Unit 32 Business Strategy - Assignment

UNIT 32

Table of Contents
INTRODUCTION...........................................................................................................................1
P1. Framework for macro-environment analysis........................................................................1
P2. Framework for internal analysis...........................................................................................4
P4. Selection of a strategic option along with rationale..............................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is being understood as a set of decisions and actions that assist business
organisations to effectively accomplish business objectives. In simple terms it is a master plan
that offers formative guidance to company management to secure more competitive position in
marketplace (Brewster, 2017). In addition with this, business strategy aid organisation to satisfy
needs of customers in best effective manner and further meet challenges and threats and gain
command over adverse situation in order to attract customers and achieve organisational goals in
well defined manner. Present report includes discussions on Tesla which is a founded in the year
2003 and operates their functioning in automotive and energy storage industry. In this report
formative discussions has been conducted internal as well as external analysis along with
strategic management plan. Further report includes different types of models and frameworks
with the help of which organisation can effectively able to accomplish their operations while
gaining more competitive edge in marketplace.
P1. Framework for macro-environment analysis
It is important for an business organisation to determine impact of external environment
factors on functioning of businesses. By identifying this company can able to analyse threats and
challenges that may create negative impact on productivity and profitability of organisation. This
will aid them to formulate strategies and overcome challenges to ensure long term sustainable
growth. PESTLE analysis is being undertaken by Tesla Motors as to identify factors within
macro environment that affect their work efficiency. With the help of this company can able to
overcome subsequent challenges and threats that create hurdles and obstacle in growth path of
organisational success.
PESTLE
Pestle analysis is being undertaken by an organisation in order to track down the
environment within which they operate their functions and are looking forward to launch their
new product and services. It is an acronym which is mainly stand for Political, Economical,
Social, Technological, Environmental and Legal Factors. Tesla Motors takes advantage of
PESTLE analysis as they are engage in the functioning of offering their services as leading
automotive brand. Thus, it becomes essential for company to determine threats and opportunities
that affect their work efficiency and further impact on their growth prospects.
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Political:
Political factor evaluate the evaluate the extent at which policies of a government impact
upon economy of a certain industry. It further include factors related to political stability, foreign
trade, government policies, tax policies, labour law, trade restrictions, environmental laws,
corruption etc. All these factors are required to be undertaken by business organisation as to
effectively access attractiveness of potential market (Jeston, J., 2014). UK political stability
provide great extent of opportunities to Tesla in order to enlarge their market holdings. With the
help of this they can effectively lead towards more sustainable growth. While terrorist attacks,
Trade wars, Political instability and adverse situation of BREXIT influence organisation in
negative way and further impact on their smooth functioning. In order to challenge this Tesla can
take advantage of strategies as to overcome these treats and facilitate sustainable growth.
Economic:
Interest, economic growth, inflation exchange rates, unemployment rates and
disposable income of customers are some of the factors that are included in economic factor. All
these factors impact upon organisation functioning directly or indirectly and have long term
impact on organisation functioning. It is essential for Tesla to effectively determine this factor as
this affects the manner in which organisation price their services and products. Due to increase in
prices of fuel-engine it has been measured that demand of sustainable cars in being effectively
increased. This create opportunities for organisation like Tesla Motors, as it is one of the leading
and growing sustainable organisation and provide eco-friendly cars to customers. Thus, by
offering qualitative products to consumer base organisations can increase loyalty among
customers that subsequently increases their overall ratio of profitability.
Social:
It include factors related to demographic characteristics, values of population, norms and
customs in which organisation operate their operations. It is essential for Tesla marketers to
consider factors like population trend, income distribution, population growth, career attitudes,
lifestyle attitudes and cultural barriers when their target certain customers. As per the evaluation
it has been identified that customer nowadays are more concerned towards environment. This
creates opportunities for Tesla as to gain effective advantages from market. While it has been
analysed that organisations those who are already present in marketplace as global leaders have
sound labour, funds, material to challenge eco-friendly cars that affect functioning of Tesla. For
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this it is essential for company to formulate strategies and offer high tech environment friendly
cars at cost effective prices to customers at periodic level in order to constantly attract attention
of customers as to ensure long term sustainability.
