Business Strategy Analysis: Tesla's Macro, Internal, and Models

This report provides a comprehensive analysis of Tesla's business strategy, examining its macro and internal environments. It begins with an introduction to business strategy and its importance, followed by an overview of Tesla and its operations. The report then delves into a PESTLE analysis to assess the macro-environmental factors influencing Tesla, including political, economic, social, technological, environmental, and legal factors. The internal business environment is evaluated through a SWOT analysis, highlighting Tesla's strengths, weaknesses, opportunities, and threats. Porter's five forces model is applied to analyze the competitive landscape of the electric vehicle industry. Finally, the report explores various strategic models and concepts, such as the Ansoff Matrix, to provide insights into Tesla's strategic direction and growth opportunities. The report concludes by summarizing the key findings and recommendations for Tesla's future strategic planning.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 .........................................................................................................................................3
P1. Macro environment analyses of Tesla..................................................................................3
TASK 2 .........................................................................................................................................5
P2. Internal business environment and capabilities of Tesla......................................................5
TASK 3............................................................................................................................................7
P3. Porter’s five forces model of Tesla.......................................................................................7
TASK 4............................................................................................................................................8
P4.Different models and concepts for Tesla...............................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is the set of various strategies which are adopted and implemented by the
business organisations in order to accomplish the business goals and objectives. These strategies
are developed by the organisations so that they can attain the competitive advantage in the global
market (Ansoff and et. al., 2019). Furthermore, these strategies help the company in devising
whether to expand the business or not. In this report, the impact of macro environment on the
organisation has been explained. It has also assessed the internal business capabilities of the
organisation. This will also analyse the porter five forces model and last part of the report will
elucidate the different models, theories and concepts which will be advantageous in strategic
direction available for an organisation.
Company overview
Organisation undertaken in this report is Tesla which was founded in 2003 and deals in
automotive industry. The organisation is engaged in producing not only the electric vehicles but
also several energy storage materials. It employs 45000 people and operates throughout the
world. This company was started by the group of engineers and have build the electric car as
their very first production.
TASK 1
P1. Macro environment analyses of Tesla.
The macro environment of any business organisation is concerned with the factors which
have an impact on the operations and functions of the company from outside the company. It
consists of those factors which influences the organisation from the external business
environment (Arthur, 2018). This is that situation or condition existing in an economy which
operates as a whole instead of operating in a specific region. For analysing the external business
environment of Tesla, PESTLE analyses will be conducted.
PESTLE analyses
The pestle analyses is a conceptual instrument which helps in identifying and analysing
the potential market threats which have the impact on the organisation. It is one of the most
crucial concept of marketing which helps in which the company is able to asses the external
business environment such that the company is able to establish a control and track on the
external business environment. The following is the PESTLE analyses of Tesla:

 Political factors: There factors in the external business world which are governed and
regulated by the government of the country. Such factors are like taxation policy,
subsidies, imports, exports, etc. which are under the control of the government and have a
crucial impact on the functions of the Tesla. For instance, the trade policies of Tesla can
restrict the performance within the industry and also the revenue of the company.
Furthermore, there are some favourable influences also like the incentives of the
government for electric automobiles will be treated as an opportunity for the company as
well as the enhancement of new global trade agreements helps in expanding the business
of the Tesla.
 Economic factors: Some factors of the macro environment has a crucial concern relating
to the profitability and generation of the revenue which depicts the financial stability of
the company. It includes, inflation, deflation, foreign direct investment, etc. For instance,
the market of the solar energy has a favourable impact on the growth opportunities of the
organisations solar panel business because of the increasing growth rate of the business
(Barney, 2015). Apart from this, reduction in the cost of renewable energy makes the
products of the Tesla more attractive and unique which leads to the greater profitability
for the business.
 Social factors: The external environment is highly concerned about the social market of
the business world. Social factors includes the different tastes, preferences, attitudes,
demographics, lifestyle, etc. of the people which have a significant impact towards the
operations of the business. For instance, in present social market, the maximisation of
popularity of low carbon lifestyles are increasing and gaining attention which has
increased the preferences of renewable energy among the people. And this in turn has
maximised the demand for Tesla’s electric vehicle and other similar offerings.
 Technological factors: It is one of the most emerging term in present business world.
Advancement in technology has brought several changes in the manner of operating the
business organisations. It includes factors like innovation, invention, research and
development, etc. The higher rate of technological changes prevailing in the market has a
crucial impact on the organisation (Brandenburger and Stuart Jr, 2016). It presents the
opportunity for the Tesla which enhances its technologies. Furthermore, there are some

