Strategic Management of Tesla: PESTLE, Porter's Five Forces, VRIO and Value Chain Analysis

This report analyses the strategic management of Tesla using various tools including PESTLE analysis, Porter's Five Forces, VRIO analysis, and Value Chain Analysis. It identifies the factors that impact the company on a macro level and its internal resources and capabilities. The report also discusses the strengths, weaknesses, opportunities, and threats of Tesla.

Strategic management

Executive summary
Main purpose of the report is to identify those factor by conducting an industrial analysis
that impact a company in the specific industry. These factors impact the organization on a macro
level. This report is based on the Tesla, a car manufacturing company. This report has determine
various strategic management tool including PESTLE analysis, porters five forces, SWOT
analysis, VRIO analysis, organizational capabilities and many more. Therefore, objectives of this
study is to analyses external factor so that company can identify them and run their business in
effective manner.

Table of Contents
Executive summary ...........................................................................................................................2
INTRODUCTION .............................................................................................................................4
MAIN BODY.....................................................................................................................................4
.........................................................................................................................................................11
CONCLUSION ...............................................................................................................................11
REFERENCES.................................................................................................................................12

INTRODUCTION
In business, strategic management is refer to the management of an organisational
resources so that company can become able to achieve their objectives and goals. It include setting
the goals, analysing competitive environment, examining internal organisation, evaluating
strategies and ensuring that company's management rolls out the strategies in organisation
(Dzwigol, 2020).Company chosen in this report is Tesla. It is founded by a group of the engineers
in 2003. today's it build the all electric vehicles. This report will be based on the various strategic
management tool including PESTLE analysis, resources based value, porters five forces, value
chain, SWOT analysis, capabilities and VRIO analysis.
MAIN BODY
PESTLE Analysis
 Political factors- As Tesla has global reach across the worlds and jurisdiction and it
continue to expand and optimize its retail services and supercharger capabilities globally.
As resulting, respective company is subject to a variety of the regulatory and political
requirements as well as diffident economic and social condition over which Tesla have
minimum control.
 Economic factors- Currently Tesla cars in developing regions are considered as
expensive. This element refers to economic growth of an organisation and its profitability.
As government is promoting the vehicle's sale by providing incentives, it is a plus point
for Tesla. With the cars, Tesla has immense opportunity to launch it into the such market
where need to shift to sustainable sources of the energy is must.
 Social factors- Tesla cars have popularized notion of the luxurious electric car on
customer's mind. This part of analysis also concerned for profit maximization for business
studying its buyers, employees and investor understanding socio cultural aspects of the
place (Siegel and Leih, , 2018).
 Technological factors- Automation, incentive and rate of the technology changes too may
impact overall growth of the organisations. Tesla cars are at par with the technological
advancement. Its luxurious cars with innovative gadgets are future and its features attract
customers. However, characteristics of the Tesla- like the online mobile system and
automation are unparalleled.

 Legal factors- As respective company is expanding in other nations. So it need to uphold
legal regulation and update its policies in order to abide by rules. Tesla has the scope in
promoting their eco- friendly vehicle overseas, improving company's international patents
(Nagel, and Aviles, , 2021).
 Environmental factors- Ecological elements are beneficial for Tesla. Respective
company supporting the expanding situation programs in order to deal with the climate
changes and controlled use of the resources issues. It can expect a growth by examining
the ecological elements.
Porters five's forces
 Competitive rivalry- Tesla operating in highly aggressive market. This aspect of the
framework outline influence of the competition on automotive and energy solution sector
environment. Therefore, In relation to Tesla, external element and their intensities
responsible for string force of the competitive rivalry (Köseoglu, and et,. al., 2019).
 Bargaining power of customers- Influence of the customer in organisation and
automotive, battery and the solar panel trade environment are accounted for this feature of
this analysis. Tesla's buyer are direct element that determine organisational sales revenue.
Following external elements and their intensities uphold moderate force of customer's
bargaining power on firm:
 Low switching cost,
 Low volume of the purchase
 Moderate substitute availability
 Bargaining power of suppliers- Business of Tesla is depend on the supplier's reliability.
Intensities of external factor which create moderate force of supplier's bargaining power
are below:
 Moderate size of the suppliers
 Moderate forward integration
 Moderate supply level

