Internal Environment Of Tesla

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1: Apply framework that is used to influence the macro environment......................................3
M1: Critically analyse macro environment to determine strategic management decisions.........6
D1: Interpretation of information and data applying environmental and competitive analysis. .6
TASK 2............................................................................................................................................6
P2: Analyse the internal environment of Tesla company............................................................6
M2: Critically evaluate the internal strength and weakness.......................................................8
TASK 3............................................................................................................................................9
P3: Application of five force Porter's model to evaluate competitive force................................9
M3: Strategies to improve competitive edge and market position............................................10
TASK 4..........................................................................................................................................10
P4 & M4: Implement different range of theories to conduct the strategic planning.................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy include the management practices that include the strategy which are
further executed by the company in order to gain the potential success. As an organisation gets
affect by both micro dan macro environment so in order to cope up with the unforeseen
conditions the business take primary actions to strengthen its position within the market. It
basically refer to the long term plan that is created in order to attain the specific objective of the
organisation (Apenko, 2017). For the better understanding of report Tesla company is selected
which is known for the manufacturing of electric cars with the help of solar panel in an efficient
manner. The company has adopted the sustainable methods due to which it has eradicate the use
of fuel which further leads to minimal carbon emission. This report cover different topics like
analyse the impact as well as influence of macro environment within the organisation. Access the
internal environment as well as capabilities. Moreover, apply porter's five factor model within
the given market. Furthermore, application of the models, theories as well as concept to interpret
the strategic direction available to an organisation.
TASK 1
P1: Apply framework that is used to influence the macro environment
Pestle analysis is the efficient strategic management tool that is used to determine the
effect of the external factors in the functioning of company. There are vagarious determinant of
company that has to function on the basis of external factor like the market share of the company
depends on effective technology. So in order to run the business these macro factors need to be
studies and evaluated in detail (Chen, Eshleman and Soileau, 2016).
Political factor: Political factor include the stability within the market as well as support
of government towards the company which are evaluated by the firm before diversifying into
new geographical area. Tesla company unlike other traditional vehicle does not depend upon the
fuels like diesel or petrol to run the vehicle. It only uses the electricity or gas which is beneficial
for the economy.
Positive: The government of various countries supports the contribution of Tesla motors
due to which they take the responsibility in order to improve the hybrid engines like Tesla
Roafstar.

Negative: Although company have gained the positive responses from both public as well
as government due to which they undergo global trade agreement but still Tesla motors finds
difficulty to stretch its business and spread the awarenesses especially in developing markets.
Economical factor: This factor is associated with the different phases of the economy
such as recession or inflation that affect the fortune of company. So based on the per capital
income and the disposable income of the confined geographical area the company indulges into
the market and formulate strategy accordingly (Cubas‐Díaz and Martinez Sedano, 2018).
Positive: Initially the company used to segment only the premium group but later on it
diversified the market and extent product range by focusing on both high as well as middle
income group people like, Tesla Roadstar and Model X falls under the luxury category. Whereas,
Model 3 was launched specifically for the middle income group that help company to leverage
its market suitably.
Negative: Even though people have high purchasing power but still they prefer fuel cars
because of lack of awareness among the people in different parts of the country. Like in UK and
USA the market share of company is high because in other Asian market the company
experiences less loyalty from the end market (Dickson and McCord, 2016).
Social factor: It include the preferences, attitude and perspective of customer which
changes wityh the trend and affect the demand as well as supply of the offerings. So before
launching any product the company need to analyse market situation like today people love the
concept of electric cars due to their efficiency and environment friendliness attribute.
Positive: As the society understand the relevance of using sustainable environment the
fulfil the need to customer as well as does not harm the surrounding for instance, Model X of
Tesla. Hence, the transition in the thinking of customer as offer the wide opportunity to the
respected company in order to incorporate the business effectively.
Negative: Due to the deep understanding the demand of the the Tesla for Roadstar,
Model X and S has increased widely. So it is vital for the company to expand its capacity in
which they are lacking. Due to the huge waiting time to fulfil the demand leads to rthe chances
of dissonance that is difficult for company to overcome (Pestle analysis, 2018).
Technology factor: It refer to the advance methods that is adopted by company in order
to identify the new and creative methods to carry out the business. In terms of manufacturing

