Strategic Management Report: Tesla's Competitive Advantage Analysis

This report provides a comprehensive strategic analysis of Tesla, a leading American automotive and energy company. It begins with an introduction to strategic management, emphasizing its role in achieving organizational goals. The report then delves into Task 1, which involves evaluating Tesla's external environment using the PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors. It also examines industry scenarios through Porter's Five Forces, assessing suppliers, buyers, substitutes, new entrants, and competitive rivalry. Task 2 focuses on internal analysis, exploring Tesla's mission, vision, and strategic capabilities. The report concludes with Task 3, discussing strategic choice models that Tesla could employ to sustain its competitive position in the electric vehicle market. The report highlights Tesla's focus on innovation, sustainability, and its ability to adapt to market dynamics. The analysis underscores the importance of strategic planning, monitoring, and adaptation for Tesla's continued success in a competitive global market. The document explores Tesla's ability to create competitive advantages, manage its resources and sustain its market position.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Appropriate model to review the external environment of the company....................................1
Industry scenarios facing the company within its existing market domains...............................3
TASK 2............................................................................................................................................5
Relevant internal analysis tools to draw appropriate decisions..................................................5
TASK 3............................................................................................................................................9
Strategic choice models to sustain the company’s competitive position....................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
.......................................................................................................................................................14

INTRODUCTION
Strategic management is consider as an ongoing planning, monitoring, analysis and
assess all the necessary aspects for business to meet all the set goals and objectives. Mainly, it is
management of business resources through which firm can easily attain their targets in stipulated
time frame. It includes setting objectives, analysing competitive environment, evaluating the
internal organisation, ensuring about all the strategies through which company may easily attain
higher success at market place (Ansoff And et. al., 2018). As it also provide strategic direction
that support company in expanding their business at competitive market place. Furthermore,
strategic management is predicated clear understanding about organization mission or purpose to
attain future development at market. Present assignment is focuses on Tesla, is one of the famous
American automotive and energy company and specializes in electric car manufacturing by its
SolarCity subsidiary, solar panel manufacturing. The main focus of this firm is to capture market
share from its competitors. In this regards, project is goring to discussed about appropriate model
to evaluate the external environment of organization. Along with this, company strategic
competencies and capabilities are also mentioned in this report that assist in improving its
performance level at competitive market place. At last possible strategies are discussed that
company could follow to defend its core business.
TASK 1
Appropriate model to review the external environment of the company
It is important for company to review or analysis their external environment with the aim
of determining the actual performance at market. Basically, environmental scanning is important
as it define rapid modification that take point within the business environment. It has a great
impact on performance of company and at also help them in evaluating possibility to heighten
their brand image. It directly contributes in align strategies within the organizational
environment. By reviewing external environment company ahead from the competition in market
and also manage their positive performance through which firm attain success at competitive
market place (Hill, Jones and Schilling, 2014). In context of this, Tesla operating their business
in automotive industry as it designs, develops, manufactures and sells fully electric vehicles,
energy storage system and so on. Along with this, company operated by two segments like
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Automotive and Energy generations and storage. Company always focus on developing their
performance by which they review their external environment by using PESTLE analysis: Political: It is considered as a crucial factor that directly affect the company and its
activities as well. This factors is refers to the political environment of country wherein
Tesla is operates. In UK, political environment is an effective in which Tesla has strong
presence that support them in attaining sustainable growth at market place. Currently,
political environment of UK is quite unstable in nature because of unpredictable events
like Brexit. Due to this, company is affected and also could be threat for company
(Ginter, Duncan and Swayne, 2018). This is the reason that firm face issue in develop its
designs within alignment of unstable laws and regulations. Thus, it is essential for Tesla
to maintain their image in market place by following all the political laws so that they
improve their brand image at competitive market place. Economical: This factor is refers to the entire performance and condition of nation that is
based on the economic grounds. In this regards, overall growth of electronic vehicle
market is reach more than $1.5 trillion dollars. This can be consider as a major
opportunity for Tesla in developing their growth level within Automotive industry. Along
with this company also invest more for development of cars and electric vehicles through
which they can established their competitive and famous brand image. With the
assistance of this, company holds substantial share within the UK market that support in
making their overall performance higher. In this regards, it also get affected due to
increase rate of inflation that create various challenges in-front of company related to raw
materials and other important resources. Thus, it is crucial for Tesla to make appropriate
relation with suppliers so that they might be help them in sustaining in market pace for
longer period of time. In this regards, stability in economy provide opportunities to
company in developing its market share and also make brand more popular. Social: This type of factor help in analysing the impact on the company and its activities
as well. In this regards, social conditions and trends affect Tesla firm's remote by its
worker, customers and investors as well (Trigeorgis and Reuer, 2017). It consist how
Tesla align with social trends in its target markets in order to maximising their
profitability level. Furthermore, Tesla has growth opportunities that is highly based on
the rising popularity of low carbon lifestyle and its accelerative preference for renewable
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strategy (Foss and Hallberg, 2014). By this, firm can boost their financial performance at
market place and its wealth distribution trends also increase the population of potential
customers as well. Technological: It is refers to how technologies influence the company and its image as
well. In this regards, advancements of Tesla automotive and energy solution is highly
depends on available technologies that help in making organisation cost effective. Along
with this, materials engineering technology play a crucial role in evaluating the efficiency
that may assist in enhancing overall profitability at automotive industry. Mainly, high rate
of technological change is consider as an important opportunities and threat as well
through which company can increase its brand image. Along with this, increase
popularity on online mobile systems may aid in promoting the company through which
number of customers get attracted that support in establishing its competitive edge. Legal: It includes laws and regulations which governs the process of the company. In
context of Tesla, there are various legislations such as protection of intellectual property
that could be effective and used by Tesla as a opportunity to protect their new products in
market. Therefore, it is crucial for business to effectively adhere all the appropriate laws
and legislations that help them in enhancing its brand and make them more agonistic in
market.