 Threat of substitution- Tesla's experience the effect of substitute on energy solution and
automotive industry environment. Intensities of external element that leader to moderate
force of of substitution's threat against Tesla are below:
 Moderate performance of the substitute
 Moderate substitute availability
 Threat of the new entrants- The new entrants are new organisations, that impact industry
environment and measure performance of the organisation like Tesla. Intensities of
external component that create puny force of the peril of new entrants, as below;
 High cost of the brand developments
 High economies of the scale
 High cost of doing the business.
Resources based value of organisation
In organisations, resources based value chain help the business to assess their strength
relatives to competitors. It is based on the economic that aid to improve the organisational
efficiency and also lead to a competitive advantages (Potyshniak, and et,. al., 2019). It is related
to the organisational internal factors that involve resources of the brand reputation, employees and
organisation culture. It adopts the internal perspective to explain Tesla's internal resources and
other capabilities collection which represent a base on which the value creating approaches are
developed (Angiola, Bianchi and Damato, 2019). Internal resources of the respective organisation
are as patents, finance, brand name, capital equipments and talented manager or workforce. In
organisation, resources can be touchable or intangible. In relation the Tesla, resource based model
define a linkage between the strategy selection and resources identification to have the
competitive advantages. Tesla has identified its internal resources and also assess strength and
weakness after which these of the resources offer capabilities that is unique to the organisation and
relative to its competitors. Respective company has determine that how it can utilise the resources
in a best way so that company become able to attain competitive boundary and locate in the
attractive sector by formulating or implementing a competitive strategies by utilising the
capabilities and resources in efficient and effective manner.
Capabilities of organisation

Tesla is a leading manufacturing company of the electric car and components at global
level. One of the main reason for company's success is to paying attention on entrepreneurial
concept. Tesla may select different strategies so that it can become able to increase their bourgeois
opportunities. Competences and resources of the respective company knowledge, innovation and
connectedness. Tesla produce the electric cars that are operated by utilising sophisticated software,
which makes driving more gratifying and also quite multifaceted. Thus, it is realizable that
respective company is performing its business activities in a plausive surrounding as automotive
sector is changing and every transformation are primary concern of Tesla. Hence, development
and utilisation of the environmentally friendly goods can be related as major focus of the
companies, customers and government. More so, buyers seek for modernism and are ready for
these driverless cars or vehicles. All these kind of the changes impact organsiational
entrepreneurial practices in an affirmative way as respective company is able to address the
customer's needs and requirements (Certo, Raneyand Albader, 2020).
VRIO analysis
This is an internal analysis that helps and allows the organisation to identify the resources
and their capabilities that give them a sustained competitive advantages. These resources can be in
the form of money, skills, human and technology. There are four dimensions that make up the
analysis are given below:
 Valuable- Resources must be valuable, so that it can provide some sort of benefit to the
organisation. Tesla's valuable resources are its human resources, financial resources,
marketing expertise and operation manger that lead to a competitive advantages to
respective company.
 Rare- If resources are uncommon and and only some few organisations can acquire them
then those resources are considered rare. Customer loyalty is a rare resources for Tesla so
company need to invest in the developing a strong loyalty. Opportunity to the brand
extension is another rare resources for the Tesla s it is not easy for every company to
extend their business
 Inimitable- If resources are extremely expensive for the organisation to acquire them
then it become hard to imitate. In relation to the Tesla, its imitable resources include
customer network and loyalty, other rivals also try for it but they do not get success (Yan,
Hong and Warren, 2021).

