Impact of Macro Environment on Tesla's Strategies

This report discusses the impact and influence of macro environment on Tesla's strategies and analyzes the internal environment and capabilities of the firm. It also examines Porter's five force model and evaluates competitive forces.

Business Strategy

 Table of Contents
 INTRODUCTION...............................................................................................................3
 LO 1.....................................................................................................................................3
 P1) Discuss the impact and influence of macro environment on a given organization and
it's strategies...........................................................................................................................3
 M1 Critically analyse the macro environment to analyse the strategic management
decisions.................................................................................................................................5
 LO 2....................................................................................................................................5
 P2) Assess internal environment and capabilities of a firm. ..........................................5
 M2) Critically examine the impact of internal environment on organisational capabilities,
structure and skill set..............................................................................................................8
 P3) Discussion of porter's five force model as well as evaluation of competitive forces..8
 M3 Determine appropriate strategies to improve competitive edge and market position.. .9
 LO 4 ....................................................................................................................................9
 P4 Applying a range of model, concept and theories to interpret strategic planning.....9
 M4) Produce a strategic management plan that has tactical priorities and objectives..10
 D1)Critically analyse the data applying environmental and competitive analysis to
produce a set of strategic direction, objectives and tactical action.......................................11
 CONCLUSION..................................................................................................................12
 REFERENCES..................................................................................................................13

INTRODUCTION
Business strategy is explained as set of actions which is used by an organization in order
to attract potential customers towards their product in order to accomplish set goals and
objectives (Anwar, 2019). It is mandatory to build business strategy in order to gain competitive
advantages against rivalry. Effective business strategy aid firm to gain productive results in the
set time frame. This report is based on Tesla that came into existence in the year 2003 by a group
of engineers. This leading organization not only build all electric vehicles but also provide
infinitely scalable clean energy generation and storage product to their customers. The main aim
of this firm is to provide zero emission electric power car. This assignment covers impact and
influence of macro environment in a firm and it's tactics. The internal and external environment
analysis is done in order to gain best results. Porter's five force model is deeply studied to
understand the competitive forces. Numerous models and theories are explained in order to
devise strategic planning in a firm.
LO 1
P1) Discuss the impact and influence of macro environment on a given organization and it's
strategies.
Macro environment is stated as those economic factor such as, technological changes, political,
demographical, social conditions and so on which directly or indirectly affect the smooth
functioning of the business in intense competitive world (Cubas‐Díaz and Martinez Sedano,
2018). In order to grow and develop successfully it is the core element which need to examined
effectively for better outcomes. Some of the factors that affect the businesses and consumers on
day to day basis are unemployment rates, taxes and inflation. This has effects internal business
strategies and capabilities at a tremendous scale. Tesla is a American auto-mobile company that
execute design business plans so as to competitive edge in open market place. There are
distinguish macro factors which affect business functions can be explained by using PESTLE

analysis.
PESTLE analysis refers to as business tool that are adopted by firm in order to
examine external environmental factors which directly or indirectly influence overall
productivity and profitability ratio of the businesses. Tesla can adopt this tool in the premises in
order to understand the drawbacks of macro factors which are, social, political, legal economic,
and technological on their business strategies and activities. Factors of pestle analysis are
illustrated below:
Political factor: Political stability, taxation policy,trade restrictions, foreign trade policy,
competition regulation and so on are some of the factor of political factor. In the success path of
the business this factor directly or indirectly affect day to day working in both positive and
negative way. In order to grow the business of Tesla management need to scan the political
condition of UK in order to accomplish best results as compare to rivalry. As UK has stability in
their political environment so it favour expansion of business across the globe. It aid in
enhancement of market penetration that raises sales volume of the product at tremendous scale
(Grayson and Hodges, 2017I).
Economic factor: Some of the examples of economic factor are, policies, tax rates,
interest rates, wages and so on. All this uncontrollable factor greatly affect the business strategies
and function in intense competitive world. As the economical condition of US, Europe and Asia
raises gradually it is beneficial for Tesla as this nation leads towards development of electric
vehicles. By this Tesla is able to gain huge profit that can be further used in growth and
development of business in the coming years.
Social factor: In order to raise goodwill in the eyes of the customers it is essential to
follow social factor on priority level. Society tradition, culture, beliefs, economic status, religious
orientation etc. are included in social factor. All this factor directly affect business policies and
functions as they need to changed as per the requirements. In order to satisfy client it is essential
to perform social factor effectively as it builds positive image in their mind regarding the
companies product and brand. Tremendous changes in consumer demand increases the
preferences of electric car because they unlike traditional cars. Client seems to satisfactory as
this goods are uplifting their living standards. Countries like, Europe, USA and Asia has raised
their wealth dispersion which directly assist in enterprise financial execution.
Technological factor: In order to compete with tough bench mark of competitors it is

