Tesla Inc.: Business Strategy and Environmental Analysis Report

This report provides a comprehensive analysis of Tesla Inc.'s business strategies, focusing on its internal and external environments. The introduction defines business strategy and highlights Tesla's position in the automotive industry. Task 1 employs PESTLE analysis to evaluate the impact of political, economic, socio-cultural, technological, legal, and environmental factors on Tesla's operations, particularly within the UK market. Task 2 utilizes SWOT analysis to assess Tesla's internal strengths and weaknesses, as well as opportunities and threats, followed by a VRIO analysis to evaluate its resources and competitive advantages. Task 3 applies Porter's Five Forces model to assess the competitive landscape, examining factors such as competitive rivalry, bargaining power of buyers and suppliers, the threat of new entrants, and the threat of substitutes. The report concludes with a summary of findings, emphasizing the importance of strategic planning in the automotive industry. The report also includes references to support the analysis.

Business
Strategies

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Analysis of impact and influence of macro environment on organisation and its strategies.
.....................................................................................................................................................1
TASK 2............................................................................................................................................3
P2. Analysis of internal environment and capabilities of organisation. .....................................3
TASK 3............................................................................................................................................5
P3. Evaluation of Porter's five forces model of organisation.....................................................5
TASK 4............................................................................................................................................7
P4. Evaluation of models to interpret and devise strategies planning for organisation.............7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy can be referred as a decision or actions of organisation for attracting
customers as well as achieving objective of business (Bharadwaj and et. al., 2013). These
strategies are master plan of secure competitive position of organisation in market area over rival
companies. Business strategies will help in carry business operations and fulfil wants and desires
of end customers of company. For this report chosen company is Tesla Inc. which is also known
as Tesla Motors. This organisation was found in July, 2003 by group of engineers. Tesla deal in
an automotive industry and provide it services worldwide. Founders of this company is Robyn
Denholm, Elon Musk and headquarters are located in California, U.S. Purpose of this report is
analyse of internal and external environment which help in developing strategies for business
and Porters's five force model in order to gain competition advantages. Evaluation of different
theories to interpret and devise strategic planning.
TASK 1
P1. Analysis of impact and influence of macro environment on organisation and its strategies.
External Environment for Tesla includes Pestle Analysis which is a structure that
basically describes the macro-environmental factors for an organisation. It a strategic tool used
for understanding market growth or decline rate of a business. Pestle Analysis for Tesla includes
the following factors:
Political Factors: These factors basically relate to how government intervenes in economy.
Political Factors includes tax policy, trade restrictions etc. (Bharadwaj and et. al., 2013). Under
UK economy government is providing subsidy for low emission vehicle. Moreover Tesla
receives governmental support to a certain extent.
 Positive Impact: Expanding free trade agreements has helped Tesla to reach different
zones of the world this because UK government supports eco friendly cars that are
generated by Tesla.
 Negative Impact: High taxes and tariffs incurred by UK government have affected Tesla
overall sales and this negatively impacted the company.
Economical Factors: Economic factors greatly affect business operations. These factors include
economic growth, inflation rate, interest rate etc. Under UK market economic crisis usually
declines the sales of vehicle.
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 Positive Impact: Tesla business is rising fast this is due recession that has increased
economic activities globally. Moreover with rising economic activity level of
employment has increased globally and has led to higher spending on goods.
 Negative Impact: Growing inequality in society under UK has negatively impacted
consumer sentiments which is due downward pressure on consumer spending for Tesla
products.
Socio-Cultural Factors: These factors basically comprises of cultural aspects, population
growth etc. High trends in social factors affects Tesla's overall demand under UK economy
(Blackburn, Hart and Wainwright, 2013).
 Positive Impact: Tesla cars has growth opportunity due to rising popularity of low
carbon lifestyle and increasing preference for renewable energy. This is broadly
appreciated by UK government.
 Negative Impact: Broader attitude towards migration has negative impact in Car Tesla
market this is due inability to bring out international talent to mange operations under
UK.
Technological Factors: It includes technological aspects like automation, research and
development, technological incentives and many others (Chang, 2016). These factors determine
barriers to entry for company's under UK market. Tesla has adopted advance technological to
carry out its business activities under UK market.