 Organisation- The company should effectively assemble and co- ordinate its resources
for organized to capture value. The customer network and loyalty at workplace leverage
customer loyalty to the good impacts by proving a better service. In relation to Tesla, for
the opportunity to brand extension, respective company would require a high marketing
budget. An effective cost structure will be helpful for the respective company in
combatting and using strategically to invest in right place
Value chain analysis
It include two categories of the activities including primary and the supportive activities
which are mentioned below:
Primary activities- It refers to product and services in organisation that include inbound and
outbound logistic, operation, marketing and sales and services (Met,and et,. al., 2020).
 Inbound logistic- It imply succession of the goods into organisation including storage ,
distribution and transport. There is large number of the Tesla warehouse. Main locations of
Tesla's warehouse are Lathrop, Livermore, Sparks Nevada and Elkridge.
 Operation- Tesla's conduct its vehicle manufacturing and assemble operation at their
facilities in Lathrop- California, Shanhhai- China, and Fremont- California. Generally,
operation of Tesla is divided into two segment including automotive and energy generation
and storage.
 Outbound logistic- The outbound logistic of Tesla involve warehousing and allocation of
its electric vehicles, solar panels and energy storage system produced by respective
company. This firm make direct deliveries of its electric vehicles to their customers. This
company does not deals with re sellers and dealers, preferring to sell directly to the end
users.
 Marketing and sales- In Tesla, its sales and advertising practices are exceptional, same as
other organisational practices of electronic auto maker. As per to its CEO Elin Musk,
Tesla “shells out practically nothing on endorsements and advertising, and also relies
heavily on the word of mouth. Its marketing strategy is referred to as “Zero Doller
Marketing”. Its ability to gain attention of the extensive media courage at global scale
serves as major sources of the value on a term of increasing level of the brand awareness at
global scale (Karpenko and et,. al., 2019).

 Services- Tesla had a number of the high profile consumer services complaints in past.
Customer services practices of Tesla have improved during last few services. Electric
vehicle organisation aims to own customary experience and according, does everything on
their own, from manufacturing to sales, respective company does not put up for sale
through the dealership so that the customer experience is not subjected to third party.
Supports activities- These practices of the company are linked with the primary activities and
also provide an aid to primary activities in order to run the organisational functions (Regent and
et,. al., 2019).
 Technological development- World's wild stimulating mobility sectors can only be
differentiated form each other from the innovation till now the auto mobile sector has
evolved a lot. The BMW is key opponent of the Tesla till now. The BMW has launched its
electric vehicles and also are committed for growing its vehicles in this industry.
 Infrastructure of Tesla- On the basis on their product they are classified into two
categories including energy production division and other is auto mobile sector.
 Human resources management of Tesla- To run the company and maintaining
profitability, HRM is very essential. Tesla is granting importance of the Human resources
department in order to strengthen their relationship with buyer and to increase their
strength.
 Procurement- Catla has thousand of the suppliers at global level and has also made good
relationship with them. Tesla has built a strong relationship with its suppliers and its one of
the best supplier is Panasonic (Gallo,. and Tomčíková, 2019)
Strength Weakness
 Tesla is famous for its innovative style.
This company has emerged as excellent
organisation for workers, thanks to its
innovation and diversity friendly
culture.
 It is biggest dominator in US in term of
the electric vehicle sales. It is recognises
as a leading player within the electric
 Tesla's mostly business is depend upon
the battery electric vehicles & plug in
the electric vehicles that sometimes
cause deficiency of the batteries supply.
Its directly impact sales of the electric
vehicles.
 Recently, Tesla got fined to follow the
unethical working system that caused

car market.
 Tesla is globally famous for their 0$
marketing strategy as it does not spend
nay amount for its marketing other than
its launches.
impact on employees safety. So there is
a high employee turnover rate.
 Due to its high standard of the
innovation causes certain mechanical
and product delay in term of the
launching product like manufacturing of
company's model X got postponed due
to a frequent innovative changes.
Opportunities Threats
 Tesla has opportunity to tap into the
Asian market that is India in which
market of automation, EV and
renewable energy is goring very
rapidly.
 As costumers are becoming
environmentally aware, need for the
electric vehicles is emerging along
with the requirement to minimize use
of the fuel driven cars.
 Latest technological development by
few rivals within this manufacturing
sector poses a threat for Tesla. Customer
attracted to that new equipment can be
vanished to rivals, reducing largely
market share of Tesla.
 Exchange rate maintains varying rate
and it impact the organisations like
Tesla which has its sales internationally,
when its suppliers are regional.

CONCLUSION
Form the above report it is find out that if a company want to enter in an industry and
remain to survive in existing market, then becoming essential for the organisation to analyse the
amarket carefully. These analyse of industry include, PESTEL analysis, SWOT analysis, porters
ffive forces, resources based analysis and value supply chain analysis. All the framework make
enable an organisation to identify those ffactors that may influence success of the business,
therefore it is responsibility of the business organisations to conduct an industry analysis as it will
help them identity negative factors and remove them by adopting an effective strategy. The fore, it
is suggested to very business organisation that to compete in their respective market they need to
keep an eye on the trends and new changes carefully so that it can survive in changing market
efficiently.

REFERENCES
Books and Journals

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