 Environmental: In UK, there are several rules and regulations that needs to followed by
Tesla so that they can easily hold their positive image. In context of this, Tesla has good
honour in market place. As the primary focus of Tesla is on sustainability and saving
energy that support in making them popular at marker place. However, overall Tesla has
good image in context of environmental impact (Aguinis, Edwards and Bradley, 2017).
By this, firm improve their products and supply chain more energy efficient.
Industry scenarios facing the company within its existing market domains
Industry analysis is one of the crucial activity for every business organisation so that they
can easily evaluate the actual issues and opportunities presents in the market place. One of the
main advantage of using tool is to effectively understand its actual position at market as compare
to its competitors. By this, company can easily prepare an effective strategic planning that
directly contributes in attaining higher growth at competitive market place (Karadag, 2015). In
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context of Tesla, company use Porter Five forces that help in analysing industry and its market
position as well. Suppliers' Bargaining Power: In this component, it is concern with those aspect in
which it signifies that the ability or potentiality of supplier to easily drive up the cost of
inputs. In relation to Tesla, its barging power of supplier is moderate as Tesla has build a
efficient supply chain with various suppliers and also there a wide availability of huge
suppliers within market. Moreover, company mane an initiative in experimenting the
product design using various materials because, if prices one raw materials goes up then
Tesla can easily switch to another. Buyers' Bargaining Power: In this, it signifies that the ability or capacity of customers to
consume product or services as per their own demands or interest. In relation to Tesla, the
industry where it operates its function has various other companies whop offer the same
products at similar price. Therefore, the bargaining power of buyer for Tesla is high,
because due to the availability of different option empower consumer to shift their
demand or interest to other brand easily. However, Tesla make an attempt to come up
with innovative features and function in its products that lead firm to attaining agonistic
advantage in an advanced way. Threat of Substitutes: This force is moderate in nature as in automotive industry there
are different alternatives to buy a electrical car. In this regards, no switching costs enable
competition and substituted like easily attract customers public transportation. Thus, it is
important for company to adopt service orientation as a strategy to influence more and
more customers towards its services. It may increase its profitability at market. Threat of New Entrants: Under this force, entry of new entrants is weak because it
required more financial resources to run a new business in Automotive company. This is
the reason that Tesla easily enhance brand and also established their agonistic image
(Engert, Rauter and Baumgartner, 2016). Through this, Tesla easily capture market share
from its competitors and raise their profitability as well.
 Competitive Rivalry: It is one of the major force in automotive sector in which
competitor is also offer similar products in cheap rates. In context of this, Tesla operates
their business in highly competitive market in which they serve aggressive in innovating
as well as promoting their products in market place with the aim of generating larger
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profitability level. Thus, it is important for Tesla to work on producing differentiate and
unique products as per continuous basis so that company can easily capture larger market
share and enhances their growth level as well (Gallus and Frey, 2016).
TASK 2
Relevant internal analysis tools to draw appropriate decisions
Tesla is well known for delivering best and unique products in market place by
developing technology. It operated their business in over the world with the aim of generating
more and more profitability. The primary focus of Tesla is to offer premium differentiate cars to
large number of customers in order to attain competitive advantage that support in attaining
higher growth. Thus, it is crucial for company to evaluate internal analysis so that they can
improve their performance level at competitive market. In this regards, the mission and vision of
Tesla is understood by following points:
Mission: “ To accelerate the world' transition to sustainable transport” is the main
mission of Tesla in which company focus on producing quality cars in market so that they can
easily satisfy customers needs. For attaining the company implement renewable strategy through
which company can improve their business scope and also increase its profitability level at
market place.
Vision: “To develop the most compelling car company in automotive industry by driving
the world' transition to electric vehicles” is the main vision of Tesla in which company indicated
leadership and excellence in the business organization. For attaining the same, company also use
new and innovative technologies within its electric auto mobile products so that company can
offer unique products to its customers and get their higher satisfaction level. Along with this,
Tesla also focus on putting efforts on designing and manufacturing cars in order to become a
leading company in auto mobile industry (Powell, 2014). In addition of this, Tesla also use
advanced and innovative technology to address current concern present in the market place. With
the assistance of this, company can easily improve their competitive image at competitive market
place.