 Positive Impact: Tesla produces eco friendly cars with highly advance technology under
UK market which because on technical grounds the country is very strong.
 Negative Impact: High rate of technological change adopted by Tesla negatively
impacts UK market, which is basically due to rapid obsolescence of technologies used in
products.
Legal Factors: Legal factors basically includes consumer law, employment law, discrimination
law etc. These factors includes government intervention. Legal factors for Tesla under UK
market affects working condition positively and negatively.
 Positive Impact: Government of UK has launched international patent protection policy
due to which Tesla can easily expand its business operations overseas.
 Negative Impact: Increased regulations under auto-mobile industry by UK government
has affected the functioning for Tesla.
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Environmental Factors: It includes environmental and ecological aspects like weather and
climatic conditions (Ghezzi, 2013). Tesla's biggest strength is this sector because the company
produces environmental friendly cars. Due to this sector Tesla under UK market has achieve
great heights.
 Positive Impact: USP for Tesla cars is that they produce electric cars that has
insignificant carbon emission which positively impact the company because electric
vehicles, batteries and solar panels are considered suitable for UK environment.
 Negative Impact: Climate change is reaching alarming levels for Tesla under UK market
because large fossil fuels is burning transportation and electricity generation is created.
Therefore, pestle analysis help an organisation to make strategic planning and try reducing the
overall threat. Moreover external factors that impacts the functioning of an organisation are
carefully analysed to improve the working condition.
TASK 2
P2. Analysis of internal environment and capabilities of organisation.
For analysing micro environment of business SWOT analysis model has been used. This
model is helpful in evaluating internal as well as external environment of organisation (Grover
and Kohli, 2013). Strengths and weakness of Tesla leads to analysis of internal environment and
opportunities and threats are related to external environment of organisation.
 Strength: Tesla company is producing different products and have build strong image in
organisation. This organisation is using high innovative tool and technology in its
manufacturing or processes. Government parties are providing support in Tesla business
operations and this help in expansion of business. Tesla has very strong control over its
production process which leads to development of quality product and distribution of
products to worldwide area.
 Weakness: Tesla weakness includes issues of organisational capacity. This organisation
have only one plant worldwide which leads to minimum production of company
products. Most of customers are not fully aware of features of Tesla. This organisation is
producing very specialise products but many of people are not fully informed about
product.
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 Opportunity: Tesla should focus on its marketing and promotion of products to inform
its customers and create awareness in market regarding Tesla products. Company should
increase is products by expanding its business activities in other area (Hoejmose,
Brammer and Millington, 2013). Company can take advantage of improving its supply
chain all over the globe and attract new customers towards organisation.
 Threats: Company have biggest threat from its competitors as Tesla's rival companies
are using new and creative strategies to increase their sales. This company is quite
depended upon raw material which is used in production of Tesla products. Changes or
fluctuation in material price can have negative impact on organisation as its operations.
VRIO Model:-
VRIO (Value, Rareness, Imitability and Organization) model analytical tool which
measure the resources of the company as well as competitive advantage. This model was
introduced by Jay B. Barney which examine company's financial, human and material resources.
VRIO analysis is related to PESTEL analysis to examine the external environment as well as
analyse the internal environment of the organisation (VRIO Analysis, 2016). In respect of Tesla
they adopt VRIO model in order to conduct market analysis, which explanation is given below:-
Resources Valuable Rare Imitable Organized
Brand Awareness Yes - - -
Battery Yes Yes - -
Employees Yes Yes Yes -
Futuristic Designs Yes Yes Yes Yes
 Value:- There are various products in an organization which are valuable for a company.
In respect of Tesla there valuable products and resource are Brand Awareness, Battery,
Futuristic Designs and Employees (SiaSoh and Weill, 2016). This will help them in
gaining competitive advantage at marketplace as well as this will also help them in
gaining goal and objective in effective manner. The respective company brand awareness
and loyalty is high which attract customer at high level as well as their batter and
futuristic design help company in gaining advantage in market place. Along with this
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their employees are very skilled which help them in conducting work properly and
gaining objective. Rare:- It refers to those resources which are rare for company. In context of respective
company there some resource are not rare such as brans awareness because there are
various other auto motive company which are almost equally popular at marketplace
(Spender, 2014). But there are several resources of respective company which are rare
such as their futuristic design and battery that attract customer and help in gaining
advantage. Moreover their employees are also very skilled and experienced which
consider as rare resources. Imitable:- It refers to those resources which are not imitable by other a company. In
respect of respective company their battery can be imitable by other competitive
companies. But there are several other resources which are non imitable by other
companies such as futuristic design and employees which help them in gaining high
advantage at market.
