Business Strategy Report: Analysis of Tesla Motors

This report provides a comprehensive business strategy analysis of Tesla Motors. It begins with an executive summary and an introduction to business strategy, followed by an external environmental analysis using the PESTLE framework, examining political, economic, socio-cultural, technological, environmental, and legal factors affecting Tesla. The report then delves into an internal analysis using SWOT analysis to assess Tesla's strengths, weaknesses, opportunities, and threats. A VRIO analysis is conducted to evaluate Tesla's resources and capabilities, determining their value, rarity, imitability, and organization. Furthermore, the report includes an industry analysis using Porter's Five Forces to understand the competitive landscape. The conclusion summarizes key findings and recommendations for Tesla's strategic direction, emphasizing the need for product development to maintain competitiveness. The report highlights Tesla's strengths, such as government support and technological innovation, while also addressing weaknesses like high production costs and competition. The analysis offers insights into how Tesla can leverage opportunities and mitigate threats in the automotive and energy sectors. The overall analysis offers a detailed view of Tesla's strategic position and potential for sustainable growth.

BUSINESS
STRATEGY

EXECUTIVE SUMMARY
The below report is based upon the strategic analysis of Tesla Motors. The external
analysis reveal that political and economic environment of UK fosters the growth and
development of company. Further, it exhibits that the corporation possess the resources to launch
new products at rapid intervals to stay ahead of competitors in market place. On the basis of
SWOT, it can be said that the company also enjoys benefit of monopoly in different sectors of
hydrogen and electric vehicles. The resource which meets all the criteria of VRIO is
acknowledged to be manpower. Further, it is advised that corporation should undergo product
development in order to remain competitive and ensure its long term sustainability within the
confines of automotive sector.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
TASK 2............................................................................................................................................6
TASK 3............................................................................................................................................9
TASK 4..........................................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The integration of plans, activities and procedures that together leads to accomplishment
of organisational objectives, can be termed as a business strategy. This is aimed at availing a
competitive edge in market and to outshine the rival firms by way of company's strategic
direction. It is designed and developed by top, implemented by middle and taken into use by
lower level management. The following report takes into account the business strategy of Tesla
Motors which is an automotive and energy company having its headquarter within USA. It
consists of internal, external and industrial analysis with the usage of several models and
frameworks. Furthermore, it constitutes strategic management plan devised on the basis of
selected growth strategy.
TASK 1
Owing to the rapidly changing and turbulent business environment, it becomes essential
for every organisation to constantly carry out an assessment of such environment. The external
environment of company in this regard is out of control and scope for modification. This helps in
ascertainment of the associated opportunities and threats that have a significant influence on the
operations and functioning of business. With the determination of probable opportunities and
threats, it becomes easy for the company to stipulated strategies for the welfare and betterment of
entity. In this relation, Tesla Motors has also carried out a macro environmental assessment to
gain knowledge of the influence of external factors on business strategies.
PESTLE
This can be said to be an analytical and strategical tool that aids a corporation in carrying
out the external assessment in order to ascertain the underlying opportunity and threat associated
with each factor. Being a well recognised brand, this holds prime significance for Tesla Motors
as through this information, opportunities can be easily capitalised upon while threats can be
dealt with, in an effective manner. PESTLE for the respective organisation has been carried out
as follows:-
Political: This factor of PESTLE contains plans, policies, course of action and
legislations passed by government of a country at rapid intervals in order to take a control over
the operations and functioning of business running within market place. In this regard, the
companies operating in United Kingdom benefit from the stable political condition of nation.
4

