Analyzing the Impact of Macro Environment on Organization and Strategies

This article analyzes the impact of macro environment on organization and strategies. It discusses the various factors that influence strategic planning and the frameworks used to analyze the internal environment and capabilities of an organization. It also evaluates the competitive forces in the market sector using Porter's five forces model and applies theories to develop a strategic marketing plan for the organization.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Analysing the impact of macro environment on organisation and strategies........................1
LO2..................................................................................................................................................3
P2 analysing internal environment and capabilities of organization by appropriate frameworks.
......................................................................................................................................................3
LO3..................................................................................................................................................4
P3 Evaluating competitive forces of an market sector of organization by applying Porter's five
model............................................................................................................................................4
LO4..................................................................................................................................................7
P4 Applying theories and developing strategic marketing plan for organization.......................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is basically long term business plan for any organization that basically
will cover a time period of minimum three to five years of time. These practices are basically
concerned with major resources issues along with allocation of resources as well. Strategies are
concerned with scope of business like what and where they will produce. Tesla is an American
automotive and enrgy organisaion based in Palo Alto, California. Tesla was founded in July 2003
by the engineers named Martin Eberhard and Marc Tarpenning in the name of Tesla Motors. The
report will highlight the frameworks and impact of macro environment on organisations
strategies. The study will highlight internal environment of organisation by performing SWOT
analysis. The report will also address Porter's Five Force Model to evaluate competitive forces
for particular market sector to gain effective market conditions. Moreover the reopt will show
STP and marketing plan of TESLA (Baumgartner and Mangematin, 2019).
LO1
P1 Analyzing the impact of macro environment on organisation and atrategies.
Strategic planning is abn process in which the leaders of an organisation. Determines the
vision of future and alo identify their goals and objectives of the business.
Different strategic planning techniques are as follows-
Budget planning- Budget planning gives all the information about the availability of budget in
TESLA, current and future expense, allocating them and arranging sources of revenue for
business expansion. Plan is made for spending money on specific activities.
Business planning- It is an written document of businesses future, it contains a plan that what to
do in future and how organization will operate in future. What resources are available and if not
how to acquire that.
Stakeholder analysis- It is an practice in which individuals are identified before working on any
plan. Grouping individuals according to the participation level and interest and finding ways to
communicate with them (Baumgartner and Mangematin, 2019).
Stakeholder matrix- Is is a project management tool which is used to analyses a project. The
aim of this matrix is to satisfy the needs and interest of each stakeholder. Tesla is focusing on
needs of stake holder ie, they are getting required return on investment or not.
PESTLE analysis-
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Political- Incentives given by government for electric cars. Trade agreement introduced by
government. As government gives more incentives to company less will be the cost incurred in
manufacturing.
Economic- Factors like market growth rate, trade levels, change in currencies rates etc, as when
currency rates changes company also has to make changes in their policies. As when cost of
battery is low it assist in saving manufacturing cost (Simons, 2016).
Social- Social factors like everyone not prefers to use electric car. So according to need company
has to manufacture its products. Company has done a great job in maintaining their place in
minds of people as an electric car which helps in facing competition if arises (HunTer, 2016).
Technical- Tesla uses advance technology in their cars. Efficient batteries are been used by
TESL which provides long and better rides to consumers. Technology is important in determing
sales and profit for business, it is important for marketing and increasing sales.
Environmental- From electronic vehicles to products which assists in saving energy. main focus
is on durability and energy saving. Changes in climate affects the company as their batteries are
resistant or not that it can survive in hot conditions or not (HunTer, 2016).
Legal: Laws is important factor which affects the business. Laws related to labours affect in this
sense as wages rate is less more labours can be appointed by TESLA.
Porters five forces model-
Competitive rivalry: There are limited companies which are operating in a automotive market.
Tesla has a biggest strength and large aggressive marketing campaigns, which stops the other
competitors to enter in the market. Company can generate scale which assist in facing
competition.
Threats of new entrants: Tesla can tackle its competitors by developing new goods and services.
By creating economies of scale which results in this way that it cost can not be lowered.
Bargaining power of suppliers: company can reduce the bargaining power by building supply
chain with many suppliers. Firm can so experiment with design of products using different
materials (Kossyva, Sarri and Georgolpoulos, 2015).
Bargaining power of customers: TESLA can reduce the power of bargaining by creating large
customer base. By speedily creating new goods and giving offers bargaining power can be
reduced.
