Strategic Management: Identification of Possible Strategies

This document discusses the identification of possible strategies in strategic management, focusing on the Ansoff Matrix, BCG Matrix, and market penetration strategy. It provides insights into Tesla's approach and its competitive advantages.

Strategic
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Identification of the possible strategies...................................................................................1
TASK 2............................................................................................................................................5
Evaluation of the strategy............................................................................................................5
TASK 3............................................................................................................................................9
Recommendations.......................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic management is defined as the identification and description of the strategies that
managers can carry out to attain good performance and a competitive advantage for the
company. It is a ongoing procedure that appraise the business as well as industries in which the
organisation is involved and analysis the strategy of their competitors and set goals and objective
to reach present and potential competitors (Ansoff And et. al., 2018). After the competitor
analysis set the strategy for the business that suitable, acceptable. To better understand the
strategic management taken organisation Tesla Inc. which is an American automotive and energy
based organisation. The company founded in July 1, 2003 by Martin Eberhard, Marc
Tarpenning, Elon Musk, J.B. Straubel ans Ian Wright. The headquater of the company situated in
Palo Alto, California, U.S. Tesla Inc. has been dealing into Electric Vehicles and Tesla energy,
assemble different types of plants and products.
In the report analysis the external and internal environment then set effective strategies
that supports to business to gain competitive advantages and meet with the organisational goals
& objectives. There is applying possible strategies such as Ansoff matrix, BCG matrix, safe
criteria and many other. After implication provide justification for particular strategy and provide
recommendations.
MAIN BODY
1. Identification of the possible strategies
In the modern business environment, it is essential for the business to make and apply
possible business as well as corporate strategies. There are different strategies that can be
selected by the Tesla for the sustainable growth. Some of the possible business strategies are
defining such as:
Ansoff Matrix: It is also known as market growth matrix that applied by the organisation
for strategic marketing planning and grab opportunities to generate profitability with the help of
new product development and enter into new market (Bettis and et. al., 2014). It is one of the
best model that utilised by the different types of organisation to get growth in competitive
environment. This model used to analysis possibilities for business to increase their sales through
presenting options for new markets. All the four aspects of particular strategy have been
evaluated for Tesla as below:
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 Market Penetration: It is a type of growth strategy where company sell out existing
products in the existing market. In this strategy company analysis the market trends and
identify customer taste and preferences. For this company apply the different types of
promotional strategies, set different price structure to attract customer and make the
distribution more extended. Tesla apply the this strategy to attain more market share for
existing products and become familiar with the consumer regarding to product and sell
out them. Product Development: In this strategy new products are launched by the company in the
existing market. After analysing different factors and related risk, a company apply
modification in the existing products like change its outlook or presentation, improve
quality as well as performance of the product. If Tesla apply product development
strategy, who provides part of car so as to target to car owner in buying a replica of the
models, clothing and pens (Boyd. and et. al., 2012). Market Development: This strategy also known as market extension strategy where
business sell out the existing product in the new market. For this require to analysis the
new market condition, customer taste, market segmentation and many others. There are
different approaches for the particular strategy such as: new distribution channels, new
geographical markets, new product packaging and different pricing policies. Tesla apply
market development strategy for this require to select effective market strategy to conduct
business activities into new market. It supports to intensify the business at geographic
location.
 Diversification: It is last growth strategy where company launch new product at the new
market at the same time. It is consider more risky strategy because off two unknown, new
products being developed and the business does not know the development issues that
happen in the procedure. This strategy apply by the Tesla to tap into new market with
new product to cover market share and increase profitability (Daley, 2012).
Justification: Market penetration should be selected by the Tesla to increase sales of
their existing product in the existing market. For this company apply effective strategy that
supports to attract more costumer and market share. It is less risky strategy because company
have experience of customer as well as market so according to that they develop strategy. As the
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company is having good brand image and loyal customer so company have the information about
the requirements of the customer.
Competitive Advantage: Tesla apply the market penetration strategy to get various
competitive advantages such as:
 Tesla have experience about the market and know the risk & growth about the market.
 Company easily analysis the market trends and changes in the customer taste &
preference.
