Unit 32 Business Strategy

Unit 32 Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Pestle and Swot analyses........................................................................................................1
VRIO framework....................................................................................................................2
Porter’s five forces.................................................................................................................6
TASK 2............................................................................................................................................9
Strategic direction available to organisation..........................................................................9
Bowmwn Strategical Clock..................................................................................................10
Recommendation for appropriate growth Strategy..............................................................12
Strategic management plan...................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Strategic plan is a group of actions and plans that are used by the organization to attract
more consumer towards the company and their product (Johnson, 2016). This important for
organization to work with effective strategies to get better result in the target market. Tesla
Motors is one of the fastest growing organization in current time. It is providing electrical
vehicles to the world wide consumer base. Tesla Motors was established in year 2003 and
current CEO of Tesla Motors is Elon Musk, who is a well Known Entrepreneur. This report is
providing different strategic plans that can be used by the organization to meet their goals with
high efficiency. The PESTEL and SWOT analysis is performed to study the internal and external
factor that can affect the business of Tesla in the global market. Porter Five force model will be
used to known the current status of electrical automotive industry. The Ansoff Matrix is used to
get the strategic direction to improve its presence in the global market. A Strategic plan will be
used in the report to improve the consumer base of company in the current market.
TASK 1
Pestle and Swot analyses
Strength
The main strength of Tesla lies in their production of electric vehicles along with energy
generation products. While the other manufacturers of vehicles mainly emphasis on providing
electric cars that are affordable, Tesla targets the certain niche market that is the luxury electric
market of auto mobile (Akter and et. al., 2016). This is their main strength where they are the
pioneer in terms of electric cars. Another strength which has dominated tesla is their
transformational strategy of delivering the innovative technologies. This is distinct from others in
the sense that they provide highly cost effective electric vehicles as well as the gas-powered
vehicles. Their high investment in the innovation has been their greatest strength which has
enabled them to capture the great market share.
Weakness
The company generally have extreme load of high debt. In 2016, Tesla had around $2.5
billion of the debt and thus their capital leased and reduced to around 72%. This debt became
their biggest weakness and thus hindered their operations along with their decrease in revenue
and profit. Besides this, it's another weakness encompasses their burning of large amount of
cash. This is because of their high investment in research and development. This company has
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been reported to have the negative flow of free cash since its inception which has somehow
raised their debts and compelled them to sell their shares (Olson, E.M. And et. al., 2018).
Besides this, company has the limited presence in market and builds most of its revenues within
US along with china and has restricted their expansion.
Opportunities
Company has the golden opportunity for expanding its value chain across the globe. Like
company can eventually increase their revenue by expanding in the Asian automotive as well as
markets of renewable energy. Another opportunity which tesla have is that in order to enhance
their profit margin, they would need to mitigate their cost. Thus, with the help of various
gigafactories, they have the potential to enhance the production of auto-mobile. Because of this,
the company would be able to grab the benefit of different discounts on the purchase of bulk
material. Apart from this, the growing awareness of people to lead healthy life free of pollution
and harmful gas would be an excellent opportunity for tesla who are mainly focussed towards
producing fuel efficient cars.
Threats
However, Tesla develops vehicles which target niche vehicle owners, it still faces the
extreme competition from various other organizations such as Toyota, Ford etc. This would
hinder their operations in the future and might lower their revenue. Another major threat which
the company might face is the debt (Amran, A. and et. al., 2016). Due to its expansion in new
technologies as well as development of manufacturing industries, they would need to raise their
funds either with the help of debt financing or the equity offerings. One more threat which might
dominate tesla is their low cost offerings. Providing the cars at low cost might lower down their
profit margin in comparison to the other famous companies of car and slashing the price might
force them to lose their market share.
VRIO framework
It is basically used to analyse the resources of the organizations which will provide them
the competitive advantage in the long run.
Valuable Rare Imitable Organization
This comprises of the resources
which provided some value to the
customers and thus provide the
This constitutes
the resources and
products which
This constitutes
the resources as
well as the
This involves the
well through
process, structure
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