Technological:
It include advancements in techniques, trend and technologies. In order to gain
subsequent growth it is essential for organisations to undertake latest technological trends in
order to serve customers in best effective manner and gain more competitive advancements.
Tesla operate their functioning as an organisation that always come up with the idea which is
based on hydrogen fuel with offering their product with latest techniques as to fulfil expectation
of their loyal costumers. This effectively lead towards increasing expectation of customers that
create pressure on company as to offer more competitive and innovative products. In order to
overcome this, Tesla Motors in required to take advantage of best effective form of strategies as
to offer innovative products to customers while ensuring more competitive advancements as
compared to their competitors.
Environmental:
Environmental factors importance is increasing because of rise in scarcity of raw material,
carbon footprint target that has been set by government and population targets. In this elements
that are included are related to climate change, weather, environmental offsets. It has been
determined that impact of climate change affect he manner in which organisation operate their
business and offer their products. Thus, Tesla Motors is required to effectively engage
themselves in CSR activities and decrease their level of carbon footprint. In order to attract
attention of customers organisation can offer high-tech eco-friendly products. In order to
overcome impact of environment Tesla Motors can undertake advantage of different type of
strategies as to minimise impact of these factors on organisational policies, practices and
procedures.
Legal:
Legal factors include factors such as employment laws, patent laws, antitrust laws,
discrimination laws, copyright laws, employment laws and more. It is essential for organisation
to effectively understand impacts of these factors on organisational functioning as to trade
ethically and successfully. Tesla is required to effectively understand potential changes in laws
and legislations as to safeguard themselves from being get trapped in any legal situation. It has
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been analysed that with an increase in governmental concern towards environment it is
mandatory for all organisations to decrease amount of carbon emission and implement green
policies within their organisational structure. This will lead Tesla to gain trust from customers
that simultaneously increases their profitability. While tax policies which is related to green
business is considered as an threat element for company that can be overcome by Tesla by
undertaking go-green strategies and tax policies.
According to the discussion this has been evaluated that Tesla can undertake numerous
form of opportunities in order to effectively increase their ratio of profitability. Tesla Motors can
take advantage of eco-friendly technologies in order to launch cars in innovative manner and
further invest in go-green and other environment related CSR programmes in order to effectively
increase organisation global share. While by taking use of taxation policies Tesla can overcome
may threats and can further ensure smooth functioning.
P2. Framework for internal analysis
It is important for organisation to have proper understanding of internal environment and
identify threat as well as opportunities in order to operate their functions in best effective
manner. In order to identify impact of these internal environment Tesla undertake use of SWOT
and VRIO analysis which is being further determined below:
SWOT
SWOT is an acronym of Strength, weaknesses, threat and opportunities which is included
in internal factors of an environment within which organisation operate their functions. With the
help of this tool company can effectively able to overcome challenges and can ensure long term
sustainability in marketplace. SWOT in context with Tesla is being conducted below:
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STRENGTHS WEAKNESSES
 Tesla undertake use of advanced and
innovative technologies as to offer high
tech products to their customers in
order to gain more competitive
advantage. Company us taking
advantage of powertrain technology as
to offer competent products and
services to customers in order to gain
success.
 As company successfully operate their
functions as energy sufficient company
and shows their concern towards
environment thus, government offer
financial aid to management as to
effectively use energy in best effective
manner (Wheelen and et. al., 2017).
 Tesla operates their functions with
having exclusive market presence. With
the help of this they gain monopoly in
electric and hydrogen cars.
 Tesla have ascertained the importance
of channels of distribution. Thus they
have undertake their own system of
distribution as to effectively prevent
themselves from any kind of future
delay.
 The main weaknesses that affect
functioning of Tesla is their
manufacturing plant which is situated in
California, as this unit produce
estimated amount of 500,000 units at a
time. It acts as an drawback for
company
 Overall cost that has been expensed by
Tesla for their vehicles in more costly
as compared to ordinary auto mobiles.
