Business Strategy Analysis: Tesla's Macro & Internal Environment

This report offers a comprehensive analysis of Tesla's business strategies, focusing on its macro and internal environments. It begins with an introduction to business strategy and its application to Tesla, an American automotive company. The report then applies various frameworks to assess the influence of the macro environment using PESTLE analysis, evaluating political, economic, social, technological, environmental, and legal factors. The internal environment is analyzed through SWOT and VRIO analyses to understand Tesla's strengths, weaknesses, opportunities, and threats. Additionally, the report utilizes Porter's Five Forces model to evaluate competitive forces within the market sector. Finally, it interprets and devises strategic planning for Tesla, incorporating concepts like benchmarking and the Ansoff matrix to recommend suitable growth strategies such as market development. The report concludes with a summary of findings and references.

Business Strategies

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Application of different frameworks to analyse the influence of macro environment on a
company and their business strategies........................................................................................1
TASK 2............................................................................................................................................6
P2 Analyse the internal environment and capabilities of Tesla by using appropriate framework
.....................................................................................................................................................6
TASK 3............................................................................................................................................9
P3 Porter’s Five Forces model to evaluate the competitive forces of a given market sector for
an organisation............................................................................................................................9
TASK 4 .........................................................................................................................................11
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation.............................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is defined as the set of actions that helps an individual in achieving
objective of the company. It act as the backbone of company as it provide guidelines to the
business with which they are able to perform efficiently in the current as well as future market
place (Akter and et. al., 2016). The following assignment is based on Tesla which is an
American Automotive company having the headquarter in California, US. This report will
discuss about the impact of macro environment on an organisation. Furthermore internal
environment and capabilities are discussed with the help of SWOT and VRIO analysis. Porters
Five Force model is used in evaluating the competitive forces. At last this study will cover the
theories, concepts and models used by an organisation.
TASK 1
P1 Application of different frameworks to analyse the influence of macro environment on a
company and their business strategies
Vision : To become a leader as a multinational automotive business that focuses on
electric vehicles.
Mission : To accelerate the world's transition to sustainable energy.
Objective : Generate demand and increase sales for Tesla's Motor's electric car. Build
long-term awareness and manage corporate reputation. Manage Tesla's existing customer base to
create loyalty and customer referrals.
Strategy is defined as an action that are to be done in a particular set of sequence so as to
achieve organisational goals and objectives within budget and on time. It is general direction that
needs to be followed by the company to achieve high results in the near future. Effective
strategies help businesses to achieve desired results and attain a competitive advantage thereby
increasing its sales and profits. Different strategic planning techniques that are followed in Tesla
are as follows : Benchmarking : This is defined as comparing the performance of the organisation with a
rivalry which is the best in the industry (Channon and Caldart, 2015). This helps Tesla to
analyse its position in the market and helps it to compare its current position with other
rivalries in the market so that its performance can be improved.
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 Business analysis : By analysing properly the activities of the business helps in
identifying its weaknesses and strengths so that strategic decisions can be taken to
improve its weaknesses and grab any opportunity present in the market.
Various analytical framework to acknowledge macro environment
Stakeholder Analysis
This is referred to as identifying the people who will be impacted by the actions that will
be taken in an organisation before initiation of any project so as to achieve project goals and
objectives (Echchakoui, 2018). This analysis helps Tesla in grouping stakeholders in accordance
with their common interests, level of participation and impact of the project. Following are the
steps for stakeholders analysis ;
Step 1 : Preparing a list of all the potential stakeholders of the project. Sales department,
customers, marketing department, employees, suppliers, government etc.
Step 2 : Prioritizing the stakeholders based on different categories such as interest
involved, impact of the project, level of participation etc.
Following categories can be formulated by following the above steps :
 High power, high interest : Major stakeholders that have heavily invested in the
project.
 High power, low interest : The team members of the project who have high power
over the project but low interest.
 Low power, high interest : Customers and suppliers have low power over the
project but have high interest in the results of the project.
 Low power, low interest : These stakeholders do not have much interest in the
activities of the company and also do not have any power.
Step 3 : Communication of the project to the stakeholders based on the level of their
priority so that maximum support can be gained from them for the success of the project.