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Threat of substitute: Company can lower its prices if possible. Company can use penetrating
pricing strategy so that it can expand its market share and also assist in dealing with substitutes.
LO2
P2 analyzing internal environment and capabilities of organization by appropriate frameworks.
Internal environment of the business is composed of different elements within the
organization that includes workers, corporate culture and management. Roles of manager and
how business is working inside all such factors are considered as internal factors.
SWOT analysis-
Strength- Best employees are there by there innovative ideas company is successfully leading
the change. Best in brand in electric cars as TESLA's electric cars covers maximum distance
(Kossyva, Sarri and Georgolpoulos, 2015). As most of the car manufactures chooses to offer
affordable cars but TESLA does just opposite, it targets an specific, luxury automotive market.
So this unique point can be its biggest strength.
Weaknesses- Higher standard of innovation, greater is mechanical complication and production
risk factor. Due to higher experimenting and more complicated process, company is facing an
issue of not meeting demands of customers.
Opportunities- Company can increase its profit as it is being successful in proving electric cars
to customers. It can take advantage of discounts on bulk buying of raw materials (Kossyva, Sarri
and Georgolpoulos, 2015). There is less competition for TESLA as the electric car manufacturers
are less so this can generate future opportunities to grown in market.
Threats- Tesla is successful in increasing market though it can not face the market competitors
ie, Toyota, ford etc. Due to highly complex innovative manufacturing process. Some defective
products have been manufactured which is a biggest threat for organization. Loss of government
subsidies can drive up prices, this can be an future threat for TESLA.
VRIO framework
VRIO stands for valuable, imitable, rare and organised. There are four types of
advantages when a company performs VRIO analysis, these are competitive advantage,
temporary competitive advantage, competitive party and competitive disadvantages.
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This advantages which company develops to deal with competitors in the industry. On
order for a resources or quantity to be advantage, it should be rare, valuable, hard to imitate.
Tesla has very few SCA which includes Elon Musk and Gigafactory (Lawton, 2017).
It is concluded that internal environment in Tesla is very good. Employee relation in the
organisation is very good which impacts in this way that more productive work is generated by
the employees. Environments impacts a lot in day to day working as environment is good all
employees in the organisations are happy and work with their full potential. Tesla has a greater
capability of fulfilling their innovative ideas as they have enough resources and high skilled
employees which assist in accomplishing new innovative ideas.
A temporary competitive advantage is both rare and valuable. Temporary advantage for
company is autopilot technology which Tesla has recently integrated into cars. This can be said
as temporary advantage because the organisations are already testing and applying this type of
technology into vehicles as well (Lawton, 2017). Company has created global supercharger
network for buyers to charge their electric cars for free of cost. Super charge network is a TCA
because as the market for electric cars grow organisation will create more charging stations
which are open to all similar electric vehicles, as similar to gas stations today.
A competitive party is needed to be valuable. TESLA has a few Cps which includes go
green, market trend and partnership between Panasonic and Tesla. Partnership between tesla and
Panasonic is powerful as Tesla decides to integrate the batteries which it used in Tesla models.
A disadvantage is also as important as competitive advantage. CS clears zero VRIO test
and are considered as a disadvantage to company. Company has a CD if oil prices fail. Another
disadvantage is when the organisation is unable to reduce the barrier so that it can enter into
vehicles it sells (Mohelska and Sokolova, 2016).
LO3
P3 Evaluating competitive forces of an market sector of organization by applying Porter's five
model.
Porter's five force analysis is tool to analyses competition for business. The tool helps
draw organizational economics for industries identify their uniqueness and factors generating
profits for them. Tesla as successful manufacture of electric vehicles must prioritize for
multinational business environment. Being one of the vast marketers for electric motor vehicle
Tesla will ensure factors of external environment to face competition from rival auto makers
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such as Bavarian Motor Works, Toyota, Ford, Honda, Nissan, General Motor company and
Volkswagen. Tesla will attain pressure from substitute, suppliers and buyers in market for
analysis for business (Mourdoukoutas, 2015).
Competitive rivalry- Tesla considers external factors along with their responsibilities for
competitive rivals. Tesla faces competitive rivals through following strong force.