outside factors which creates feat on the Tesla for rapid obsolesce of the technologies
which is being used in their products.
 Environmental factors: The environment is of great concern in present business world.
This is because the organisations now focuses on preserving the environment. It includes
factors like conservation of wild life, climatic conditions, ecological trends, etc. Thus,
Tesla will have an immense opportunity for promoting its electric vehicles which are
used for raising concern on the changes in climatic conditions, expansion of
environmental programs and increasing standard on the disposable of waste (Figge and
et. al., 2014).
 Legal factors: Every organisation is required to be bound with certain laws and
regulations which have a significant impact on the operations of the country. It includes
factors like environmental laws, consumer laws, employment laws, etc. Therefore in
Tesla, the organisation will work on identifying and analysing the various opportunities
which will provide and opportunity for promoting the electric vehicles of the company
which are based on the regulation related to the consumption and customer must follows
that. Apart from this, when the organisation is involved in expanding its operations
globally then it must adopt patent rights so that no other company can copy the design
and style of the company.
Mission: The mission of the company is to speed up the world's conversion into a
sustainable energy.
Vision: The vision statement of the company is to develop the most powerful car
company of the 21 century where the world be driving through electric vehicles.
Strategy: There are various marketing strategies which are required to be developed by
the organisations and such strategies helps the company in accomplishing business goals and
objectives effectively and efficiently. Tesla will use various marketing and promotional
strategies in order to attain business goals and objectives. The strategies are the set of relative
tools and tactics which are used by the business organisation in order to attain the set objectives.
Every organisation exist for some purpose and the roadmap for fulfilling that purpose can be
framed with the help of different strategies. For instance, in order to launch a new product the
marketing mix strategies and STP strategies will be used by the company. Apart from this, for

analysing the internal and external environment, PESTLE and SWOT will be used by the
company.
Objectives: The objectives are required to be SMART because every business exist for
some particular purpose and this purpose must have certain objectives. Such objectives must be
specific in nature, easily measurable, accessible, reliable and time bound. Therefore, the
objective for the Tesla is the following:
 The Tesla aims to achieve the 10 percent sale through its vehicles by the end of 2019.
 The Tesla aims to maximise its revenue by 5 percent by the end of 2019.
Ansoff Matrix
This model was formulated by H. Igor Ansoff in 1957 in Harvard Business Review. It is
strategic planning tool which help managers, executives and marketers for future growth. This
concept is applied when organisation is looking new opportunities to grow in competitive market
for earning high revenues and profits (Miller, 2016). This is helping to determine market and
product growth strategy. It is also known as Market/Expansion Grid which help organisation in
planning and analysing strategies for growth. They are described below:
 Market Penetration- This strategy is called growth as it focus on selling existing goods
and services in existing market. It can be adopted by Tesla in order to increase their
market share through their existing products with help of sales promotion, advertising,
pricing strategies, personal selling. They can restructure market through campaign,
advertisement, introducing loyalty schemes and others.
 Market Development- It is the strategy where business capture new market in order to
existing market. As Tesla is planning to expand their market into Brazil with same
existing products. In order to implement this strategy, they need to consider various
factors to get success in such market. Firstly, new geographical market need to be
selected in Brazil location, the way of packaging or designing, new distribution channel
and pricing strategies for better outcome. As it is more risky than other because
organisation is going to start their business in new place and focusing or targeting new
market (Ansoff Matrix, 2018).
 Product Development- It means strategy where business wants to introduce new product
into same survival market. It requires new competencies development and need
organisation to alter products (Scholes, 2015). This strategy can be suitable for Tesla if it

