist
Tesla in minimizing manufacturing errors and ensuring that all products are thoroughly
tested, resulting in customer safety and satisfaction (Response to ethical dilemma, 2020).
As Tesla use batteries from Panasonic, the company can bring new technologically
advanced batteries which will have greater energy capacity.
CONCLUSION
According to the findings of the project, a global strategy can assist a company in
increasing profits by trading in two different marketplaces across the world. Environmental
quality is provided by global sustainability, which includes clean air, natural resources, and a
non-toxic environment. Various elements in the internal and external business environment offer
opportunities and threats for business development, and these factors can impact a company's
profitability and competitive position in the industry. A business may successfully develop into
the worldwide market and generate better profits from their operations and functions by creating
and following certain CSR.