very essential to adopt modern technologies in their working premises. By doing so emerging
needs of the customers can be meet in the set time frame in cut throat competitive world. Tesla is
benefited because of technological advancement in automotive energy storage industry as they
assist in gaining competitive advantages against rivalry (amratanakul, 2018). Additionally, It
allows Tesla to be fuel efficient in open market place which is a positive mark for the company.
Along with this firm become more flexible to adopt innovation instead of traditional cars in
automotive industry.
Environmental factor: Changing climate, population, natural vegetation and so on are
included in environmental factor. As customers are more concern about environment the demand
for electric cars is raising day by day which is a huge business opportunity for Tesla in intense
competitive world. In order to capture huge market ratio firm can come up with latest electric
version of vehicles that emit less carbon emissions in the surroundings. In order to protect
environment Tesla is conducting continuous research and development work and are more
focusing on coming up with goods which re environment friendly.
Legal factor: In this particular case it covers, employment law, consumer law, fraud law,
health and safety law etc. Organization need to follow essential laws in their premises according
to their businesses type. By doing so employees are assured that they are not exploited in any
terms and are retained for longer time frame. However, in UK all vehicles are EC approved that
is considered as a national approval of particular nation, Tesla ensures that all legal norms
regarding vehicles of specific country are followed in order to run the business smoothly without
government interference (Lawton, 2017).
M1 Critically analyse the macro environment to analyse the strategic management decisions.
Macro environment factors helps in identifying the market scenario. By doing so top
level management an organization are able to frame tactics in order to overcome the negative
influence on the business functioning and operation activity. However, these forces helps in
developing strategic management plan in order to come up with unique idea in the market.
Additionally,this aid in identifying opportunities to enlarge business in neck to neck competitive
world.

LO 2
P2) Assess internal environment and capabilities of a firm.
SWOT analysis is done to understand the internal strengths, weaknesses, opportunities
and threat. By doing so tactics can be framed accordingly in order to compete with competitors.
Strengths Weaknesses
 The core strength of Tesla is High
product differentiation. Also, more
brand recognition in the market by
developing auto-mobiles on electric
energy is another strength of the firm.
 Diversified marketing policies and zeal
to satisfy customers exception is open
market place has is the main strength
due to which loyal client are build with
the firm.
 Tesla has limited presence in many
nation such as, China.
Opportunities Threats
 Tesla can concentrate on market
penetration in other nation in order to
capture huge market ratio. This helps in
raising more sales ratio.
 Neck to neck competition in
automotive industry is big threat in the
market. Competition give birth to
innovation due to which firm are
coming with more innovative electric
cars by adopting latest technologies in
order to be in the leading position
(Linder and Williander, 2017).
VRIO model
This particular model looks within internal resources that aid in providing sustainable
competitive advantages in open market place. VRIO model is used across the globe in order to

examine internal capabilities and resources of a firm. Offerings, market presence, human
resource and system software are the four resources and capabilities of Tesla motors that are
used for VRIO analysis. The points are briefly explained below:
Valuable: Across the globe Tesla is recognized for serving high quality services to the
customers over the years. The skilled team of Tesla are working day and night to full-fill the
emerging needs and wants of the customers in short time duration. Organization is training
employees to serve those services are demanded by customers this helps company to bind loyal
customers for longer time as well as build positive image in the eyes of the customer. Retalix
software system is used by Tesla as it aid to conduct operational activities smoothly.
Organization is providing all necessary requirement to the co-workers as they are valuable assets
of the firm who work effectively and efficiently to meet the set standards on the set deadline.
Rare: The software of the organization are designed according to their business
requirement. Organization is offering is rare in the global market this is because they come up
with innovation in their product or services. Advance tolls and techniques are adopted in the
premises in to meet the demand of the client (Macarthy, 2018). Along, with this their personnel
are rare and different because they hire experts in order to conduct training and development
programmes for their skilled and potential employees. It raise their workforce efficiency at a
tremendous scale.
Inimitable: The innovative software that is Retalix software which is designed by the
team of Tesla is unbeatable in the market as it is specially designed to tackle, monitor and
handle Tesla's business operations and is operated in the own premises only. Additionally, the
employees are highly skilled and full of potential due to which they easily adopt to the dynamic
needs without any resistance and work accordingly to create tough benchmark for other.
Organised: The co-workers of Tesla are working in organized and systematic manner
due to which if any problem occurs it is resolved easily. Along with this teammates are having
good relations with each other which helps to deal this complex work in easy manner. However,
their coordination among the team aid them to achieve the set targets in the set time slot which is
a positive mark of the company in global market.
Resources Valuable Rare Inimitable Organised
Market Yes - - -