want to remain competitive in existing market. It requires more research and
development, requirement of customer needs and should be first in market.
 Diversification- It is the strategy where business is going to introduce new product into
new market. It is the most risky strategy because it is moving towards new product and
market without no experience or little.
From above theory, it can be concluded that Tesla should adopt market development
strategy for their business in order to earn more profit and growth in competitive market. As it is
expanding their business in Brazil with same product for increasing their market and growth.
In order to implement such strategy in business, they need to adopt strategic management
plan which contains strategies, objectives and plan.
TASK 2
P2. Internal business environment and capabilities of Tesla.
Internal business environment is concerned with the actions of the company which takes
place within the company itself and has a significant impact on the operations of the
organisations. The analyses of this can be done by SWOT analyses.
SWOT analyses
The SWOT analyses is the theoretical technique which helps in identifying and analysing
the company’s competitive position and also helps in planning strategically (González-Rodríguez
and et. al., 2018). This concept in real sense is designed for the purpose of facilitating the
realistic, fact based, data driven approach and organisations are required to keep the analyses
accurately by avoiding pre convinced beliefs. This tool helps in evaluating the competition, risk,
performance, capabilities of the business, etc. Apart from this it helps in assessing the internal
strength and weakness of the company which are generally controllable and external threats and
opportunities which lies outside the business organisation and are generally uncontrollable in
nature. The following is the SWOT analyses of Tesla discussed below:
Strength
 Higher rate of innovation specially in
case of introducing the first electric
sports car. It encourages the Tesla to
Weakness
 It has a major drawback of limited
presence in the other countries. This is
because it produce major portion of

produce competitive and those
products which will helps the
company in maximising the financial
stability and profitability for the
company.
 It has a strong brand image in the
global market which relates to the
innovation and renewable sources of
energy. This helps the company in
attracting the companies potentiality
to attract and retain new customers.
 It has also used the most advanced
and best technologies which makes its
product efficient and effective.
 The company has a huge support
from the government of the country
as it is producing eco friendly
vehicles.
 The leadership and team spirit is on
heights under Tesla which helps them
in accomplishing business goals
effectively and efficiently.
 Tesla has strong distribution channel
network because they have made their
own channel.
their product in US and have limited
presence in China and other
developing markets throughout the
world.
 It has limited supply chain which
restricts the operations of the company
in expanding its business in other
countries (Teece, 2017).
 The higher prices of the Tesla’s
products compared to its competitors
also is a weakness.
 Tesla produces those products which
are futuristic in nature and takes into
consideration the environment. But
majority of the people are not aware
about such products due to poor
marketability and understanding of the
people regarding different
environmental problems.
 Opportunities
 It has greater opportunities for the
new technological vehicles like
hybrid, green cars, electric cars, etc.
This has launched and researched
ample of products in this area and can
Threat
 Higher level of competition in the
market where various automotive
companies are competing with each
other in respect of design, quality,
performances, prices, technologies,

continue to do the same (Simons,
2015).
 Tesla will also have an opportunity
for global sales expansion which will
have impact on the economic growth
of the countries.
 The company can also concentrate on
improving its performances through
the diversification.
etc.
 Fluctuations of variations in the
material pieces can maximise the cost
of lithium which is one of the most
important material used in
manufacturing of automotives.
 Competitors like general motors, etc.
places a serious threat to the company.
TASK 3
P3. Porter’s five forces model of Tesla.
The Porter five forces model was developed by Michael Porter in 1979. The idea behind
developing this instrument is related to determine the intensity of competition in the industry and
the level of profitability for the business (Håkansson and Snehota, 2016). This model has five
different forces which are to be taken into consideration. These forces of Tesla will help in
demonstrating the structure of an industry and the level of competition in the market. The
following are the five force model of Tesla discussed below:
 Competitive rivalry: This force of the model is related to identifying the number of
competitors prevailing in the market and the potentiality of the company in order to
undercut or meet the competition. Therefore, Tesla has a strong competition in the
market. There are small number of organisations operating in this sector and due to the
low switching cost, the company faces intense competition.
 Bargaining power of customers: This force is related to identifying the bargaining
power of customers. In this, the ability of the customers for demanding low priced
products or high quality products are determined. Thus, Tesla will have moderate force
regarding the bargaining power of customers. It has a low switching cost which creates a
hurdle for the customers of the Tesla in order to purchase cars from other providers.
Apart from this, there are limited alternative products are available in the market.

