Strategic Plan for SpaceX: Analysis and Recommendations

This report provides a comprehensive analysis of SpaceX's business strategy, beginning with an overview of the company's background and its presence in the aerospace industry. It examines the impact of the macro environment using PESTLE and SWOT analyses, highlighting political, economic, social, technological, legal, and environmental factors influencing SpaceX's operations. The report assesses the organization's internal environment, focusing on its strengths, weaknesses, resource deployment, and competitive advantages. Furthermore, it evaluates the competitive landscape using Porter's Five Forces model to understand the barriers to entry, competitive rivalry, and threats from substitutes. The study culminates in a strategic plan for SpaceX, incorporating various theories and models to guide the company's future development and expansion, including potential overseas market opportunities and recommendations for reducing weaknesses and enhancing competitiveness. The report concludes by emphasizing the importance of adapting to external factors and leveraging internal capabilities for sustained success.

BUSINESS STRATEGY

TABLE OF CONTENTS
Introduction..................................................................................................................................................1
Part A...........................................................................................................................................................2
P1 Analyze the capabilities of organization highlighting macro environment and their impact on
organizations............................................................................................................................................2
P2 Conduct an assessment of the organization’s internal environment and its capabilities....................4
Part B...........................................................................................................................................................7
P3 Evaluate the competitive forces applying Porter’s Five Forces model of a given market sector for
your chosen organization.........................................................................................................................7
P4 Applying a range of theories, concepts and models, you are required to interpret and devise a
strategic plan for your chosen organization.............................................................................................9
Conclusion.................................................................................................................................................12
References..................................................................................................................................................13

LIST OF TABLES
Table 1: SWOT analysis..............................................................................................................................3
Table 2: Action Plan for SpaceX...............................................................................................................10

Introduction
Business strategy is the enterprises working plan for meeting the visions, prioritizing the objectives,
successfully competing it and the optimizing the financial performance with the respective business
models. The report will highlight the impact and influences of the macro environment of SpaceX. The
organization is the private organisation and deals in the industry of Aerospace and founded by Elon
Musk in 2002 and its headquarters is in California, US. The study will review the SWOT and PESTLE
analysis of the external environment. Porter’s five forces model is also reflected in the report so that
competitions and other barriers can be reviewed. Moreover, the study also relates to the internal
strengths and weaknesses with the presence of external macro factors present in external environment.
At the end, the report will also give the strategic plan that will show the effective business strategy of the
SpaceX. Moreover, this strategy also supports the business to expand their market overseas as well so
that space travel can become famous and attractive to the customers.
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Part A
P1 Analyze the capabilities of organization highlighting macro environment and their impact on
organizations
The impacts of the external factor greatly influence the business strategies, its positions and business
success. For assessing the influences of various models and matrix must be applied by the SpaceX
management. Prior to application of analysis, it is important to understand the micro and macro
environment meaning that works in the business environment. Micro environment involves the elements
that influence internally but at the same time it can be managed by the organization (Johnson, 2016).
While on the other side, macro environment is the external factor that cannot be completely eliminated
at any cost but it can be reduced. For effective functionality and performance, it must assess all the
factors and carry out the amendment on the basis of PESTLE and SWOT analysis:
For analyzing the environment, PESTLE model for SpaceX are as follows:-
Political factor: Political factor relates to the trading policies, government regulations, funding,
lobbying, geo-political conflicts and foreign government activities. These all factors majorly influence
the working and operations of the SpaceX (Prasad and Basu, 2015). For instance: the tax rates of the
government can be raised for the project related to the SpaceX that will create negative influence on the
organization to implement the project that can result into high cost for the project.
Economical factor: This factor relates to the ecological imbalances, environmental occurrences (local,
international and space), competitors move, suppliers relationships, customer relations and internal
organization culture. These factors can positively or negatively influence the business of the SpaceX.
For instance: During the implementation of the business model project of SpaceX, if the local
environment did not support in the project running in the way it should be, the results will not be the
same the organization wanted.
