Unit 32. Business Strategy assignment : Silicon Valley

Unit 32
Business Strategy
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Executive Summary
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INTRODUCTION
Business strategy is defined as the achievement of desired ends or objectives. This is
also called long term business planning usually period of 3 to 5 years. It is also knows
actions and moves of competitors that is used by firms for attracting large number of
consumers, improving performance, competing and achievement of organization’s goal
and objectives. It is the master plan of any organization to carry out their activities and
operations in proper manner. There are various types of business strategy such as
competitive, corporate and strategy in general.
The company chosen for assignment is Tesla which is American start-up powered by
Silicon Valley which is specialized in manufacturing of electric cars. This was founded
by Elon Musk in 2003 and reached to its success as a dynamic automotive and energy
solution organization. The company became famous for its innovative approach in the
market and the dominant position worldwide. The main aim of this report is to discuss
about impact and influence of macro environment with help of different theories and
models on business and internal capabilities and environment. It also cover porter's five
force model and for understanding strategic directions available for business.
TASK 1
P1 Applying appropriate frameworks in order to analyze impact and influence of
macro environment and its strategies
It is essential for business to make proper plans and strategy in order to accomplish set
goals and objectives in an effective and efficient manner. This provides guideline to
business to work as per their mission and vision of organization. Therefore, it is
imperative to first understand the strategic context of any organization.
Strategic Context
Mission- The mission of Tesla is to speed up world's transition for sustainable energy.
Vision- “The future is electric” to be the company of 21st century through driving world's
to electric vehicles.
Objectives- The main objectives of Tesla is to manufacture, design and market for
luxurious electric powered vehicles.
Meaning of Strategy
It is defined as high level plan in order to accomplish one or more goals and objectives
under uncertainty conditions. This is scope and direction which assist in achievement of
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organization advantage through configuration of resources having challenging
environment for meeting stakeholder and consumer expectations (strategy, 2019).
Role of strategy
Strategy plays different roles for business to achieve goal and objectives, their strategic
intent and different strategic direction. They helps in providing direction to business to
go to right path and make strategy for business in order to achieve set outcome or
desired results (Role of Strategy, 2019).
Different strategic planning techniques
There are different types of strategic planning techniques which helps in proper
planning of enterprise activities and operation. As per size and nature of business,
respective organization has to adopt techniques for positive outcomes. This includes
bench marking, budget planning, business analysis, business models, competitive,
financial analysis & market analysis and so on (24 Strategic Planning Techniques,
2019).
Various frameworks and models have been looked into to analyses the macro
encirclement of Tesla. Key frameworks such as SWOT, PEST and Stakeholder
Analysis has been conducted with examples.
Tesla SWOT Analysis
Strength- This is the Leading automotive company (Tesla SWOT Analysis (2019), 2019)
which is best in selling Electric Cars that traveling up to 600km with single battery
charge. This has cross sell and diversification where Tesla insurance program with
Liberty Mutual Insurance Company. It has very high innovative company to develop
competitive and profitable products. The CEO Elon Musk oversees all the product
developments, engineering and design of the company’s products. Example: respective
organization can introduce more products.
Weaknesses- It is manufacturing complications with production risk factors, delays in
distribution and also extreme troubles while manufacturing Model X battery assembly at
Giga factory 1. Tesla is unable to meet the demand which might affect the brand value.
There are shortage of batteries which leads to decline brand value at marketplace. The
CEO, Musk is the sole representative of Tesla. Example, it has to conduct market
research for improving weaknesses.
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Opportunities- It has opportunity for expanding its business to the Asian market which
is still new to the automotive and renewable energy market. They have reduce
production cost for making their own battery. They are currently buying products from
primary supplier named as Panasonic. For example: it has opportunities in expanding
different countries for earning maximum gains and profits.
Threats: This is facing aggressive competition from many automotive brands such as
Mercedes, BMW, Audi, Lexus for both self driven technology and alternative fuel
vehicles (Hybrid, Plug-in-hybrid). It is facing product liability claims over autopilot
vehicles which is not very successful. The products of Tesla are defects due to
manufacturing designs which will affect the company image. Example: decline in quality
leads to hamper brand values and goodwill.
Environmental Analysis- The environmental analysis can be performed through PEST
(Political, Economical, Social and Technological) and Porter's Five Forces Model.
Tesla design, manufacture and distribute environmental friendly electric cars to the
market. This reduces the carbon footprint in the environment. Also Tesla has excellent
reputation on environmental impact on their electric vehicles and other energy saving
products, it is also important to work on their product and supply chain more energy
efficient if they expect for higher popularity/demand.
Political:
Any business environment has an impact with the political situation directly or indirectly
in its operating country. The political environment is effects the regulatory environment
too. Economical instability due to political instability will lead to business operational
disruption and therefore financial losses. Political disruptions between nations and
terrorism will also effects business environment (TESLA PESTEL/PESTLE ANALYSIS,
2019).
