Unit 32 - Business Strategy - Assignment

Unit 32

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Impact and influence of macro environment on an organisation and its strategies................1
TASK 2............................................................................................................................................3
P2 Analysis of internal environment and capabilities of organisation........................................3
TASK 3............................................................................................................................................6
P3 Evaluation and application of Porter's five force model........................................................6
TASK 4............................................................................................................................................7
P4 Application of models, theories and concepts........................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business strategy is the process of formulating different types of decisions which are
formed for the purpose of attaining long term goals of business. With the help of it competitive
advantage and sustainability can also be achieved for business projects. Top level executives are
responsible for formulation of all of them with the help of their subordinates. Main aim of this
report is to develop a business strategy for a company. The organisation which is selected for this
assignment is Tesla which was founded in year 2003 by a group of engineers. Various topics are
covered under this project such as analysis of micro and macro environment, assessment of
capabilities of organisation, discussion of porter's five force model, application of range of
theories for strategic planning.
TASK 1
Tesla is one of the world's largest automotive sector organisation which is executing
business all around the world. Recently appointed junior strategy manager of the company is
being asked by line manager to product an environmental analysis and strategic growth. For this
purpose various aspects are going to be analysed which includes internal and external
environment, capability analysis, competitive market assessment and models for strategic
planning.
P1 Impact and influence of macro environment on an organisation and its strategies
Mission: Mission of Tesla is to accelerate world's transition to sustainable energy
(Mission, vision and objective of Tesla, 2019).
Vision: Tesla is willing to be the market leader in upcoming period by launching new
cars in the market (Mission, vision and objective of Tesla, 2019).
Objective: Main objective of Tesla is to capture large market share by attracting large
number of customers (Mission, vision and objective of Tesla, 2019).
Strategy: It can be defined as the process which is used by business entities for the
purpose of attaining long term business objectives. Managers in Tesla also formulate different
strategies for the purpose of capturing large market share.
Strategy plays vital role in the attainment of business objectives because main purpose of
it is to reach to the long term business goals and strategic intent. Managers in Tesla form
different types of strategies such as competitive analysis, market situation analysis etc. There are
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various types of strategic planning techniques which are used by organisations for the purpose of
reaching to the business goals. These are PESTLE analysis, Stakeholders analysis etc.
Macro environment: It is the combination of different types of factors which are
available in the environment and affect business entities positively or negatively. In order to
analyse it a tool named PESTLE analysis is used which helps to determine effect of different
factors such as political, economic, social, technological, legal and environmental. All of them
are also determined by junior strategy manager of Tesla and detailed analysis of all of them is as
follows:
Political: Governmental incentives, political stability, global trade agreements are
considered as the part of political factors which may influence and affect Tesla and strategies
which are imposed by it. Government provide incentives to the companies which helps to
develop the country and Tesla has opportunity to acquire it and attain growth.
 Positive: With the help of government incentives Tesla can strengthen its financial
performance which can help it to attain higher profits.
 Negative: If top level executives are not able to work according political situations of the
country then it will become difficult for them to execute business effectively.
Economic: Different types of conditions such as market growth, currency, trade levels,
inflation and deflation rates are considered as the part of economic factors. All of them are
required to be taken in to consideration by Tesla then it can impact and influence the whole
organisation and its strategies because it directly affect purchasing power of customers.
 Positive: All the economic conditions are analysed by Tesla's managers and then prices
are set for the cars so that purchasing power of client could be met in negative situations
also.
 Negative: One of the major issues for Tesla is economic stability issue because economy
changes frequently and for automotive sector companies it is not possible to modify price
of products again and again.
Social: Taste, preferences, age, gender, income level, buying behaviour, belief and value
of customers are social factors which should be analysed by companies such as Tesla while
planning to launch new products in the market. With the help of it negative influences and
impacts of all of them on organisation and its strategies could be reduced.
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 Positive: Tesla is improving wealth distribution in developing markets which is helping it
to expand business and generate higher profits.