vehicle the company remain curious to identify latest technique and use to enhance the
manufacturing process.
Positive: Tesla has implemented the automation as well as artificial technology to gain
the advantage in terms of manufacturing the vehicle effectively (Fontana, Sastre-Merino and
Baca, 2017). There are various competitive company that lack to adopt the advancements but
Tesla has adopted it effectively.
Negative: In order to bring constant innovation Tesla has to incur huge capital
expenditure to manufacture different models and incur expenditure to bring significant
innovation. Along with that if the firm constantly bring innovation then it uplift the preferences
of customer for which they need to incur additional expenditure on regular basis.
Environment factor: Environment refers to the surrounding within which the business
function so all the production needs to be take place after implementing adequate CSR policies
for the welfare of society, employees as well as environment.
Positive: The main strength of the Tesla is that it is environment friendly and abide many
regulation which are related to the environment such as reduction of carbon emission. This can
helped the company to cater the huge market effectively.
Negative: In order to expand the operations the company need to incur various
expenditure in different parts of the country where it plans to diversify its market. It need to
undergo immense expenditure on the development of the gas station in order to expand the
business effectively.
Legal factor: It involve rules and legislation that is prepared by government with the
objective to retain the interest of employee on the company. While expanding from one mnarklet
to the other Tesla nee to update and revise all its policies and regulation associates with the
business (Ghemawat, 2016).
Positive: The company has already expanded in various parts of countries in order to
expand the chances of profitability. So it render each and every international regulation
efficiently.
Negative: The company itself has adopted the sustainable method to perform the business
but still they experience the restricted market to function because of the adoption of various law
that can hamper the image of company.

M1: Critically analyse macro environment to determine strategic management decisions
Tesla has systemically operated in the wide market by analysis both internal and external
market to appeal the interest of customer and carry out the functioning effectively. It widely
depend upon the technology so that it can easily product the innovation or green vehicle fro the
welfare of environment. Due to the company come up with different models like Tesla S or
Roadstar with the objective to eradicate the chances of carbon emission. On other side, although
it has renowned image but the political instability or conflicts with the competitors can hamper
the performance of company. So each aspect has positive and negative affect that need to be
considered effectively (Gumusluoglu and Acur, 2016).
D1: Interpretation of information and data applying environmental and competitive analysis
Information that is grabbed through analysing macro environmental provides with
various factors that affects performance of Tesla organisation. Different factors such as legal,
political, economical, social, technological and environmental factors influences business in
positive and negative manner. All these factors helps in identifying issues that are going to affect
business in future. Environmental factors helps in analysing competitive market and how a new
or existing business will be turned as threat for Tesla. Analysing these factors set of valid
strategies will be designed on the basis of these strategies action plan for Tesla will be designed.
TASK 2
P2: Analyse the internal environment of Tesla company
Tesla has been emerges as the most competitive company so this SWOT analysis helps to
reveal necessary insights regarding each and every factor of the company that is strength,
weakness, threat and opportunities (SWOT analysis of Tesla Motors, 2019). So it helps to
determine the necessary factors that is responsible for the competitiveness within global
automotive market.
Strength
Tesla has dominated the US markets in terms
of the sale of electric cars like in 2019 the
company has wide market share in terms of the
sales of Model 3 car. Accordingly it keeps on
launching various variants or model in order to
Opportunity
After analysing the existing problem of country
in terms of carbon emission and dependency
on non renewable resources like fuel is very
high. So to cope up with this situation Tesla
adopted the latest technology and strategy the

maintain its pace and retain its position. Along
with that Tesla Roadster gained recognition
due to its innovative energy management
technique which even gained the support from
the local authorities in order to strengthen its
capability.
manufacturing of hybrid vehicles that are
considered as green car and received immense
support from the society. Hence, it helped to
overcome the problem of carbon emission that
leads to climate change by exploiting the
external opportunity effectively.
Weakness
Tesla is unable to meet the surplus demand of
the customer due to which the customer have
to wait for long to get their offering which at
times loose their interest level and they
switches to the other competitors. One of the
reasons for unbalanced demand and supply is
capacity problem because of which company
find difficulty to manufacture optimum quality.
Threat
In terms of manufacturing electric cars Tesla
faces challenges on the basis of design,
attributes as well as functioning in comparison
with the other tough competitors like Ford and
General motors.
VRIO model is used to by the company in order to implement the unique strategy as well
as features that can help the Tesla to gain competitive advantage by securing better place
amongst the competitors (Higgins, Omer and Phillips, 2015). The main purpose of such analysis
is that it help to uplift or improve the competitive position within the dynamic market.
Resource Valuable Rare Imitable Organisation
Financial
capability
Yes No Yes Yes Competitive
parity
Brand image Yes Yes No Yes Sustainable
competitive
advantage
Unique design Yes Yes Yes Yes Temporary
competitive
advantage

