Business Strategy: Impact of Macro Environment on Organization Strategies

Unit 32 - Business Strategy

INTRODUCTION
The term business strategy is described as the combination of different types of decisions
and actions that are taken by an organization to achieve the aim and objectives of the business that
also helps to secure competitive position in the market.
The Report is based on Tesla, founded in year 2003, which belongs to the industry of
automotive and energy storage. Headquarter of Tesla is located in California, United States. It
offers products such as Electric vehicles, Tesla Energy etc. across the world.
The Report will provide deeper insight about Tesla’s strategic capabilities as internal and
external environmental condition with the help of different tools. It will also shed light on the
competitiveness take place within industry through the means of Porter’s model. This report also
includes strategic plan which highlights priorities and objectives associated with the firm.
TASK 1
LO 1
Analysis of the impact of macro environment on organization strategies.
Macro Environment -
It implies for the situation in terms of political, economic, social etc that takes place in the
economy rather than in a specific region or nation. It involves various factors such as inflation,
employment, gross domestic product, fiscal policy and monetary policy etc. The state of macro
environment also affects the decision-making of the company such as investing, spending and
borrowing etc.
PESTLE analysis -It refers to the tool that helps marketing department of the business to
monitor external environmental condition. This in turn assists management team in developing
competent strategic and policy framework that contributes in organizational success.
Political factors:
It includes several factors such as tax policies, rules & regulations etc. that will impact the
strategies of Tesla. Government entities majorly affects the automotive industry. Example –
policies of government related with trade of vehicles will affect revenue and performance of the
organisation. There are various political factors that are important for Tesla such as incentives of
government for electric vehicles, new trade agreements at global level and stability in political
environment in majority of major markets. Further, Brexit will also affect the business strategies
of Tesla Inc. Political stability in UK is favourable to the competitive strategies of the firm such

as market penetration etc. Due to Brexit, automotive companies loose tariff free access to the
global markets and it has to conduct trade under the rules of World Trade Organization (WTO).
This has influence companies operating in manufacturing sectors like Tesla. Further, there is a
decline in deliveries of the vehicles across the world (Raj, Kumar and Bansal, 2019).
Economic factors:
Different types of economic components is available, that influences companies operating
their business in auto-mobile industry. Due to growth in economic factors like rate of
employment, purchasing power etc., due to which sales of electric vehicles has increased. There
is an increase in rate of employment in UK as it has increased up to 76 % as compared with 75.9
% in the month of July 2019. This has positively influenced the strategies of Tesla like product
development etc. due to availability of skilled workforce in the country (Lehman and Zaitsev,
2017). Further, economic factor like lower cost of batteries supports to amend practices of
business.
Social factors:
Various type of social factors existing in societal environment that exists outside
business. It considers components such as views, attitude of customers towards the products of
the company. This will also influence strategies and tactics of company. Manager of firm should
ensure that strategies of the business should be used to maximize the benefits of social factors.
For Example – One of the major trend that provides opportunity to Tesla to increase the sales is
people purchasing vehicles through online channels. According to a survey, there are major
activities that are performed by buyers of vehicles (Schanzenbach and Sitkoff, 2019). Such as
71% people research the price of auto-mobile over online channels before buying vehicles, 63%
perform online activities to determine the present worth of vehicles.
Technological factors:
Technological factors also influences the strategies, performance and revenue of the
business. The strategy of Tesla to develop new products like Roadster sports car. The
advancement in technology is essential to develop unique products. For instance– product
engineering technology determine the cost-benefits and level of efficiency of the company.
Further, the factors that affects the strategies of Tesla are improvement in automation, high rate of
change in technology that can be a threat or an opportunity for company, gain popularity of online
mobile systems which is the best chance for business. This will help to sell vehicles to target