 Negative: If managers of Tesla forget to take social factors in to consideration then it can
affect its sales and profitability.
Technological: Technological enhancement and advancement are considered as the part
of technological factors. In order to sustain in the market it is very important for all the business
entities to focus on latest technology so that expectations of clients can be met. With the help of
it negative impact and influence such as decreased sales of organisation can also be reduced.
 Positive: Tesla is focused with automation and launching fully automated cars in the
market which is based upon latest technology and it helps to attain long term growth.
 Negative: Rate of technology change in automotive sector is very high and for all the
companies it is not possible to adopt the change easily. It affects their market image and
share which is being captured by them.
Legal: All the factors which are related to governmental rules are known as legal
elements which should be focused by business entities in order to operate business appropriately.
Tesla is executing business activities by complying with all legislation such as energy
consumption regulation imposed by legal authorities.
 Positive: Tesla complies with all the rules and regulations which helps it to get support of
governmental bodies to execute business operations appropriately.
 Negative: Regulations which are related to auto mobile standards are being increased by
government and for Tesla it is very difficult to modify its current strategies according to
it.
Environmental: Factors which are focused with environment and its protection are
known as environmental elements that are required to be focused by Tesla in order to reduce
adverse influence and impact of them on organisation and its strategies. For this purpose top
level executives within the organisation make sure that business operations are not harming the
environment.
 Positive: Complying with environmental laws helps Tesla to establish a good market
image which results in attraction of large number of clients.
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 Negative: Ignoring environment protection laws can affect Tesla negatively because
legal authorities take strict actions against such companies which are influencing society
adversely.
Stakeholder analysis or matrix: It is a technique which is used by Tesla for the purpose
of analysing different stakeholders. It is a combination of four different elements which are as
follows:
 High power and low interest: These are such stakeholders who take low interest in
performance of Tesla but have high power to influence the decision of the company.
These are directors, HR etc.
 High power high interest: These stakeholders have higher interest in organisation's
performance and they have high power to make decision of Tesla. These are lead
generators, colleagues etc.
 Low power lo interest: Such stakeholders in Tesla do not have any interest in
organisation's performance. They do not have any right to form decision for the company.
These are employees and other staff members of the organisation who get fixed
compensation for their job.
 Low power high interest: These stakeholders do not have any power of making policies
for the company but they take interest in performance of the company. These are event
coordinators, creditors and suppliers.
TASK 2
P2 Analysis of internal environment and capabilities of organisation
Internal analysis: In order to analyse micro environment business entities conduct
internal analysis of strengths, weaknesses, opportunities and threats with the help of SWOT
analysis. All of them are also determined by junior strategy manager of Tesla. Description of all
of them is as follows:
Strengths Weaknesses
 Product differentiation of Tesla is very
high which helps it to attract large
number of clients and generate higher
profits.
 Profitability of Tesla is very low which
is affecting its market image and
financial status in the market.
 Experience of Tesla is limited in new
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 Marketing policies of Tesla are very
strong which helps it to improve the
customer base.
product development which affects
interest of clients in its products.
Opportunities Threats
 Tesla is focusing on launching fully
automated cars which is a great
opportunity for the organisation to
attract more customers.
 Tesla is planning to expand its business
in new locations in order to increase
profitability.
 There are end number of competitors in
the automotive market which are
planning to capture market share of
Tesla.
 Supplier network base of Tesla is
limited which can create issues such as
low productivity for it in future.
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Valuable: For Tesla the valuable items are plant & machinery, human resource,
technology. These are all elements considered as valuable factors which help the corporation to
perform the business operation in order to achieve the goals of company.
Rare: As the technology which is used by the Telsa is rare because it use innovative
technology in its manufacturing process so that cost can be minimise and technology which is
used to make engine is also rare which is considered as the strength of the corporation.
Inimitable: It is observed that skilled labour forces are unable to inimitable as they
deliver high efforts in business firm to attain the desired goals. In respect of Tesla market value
and goodwill are consider to be inimitable as it is not easy to maintain these components of
business in longer period. Thus it is stated that any mistake in relevant to quality of vehicles have
impact of the brand value and market share in specific period of time.