OPPORTUNITIES THREATS
 Due to increase in environment  General Motors, Fiat Chrysler
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awareness among individuals there is
significant rise in electric cars sales.
 There is a formative addition in
technologies like self-driven, hybrid
vehicles etc. it is mainly related to
information wit advanced features as
well as accuracy. This enlarges the
scope for company to effectively
increase their customer base.
Automobiles and Ford are some of the
key players within marketplace that
create threat situations for Tesla.
VRIO
Resources Valuable Rarity Imitable Organized What is the result?
Powerful
brand image
Strong brand
image
- - - Competitory
Disadvantage
Offering Offerings Offerings - - Partially competitive
Software
System
System
software
System
software
System
software
- Competitive advantage
for temporary basis
Personnel Personnel Personnel Personnel Personnel Competitive advantage
Valuable
Strong brand image: Company is holding strong presence within marketplace. With the help of
which they can acquire more market share holding.
Offerings: Tesla offer qualitative products according to costumers need.
System software:Tesla take advantage of Retalix system which is designed to execute
activities in best effective manner.
Personnel:Workforce of organisation is having best effective competent skills that aid
them to fulfil goals of organisation in well defined manner.
PORTER FIVE FORCE
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Porter five Force model is a tool with the help of which organisation can able to develop
strategies in order to serve customers at best and further gain long term competitive advantage
within Marketplace. Mentioned below Porter five force analyses is being done in context of
Tesla Motors:
Threat of New Entrants
Threat of new entrants in automotive industry is low, as in this industry organisation
needs large amount of funds as to invest as capital. Thus it has been analysed that Tesla have
large base opportunities in order to launch their products and gain more competitive
advancements as compared to their competitors. In addition with this Tesla can also increase
loyalty of customers towards products and services of organisation by offering them products
and services in quality manner.
Level of rivalry within sector
In automotive industry level of rivalry is high, as in this sector there are numerous
manufacturers of vehicles already existing and are offering their products to customers (Chen
and Jermias, 2014). General Motors, Nissan, Ford Motors, Toyota, Volkswagen are some of the
key players. Thus Tesla is required to offer competition to them by offering unique quality and
innovative products to customers and satisfy their needs in best effective manner. This will allow
company to gain more competitive edge against their Rivals by ensuring long term sustainability
in Marketplace.
Threat of Substitutes
Within automotive industry it has been evaluated that threat of substitute is high as there
are number of already established organisations that exist in Marketplace those who offer their
products and services to customers. However it little impacts Tesla Motors due to high tech
electric cars manufacturers is currently low within Marketplace. This will allow Tesla to take
advantage of this opportunity and invest in this sector by taking use of differentiation. This will
allow them to offer qualitative services to customers as compared to other automotive mobile
producers. Along with this by fulfilling customers need and expectation in best effective manner
while undertaking customer centric approach Tesla Motors can effectively able to get loyalty
from customers.
Bargaining Power of Suppliers
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Suppliers bargaining power in automotive industry is comparatively low, apart from that
Tesla Motors have potential to form formative set of collision with number of suppliers at small
scale level. This allows Tesla to effectively increase their overall sum of sales ratio that
simultaneously leads them towards increased profitability. Further it has been determined that
Tesla continuously engaged in experimentation process in their manufacturing unit as they
design innovative and quality products and services, it allow them to attract customers in best
effective manner this will further benefit company to increase negotiation power which is being
hold by suppliers in automotive industry.
Bargaining Power of Buyers
Buyer has extremely high bargaining power in automotive industry, as number of
organisation is also operating there operation in Automotive sector and provide quite same
services and products to customers within Marketplace (Veit and et. al., 2014). However
numbers of dealers who offer electric cars to customers are relative Low that turns out as an
opportunity for Tesla as it allows them to increase profitability share within Marketplace by
attracting customers. In addition with this company can offer qualitative an innovative products
and services to customers with the help of which they can increase their loyalty. This will allow
company to have edge over bargaining power from buyers.