PESTLE Analysis
Macro environment refers as the external environment which includes the factors that are
uncontrollable and have an impact on the overall performance of the company. In order to study
the macro factors PESTEL analysis is used (Eyvrigh, 2016). Below is the PESTEL analysis of
Tesla:
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 Political Factors: These are the factors that involve the interference of government. The
factors which include here are tax policy, foreign trade policy, political stability etc.
Political factors has a positive effect on the Tesla as because of the incentives provided
by the government it led to strengthen the financial performance of the company.
Moreover with this factor it provide the opportunity to the free trade agreement which
helps Tesla in expanding the business operations.
 Economical Factors: The factors which include here are the economic growth, exchange
rate, interest rate etc. Change in the exchange rates is one of the economic factor that
affecting the operations of Tesla. With the rise in economic activity, employment level
has been raised globally which enable people to buy more luxurious products. Tesla is
now developing its power wall batteries and with its use they are making their car more
affordable. Thus it would help in rising the sales of Tesla which has a positive effect on
the global economy.
 Social Factors: These are the factors which involve age distribution, customs, shared
belief and attitude of the populations. Tesla by manufacturing the electric car is able to
attract large amount of the people as it has a new concept of eco friendly. With the
introduction of this car it eliminates the use of much fuel which proves to be very
beneficial for the environment. Thus with this amazing feature Tesla is able to attract
various people which results in increasing profitability of the company.
 Technological Factors: Such type of factors include advancement in technology and
every organisation must amend changes from time to time. Technology can have positive
as well as negative impact on the Tesla. With the advancement in technology, Tesla is
now able to maintain its competition with other companies. With the help of new
technologies, company is able to maintain the future sustainability. With the use of
updated technology sales and profitability of Tesla has improved a lot.
 Environmental Factors: These are the factors which are related to the ecology
environment and has an impact on the growth of the company. The Tesla car are eco
friendly in the nature as they uses electricity rather than gas. The cars are using less
carbon emissions in comparison to the other car companies. Moreover the car are using
environmental regulation of the government which will help in building of the
reputations.
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 Legal Factors: These are the factors which include consumer rights, equal opportunities,
health and safety etc. The company must know about what is legal and illegal in order to
trade successfully. Tesla is operating its business in other countries and for this it is very
necessary to keep the knowledge about the international patents. If the company are
unaware about the legal procedure it is going to have a negative impact on the operation
of Tesla. Some of the states have raised the issue of direct sales from manufacturer to
consumer. This result in affecting the delivery of the car and in order to deliver Tesla has
to incur more of the expenses. Thus Tesla has to properly follow the patent rights and
energy consumption regulations in order to run the business activities smoothly.
Ansoff matrix was developed by H. Igor Ansoff in the year 1957. It refers to the tool
which is used by the firm in order to analyse and plan the strategies which helps the managers for
the growth and development of the company (Kaya, 2015). It also refer as product or market
expansion grid. The Ansoff matrix is divided into four quadrant which helps the leaders to
understand the risk of growing the business. The four strategies of Tesla are mentioned below:
 Market Penetration: Under such type of strategy, the primary focus of the company is
on increasing the sales of the company by improving the quality of the existing products.
This strategy is basically followed by Tesla in selling of the various product like Model
S, Model X and many more. With the help of this strategy, company is able to increase
the sale of is products.
 Product Development: In such type of strategy, the main focus is toward the
development of new product in the existing market. Developing of the market will
provide some of the benefits to the customers. This basically involves extending of the
product range to the existing market of an organisation. Tesla is not involving itself in
developing of the product as because the cost of developing the products are relatively
very high. Now a days company is currently working to develop semi truck and pick up
truck with the other range of storage products.
 Market development: Under this strategy, the main focus of the company is toward
finding of the new market for the existing products. This is only made possible when the
companies finds new geographical markets or uses new supply chain. Tesla is finding
number of new market where it can start its operation in order to capture the market.
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 Diversification: Under this strategy, a totally new product is developed for the new
market. It is considered as most risky strategy because in this both product as well as new
product are developed. This strategy was earlier used by the Tesla in the past few year as
earlier Tesla was only dealing in the electronic vehicles but in the year 2016 have
expended the operations to the energy storage sector.
Recommending the most appropriate growth strategy:
From the above discussed strategy it can be clearly known that by adopting the strategy,
Tesla can grow and develop its operation easily. The best strategy which suits to the Tesla is
market development. Through this strategy, Tesla is able to capture new customers which results
in increased revenue of the company and ultimately will results in the growth of the company.