Organised: In recent time, it is observed that market share of Tesla is not organised as
delivering same product at low prices help company to determine the wider area of existing
market.
TASK 3
P3 Evaluation and application of Porter's five force model
Porter’s Five forces model: This is consider to be an essential competitive analysis
model that support to create various advantages by competitive firm which was introduced in
Michael E. Porter during 1979. The model has crucial five elements that provide framework to
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manager in order to consider vital components like competitors’, rivals and other substitute etc.
The five components in context of Tesla are defined below:
 Existing rivalry among competitors: It is observed that there are large numbers of
competitive firm for Tesla as such as Aston Martin; Bentley etc. All these rivalry firms
are trying to capture huge market share by increasing customer base and expanding
business at global level. They are consider to be one of the greatest disadvantage For
Tesla as company fear to lose the existing customer or they require extra fund in order to
make unique position in market. Therefore it is an urge need for respective company to
make valuable policies and strategies that help to increase the competitive advantage in
existing market.
 Bargaining power of suppliers: In Automotive industry it is assumed that bargaining
power of suppliers are not appropriate as there are large number of competitive suppliers
that a offer the same product at different prices so that companies may keeps on chaining
there supplier to reduce cost. It is observed that in case in an individual supplier is selling
goods at higher prices that buyer may shift to other options. In the context of Tesla as part
of automobile industry thus bargaining power of suppliers also considers to be low that is
one of the most suitable advantage for company. It will helpful for respective company to
buy subsequent material in order to manufacture valuable cars and other vehicles as peer
customer needs.
 Bargaining power of buyers: In Automobile industry there are large number of
companies offering their best cars, trucks and other vehicles to a wide range of customer.
Thus the bargaining powers of buyer are higher due to which there is a negative influence
on the overall profitability of business and total customer. Hence it is stated that to deal
with bargaining customer when they buy product form Tesla they might develop effective
prices policies that help to attract the number of customer in order to profitability within a
desired period of time.
 Threat of new entrant: In recent time it is observed that in Automobile industry the
entry of new companies is not as easy as it require large capital and investment.
Moreover, in case if company entry the respective industry then it is not possible to
capture large market share or attract more and more customer. Thus it is observed that
Threat of new entrant is very low because new firm requires huge capital amount to
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develop their business activities and earn profit. Therefore the respective company have
capture huge market share so it is not easy for other companies to develop new product in
that may reduced the survival for new companies in existing market.
 Threat of substitute: It is stated that many companies use to develop new substitute
product in order to reduce the sales for original product. It is observed that companies use
to manufacture original product in order to replace with substitute product. For Tesla
threat of substitute goods is very low because to replace automatic cars is not easy for ay
firm. The substitutes for Tesla are not so impactful as other company are not able to
provide such types of services due to which survival for new companies are not easy as
they are not able to attract large number of customer.
TASK 4
P4 Application of models, theories and concepts
Ansoff matrix: The concept of ANSOFF MATRIX is developed in 1957 by H. Igor
Ansoff in the year 1957 with the article strategies for Diversification. This support business firms
to find out the goods and various development strategies in order to gain success. There are
various development and growth strategies of Ansoff matrix that are Market Penetration, Product
Development, Market Development and Diversification. Al these elements help a respective fir
to implement their plans that benefit in attaining the desired objective in specific time frame
(Ansoff Matrix, 2019). All the essential elements of this matrix in relation to Tesla is defied
below:
 Market Penetration: It is one of the best growth policies that is depended on selling old
goods in existing markets. Different type of company use to develop formulates effective
assorted strategies in order to improve the market image and bring changes in already
developed product by knowing taste, preferences, of its customers. In Tesla the
management may use this method in order to attain the market value for existing products
in developed present market by applying different strategies such as reducing prices to
attain customer interest, promote business activities to increase sales etc.