P4. Selection of a strategic option along with rationale
Organisation in order to identify market condition can take advantage of Ansoff growth
Matrix it is a strategic tool with the help of which company can effectively able to accomplish
their goals and objectives. This model includes growth strategies such as product development,
market penetration, product diversification and new market segment development. As Tesla
Motors si looking forward to enhance their business profitability within Marketplace this
Framework allows company to improve their market performance and gain more competitive
advantage against their competitors.
Market Penetration:
Market penetration strategy mainly focuses on selling existing products of organisation in
existing Marketplace. In context with Tesla Motors Company can easily implement this strategy
as they have already existing car models which have already captured large Marketplace. As
Tesla is having formative relationship with customers with their qualitative services thus with the
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application of this strategy Tesla can identify current perception of customers along with their
needs. With the help of this strategy company can accomplish their profit margin expectation
along with sales target.
Market development:
Tesla marketing team can take advantage of marking development strategy as to offer
their already existing models in the locations like Chicago and IL in order to attract customer
segments towards organisation brand new car models. With the help of this company can
effectively able to expand their market areas in new segment.
Product development:
As Tesla engage in automobile sector which already possess number of competitors thus,
in order to offer new products in Marketplace and retain customers for long term Tesla Motors
can offer new car brand model with unique features within Marketplace. In order to introduce
their new brand model it is essential for company to identify customer’s needs and preferences
and their spending on such type of product. With the help of this strategy Tesla can able to
increase growth perspective of the new car model then Marketplace.
Diversification:
Diversification may turn out as a riskier strategy for company, as if company offer their
new car model in New Market areas and different geographical location then there is more
number of chances of loss for company and affect company to meet their expected sales
objective (Cavusgil and et. al., 2014) .
As per the above analysis, it has been identified that Tesla Motors can take advantage of
product development strategy and this will allow company to launch their new model with high
tech Innovation and features with the Marketplace as to establish market growth.
Strategic Management Plan
Vision: Emerged out as a market leader in automobile industry in all around the world.
Mission: Make an increase in accessibility of high tech and qualitative products and offer
maximum level of satisfaction to their customers.
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Objective:. To increase market share holding of company by 10% in upcoming 11
months.
Strategy: Tesla Motors can take advantage of product development strategy in order to
offer High-Tech car models in existing Marketplace as to increase their profitability.
Tactic: Tesla Motors can take advantage of value addition in order to differentiate
themselves from other large base competitors in order to fulfil needs and requirements of
customers.
CONCLUSION
As per the above mentioned about has been concluded that strategies effectively aid
business organisation to accomplish their goals and objectives in well defined manner. In
addition with this it also allow companies to analyse needs and demand of customers and offer
them products and services in best effective manner. Report includes pestle analysis that benefits
an organisation to evaluate threats as well as a opportunities. With the help of this they can frame
strategies as to gain more competitive edge within Marketplace as to simultaneously increase
organisational profitability.
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REFERENCES
Books and Journals
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In Policy and practice in European human resource management (pp. 22-35).
Routledge.
Cavusgil, S. T. and et. al., 2014. International business. Pearson Australia.
Chang, J. F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Chen, Y. and Jermias, J., 2014. Business strategy, executive compensation and firm
performance. Accounting & Finance. 54(1). pp.113-134.
Goffee, R. and Scase, R., 2015. The Real World of the Small Business Owner (Routledge
Revivals). Routledge.
Jeston, J., 2014. Business process management. Routledge.
Jocovic, M. and et. al., 2014. Modern business strategy Customer Relationship Management in
the area of civil engineering. Applied Mechanics & Materials, (678).
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible
business strategy. Journal of Business Ethics. 122(1). pp.145-165.
Laudon, K. C. and Traver, C. G., 2016. E-commerce: business, technology, society.
Lawton, T. C., 2017. Cleared for take-off: structure and strategy in the low fare airline business.
Routledge.
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.
Veit, D. and et. al., 2014. Business models. Business & Information Systems Engineering. 6(1).
pp.45-53.
Wheelen, T. L. and et. al., 2017. Strategic management and business policy. Pearson.
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