 Bargaining power of suppliers: This force is concerned with determining the potential
of suppliers in relation to the sell higher price products or low quality offerings of the
company. This will have a direct impact on the purchasing firm. Therefore, Tesla has a
moderate bargaining power of suppliers because the business of the company relies on
the reliability of the suppliers (Hofer, 2019). It has a moderate forward integration which
determines that the suppliers of the Tesla has very limited control over the distribution
process and sale of the products and services.
 Threat of substitutes: This force is concerned with the powerfulness of threat when the
buyer or customer can easily find the substitute products with attractive prices and
qualities. In this, Tesla will have moderate force because of the lower switching cost
which will allow competition and moderate accessibility of alternative products which
means that only a limited number of substitutes are available in the market which is
advantageous for the company.
 Threat of new entrant: This force is related to determining the capability of new
organisations in threatening the company. If the company is profitable then there will
very less obstacles for the organisation but if the company has many competitors then the
profitability of the organisation minimises. Thus, the Tesla has weak or low threat from
new entrant because it is a well established company and has a goodwill in the market
(Julien, 2018). Furthermore, the newly entered company will have to invest huge amount
of money in its technological and research and development department in order to
become threat for the Tesla It is one of the most leading company in its industry.
Stakeholder analyses
Stakeholder are the people who are connected with the organisation directly or indirectly
and have a greater influence in the decision making of the company. The stakeholder analyses
helps in identifying and analysing the needs and requirements of different stakeholder and helps
in developing strategic view. The following is the stakeholder analyses of Tesla:
 Customers: The customers are the key components for every organisation and they have
a stronger influence towards the income and are concerned with the quality of the
products ad services which justifies the price level. For this, the company is concentrating
on minimising the cost of batteries in the car and this in turn will minimise the overall
cost of finished products.

 Shareholders: Tesla was highly dependent on shareholder and investors for their funding
requirements. They play a very important role for the companies capitalisation and cash
flow activities. The investors are highly concerned about the level of profitability and
growth of the company in future. So the CSR activities of Tesla is concentrating on
satisfying such needs and requirements. For this, the Tesla has widened its brand to other
companies so that the number of battery cars can be increased.
Stakeholder mapping
The stakeholder mapping is a relevant process through which the company is able to
identify the important stakeholders of the companies and once they are identified then they are
categorise according to their interest generation level. Therefore, there are four relevant stages of
stakeholder mapping which will be considered by the Tesla. The first one is identification of
stakeholders like customers, employees, etc. The second one is analysing their impact and
influence, for instance, the customer are one of the major stakeholders and have the ability to
influence the level of affecting the company. The third one is making plan regarding managing
and communicating and reporting. The last one is to engage the stakeholders.
TASK 4
P4.Different models and concepts for Tesla
Strategic Management Plan (SMP)
It is defined as document which is utilised for communication within organisation the
focus energy, goals, set priorities, resources, strengthening operations, ensuring stakeholders and
employees are working for common goals in order to establish agreement for better outcomes
(Quinlan and et. al., 2019). This is type of method that believe and implementing strategy which
helps in gaining sustainable competitive edge. The strategies, objectives and tactics are as
follows:
Strategies
The strategies are considered as long term plan and actions which are taken by
organisation for achievement of goals and objectives. This helps in providing proper guidelines
to business and follow accordingly so that best results can be achieved. The strategies which is
adopted by Tesla is market development where they are expanding their business in Brazil to
increase profit and share.

Objectives
It is very important for organisation is to set objectives which should be based on
SMART goal so that better achievement can be made. The main objectives of Tesla is to increase
their market share by 20% in next five years along with maintaining quality.
Tactics
These are short term plan which are very important for achievement of strategies of
business. The tactics which are made by Tesla for market development strategy are as follows:
Requirement of Funds- Tesla need to make plan for borrowing of funds for expanding
business in another market. There are different financial institutions such as banks, commercial,
family and friends from where money can be borrowed (Schwartz and Davis, 2018). It is
advisable if they borrow from those who charges low interest rates. All planning should be made
in advance for better outcomes.
Advertisement- It is also tactics where Tesla need to chose best advertisement for their
audience in order to create awareness about upcoming products into different market. This can
make customer aware in advance which can help them to increase profits and share in market.
Develop Different Quality Level- Nowadays, consumer prefer high quality products and
services. The need and demand of people is changing day by day which can impact business and
their performance. As it is expanding business in Brazil so it need to maintain quality level and
provide high quality products to their consumers.
Bowman Clockwise strategy:
Bowman Clockwise strategy: It is a marketing model which is used by organizations to
analyses its position among its competitors. It was found by Cliff Bowman who believed that
having a strong competitiveness is an unavoidable element which can help an entity making its
position stronger. It works on two dimensions which are price and perceived value. Tesla can use
this model to asses the position of its cars in terms of products that are being offered by its
competitors such as BMW, Aston Martin, Land Rover etc. It can opt for more than one positions
for attaining desired results.
Low Price and Low Value Added (Position 1) : low price and low value added position
is nota a competitive position for an organisation. If it is talked about TESLA despite a low price
with very little value then the product is not differentiate. According to bargain basement
strategy the position to remain competitive is to be as “ cheap as chips”.