presence
Offerings Yes Yes - -
System
software
Yes Yes Yes -
Human
resources
Yes Yes Yes Yes
M2) Critically examine the impact of internal environment on organisational capabilities,
structure and skill set.
Practices, structure, policies, norms, objectives, skills are involved in internal
environment of an business organization that directly or indirectly aid in meeting the set
standards of the firm in appropriate manner (Madhushree and Aithal, 2018). By facing the these
factors management is able to cope with issue emerged from them as firm is able to frame strong
strategies to overcome them. Factors and problems related to them has made the business
internal strong and train employees to work accordingly. By conducting SWOT analysis it
showcase the strengths and weaknesses of the firm as well as assist in identifying opportunities
and threats prevailing in open market place. Additionally,, VRIO model is adopted to gain
competitive advantages against rivalry by understanding their valuable and rare resources.
P3) Discussion of porter's five force model as well as evaluation of competitive forces.
Porter's five force model is adopted by strategic planners in order to examine the
industry in which Tesla motors is operating it's business. By doing so productive results can be
attained and tough bench mark can be created for others.
 Bargaining power of buyers: This is measured by forces which are, cost and way to
shifting to purchase goods or services from Tesla's rivalry which are, Ford. The
switching cost is high due to which the customers of a company have low bargaining
power. Electric car is designed for elite class people and are prices are charged high. The
quality served is of high standards and are full-filling the needs of the customers and
turning them into loyal customers.

 Bargaining power of suppliers: Huge number of suppliers are addressable in the
automotive energy storage industry. As customers have large opportunity to gather raw
material from suppliers due to which the bargaining power of suppliers is low. In
competitive market place Tesla motor's believe on long term partnership with their
suppliers so that their needs can be full-filled (Oldman and Tomkins, 2018). Threats of substitution: Organization has less threat of substitution because there are few
substitutes for their products in open market place. Customers are willing to pay for a
those product which depends on the availability of substitutes goods. There are few
substitutes for their products hence, organization has less threat of substitution. In the
global market Tesla motors can cope up with threat of substitution by being a service
oriented. Competitive rivalry: Product differentiation, exit barriers, seller concentration,
competitors diversity, product differentiation so on are determined by the several factors
of competitive rivalry. In automotive industry there is high degree of intensity rivalry as
the ratio of competing brands is large. However, most of the auto-mobile firms such as ,
Jaguar, BMW etc. has announced their idea to increase its focus in this segment.
 Threat of new entrants: In cut throat competitive world automotive industry has strict
barriers to entry due to which treat of new entrants is very low. By this automotive
industry is able to meet the emerging needs of the customers smoothly and are able to
bind them for longer time duration.
M3 Determine appropriate strategies to improve competitive edge and market position.
Porter's five force analysis helps an organization to understand the forces which impacts
on the profitability in specific industry and provides decision making criteria towards the enter
into new market, increase capacity as well as formulate competitive strategies. It is based on the
dynamic features and characteristics of industry that are required to compete in the competitive
marketplace as well as shows market positions clearly (Peng, 2017).
LO 4
P4 Applying a range of model, concept and theories to interpret strategic planning.
Strategic planning is stated as procedure in which companies leaders measures their
vision for up-coming years along with discover firm's goals and objectives. Numerous theories