As already the Tesla is having a very renowned brand so it will be very easy for the company to
enter into a new market. If Tesla is able to implement this strategy properly it would definitely
results a competitive advantage for the organisation.
As to evaluate the impact of internal environment Tesla uses SWOT analysis. It refers
to a framework which is used to analyse both internal as well as external factors. Strength and
weaknesses are the internal part of an organisation which can be changed and controlled to some
level (Mathooko and Ogutu, 2015). On the other hand opportunities and threat are external to the
company which cannot be changed. With the help of SWOT analysis, Tesla is able to know
about the strength, weakness, threat and opportunities which help in enhancing the performance
of the company. Below mentioned is the SWOT analysis of Tesla:
Strength
 Tesla has developed its own
distribution channel which makes it
different from others.
 With the help of new innovative
technology, the company has acquired
a unique position in the auto mobile
sector.
 Tesla is a well known brand with
differentiated features which enables
the people to attract toward the car.
Weaknesses
 Tesla is facing the issue of capacity as
its all the cars are manufactured at the
same place i.e. Fremont, thus it become
difficult for the company to focus on
the high volumes.
 Cost of vehicle of Tesla is very high as
compared to other companies.
 The amount spend on technologies by
Tesla is very expensive.
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Opportunities
 Tesla can increase its expansion of
sales globally which results in increase
of revenue.
 Company can also diversify its product
this will help the company in acquiring
of the new business.
 Developing of the lower priced model
so as to attract large number of
customers.
Threat
 Company is facing high competition
from other brands like Ford general
motors, Audi etc.
 Tesla directly sells its car to the
consumer without any involvement of
any regulation of dealership and thus
led to the increase in selling price.
TASK 2
P2 Analyse the internal environment and capabilities of Tesla by using appropriate framework
Tesla company is specialised in the manufacturing of the electric cars. The company is
operating multiple production and the main vehicle are manufactured at the Tesla factory in
California.
Strategic capabilities and their key components
It is the procedure in which different strategies are shaped up so that a competitive
advantage over the rivalries can be gained. These strategic capabilities have six main
components which are strategic purpose, key goals, action planning, tools for analysis, values
and vision (Ouma and Oloko, 2017).
Resource based view strategy
This is a managerial framework used by the management in an organisation so as to
determine those strategic resources which can be exploited so as to gain sustainability and
competitive advantage. There are two kinds of resources based on this strategy : tangible and
intangible. Tangible resources are physical resources like land, machinery, equipments etc.
intangible resources are the ones that cannot be touched or that do not have a physical presence
like trademarks, patents, brand reputation etc.
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McKinsey's 7S Model :
This is a tool which helps in analysing organisational design of a firm by identifying 7
key internal components. These components are needed to be aligned effectively and efficiently
by Tesla so as to be able to achieve its goals and objectives (Ravanfar, 2015). These are
mentioned below :
 Strategy : It is a plan which is formulated by a company to attain competitive advantage
so that sales and revenue can be boosted up and goals can be achieved within budget and
on time.
 Structure : It depicts the manner in which business units and its divisions are organised
to share information with each other. It increases the effectiveness of communication in a
company and gives the company a competitive advantage.
 Systems : This a process that is followed in a company to depict the daily basis activities
and decision making process in a company. Maintaining an appropriate system in Tesla
will help the managers in organising the company employees properly and effective
decision making.
 Skills : It involves competences and capabilities of employees while performing their
jobs. Capable staff of Tesla will allow the company in dealing with complex situation in
effective manner.
 Style : This represents the style in which the management can manage the employees
within the company and the type of interaction that exists in the company between the
staff and managers. Tesla follows participative style of management which increases
employee participation and efficient decision making process.
 Staff : This represents the type and number of employees who are working in a company.
It also involves the recruitment and selection criteria that is followed in a company to
employee most efficient staff.
 Shared values : These are the standards and norms that are followed in an organisation
which manages the behaviour of everyone working in a company so that the rules and
regulations are effectively implemented.
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Capabilities of Tesla:
For distinguishing the capabilities Tesla uses the model of VRIO. It is a analytical tool
which help in evaluating the resources of the business enterprise (Schaltegger, Hansen and
Lüdeke-Freund, 2016). It defines which resources proves to have a competitive advantage or
which resources are having the disadvantages. Below is the VRIO analysis of Tesla.