Social factor: It includes factors such as ethical, media, history, education and ethnic and religious. This
factor can also relate to the negative consequences on the organization as different people work in the
organization. For instance: The place where the SpaceX is planning to implement or developing the
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project model, it should consider the humankind’s challenges that minimal impact the religion of the
people (Wang et.al. 2015).
Technological factor: The SpaceX must consider the factors related to the research, development,
communication, adjunctive and spinoffs. As in the organization, space exploration is highly dependent
on the research and development department and second positive influence will be that cheap and more
sustainable environmental trips can result into more spaceships to be launched. Thus, external factor if
positively impact that means organization business model will greatly benefited with technological
support.
Legal factor: This factor related to the patents, space laws, licensing and regulatory compliance. The
example of legal factor shows that Obama’s programme has still not shown any approval whether they
are supporting private or public funding. The SpaceX results into failure if the challenger explosion
results negatively and in this regard the organization will also have to face the liability issues as well.
Economic factor: The factors like income streams, exchange rates, trade barriers, inflation and foreign
economic trends. SpaceX business model will negatively influence through the effect of global recession
those results into consistent economic uncertainty. With this the government facing such situation will
seem space travel as unnecessary expense and no funds will be available from the government funding
and with that NASA will reduce the budgets. It will focus more on private funding.
SWOT analysis
Table 1: SWOT analysis
Strength
 Private organization
 Uniqueness
 CEO public profile
 Cost competitive (Herbert, 2018)
 High dependency of self reliance
 Competitive cost
Weaknesses
 Issues related to technological
advancement
 Increase in costs for spaceships
 High infrastructures cost due to poor
infrastructure issues
 Majorly depends on the government
 This business includes lots of complexity
Opportunities Threats
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 The organization has the major opportunity
for cheaper delivery of satellite
 Space tourism can be enhanced
 Political stability by promoting the project
 Spin off technology is also an opportunity
 Development of rocket technology
 Good and enhanced relationship with
NASA
 Competition threat from ULA
 Resources allocation to be based on earth
challenges and difficulties
 Threats from Non US states of sovereign
 High threat from terrorism (Cascio, 2018)
 Use of important resources
Several strategies and factors impacts above mentioned have the major influence on making of decisions
along the operations of management of SpaceX. For instance: amendment in one element like economic
factor in the recession period can gradually reduce the funding of government to the projects. Further, if
the political factor is assessed with regards to the tax rate from the government and if the government
doesn’t want to invest in the project due to chances of high failure it will reduce the subsidy or increase
the taxes on this industry that ultimately impacts the business strategy, strategic decisions with regards
to modifications of procedures and policies (Scholes, 2015).
External factors changes with regards to terms and conditions in relation to the space and the trends that
impacts the strategic management functions like research and development department whose main
purpose is to support in the business model project of SpaceX to benefit overall. Hence, external factors
put the greater influence on the business revenue model and profits. These external factors cannot be
eliminated yet they are always chances to reduce them to maximum extent.
P2 Conduct an assessment of the organization’s internal environment and its capabilities
Strategic capabilities refer to the potential of the business to effectively deploy the competitive strategies
that give surety about the sustainability and raise the worth with the time passage. In the context of
SpaceX, to identify the internal capabilities, internal environment is to be analyzed that includes
capabilities of simplicity, low cost and reliability that will done through eliminating the sub contractors,
increasing internal organization communication, promoting good working environment, enhancing
decision making and reducing the lead time.
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Deployment of resources and vertical integration: According to the analysis, the resources of the
organization are deployed very efficiently as the organization manufactures all its parts internally that
can ultimately supports in reducing the costs, brings efficiency and tighter control in quality and tight
feedback loop among the designs and manufacturing teams. In addition, the organization vertical
integration supports in productivity improvement, engineering process that changes immediately, more
updates and reliability, time reduction between designing to manufacturing by 71% and with that overall
design manufacturing flows more quickly (Teece, 2017).