 Organized:- It refers to resources which didn't required organised. In context of Tesla
there some resources required organized feature on regular basis such as employees they
need to be trained on time to time basis so that they conduct work properly. Along with
this there are some factors which are non required organized such as their futuristic
design which is develop by their skilled employees.
TASK 3
P3. Evaluation of Porter's five forces model of organisation
Porter's five force model of Tesla helps company in developing strategies which leads to
determine company strength and weaknesses. This model provide a framework to company for
analysis its competitive environment. This model provide five forces to Tesla in order to develop
competitive strategies. These business strategies will help company in increasing its sales and
profitability of organisation (Oestreicher-Singer and Zalmanson, 2013). Five forces of this model
are threats of competitors, bargaining power of suppliers, bargaining power of buyer, threat of
new entrants and threat of substitute. Tesla should carefully evaluate these forces and analyses
environment of industry to ensure long term stability in market area.
Competitive rivalry
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This is a strong force for Tesla organisation as it deals in a high competitive environment.
Automotive industry is full of competition, each and every company in this industry is using new
and updated technology in manufacturing their products (Verbeke, 2013). Tesla has quite small
number of competition as this industry does not have large number of companies but all
companies in this industry are highly aggressive firms. Rival companies of Tesla is using more
modified techniques and technology in producing its products as well as attracting customers
towards company. Customers can also switch to other rival company as customers do not require
high cost for switching to competitor's company.
Bargaining power of buyers
Bargaining power of buyers affect the business and customers wants to purchase products
with heavy discounted prices so they bargain with company. This power of buyers is an external
factor of company that needs to be consider by company while fixing prices of its products.
Bargaining power of buyers is moderate force as low switching cost to customers will reduce
barriers for customers to purchase product from different provider. However availability of other
complies product is moderate in this industry (Palepu and Healy, 2013). Customers have limits
number of company who is providing this product whereas many customers consider quality
over price of product. Customer do not by this type of product on daily bases so they will
consider products form trusted brand.
Bargaining power of suppliers
Tesla company is quite depended upon the reliability of suppliers. Bargaining power of
supplier have strong impact on Tesla company and its business operations. This company is able
to produce its products by purchasing raw material from suppliers. Tesla relies on suppliers for
premium material, technology and other components. Suppliers in this industry have have better
position to control supply of material and they can easily manipulates prices of products for their
advantages. Carnages in suppliers rate affect the overall manufacturing cost of Tesla products
and price to be charge from customers also depends upon power of suppliers.
Threat of substitutes
This force have quite moderate impact on Tesla company as Tesla is providing
differentiate products which is not available to any of this competitors. By using differentiation
strategy company have monopoly because it is providing unique product to customers (Parnell
and et. al., 2012). Moderate availability of substitute products in Tesla's industry environment.
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Customer have limited number of substitutes option in market to affect Tesla market share. Tesla
has very strong image in market and build strong relationship with their customers by proving
quality products to customers. This reduces the chance of substituting its products from any other
products.
Threat of new entrants
Tesla company have quite low threat from new entrants because new company require
large amount of cost in developing business. New entrants in this industry have impact on Tesla
by providing new and innovative products to customers. New entrant or business requires high
cost for its brand development and for marketing its products. Customers do not trust new brand
in this industry and purchase products from companies which are well established and popular in
market. This external factor have weak impact on Tesla's industry environment. Manufacturing
of auto mobile products needs high cost of investment in business which impose a barriers to
new firms in this industry (Peng, 2017).
TASK 4
P4. Evaluation of models to interpret and devise strategies planning for organisation
In order to develop effective strategies for Tesla company, Ansoff matrix can be used.
This model helps in strategic marketing planning for organisation. This matrix provide a tool to
organisation in developing strategies for growth of Tesla and increase its sales in market area.