 The main competitive advantage gain by the company that easily grab opportunities and
prepare effective strategy for the business.
Business strategy
Business strategy can be defined as the collection of the all the decision making and
actions that presented by the organisation to achieve their business goals and secure a good
position in the market (David and David, 2013). It is working as back bone for the company
where is required to achieve its goals and objectives after applying the strategy. There are
selecting market penetration as business strategy.
Market penetration strategy: This strategy mainly concentrate on the selling to selling
their existing product or services into existing market where they easily generate profit and grab
higher marker share. It is applied by the Tesla to stay long time in the competitive market and
attain the advantages. It is a business strategy that apply by the business to grab market share and
achieve set goals and aims effectively.
Use of market penetration strategy in business strategy: Market penetration strategy
use in the business strategy due to promote products to enhance market share in the existing
market. For this business develop different types of promotional strategy and identify
distribution channel to attract customer for the Tesla products.
Bases of competitive advantage:
There are defined the different basis of the competition that analysing by the company
these are:
 Market Experience
 Knowledge of risk
 Different types of resources
 Quality of material
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BCG Matrix: The particular model mainly based on the product life cycle that applied
by the organisation to analysis what priorities should be provided in the product portfolio of a
business unit. The Boston consulting group growth share is defined as planning tool where utilise
the graphical representation of the business's products and services in an effort to supports the
business where decide what should sell, keep and invest. It is classified into four categories that
depended on the accumulation of market growth as well as market share linked to that largest
competitors (Eden and Ackermann, 2013). Stars (High growth, high market share): In this category business use large amount of
cash to achieve high growth in the high market share. Stars operate in high growth
industries and maintain high market share. Stars are both cash generators and cash users.
Stars is provided to primary units in which the company should invest its money because
stars are eventually expected to become cash cows and generate positive cash flow in
business. The financial services strategic business unit is a star in the BBG matrix of
Tesla motors. The organisation is earning a significant amount of its income and should
invest in vertical integrate by acquiring other firms in the supply chain. Products that are
developed by Tesla mother is high in demand and more of such products must be
developed with research and development. Question marks (low growth, high market share): The local foods strategic business unit
is a question mark in the BCG matrix for Tesla motors. As per the analysis of recent
market trends consumer mainly focus on the local foods. Thus market presents high
market growth rate but Tesla have low growth market share so it is suggested that Tesla
conduct market research and apply innovative features on the electric cars. This product
modification strategy works effectively and assure about the strategic management. As a
result it turns into cash cow to generate revenues for the business in future. It is important
part of the business for faster growing and defined incurring losses in past years (Engert,
Rauter. and Baumgartner, 2016). If Tesla fail in the innovation through research and
development department team so it is recommended that Tesla divest and secure for the
future uncertainness. The confectionery market linked with the BCG matrix that define as
attractive market for Tesla motors to growing over the years. Company have low market
share to attract customers. So they sell out low products and poor distribution in the
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particular segment. For this advised that Tesla under go the market penetration to present
more outlets. Cash Cows (low growth, low market share): These are the most profitable brands and
should be “milked” to provide as much cash as possible. The cash gained through “cows”
should be invested into stars to support their future growth. Cash cows are usually large
corporations that are capable of innovating new products or processes which turns into
new stars. The supplier management service strategic business unit is a cash cow in the
BBG matrix of Tesla Motors. This has been in operations over decades and helps Tesla in
earning a significant amount of revenue (Hambrick, 2015). The market share of the
company is high and is continue on declining because organisation is not outsourcing its
operations for supplies. Brand strategic business unit is a cash cow for Tesla Motors. This
is a innovative product and helps Tesla to become market leader and providing power to
influence the market in this category.
 Dogs (high growth, low market share): The particular strategic business unit define
about the loss of last five years that conduct in the market on declining to connect with
the environment concerns. It is suggested that business convert for the strategy and
decrease their losses. It is conducting the market segment at the decline stage and face
negative business profits. Therefore, it is expected that market will increase with
atmosphere fluctuations that are happening. It is suggested that Tesla motors invested
into business in set limit to convert into cash cow. As a result they assure about the
market stars growing in the future.