Tesla Motors has the opportunity to gain advantage of this factor and thereby enhance its sales as
well as market positioning. However, there are certain challenges also that are associated with
this factor of macro-environmental analysis. In this relation, the issues that can be faced by Tesla
may be inclusive of trade wars between international countries, instability of nation, terrorism
and so on. This may result in a significant shift in demand for company's cars and energy
products.
Economic: This factor is largely associated with economic growth of a nation which
comprises of inflation, interest and foreign exchange rates. The strong economic power and
growth of United Kingdom presents opportunities for the companies prevailing within this
country to tap advantage of the high level of infrastructural facilities. Such services can also be
used by Tesla Motors in order to enhance its stake in global market place. However, BREXIT is
a phenomenon that is posing immense threat to companies operating within automotive sector
such as Tesla Motors. To deal with this, economic pricing strategy should be taken into use by
the respective company so that majority of the economic groups can afford the offerings of
entity.
Socio-cultural: This consists of the norms, beliefs, values, practices of people of a
country which have a significant influence upon the demand for products of an entity. With
respect to automotive sector, customers demand latest, innovative and high tech designs which
meet the needs and preferences of people in an adequate manner. Tesla Motors can take
advantage of this factor in order to enhance its sales as well as market positioning. However,
every opportunity comes up with threats also. Thus, such changes and trends can be tapped by
the rival firms of Tesla Motors also, thus putting the sustainability of Tesla at stake. Thus,
consistent research need to be executed by the respective company in order to gain a competitive
edge in market place.
Technological: It is defined as factors which includes new and updated trends,
innovations, technologies and techniques that assist in changing scenario of market. The
respective organisation always focus on doing innovation with help of technology in order to
survive and sustain at market place. Currently, it has done innovation and come up with
hydrogen fuel with latest and new features. As it is fulfilling need and demand of consumers to
create loyalty towards organisation which leads user to expect more in upcoming model. This
create pressure and stress upon business to manufacture new, unique and innovative products and
5

services for their customers. Thus, Tesla Motor has opportunities for conducting business
operations at United Kingdom as it focus on highly technological products and services.
Environmental: Most of the business operations and activities are running in
environment in order to gain competitive advantage from society, community, legal bodies. The
respective organisation focus on producing less carbon emissions during their production stage.
They haven taken measures for promoting sustainable development at organisation. Also Tesla
uses less paper at organisation and will offer more eco-friendly products to their customers in
coming time period. The weather condition of respective place can impact supply chain that
leads to delay in delivering of products and services.
Legal: It is defined as factors which focus on different laws, legislation for running
business successfully. There are different laws which assist companies to run ethically and
legally at marketplace. Tesla organisation has to follow various laws and legislation while
conducting their business activities such as health and safety regulations, employment
regulations, Automobile Laws etc. Apart from this, the regulations which are executed by
government assist in moving towards green movements in terms of carbon tax, green policies
and so on. It helps in gaining loyalty and trust among customers towards business. This avoid
legal actions and punishment for organisation.
TASK 2
Owing to the rapidly changing business environment, it is imperative for companies to
analyse the internal environment in order to devise effective strategies for the betterment and
welfare of corporation in the long term. To facilitate this, SWOT analysis is used by
organisations to gain comprehensive knowledge of internal environment and thereby propose a
strategic course of action that is aimed at gaining a competitive edge in market place.
SWOT Analysis
SWOT is considered as the strategic framework that is used by companies for finding out
their core strength and available opportunities and at the same time weaknesses and threats
present within the market for the company. In this regard, SWOT analysis for TESLA is
described as below in detailed manner.
STRENGTHS WEAKNESSES TESLA is having huge support of
 Vehicles offered by this company are
6

government which can be seen in the
amount $465 billion that is given by
government (US department of Energy)
to company for energy management
projects. The company also enjoys benefit of
monopoly in different sectors of
hydrogen and electric vehicles (Cars). Tesla is also known for the usage of hi
tech technology and latest techniques.
It has been seen that many other
companies of the same sector tries to
adopt the same technology used by this
company. It includes battery packs by
Daimler and use of powertrain by
Mercedes Benz.
highly expensive which ultimately limit
their customers group as well as sales
performance.
 Cars developed by TESLA are
manufactured in single manufacturing
unit that is situated in California. This
directly limits their production
capability.
 Cost of production is quite high at
TESLA as both the manufacturing and
operational cost is high which
ultimately raises prices of every
manufactured product.
OPPORTUNITIES THREATS
 The increasing need of sustainable
products is directly creating positive
demand of cars (electric and energy)
offered by TESLA.
 New but supportive and influensive
technology such as hybrid vehicles, self
driven autonomous cars, green cars and
battery operated vehicles are bringing
huge opportunity for TESLA through
which it can easily increase its market
share.
 The major threat which could be seen
by TESLA is increasing market share of
competitors (Fiat, Ford, and General
Motors etc.) present within the auto
mobile industry.
7