Ansoff matrix deal with four major strategies which is market penetration, product development,
market development. Diversification strategy (Pisano, 2015). These strategies in context of Tesla
company is mention below. Market penetration: This strategy will help Tesla company to achieve growth by selling
its current products in current market area. In this strategy, company will focus of
increase sales of this current products in existing market area or current segment. Tesla
can use market penetration strategies by aggressive marking of its products to current
customers with motive of increase in sales. Market development: Tesla company can use this strategies by entering into new market
area. In this strategy company try to achieve growth by providing its existing products
into new market area. Tesla company needs to identify market area where there is
demand of its products and export its products into new market area.
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 Product development: In product development strategy company needs to focus on
developing new products to current market area. For this strategy, Tesla company needs
to conduct market research to identify need and demand of customers in existing market
area. Company will develop a product which full fill requirement of customer and leads
to increase in sales on Tesla products.
 Diversification: In this strategy company will focus on selling its new product into new
market area. Diversification strategies will leads to growth of company by introducing
company new product into new market area. Tesla company needs to identify needs of
new market are and than develop innovative products to full fill demands of new
customers of Tesla.
Tesla company should focus on market development strategies and take strategic decision
for business which help in successful entry into new market area. Market development strategy
will leads to growth of company as well as increase in it market area. Company can enter into
new geographical area by exporting its current products. Tesla can also improve is distribution
channel which help in transporting of current products to new market area.
Porters generic competitive strategies:-
Porters generic strategies will helps Tesla in developing competitive edge over other
company (Reich and Benbasat, 2013). This model was introduce by Michael Porter for company
to gain competitive advantages over other rival companies. Porters generic model will helps
Tesla company in to pursues competitive advantages across its chosen market area. This model
includes four type of strategies provide framework to company in developing effective and
efficient business strategies. Porter's generic strategies which can be used be Tesla company is
Cost leadership, differentiation and focus.
 Cost leadership: In this strategy Tesla company needs to produce products at lower cost
with aim of becoming cost leader in the industry. Tesla company will manufacture
product with low cost and maintain the quality of products. By this strategy company can
sell its product at lowest price to customers and this will attract customers towards Tesla
company. For successful implementation of this strategy company need to have access of
required capital and innovative strategies for manufacturing products at low cost and
maintains quality of product. Tesla company should have effective and efficient skill
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available in organisation for execution of this strategies to gain competitive advantages
over its rival companies.
 Differentiation: This strategy focus on developing an innovative and creative products
for attracting customers (Scholes, 2015). For this strategy Tesla company is more
involved in developing strategies which leads to manufacturing of unique product to
sever in market. By differentiation strategy company seeks to bring new and different
product in industry. This products should have such technology and techniques which can
not be imitate by any of this competitors in market. Tesla company should identify needs
and requirement of customers by conducting marketing research. Different products
manufactured by Tesla company should meet with requirement of customers as well as
solve their problems.
 Focus: Focus strategy is more concentrating on niche segment of market. In this strategy
company will focus on narrow segment with aim to achieve either cost advantage in that
segment or differentiation (Schrader, Freimann and Seuring, 2012). Company using this
strategies will have lower volume and less bargaining power with their suppliers. Focus
strategies contain two different strategies which is cost focus strategy and differentiation
strategies. In cost focus strategy company will seek to have cost advantage in targeted
segments whereas in differentiation focus strategy company will seek to offer different
and unique product in targeted segment.
Tesla company should use differentiation strategy in order to gain competitive advantage
over other rival companies. Company can get competitive edge over competitors while offering
new and innovative products to targeted customers and its will leads to increase in profitability
of firm.
CONCLUSION
It can be concluded that to remain competitive in the market and sustain for longer
period, a company must make effective strategies and plan. A company must apply various
models such as Ansoff matrix, Porter's five force model, analyse the external environment with
the help of PESTEL analysis and examine internal capabilities with SWOT analysis. By applying
these model a company will be able make effective decisions as well as strategies that will lead
in personal growth of the organisation which in turn will build strong relation with customers
and give a tough competition to rivals.
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REFERENCES
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Verbeke, A., 2013. International business strategy. Cambridge University Press.
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Wang, J. and Verma, A., 2012. Explaining organizational responsiveness to work‐life balance
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Online
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analysis>.
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