TASK 2
Evaluation of the strategy
Safe criteria: When an organisation apply a strategy so that time difficult to select best
appropriate strategy and analysing of their usefulness and effectiveness. Firstly there is required
to decide to criteria where assess several alternatives and a useful approach is to consider the
suitability. Johnson, Scholes and Whittington discuss on the strategy that satisfy the business to
fulfil the three criteria before it can be successful (Hill, Jones, and Schilling, 2014). There are
defined three aspects broadly:
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Suitability: It is first most essential factor of SAF strategy model. In the alternative's
suitability is the key to whether or not the strategy will do that that organisation wants it to do. It
is required to focus on the trends (PESTLE analysis), key drivers and power (porters) while
design the strategy. On the basis of these factors company get detailed information about the
external environments and about competitors strategy. Through suitability assess the number of
difference and business analysis the environmental suitability, capability suitability and
expectation suitability. Due to develop market penetration strategy focus on the trends, key
drivers and power. These are providing all the detailed information that how to external factors
impact on the performance according to that organisation prepare promotional strategies and
Porters five force model provide information of competitors according to that attract customer
provide low price of the product of Tesla.
Acceptability: It is a another aspect of the SAF strategy model where measuring the
stakeholder reviews, return and risk regarding to selecting market penetration strategy. Returns
of the strategy will be measured through benefits that adopt by the stakeholders expect from the
strategy and could be financials and non financials. It is mainly based on the stakeholder review.
The return are calculated on the basis of different methods like cost benefit analysis, real option
analysis, profitability analysis and shareholder value analysis. The particular market penetration
strategy fulfil the expectations of the key stakeholders. Stakeholders wants to generate more
profit and achieve long term growth & success. Through the particular strategy promote the
electric cars in the existing market to cover large market. So this strategy easily apply to give
competition to other companies.
Feasibility: This portion of the SAF strategy model is really make or break of any
selected strategy. Whether or not the organisation has the resources, abilities, aptitude to apply
particular strategy to get success (Hitt and Duane Ireland, 2017). Thus financial feasibility
required to be assessed by predicting and evaluated cash flows, presenting break even analysis
and a number of other financial tests. For feasibility analysis required to analysis several terms
such as work force, management power, materials and equipment for effective organisational
structure. That time require to market penetration strategy works effectively. This strategy helps
to get advantages of competitive environment. Before implement particular strategy require to
analysis about the competitors that know by the porters five forces model. The selected strategy
helpful for the business to easily grab competitive advantages because Tesla have the experience
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of existing market and about the customers so company acquire the market penetration strategy
(Hitt, Ireland and Hoskisson, 2012).
VRIO Analysis: It is a strategic analysis tool that applies by the business to uncover and
secure the resources and capabilities to get long term competitive advantage. Tesla applied this
tool to analysis the internal situation, its resources, competitive implication and possible
modification for the business or for a given resources. This assessment utilised for the strategic
management of improvement in several fields or for decision making about the advantage of an
internal or external process and securing services. This model categorised into four different
aspects like valuable, rare, inimitable and organised. For Tesla analysis of four elements
underneath:
Capabilities Valuable Rare Inimitable Organised
Battery ✔ ✗ ✗ ✗
Effective
resources
✔ ✔ ✗ ✗
Qualitative
material
✔ ✔ ✔ ✗
Charging
networks
✔ ✔ ✔ ✔
Valuable: There are identifying of valuable items of of Tesla such as battery, effective
resources, qualitative materials and charging networks. All the capabilities valuable for the Tesla
due to support in effectively modify the features of autopilot in Tesla electric vehicles. It is
essential for all the companies to performs activities effectively. It is very useful to controlling
the customer experience and add on the value in the business. When Tesla provide products at
suitable price so it is increasing the value of product (Karadag, 2015) .
Rare: Battery in the Tesla cars is not rare due to other competitor companies also provide
good battery back up in the electric cars which is manufactured by them. Effective resources is
rare because for all the organisation it is not possible to every organisation to get access such
resources. Quality of material is rare due to high cost of the parts raise price of the electric car.
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So Tesla provide good quality of material to cover large market. Charging networks of the
company is rare because it helps to attract customers regarding to electric cars.