and concepts are studied in order to identify the firm's profitability ratio. In order to determine
Tesla's revenue generation ratio Porter generic strategy is used. This covers four types of
strategies which are, cost leadership, differentiation, cost focus and differentiation focus which
are Illustrated beneath:
Cost leadership strategy: In the era of globalization where companies compete with each
other in order to survive for longer time period this strategy can be beneficial for them as cost
leadership strategy aid firm to become a low cost manufacturer in an industry. However, Tesla's
management focus on purchasing raw material at low cost that automatically leads in low prices
which is a positive mark for the company. By this emerging needs of the customers can be meet
as well as set objectives can be attained easily.
Differentiation strategy: It is well recognized in the global market regarding framing
something unique as compare to rivalry. In order to remain in the leading position Tesla
implement differentiation strategy in order to take best decision for both employees and
employer. By appropriately adopting this in cut throat competitive world emerging needs and
preferences of the customers can be meet in the set time frame. Through this strategy enterprise
is able to charge high prices for the goods which enables them to gain huge profit. This strategy
contributes in making the products unique in nature (Priem and Koch, 2018).
Cost focus strategy: Business associates are widely following this specific strategy so as
to target narrow market in neck to neck competitive world. In order to survive for longer time
duration it is important to be cost effective. Tesla by executing cost focus strategy they are
capable to meet their set standards as their main motive is to approach small market.
Additionally, Tesla adopts this tactic to raise their sales ratio.
Differentiation focus strategy: In order to cope up rivalry it is import to adopt this
particular strategy in the open market place. Differentiation focus strategy aid in targeting
markets in creative and innovative manner. However, it aid to attract huge customers for their
product which is a positive mark for the organization.
M4) Produce a strategic management plan that has tactical priorities and objectives.
Strategic management plan: It is used by business associates is it render objectives,
goals, resources, direction, market strategies, priorities and so on in a firm. In cut throat
competitive world Tesla develops this formal document as they focus on market development.
In open market place strategic management plan is illustrated as follows:

Background: In the year 2003 Tesla came into existence in the open market place. It
deals in manufacturing and selling auto-mobile products across the globe. Organisation is able
to capture huge market ratio as it is focus on manufacturing of electric vehicles which are
operating by batteries in neck to neck competitive world. Management is conducting research
and development activities in order to produce product by emission of less harmful gases. Tesla
is successfully expanded its business across various nation such as, Canada, US, China, Europe,
UK, China, Australia and so on (Revathi and Aithal, 2018).
Mission: Tesla mission statement is “To make globe free to use electric vehicles”. In
order to achieve it firm is working hard day and night to achieve it in intense competitive world.
Vision: The vision of Tesla motors is to become the earth's leading electric car firm. Both
employees and employer are working hard to meet the emerging needs of the customers.
Objectives: The main objective of Tesla to uplift market share of the electric vehicle by
twelve percent as well as sales ratio by ten percentage in the next financial year. In order to
achieve this objective in the set time frame top level management is studying other's marketing
strategy in order to gain better results.
Goals: The main goal of Tesla is focus on quality and prices of the electric vehicles in
order to expand the business in other developing nations.
Strategies: Market development strategy is used by Tesla so as to raise market share in
new market area . By this overall productivity and profitably ratio raises at a tremendous scale.
Also, tough challenges is created for others in cut throat competitive world (Shuen, 2018).
Tactics: In order to successfully implement the strategies in the working premises of
Tesla they are planning to expand the market across other nation by using online and offline
promotional strategies so as to commercialize their electric vehicle. Through this huge revenue
can be maximized which can be further used in growth and development of the business.
Additionally, tough challenges can be created for others in open market place.
D1)Critically analyse the data applying environmental and competitive analysis to produce a set
of strategic direction, objectives and tactical action.
In Tesla business and market investigation is essential because it render brief information
about internal and external market. For better productive results distinguish concepts, theories
and approaches are used so as to handle the shortcomings. However, this assist in designing a
strategic plan in order to expand business in new geographical area. Along with this analysis is

more time consuming and expensive methods (Visnjic and Jovanovic, 2018) .
CONCLUSION
The above discussion provide the conclusion that macro environment creates huge impact
on the business day to day working. They are uncontrollable in nature. By scanning the external
environment strategies are designed in order to overcome macro factor impact on overall
business workforce efficiency. Pastel analysis is conducted in order understand the external
factor deeply such as, political, social, technologism, economical, legal and environmental.
Along, with this SWOT analysis is conducted in order to better understand strengths,
weaknesses, opportunities and threats. In order to overcome threat which is prevailing in the
market tactics are framed so that competitive advantages can be gained against rivalry.
Numerous strategies such as, differentiation strategy, cost leadership strategy, Cost focus
strategy etc. are deeply studied so as to interpret strategic planning.

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