The internal capability of Tesla is measured through VRIO model in order to conduct
resources analysis for identification of competitive advantages. There are four elements of VRIO
such as value, rare, imitable and organise. The resource and internal capability of Tesla is done
through help of respective model. They are given below:
Resources Valuable Rare Imitable Organized
Design Yes - - -
Supply Chain Yes Yes - -
Proprietary
Battery
Yes Yes Yes -
Manpower Yes Yes Yes Yes
Valuable- It is defined as those resources which are valuable in nature for
accomplishment of goals and objectives. The valuable resources for Tesla includes design,
supply chain, battery and manpower. Design helps in attracting customers to gain competitive
advantage. They supply product and services to consumers in given time period. Battery
manufactured by respective organisation is based upon innovative and high technology along
with trademark. Employees of Tesla re highly skilled and loyal to organisation.
Rare- This is defined as resources that are rare for one at specified industry for
achievement of competitive advantage. Tesla has rare resources of supply chain, battery and
manpower. In terms of supply chain, they have adopted innovative and advanced supply chain
and high quality battery for running vehicles. All the skilled, knowledgeable and capable
employees are working in Tesla for achievement of goal and objectives.
Imitable- It is referred as resources which cannot be copied by other company or
competitors. The imitable resources of Tesla are proprietary battery and manpower as they
develop innovative and latest trend battery to use in vehicles and possess high skilled capable
and loyal organisations.
Organised- This is defined as the resources where each and every work should be
arranged in proper manner for operating and functioning in business. The resourcs which can be
organised by others is manpower. Tesla has hired skilled, capable, experienced and
8

knowledgeable employees for work performance to achieve goal and objectives in effective and
efficient manner.
TASK 3
It is essential for every organisation to conduct an effective industry analysis so that they
can develop better strategies for their company. With reference to TESLA, it has been analysed
that management team of this company has conducted Porter’s Five force framework for
improving their knowledge about the industry. Along with this, the analysis will also help them
out in understanding favourable and non favourable condition for the company within the
industry. All five forces of this model have been explained below in detailed manner:
Threat of New Entrants
Threat of new entrant in automotive industry seems to look low. This is because; the
industry requires huge capital to be invested in order to establish their new business. With
reference to TESLA, this force shows that management of TESLA is not required to worry about
new entrants instead of this; the company can focus on improvising their existing services so that
their efficiency in vehicles can be improved. As a result, it will help them out in enhance
customers in effective manner.
Level of rivalry within sector
Competition within automotive industry is quite high. It has been seen that there are
numerous of automotive companies who owes good range of market share within the industry.
Some of market leader of this induster are Volkswagen, Toyota, Nissan, General Motors, Ford
Motors etc. It can be said that even though the company offers electric vehicles but it still
requires faces competition within the industry. In order to overcome this situation, it is essential
for TESLA motors to improve the quality of post sales services in order to grab attention of
customers. As a result, they can gain long term profits with the help of positive relations with
customers.
Threat of Substitutes
Threat of substitutes for automotive industry is also high because companies belonging to
this industry are intensively focusing on bringing something new so that they can attract
customers and maximise their market share. But, when it is talked about TESLA, the influence of
this force is low for this company because it is dealing in hi tech electric cars. This works as the
advantageous situation for TESLA as the company can easily gain advantage of this situation
9

and improvise its level of services so that effective market share within the industry can be
attained by them in effective manner.
Bargaining Power of Suppliers
Bargaining power of supplier is relatively low for automotive industry. This is because;
the industry has lots of suppliers available within the industry. Therefore, it can be said that if
regular based supplier of TESLA does not agrees to the quotation given by the company then,
executives of company can easily approach to another suppliers are cost effective for them. With
the perspective of supplier, it can be said that these supplier cannot take risk of losing their
relationship with large scale companies like TESLA as they are providing regular based work to
them from where they can generate their profit. This shows low effect of supplier for TESLA in
terms of bargaining.
Bargaining Power of Buyers
In context of TESLA, it can be said that bargaining power of buyer for this company is
relatively low. This is because, there are very few number of company within in the automotive
industry who produces electric and energy cars. This works as advantage for TESLA as the
company can easily influence customer’s interest towards them which will ultimately contribute
in the increase in market share of company.
TASK 4
The primary goal of an entity is to earn profits while the secondary one is to attain growth
and development. In this regard, a number of choices are available to a company to adopt as
growth strategy. To facilitate this, corporations make use of Ansoff Matrix which is a framework
consisting of four quadrants that are actually four strategies out of which one could be used by
corporation to gain success and growth in marketplace. Tesla Motors has also made use of this
matrix in order to identify the most feasible and optimum strategy for the enterprise with the help
of which company can enhance its market share as well as profits in near future. In this regard,
the 4 strategies of this framework along with their probable application within Tesla Motors are
given as follows:-
Market Penetration: This can be referred to as the strategy whereby company attains
growth by sale of existent products within established market. In relation to Tesla Motors,
corporation can make use of this strategy, thereby selling high design, innovative and stylish
models with unique features in revenue generating markets for the entity. With the help of this
10