Scale and scope: As per the internal analysis, organization has wider scale and scope. It starts from
engineer to order production and then competes in commercial markets. It scope also expands into
governmental markets and costs are spread over the multiple users. In the space industry, SpaceX is
pioneer in applying the scale of economy.
Profit formula: The organization income includes positive cash flow, until 2017 planned 81 launches
and 2.4 million dollars of income. At every launch, OPEX is calculated as 0.7% of operative cost and
CAPEX measures as 228 million dollar. Further, SpaceX reinvest its profit of around 80% in research
and development department.
Customer value proposition and unique selling point: As per the analysis, the customer value
proposition is increased and it is proven by giving out 30 successful missions. The organization tailors
their services that ensure quick development and control over the cost and quality (Lynch et.al. 2018).
Value is also promoted by showing reusable launch vehicles. While unique selling point is ensured
through individual customer care and commercial space flights are also run. The other benefits that show
their uniqueness in selling point are reliability in space industry, cost savings and also ensures quick
delivery.
Key performance indicators: according to the analysis, its key strengths and performance indicators
are that it has numerous number of clients, profitability increased, maintainable employee turnover,
numerous launching, on time delivery of services, entire equipment usefulness and the organization is
quite responsiveness.
Recommendation to reduce weaknesses: For near midterm future, it is essential for the SpaceX to
compete for the contracts in the other countries, research the suborbital market, concentrates on less
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heavy and more recent launches, analyze the technologies capabilities of other industries and develop
sustainable vehicles and greener launch systems (Camisón and Villar-López, 2014).
Further, the structure of the organization is essentially in the organic design with the cross functional
teams taking together many engineers, scientific and manufacturing activities. SpaceX is the procedural
production model of business with low formalization and existence of decentralization. In addition, with
the internal analysis, it also focuses on the planning and decisions that includes short term and long term
objectives with considering local strategies as well (Fraj et.al. 2015). Its long term objective is to
colonise mars and requires the organization to conduct the activities work based and more immediate
challenges. And its short term objectives are to manage its viability as the organization to fund and
formulate the technology and machineries required for travelling mars.
Its internal analysis also focuses on change and innovation as well. The organization can advance
change with assessing different challenges, abilities and environmental factors of the organization. In
September 2016, internal factors of SpaceX can be shown in the setback reflected by Falcon 9. At the
time, Musk consistently tweets related to the ongoing research into the Falcon 9 explosion to show the
customers that the conditions is controlled. Moreover, the owner is quite open as analyzed from internal
analysis and the reason for this is because SpaceX is the private organization and it did not have to
answer to any of the shareholders. The organization other internal strength is that it concentrate on
reusable space by developing the permanent sustainable city on the red planet using ITS (interplanetary
transport system) and it positively impact on the people.
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Part B
P3 Evaluate the competitive forces applying Porter’s Five Forces model of a given market sector for
your chosen organization
For assessing the competitiveness of SpaceX, it is essential that the organization uses Porters five forces
model that are listed below:-
Barrier to entry: Entry of new organization is very complex as it includes lots of capitals that need
funds. The next barrier is organization did not receive brand loyalty but the benefit is that the policies of
the public are promoted in this industry (E. Dobbs, 2014). Further, the employment opportunities are
less in this industry as the organizations operating in this industry did not require many employees. In
commercialized space travel although government encourages commercial spaceflights as per the
National Space Transportation Policy 2013 but organizations or new startups major barrier is huge
capital investment, raw material is not readily available, no substitutes, no brand loyalty, organization
reputation is also critical in working under this industry and few number of buyers at onset luxury
product.
Further the next barrier is that it requires large number of workforce to build the rockets along with
considering immense time as well.
Competitor’s rivalry: The rivalry from the competitors is medium from the space travel firms but the
organization present in this industry has good opportunities to grow rapidly and be act in the
differentiated market. The industry works under the niche market (Johnson, 2016). For instance: Orbital
Science Corporation develops the Antares rocket but the rocket serve the entirely the different
characteristic which is not scheme to carry the individuals. But the organizations working in these
industries promote healthy, friendly and productive competition.