 Product Development: This is also one of the effective strategies that mainly include
development and establishment of a new product in present market to gain profit. It is
observed that after taking in view of a variety of factors and their related risks so that
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business firm are able to develop a new product for customer. In Tesla they can adopt
this scheme that help to attain the large number of customer by providing quality of
product, using resources in best effective manner so that competitive advantages can be
attained to meet the overall goals.
 Market Development: This is considering being a crucial approach that is related to
making of valuable strategies in order to make policies to sales their already developed
product. In business context there are different types of moderate risks which are linked
with associated with the implementation of market development strategy. In the context
to Tesla management can implement this strategy in order to established business in
different market that helps them to sell their goods in more profitable manner. This help
respective company o grow business as new market will support to increase the customer
base and improve the market value (Saebi and Foss, 2015).
 Diversification: In business context the concept of Diversification is related with
expanding business in totally new product in new market with the main motive to
increase the profit in upcoming time. In Tesla this strategy is applied by management to
entre new market like India with a new product according the needs of customer that
help them to attract in profitable manner.
From the above discussion it is stated that Tesla must focus more on product
development strategy that help them to satisfy the emerging needs of customer and attain huge
market share with new customer.
Justification: In recent studies it is notices that market development strategy shall be
adopted by Tesla as it does not require more focuses on promotional activities and other research
activities. As the respective company have better market value for its product and huge customer
base therefore it can be less risky method of development because the manufacturers already
have information regarding requirements of clients.
Strategic management plan: The descriptive program that holds the detailed
information concerning about organisation's objectives, strategies, mission, vision, tactics etc.
That helps to make valuable strategy in order to attain task. The detail of strategic plan is
discussed below:
Objective: Main objective of the company is to increase its profits by 15% in next two
years by launching natural body care products in the market
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Vision: The organisation is willing to be on the top of the beauty or cosmetic industry.
Mission: Mission of Tesla is to enhance productivity, profitability and achieve higher
competitive advantage for the betterment of the company.
Strategies: Following strategies are going to be used by L'Oreal for the purpose of
launching new products in its current market: Promotions: Promotional strategy is going to be used by L'Oreal as it can help to aware
large number of customers regarding the products that are introduction by the company in
the market. It helps to reach maximum number of prospects so that higher profits can be
achieved.
Tactics: These are the set of strategies that are formulated to achieve long term goals of business.
Following tactics are going to be focused by L'Oreal: Arrangement of funds: It is one of the major requirement of the company and the
managers may arrange funds from external as well as internal resources. These are bank
loan, selling of old assets etc.
STP: It is a set of three different strategies in which decisions regarding launching of new
products are being formulated by the company. All the three elements of STP that are required to
be focused by L'Oreal are as follows:
 Segmenting: By using this policies Tesla i supportive to include the market in various
segment that help to launch new goods in market.
 Targeting: The procedure to identify target customers is termed as targeting. The target
market Tesla would be income based customer group so that customer can be attracted in
order to increase the profitability during a specific time period.
 Positioning: The method of Positioning helps companies like Tesla to attract large
number of customer by setting good market value for their goods in mind of clients. So
Tesla implements the effective promotion strategy such as discounting, coupons etc. That
help to aware consumer in respect to their goods.
CONCLUSION
From the above project report it has been concluded that business strategy is the process
of formulating strategies for businesses in order to attain success in the market. While taking
strategic decisions it is very important for top level executives to analyse internal as well as
external environment of business. Both of them can be conducted with the help of different tools
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such as SWOT and PESTLE analysis. In order to determine capabilities of a business VRIO
model is used which helps to analyse that different resources which are used by companies are
valuable, rare, inimitable and organised or not. It is also very important for companies to analyse
competitive market so that effective strategies for betterment of enterprise can be formulated.
While formulating plans for success of business top level executives are required to formulate a
business plan which should cover different theories such as Ansoff matrix, STP analysis etc.
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REFERENCES
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Online
Mission, vision and objective of Tesla. 2019. [Online]. Available through:
<https://www.tesla.com/en_GB/about>
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