strategy, Tesla can gain rapid success as it is already famous in those regions and thus tapping a
larger audience with its new and innovative offerings would aid the organisation to inflate its
loyal customer base as well as profitability in market place.
Market development: This can be said to be that type of growth strategy whereby entity
introduces same products within emerging marketplace. In this regard, Tesla Motors can make
use of this strategy, thereby gaining access into untapped locations such as Bellevue, Chicago.
This would aid the organisation in appealing to a larger quantum of people and fulfilling their
demands and expectations with a view to attain a cutting edge market position and enhance its
profits at global level.
Product development: This can be termed as the growth strategy wherein corporations
come up with new and innovative products in existing markets thereby enhancing the satisfaction
of customers by offering them diverse variety to choose from. In this regard, Tesla Motors can
feasibly take advantage of this strategy to introduce high design and technological models which
are beyond the imagination of people in existing places so that people prevailing in company’s
revenue generating locations can be easily satisfied. This strategy would assist the enterprise in
gaining high contentment from public as they are offered new products which fulfil their
expectations and demands in the rightful manner. Through this, sales as well as profits of the
respective corporation will inflate thereby assisting the entity in gaining a leading position in
automotive sector.
Diversification: This a kind of growth strategy which possesses the highest chances of
success as well as risk. This is so because corporations here target new markets with the
assistance of new products. The people in new locations may or may not like the offerings of
enterprise, thus posing a risk to the sustainability of organisation in that location. In regard to
Tesla Motors, it can be said that this can be an effective strategy as this corporation already has
an established name and customer base within a number of countries owing to the high quality
and need satisfying offerings of company. Thus by tapping entry into new locations which are
helpful in enhancing the global market share of Tesla Motors, this organisation can easily appeal
to a larger audience with new tech products that can fulfil their demands effectively.
The above analysis and evaluation of growth strategies demonstrates that product
development will serve to be the best strategy for enterprise as it would provide aid to Tesla
Motors in enhancing its market share in dominant revenue generating country by offerings
11

existing product line only. This will be helpful because a large number of people already have
likelihood towards such offerings and thus the corporation has high chances of appealing to a
new audience in order to inflate its customer base.
Strategic Management Plan
Tesla Motors has devised a plan in this regard to implement the strategy as follows:-
Vision: To become global market leader within automotive and energy sector.
Mission: To offer products of high quality to people to attain maximised attention and
recognition from them.
Objective: To raise the market share by 9.5% within existing marketplace by next 1 year.
Strategy: Corporation will be taken into use product development to come up with
unique and innovative offerings in existing markets to raise the market share.
Tactic: Value addition will be carried out by Tesla Motors in order to distinguish itself
from other rivals and accomplishing the preferences of people.
CONCLUSION
The analysis of before mentioned discussion depicts that strategy of an organisation is the
base upon which activities as well as practices of a corporation are executed. Further, it is
ascertained that the respective organisation is affected by a number of internal as well as external
factors which are determined with the help of SWOT and PESTLE analysis. Also, it can be
acknowledged that the automaker is capable of making use of product development. With this,
unique and innovative products of company will be launched within established markets.
Company is found to be facing massive threat from the economic phenomenon of BREXIT.
Porter Five Force analysis of the automotive industry illustrates that there is massive rivalry
within automotive sector which put pressure upon companies prevailing in the respective sector
to bring up new and innovative offerings at rapid intervals. This helps in gaining the attention of
large number of people and thereby enhancing the sales of entity.
12

REFERENCES
Books and Journals
13