Substitution threat: The substitution threat is very low in this industry as it requires huge fund
investments and high technical and qualified staff. Thus, it provides the great opportunity to the
investors as it did not include any risk that the organization has to face in this industry. Further the
substitution threat for the products creates the pressure on the organization which is not presented in this
industry much.
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Supplier power: The suppliers in this industry are very limited that provides specific raw materials and
for the suppliers it is the growing market as few of them supply the raw materials the organization
needed (Rothaermel, 2015). As this industry requires high technical raw quality input and due to this
reason the organization has to purchase the product from the supplier’s available and in this bargaining
power of the supplier is quite high and low bargaining power is in hand of organization.
Buyer power: In this industry, large number of buyers is present for other SpaceX project such as space
station resupply missions, US government and commercial satellite launch. But for trips to space it has
very few buyers at onset and further, the products of the SpaceX are not the necessity product for the
customers.
It can be concluded that commercial space industry needs a big initial investment and the barriers to
entry are not important due to federal government motivation to join the market that includes subsidies
and contracts and in this context, SpaceX for its business model receives $1billion in agreement with
NASA. On the other side, industry consistently to grow that supports the organizations to serve the
benefits from the competition. It will also subsequently identify the ways to reduce the production costs
so that end cost to the customers can also be reduced (Holloway, 2017). The benefit that the industry is
that almost no product substitute is available. Finally, the five forces analysis shows that this market is
quite attractive and appealing to the new entrants and investors to invest in the organizations.
Further to improve the competitive edge, organizations can identify the opportunities to explore their
space projects. NASA, the American government space program gets around $16.8 billion from the
funds of 2013 in comparison to the government’s multi-trillion dollar budget. Due to the government
spends so few money on innovation of science, the private sectors are able to take the authority and
become space transport leader (Goetsch and Davis, 2014). Moreover, SpaceX strives to open the new
lines whereby private industries will become responsible for the real introduction of space flights which
was formerly linked with the government. Further in 2010, US space program of shuttle brings the loud
criticism for the federal authorities which will benefit the private sector. The founder of SpaceX believes
in promoting competition in the private space industry in respect to low costs for both federal
government and private organizations.
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P4 Applying a range of theories, concepts and models, you are required to interpret and devise a
strategic plan for your chosen organization
Strategic planning is the organization procedure of defining its strategies or direction and formulating
the decisions on resource allocation to pursue the strategy (Scholes, 2015). The strategy plan of the
SpaceX includes five major steps that are listed below:-
Mission: As many organizations like Funerals.com, SpaceX also developed with the particular goal in
the mind. Irrespective of dream of Musk to have multi-planetary civilization, the organization is
promoted towards the reliability and price betterment of space transportation from being friendly sector
in private industry. Musk also estimated that average cost per pound to vehicle orbit was $4000 within
the control of federal government programs but that can be lowered down to $500 per pound.
Importantly, SpaceX needs to create the space travel and market which is affordable for the customers.
Vision: The vision of the organization is to design, manufacture and introduced the advanced spacecraft
and rockets. The organization was developed in 2002 to revolutionize space technology with the
ultimate objective of allowing individuals to live and sustain on other planets.
Objectives: The organization objectives are divided into two parts i.e. short term and long term
objectives (Johnson, 2016).
Short term objective: The short term objective of the organization is that it requires managing its
feasibility as the organization to finance and creates the technology and high machineries that are
required for travelling to mars.
Long term objectives: The organization long term strategy is Mars colonization.
Strategies
The objectives are to reduce the cost and improve the reliability in the space transportation along with
more integrated programs with the government. The organization has to follow the following strategies
to reduce the cost.
Reduction in cost
The organization has to reduce the cost on the production and designing along with the resources. For
that, it is essential to reduce the supply expanses. The organization can manage the multiple suppliers for
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