Tesla will face the political factors such as, work week regulations in auto manufactures,
mandatory employee benefits, minimum wage and overtime regulations, Industrial
safety regulations etc.. in any country operating their business. For example, political
instability leads to disruption and economic instability.
Economical:
The country’s economy is based on its rising businesses. The growth of the economic
activities directly contributed to increase the level of global employment and that has led
to higher spending on luxury vehicles and goods. Therefore the market for SUV’s has
increased globally with higher economic activity. The rise of the middle class has been
especially beneficial for the vehicle brands. However, If Tesla can approach the middle
class consumer segment with lower cost models the company can grow faster with
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middle class consumers. For example, the decline in value of money decrease sales of
respective organization.
Social
Cultural factors have a major influence on the demand and supply chain. Certain
products are perceived in certain societies and the level of acceptance of these
products are varies on cultural believes. More people are focused on environmental
protection
Tesla is also especially focus on helping the brand transition towards better, greener,
sustainable fuel efficient future. If the Tesla plan “the future is electric” is successful, the
world could save billions that are spent on every year on fossil fuels. For example, there
is frequent change in need and demand of consumers which leads problems to
business to conduct their activities effectively.
Technological
Technology is undoubtedly the largest factor influencing growth of the businesses
globally. It’s makes business efficient and affects the competitiveness. Every business
is look for the newest technology to see their sales growth.
Tesla is also with the modern 21st century technology as their sales and profit increases
every year. For example, non adoption of technology in business leads to failure of
business from competitors.
Stakeholder Analysis- There are different framework which helps in stakeholder
analysis such as stakeholder matrix and stakeholder mapping. Tesla has used
stakeholder matrix which means to analyse stakeholder of project to align goal with
project. It includes power interest, stakeholder analysis and stakeholder engagement
assessment matrix (3 Types of Stakeholder Matrix, 2019). If employees of Tesla has
power and interest then they carry out project work. In order to know analysis of
stakeholder, it is very important to analyse different factors such as religious belief,
value of ownership, demographics, communication and so on. It is very important to
include stakeholder engagement for given topic in terms of unaware, neutral, leading,
supportive and resistant.
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Structure Conduct Performance Model- This is the framework which helps Tesla in
making relations with market structure, conduct and performance. There are three
elements of such model which are described below.
 Structure- It is stable for particular time period and affect buying behavior of
buyers and seller. The organization has to depend upon market supply and
demand. In case of any change in those leads impact to business. The
respective organization has to understand structure of market in order to conduct
business activities for their users in effective manner.
 Conduct- It is the way where buyers and seller behave among themselves and
each other for buying of products and services in an effective and efficient
manner. They chose own investment, research and development, strategic
behavior. Tesla has to behave proper with their seller and buyer so that they can
conduct their activities, operation and functions of business in appropriate
manner.
 Performance- This is measured through comparing results of firms and industry
in terms of profitability and different ratios. The components covers under this are
product quality, production efficiency, resource allocation. Tesla has to improve
their performance for achievement of maximum profits and gains in order to
survive at marketplace.
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REFERENCES
Books and Journals
Bharadwaj, A. and Venkatraman, N. V., 2013. Visions and voices on emerging challenges in
digital business strategy. MIS quarterly, 37(2), pp.14-001.
Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development, 20(1), pp.8-27.
Ghezzi, A., 2013. Revisiting business strategy under discontinuity. Management
Decision, 51(7), pp.1326-1358.
Peng, M. W., 2017. Cultures, institutions, and strategic choices: Toward an institutional
perspective on business strategy. The Blackwell handbook of cross‐cultural management,
pp.52-66.
Scholes, M. S., 2015. Taxes and business strategy. Prentice Hall.
Spender, J. C., 2014. Business strategy: Managing uncertainty, opportunity, and enterprise.
Oxford University Press.
Online
strategy. 2019. [Online]. Available through:
<http://www.businessdictionary.com/definition/strategy.html>.
Role of Strategy. 2019. [Online]. Available through: <https://www.marketing91.com/role-of-
strategy/>.
24 Strategic Planning Techniques. 2019. [Online]. Available through:
<https://simplicable.com/new/strategic-planning>.
3 Types of Stakeholder Matrix. 2019. [Online]. Available through:
<https://www.projectengineer.net/3-types-of-stakeholder-matrix/>.
Structure, conduct, performance paradigm. 2017. [Online]. Available through:
<https://policonomics.com/structure-conduct-performance-paradigm/>.
Tesla SWOT Analysis (2019). 2019. [Online]. Available through:
<https://bstrategyhub.com/tesla-swot-analysis/>.
TESLA PESTEL/PESTLE ANALYSIS. 2019. [Online]. Available through:
https://notesmatic.com/2017/10/tesla-pestelpestle-analysis/
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