 Weak force justifying small number of firms
 Strong force justifying highly aggressiveness of firms
 Strong force justifying low switching cost
Being in auto mobile market that indulge lot of innovation the effect of competition of
business for Tesla is too vast where count of buyers keep on decreasing day by day. The effect of
this practice of Porter's Five Force analysis will help survive through rival to gain high
profitability strategic management for automotive energy solutions for industrial environment
(Mourdoukoutas, 2015).
Bargaining power of Tesla's customers- Company sales of Tesla is directly affected by
determinations of customers affecting company's revenue and sales respectively. The external
factors and intensities affected the bargaining power of customers in following ways.
 Strong force justifying low switching cost
 Moderate force justifying moderate suitable availability
 Weak forces justifying low volume of purchases
Reduction in switching cost will lead to elimination of barrier for Tesla promoting business to
other dealers in respective business practices where availability of substitute limits the customers
bargaining power of Tesla. Inc. The practices will reflect Tesla Inc. strategy for generic type and
intensities (Priem, Wenzel and Koch, 2018).
Bargaining power of Tesla suppliers- Bargaining power of suppliers are affected by following
factors in the process such as
 Moderate force that is moderate forward integration
 Moderate force that is moderate size of the suppliers
 Moderate force that is moderate level of supplies.
Suppliers of Tesla having low forward integration referring to limited control of suppliers for
selling their products. Factor affecting moderate level of effective supply empowering affects
Tesla in limited approach.
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Threats of substitute- The intensity of external factors lead to moderate force of threats
substituting against company (Priem, Wenzel and Koch, 2018).
 Strong force that is low switching cost
 Moderate force that is moderate substitute availability
 Moderate force that is substitute of moderate performance
Porter's five field analysis for Tesla will prove to be low cost switching pausing them back into
competition among their rivals. The lost cost practices of Tesla enabled substitutes limit to
address attain customer's benefits along with reducing operational cost a well. At time many
substitutes only focus on satisfying partial needs of their consumers and customers as well.
Threats of new entrants- Companies like Tesla have a hue impact on industrial environment
along with performances where intensities of external factors are created threat to new entrance
as follows.
 Weak force that is high cost involved in brand development
 Weak force for high cost involved in business operations
 Weak force that is high economies for scale
Operations of business involves high cost for development of their brand involving enormous
popularity of Elon Musk. Thus makes tough to Tesla if new companies come up with more and
effective technologies and effective market innovations (Revathi and Aithal, 2018).
Evaluation of applicability of Porter Five Force analysis for Tesla -
The evolutional of Porter Five Force Analysis will be analysed by the applicability on
Tesla will be justifies by following manner -
Advantages of model -
 The applicability will help Tesla in gauging competition in the market by having rising
power along with earning good profits. The practice will help Tesla in making plans for investments along with managing
competitive pricing for sustaining in the market type.
Disadvantages of model -
 The applicability of this factor for Tesla will lead to ignorance of all other factors such as
human values, operational activities etc.
 The may find that Tesla is perfect fit for all type of working conditions and may create pit
fall in such operational activity for Tesla (Kossyva, Sarri and Georgolpoulos, 2015).
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LO4
P4 Applying theories and developing strategic marketing plan for organization.
Strategic Planning is an organization activity for making priority along with managing
the resources and energy, boost the operational activity along with assurance that employees and
stake holder work together in attainment of common goal and objective of the firm.
Porter's generic strategy
The application is primary determination of firm's profitably that is effectiveness of
industry in which they operate. Even if industry have average profitability, the firm optimum
positioned is to withdraw effective returns. The effectiveness of these practices can be taken into
effect in following ways such as -
Cost Leadership strategy
The effect of practices of states production in low cost activity than expected. The
method focuses on selling their product on low cost to attain market attention and raise the sales
in market or on the other hand focuses on selling products and services on high costs that aim on
attainment of higher profits compared to ones that earn and spend more (Simons, 2016).
Differentiation strategy
Differentiation strategy is development of product and services offering different and
unique attributes for the value of customers to ensure that products always stay in the light of
competition. These practices will lead to effective scientific research that will affect the working
condition of Tesla if implemented.
Focus strategy
Focus strategy is narrow segmented attempting to achievement of price benefit or even
uniqueness as well. Applicability of this factor deliver higher sense loyalty of customers lead to
direct compensation as well. Focus strategy will able to focus on broad range of products to
ensure their practices are directed into right directions as well (Simons, 2016). It may be further
easy for broad market for Tesla to adapt the products and services for the firm directly into these
condition of market.