Inimitable: Effective resources are not inimitable due to turns aids to higher operational
performance as well as profitability of the organisation. Qualitative materials and charging
networks are inimitable due to material used by the company is difficult to be possessed by
another organisation at a reasonable price. Charging networks are not afford by the every
organisation so they are not establishing different places of charging networks (Keupp, Palmié
and Gassmann, 2012) .
Organised: Qualitative materials is not organised due to provide same products by
competitors at low price to attract more customers to cover larger marker area. Charging
networks are organised that takes long time to set up different networks at different places. Tesla
is a systematic organizational structure that supports in coordination between all the activities in
efficient way.
After applying the VRIO model Tesla easily analysis their strength and resources that can
be source of sustained competitive advantage. On the basis of these analysis firm's know the
internal resources that become sources of the competitive advantages where valuable, rare can
not be imitated by competition and organised to cover large picture of the business. On the basis
of VRIO analysis company know which type of competitive advantages easily face by the
company (Killen and et. al., 2012.).
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TASK 3
Recommendations
Strategies are plays important role to prepare effective plan of action to effectively grab
the opportunities and goals (shot term & long term) in particular period of time. In present time
global competition increase day by day every organisation expand their business activities to get
growth & success. For this they are developing effective strategies in order to get success and
attract large number of customers. In this report mention the Ansoff matrix strategy that related
to growth. There are defined different types of strategies such as market penetration, marker
development, product development and diversification. From the these strategies business select
market penetration strategies where company sell out existing products into existing market
effectively. It is recommended that company analysis the strategies before the apply in the
business for this require to conduct internal and external analysis where consist of PESTLE
analysis that provides external factors that impacts on the organisational performance. SWOT
analysis provides internal activities that will help to become strong to face challenges. Every
organisation use effective strategy against their competitors. In the Tesla use different types of
business strategies but mainly used market penetration strategy to get higher success at the
market place. This strategy apply by the Tesla effectively due to check through SAF model
where check the acceptability, suitability and feasibility. It is suggested that before the apply of
the strategy in the business require to set into the SAF model. This model is utilising by the Tesla
to check the effectiveness in the business. The Market penetration strategy adopt by the Tesla
when fulfil the requirement of stakeholders, beneficial to get competitive advantages, attract
large number of customers and increase their sales. Tesla from the starting working into
American market so company have the knowledge about the market risks, changes and
flexibility. According to that they are preparing effective strategies about the product and apply
in the business. The particular business strategies helps to capture large market share that bring
the entire success of the business at the market place. It is one of the best advantage to apply this
strategies that company face lesser risk and compete easily into competitive environment with
the competitors through selling of qualitative products at affordable price.
On the other hand, Tesla also use BCG matrix to know the different position of the
company at different market situation. In the star company have high market growth and high
market share that time business easily grab various opportunities to stay long time in the
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competitive environment. Through BCG matrix identify business level strategies for business
units. Through the evaluation recognise the strategic business units of Tesla motors fall within
the BCG matrix for Tesla motors. Through the Stars analysis the financial services that present
the expectation in the future market. It is presenting number one brand strategic business unit and
generate sales through greatest product portfolio. Through the strategy estimation in the
upcoming time how much market share grab by the business effectively. Cash cows provides
information of supplier management service to operate business and outsourcing it. Tesla invest
money in the business to keep strategic business under the operations. It will not stay longer and
convert into dog strategy. Question marks define about the local companies strategic business
unit that impact on the business strategy. For this require to know about their strategy and show
high growth rate. In the Dogs strategy operating market segment on the basis of past 5 years
declining.
CONCLUSION
Strategic management is important tool that applied by the every organisation to know
which type strategy for the business effectively. There are applied different types of strategy and
analysis in SAF model where check the suitability, acceptability and feasibility of the product. It
will help to apply strategy effectively to grab market opportunities. In the business strategy apply
market penetration strategy that beneficial for the business to achieve their organisational goals
and objectives. It helps to achieve stakeholders expectations and sustain long time period in the
competitive market. There are applying BCG matrix for know the position of the Tesla into
different situation and how to survive in the market. There are applying VRIO model to know
the strength of the business to survive in the market properly.
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