Factors Valuable Rarity Inimitable Organised Results?
Global
presence
Global
presence
Sustained
competitive
Advantage
Unique
designs
Unique
designs
Unique
designs
Temporary
Competitive
Advantage
Customers
loyalty
Customers
loyalty
Customers
loyalty
Customers
loyalty
Sustained
competitive
advantage
Highly
efficient
product
Highly
efficient
Highly
efficient
Highly
efficient
Highly
efficient
Competitive
Parity
For identification of capabilities, four sources have been taken into consideration namely
Global presence, unique designs, customer loyalty and highly efficient products. Below is the
VRIO analysis of Tesla:
Valuable: It is defined as those sources which add value to the company and are beneficial for
attaining the objective of the company.
 Global presence: The image of Tesla is very good thus had a global presence worldwide.
 Unique designs: The designs provide by Tesla are very unique as they are developing the
electric cars.
 Customer loyalty: As the company is providing the best brands and designs. This is the
reason customers are very loyal toward the Tesla.
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 Highly efficient products: The products are very efficient in the nature as they are
developed by the use of latest technology.
Rarity: It defines as those resources which distinguishes the company from other company.
Global presence is not found to be rare for the company as there are many competitors available
in the auto mobile sectors.
 Unique designs: The designs are developed with the use of most innovative and creative
minds that distinguish them from others.
 Customer loyalty: As because of the designs and brand, customers are very loyal toward
the company.
 Highly efficient products: The products developed by the company are very efficient as
they have developed with skilled manpower.
Inimitable: It refer to those resources which cannot be copied by the competitors. This
characteristic is not hold by unique designs as because of available competitors, the design of
Tesla are started copying.
 Customer loyalty: One cannot force customers to be loyal , this quality is developed self
build.
 Highly efficient products: Tesla is making a change in the products with the
advancement of technologies.
Organised: The resources are always organised in a way that that led to the achievement of
goals and objectives of the company. The product of Tesla must be updated with the
technologies. This would result in developing of the loyal customers which results in enhancing
the image of the company which results in the global emergence.
TASK 3
P3 Porter’s Five Forces model to evaluate the competitive forces of a given market sector for an
organisation.
Porter's Five Force model was developed by Michael Porter in the year 1979. It is defined
as the framework which helps in identifying the weakness and strength of the company with the
help of five competitive forces. With the help of this model company is able t formulate the
effective strategies (Scholes, 2015). The five forces of Porter is mentioned below:
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 Bargaining power of buyers: Buyers are the one which want to buy the products of high
quality but at the lower price. In Tesla bargaining power is relatively high as there are
large number of competitors like Ford , BMW which are dealing in similar type of
electric car and also at the lower cost. This led to switching the customers toward the
other cars.
 Bargaining power of suppliers : Suppliers are the individual who supply the raw
material to the manufacturer. The bargaining power of supplier is relatively very high. As
there are only selective seller so Tesla has to pay with the amount whatever required by
the suppliers. Tesla by building a effective supply chain is able to minimise their cost.
 Threat of new entry: This force defines how a company is able to enter into a particular
industry. It refers to the new way of doing the existing things. The threat of new entrant is
relatively very moderate (Wicker and et. al., 2015). Though there are so many
competitors like General motors, BMW and have build the car which are not expensive
as compared to Tesla but still people are moving toward the Tesla because of its high
quality products. Moreover the models which are developed by Tesla are developed with
highly advanced technologies which become difficult for the competitors to copy.
 Threat of substitute: It refers to the situation where new product is developed with the
same specification in order to satisfy the needs of large number of people. Tesla do not
have any fear abut the threat of substitute as Tesla is the most popular brand among the
other brand by which it has developed lot many loyal customers. Though many
competitors try to copy the feature but were not able to developed with the same quality.
 Competitive rivalry: It refers to the factor where company tries to find about the
competitors available in the market. Tesla is facing high competition in the terms of
rivalry. The company which are in competitor with Tesla are Ford, Audi and many more.
Though many competitor tries to copy the facts of Tesla but were not that successful. In
terms of sale, Tesla is the leading company but still has a threat in the near future as
many company are in competition with it.
The above five force of Porter's will helps the managers of Tesla to formulate the suitable
strategies and tells the company where it is lacking and what measures can be taken so as to gain
sustainability at the market.
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