Marketing strategies (Segmentation, targeting, positioning) of TESLA
Tesla didn't choose small car segment, the segment chosen by the organization was lower
volume, price sensitive high performance car segment which enables the company to create its
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brand identity. Tesla establish premium pricing and earns a lot of profit by targeting rich persons
who are ready to pay higher prices for the cars. Since, 2015 Tesla is selling all electric luxury
cars SUVs which has done well in market and has delivered the record of 100,000 vehicles in
2017 (Yang, Kueng and Hong, 2015). Tesla has unique positioning strategy and it is their biggest
strength this, The positioning strategy used by Tesla is “the only stylish car which can go from 0
to 100 in 3 seconds without a drop of oil”
Strategic marketing plan-
Vision Vision is to manufacture most innovative car organisation of 21st
century by changing world transmission to electric vehicles. The aim of
the company is to provide electric cars to people
Mission Its mission is to accelerate the worlds transformation to sustainable
energy.
Strategies Strategy used by Tesla is focus strategy. As it focus of offering products
according to the need of the customers. This strategy is beneficial for
Tesla in reaching their targets (Zhu and Chertow, 2017).
Marketing mix Product- Tesla products are within the automotive energy and energy
generation markets. Tesla has some of the main products like, auto
mobiles, batteries energy storage and solar panels etc.
Place- The products of the company like energy storage, solar panels at
organisations own stores, galleries located in malls and other areas.
Tesla has its own service centres in almost everywhere in UK where
customers can access repairs and maintenance services.
Promotion- Tesla do promotion of its products via viral marketing,
personal selling, public relations and sales promotion.
Price- Pricing strategies used by Tesla are premium pricing strategy and
market oriented pricing. Companies knows that customers will pay the
high prices for the products as they are offering premium quality
products (Lipitakis and Phillips, 2016).
Budget TESLA is making an initiative to expand its market by offering premium
quality electric cars so the minimum budget required for this is 5000
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Euros.
CONCLUSION
From the above study it can be concluded that business strategy is important it helps in
performing the business task in a well and desired manner. The study summarized that internal
factors such as SWOT as by doing this analysis it is clear for TESLA that what are their strength
as buy knowing its strength it can expand its business and weaknesses addresses out weak points
and measures are taken so that it improve the weakness. Study concludes PESTLE analysis
which company know what are factors affecting the business and help in dealing with them.
Porter's five model is explained which helps shows competitive rivalry, bargaining power of
customer, which assist the company in dealing with that.
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REFERENCES
Books and Journals
Baumgartner, M.A. and Mangematin, V., 2019. Strategy renewal: breaking the mould with new
business models. Journal of Business Strategy. 40(2). pp.22-31.
HunTer, P., 2016. The seven inconvenient truths of business strategy. Routledge.
Kossyva, D., Sarri, K. and Georgolpoulos, N., 2015. Co-opetition: a business strategy for SMEs
in times of economic crisis. South-Eastern Europe Journal of Economics. 12(1).
Lawton, T.C., 2017. Cleared for take-off: Structure and strategy in the low fare airline business.
Routledge.
Lipitakis, A. and Phillips, P., 2016. On e-business strategy planning and performance: a
comparative study of the UK and Greece. Technology Analysis & Strategic
Management. 28(3). pp.266-289.
Mohelska, H. and Sokolova, M., 2016. Smart, connected products change a company’s business
strategy orientation. Applied economics. 48(47). pp.4502-4509.
Mourdoukoutas, P., 2015. Business strategy in a semiglobal economy. Routledge.
Priem, R.L., Wenzel, M. and Koch, J., 2018. Demand-side strategy and business models: Putting
value creation for consumers center stage. Long Range Planning. 51(1). pp.22-31.
Revathi, R. and Aithal, P.S., 2018. Business Strategy of Top Indian Company: L&T InfoTech.
Simons, R., 2016. Strategy Execution Module 2: Building a Successful Strategy.
Yang, M.J., Kueng, L. and Hong, B., 2015. Business strategy and the management of firms (No.
w20846). National Bureau of Economic Research.
Zhu, J. and Chertow, M.R., 2017. Business strategy under institutional constraints: evidence
from China's energy efficiency regulations. Ecological economics. 135. pp.10-21.
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