Highly
Efficient
Yes No No Yes Competitive
parity
Valuable: This area help the Tesla to identify whether the resources of company helps in
delivering value to the user which acts as an opportunity for company to establish unique image.
In relation with Tesla motors the company has gained the valuable financial capability that can
help the firm to adopt the latest innovation and cater the need effectively. Along with that the
renowned image of company has helped to developed the unique brand image as well as design
that appeal the interest of customer. Further, in terms of function the electronic cars are highly
efficient (Linder and Williander, 2017).
Rare: It's preferable if the company offer the value to customer but along with that these
values need to be rare otherwise it will lead to the situation of competitive parity where business
may find difficult to differentiate itself. In term of Tesla company have the rare product design as
well as brand image that make it relatively easier for the customer to recognise the brand and
differentiate it with others. On other side, there are other major companies like Toyota that too
make huge financial investment in order to offer highly efficient vehicles. Therefore, the
company need to look for the rare component in their product.
Imitable: It refers to the method that is adopted by the other organisation in order to
duplicate the resources as well as capability of the organisation. If the resources are imitable then
it can lead to the temporary competitive advantage under which the company need to make effort
to retain its position. In terms of Tesla the brand image of company as well as its efficient can't
be imitated by the other competitors. Whereas, the financial resources as well as design of the
company can somewhat comped by the other competitors.
Organization: It reflect the structure, processes as well as management system in order
to capitalise the capabilities of an organisation. Without the internal support the company will
only left with unused competitive advantage. Here the string brand image of Tesla helps it to
gain the leverage of sustainable competitive advantage. This is the main reason due to which the
loyal customer stick to the particular brand and avail its offering only even if the switching cost
is high (Holotiu and Beimborn, 2017).

M2: Critically evaluate the internal strength and weakness
Tesla motors due to its global image find convenience to sell appeal the interest of
customer. This further initiate the company to take the advantage of its economies of scale
effectively. For instance, the company has launched different types of SUV and Sedan like
Model X and Model 3 respectively to cover the requirement of middle and high income group
people. Whereas, there are various competitors within electric car company like Audi and Toyota
so the company need to incur preferable expenditure in different innovation and technique that is
time as well as cost consuming (Maniora, 2018).
TASK 3
P3: Application of five force Porter's model to evaluate competitive force
Porter's five force analysis is a framework which was propounded by Michael Porter that
contain five forces which are determined by the company in order to shape the competition level
within the industry. Application of these factors can help the Tesla company to analyse the
external competitors environment within electric vehicle manufacture.
Threat of new entrant: The probability of new firm entering in electric vehicle market is
moderate as there are already well established companies such as Toyota, BMW as well as
various models of Tesla like Model X, Model; 3 and Model S that has boost the whole market
and gained the huge customer base. So due to the monopoly of electronic cars it is quite
challenging for the new firms to gain the advantage of huge capital and position itself as a
reliable brand. Further, Tesla Roadstar has gathered the attention of global market so in case if
the brand waive its patent right then certainly the percentage of new entrant will enhance.
Threat of substitution: Although there are less companies engaged in the manufacturing
of electric cars but the threat of substitution is high so Tesla concentrate to differentiate itself
from other automotive companies and gain core competencies. So with the assistance of research
and development department the company demonstrate the practical needs of customer which
needs to be fulfilled desirably (McAdam, Bititci and Galbraith, 2017).
Rivalries among existing firm: The existence of rivalries within the electric vehicles are
highly competitive which means that the Tesla needs to function in the wide competitive market.
So to sustain in dynamic market the company bring innovative and anticipate the interest of
customers on the continuous basis. Contrary, even the other competitors like Mercedes Benz or

BMW are identifying the Tesla's strategy and try to deliver the values to the customer in order
gain the support from external market. Hence, earlier Tesla used to segment only the upscale
audience but to widen its reach it launched various other models like Tesla S to cover wide
market effectively.
Bargaining power of buyer: Buyer are the ultimate user of the product due to which the
bargaining power of buyer for the electric cars are high due to significant availability of
substitute. With the absence of switch cost from Jaguar, Audi to Tesla considerably extend the
buyer's bargaining power. Along with that price sensitivity is again the greater aspect that need to
be taken care by the company. Like, if the population is price conscious and they find that Tesla
prices are relatively higher then the customer will switch to the other brand. Further, the
company manufacture new models like Model S that are exclusively designed to cover the
middle income group range as well (Scholes, 2015).
Bargaining power of supplier: To carry out the manufacturing process the company
directly depend upon vendors or supplier to get the availability of raw materials which are
transformed into the final product. Herein, Tesla has huge brand recognition due to which even
the supplier want to be the part of company that lead to low bargaining power of supplier.
Additionally, the company make significant effort in order to maintain the supplier supply
relationship which can help them to get the raw material of supreme quality within specific
duration. Thus, it can finally motivate the company to use the resources and prepare the desired
product for the organisational success.
M3: Strategies to improve competitive edge and market position
To enhance competitive edge Tesla motors needs to design its products in such manner
that it satisfies large number of consumers on the basis of quality served and price charged.
Business environment related to auto mobile sector is very competitive and threat of new entry is
very high. To improve competitive target market needs to be diverse that satisfies needs to
different consumers. This will help company to enjoy competitive advantage through becoming
best in one of its product variant. To manage good market position adoptive strategy needs to be
implemented so that changes in the business environment can be used for benefit of business.

TASK 4
P4 & M4: Implement different range of theories to conduct the strategic planning
The Ansoff matrix for Tesla refers to the planning model that is designed by the vehicle
manufacturing company to take the strategic decision effectively. It include different strategic
options which are prepared by the organisation in order to adopt the best possible strategy for the
functioning of company.
Market penetration: Here the company are more reluctant to sell the current product in
the current market. This strategy is extensively implemented by the Tesla Motors under it
concentrate to sell the different design of the vehicle like Model 3, electric hardware, Model X
and Model S within twenty nine countries along with the market of United State.
Product development: With this strategy the company take the decision to sell the
completely new product within the current market. In terms of Tesla Motoes the company less
frequent come up with new addition as huge cost is involve to carry out the manufacturing of
electric cars. Hence, after taking the reviews and constructive feedback Tesla takes the decision
to launch new model with new attributes and design.
Market development: This is just opposite of product development as here the company
seeks for new market or potential area where it can sell or diversify the range of its product. The
CEO of Tesla that is Elon Musk has effectively adopted this strategy to expand the market by
emerging into both developing and developed market.
Diversification: This is considered as risky strategy because company take the wider step
to launch the new product in the completely new market. Tesla has successfully used this
strategy in order to enter within energy storage sector and manufacture the vehicle suitably.
Hence, the company can use various strategy but primary it need to concentrate on the
product development under which the expert of company think that how they can launch the new
efficient proud but at minimal prices.
Strategic management plan: It comprises of the suitable strategy as well as allocation
of resources which are required to strength the functioning of an organisation. The Tesla has
made the strategic business plan for the customised vehicle in order to satisfy individual demand.
Objective: The objective of company need to SMART so that it can be easily measured
and implemented by the company. The prime objective of the Tesla motors is to increse the
footfall of company by 15% within fifteen months.

Vision: Tesla's vision is to penetrate effectively in different geographical areas in order to
retain the top electronic position of the company (Teh and Corbitt, 2015).
Mission: The mission of company is to promote the brand and concentrate to implement
the sustainable method for the adequate functioning of firm.
STP
Segmentation: Tesla market has depigmented the wide market on the foundation of
demographic segmentation. Under which the manager of company sub divide the large market
on the basis of purchasing power that is income, occupation and the age group.
Targetting: On the basis of segment the targetted audience of Tesla are the people that
have high status class and earn high income. It basically include the manager of company, CEO,
businessman as well as entrepreneur who can afford the customised cars and add the features
based on their requirement.
Positioning: It means setting the image of company within the market, so Tesla can
position it as tailor made cars via different social media sites. Along with that it can take the help
of its website and affiliated marketing top spread the awareness and enhance the interest of target
market for the company.
CONCLUSION
From the details mentioned in the project report on business strategy it has been
concluded that forming an appropriate strategy suitable for business is essential for success.
Business strategy is formed on the basis of all the factors that can affects business in long or
short run. Macro environment of business is analysed through PESTLE analysis and managers of
business will be efficient in identifying factors that needs to be considered while managing
business operations. Apart from this strengths and weaknesses of a business is also identified that
helps in designing corrective action strategies to execute operations in smooth manner for best
results. Area of growth is identified which helps in grabbing opportunities on time and enjoying
good market position.

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Online
SWOT analysis of Tesla Motors. 2019. [Online]. Available
through:<https://www.marketing91.com/swot-analysis-of-tesla-motors/>
Pestle analysis. 2018. [Onlione]. Available through:<https://notesmatic.com/2017/10/tesla-
pestelpestle-analysis/>