In this regards, Tesla mission and vision statement directly reflects the nature of its
prominent all -electric auto-mobile manufacturing. Both are meet demand of market and
customers. This will contributes in establishing famous and competitive image of company at
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market and at the same time also make them sustain for longer time of period (Hladchenko,
2015). Currently customers look for unique and best quality cars from the company to enhance
their satisfaction level. This type of demand aligned with company mission and vision because
Tesla is also focus on delivering unique and innovative products so that customers can easily
satisfy their needs and at the same time also get loyal towards the company and its offerings as
well. With the help of this, Tesla may attain competitive edge from its competitors at market
place.
Along with this, it is also important for Tesla to analysis their strategic competencies and
capabilities through which they can improve their abilities of attain success. For attaining the
same, company is responsible for managing all the necessary resources which support them in
attaining their strategic objectives in an effective manner. In this regards, company has several
capabilities and competencies for which VRIO framework is one of the effective way or analysis
that help company in analysing their actual capacity. This model can be understood by following
description:
As per the above explained content, it has been identified that Tesla is performing its
business function in an effective and efficient manner This is because, it take initiative in
adopting suitable modification or changes in its working environment as or market trend or
demand that lead them to attain sustainable growth and development. Hence, for analysing the
internal capabilities and potentiality, Tesla make an attempt to imply VRIO analysis into its
business function which is discussed below:
Resources Valuable Rare Imitable Organisable Competitive
advantage
Global
Competition
Yes No No No Competitive
Disadvantage
R&D skill Yes Yes No No Competitive
Parity
Innovation Yes Yes Yes No Temporary
Competitive
advantage
Human Yes Yes Yes Yes Sustainable
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Resources Competitive
advantage
Valuable
Global Competition: According to analysis, it has been signified that Tesla potentiality to
cope up with current or upcoming market trend and rivalries is valuable. Due to such
performance, it enable organisation to improve its overall productivity and profitability ratio in
an innovative or productive style.
R&d skills: In this component, Tesla make an initiative to examine the customer taste or
preference as well as marketplace competition in order to implement best strategic decision,.
With the help of such initiation, it empower an establishment to bring increased level of
customer satisfaction and also lead them to enrich its brand image among competitors. Due to
this, Tesla's potentiality to perform R&D activities is valuable.
Innovation: Under this, Tesla make use of all advanced or new technologies within its
managerial and operational functions which make its innovation premises valuable. Additionally,
it assist them to enlarge its market share or size in a better manner. Moreover, it also help them
to place their brand in an impressive position without any hindrances.
Human Resources: In this, Tesla human resource are highly valuable as each personnel
within firm are increasingly skilled and talented that enable organisation to acquire novel ideas.
Due to which, it lead Tesla to gains its brand value in an impressive or improved mode.
Rare:
R&D skill: Under this, Tesla's R&D are recognised as rare in current competing industry.
This is because, it lead them to acquire aggressive and competent position among rivalries and
also able to attain sustainable productivity ratio.
Innovation: As per analyses, Tesla performance in adopting modern and innovative
techniques within its business process are signified as rare (Baumgartner and Rauter, 2017).
Henceforth, such action by company aid them to enlarge its volume of sales in an efficacious or
expeditious mode.
Human Resources: By having potential or skilled manpower in Tesla's business premises
that is classified in rare category. With the help of this, establishment are able to gain
competitive advantage among competitors in a stipulated time duration.
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Imitable:
Innovation: In this aspect, Tesla's innovation capacity is not imitable in nature that means
its strategies cannot be adoptable by any other companies within existing market (Rees and
Smith, 2017). Due to such contribution by company, it lead them to acquire competence position
inside competing marketplace in an amended or style.
Human Resource: In relation to human resource, Tesla's strategies in obtaining talented
workforce is imitable in nature that empower them to improve its capacity in surviving within
market for longer period of time.
Organisable:
Human resources: Under this element, Tesla's human resource is fully organised and
systematic that assist them to enlarge its market division to a new geographical region and also to
enrich its sales performance in an amended way.
Overcoming solution
According to proceeding explained analysis, it has been determined that Tesla has
various capabilities at the same time they lack in several fields that directly impact over their
decision making process. Some of the measures which Tesla can implies within its business
function are as follows:
 The foremost measure that Tesla should apply in its functional unit is that they can take
initiative in acquiring appropriate emerging market strategies that help them to enlarge its
market share by introducing the brand in a new geographical regions.
 In addition to this, Tesla must introduce unique and innovative features in its existing
products or service (Borland and et. al., 2016). This is because, it assist them to attract
large number of consumers towards their brand and they can easily place their company
in an aggressive or competent position.
TASK 3
Strategic choice models to sustain the company’s competitive position
In automotive industry, it is crucial for business organisation to maintain their
competitive image and also tries to capture more and more market share by providing quality
services to its buyers. This will directly contributes in establishing its competitive image at
market place. In context of this, company needs to focus on developing their image more
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popular. For attaining the same, Tesla use Bowman strategy clock to attain competitive market
position to capture larger market share from its competitors. With the use of this marketing
model company focus on implementing as well as using advanced technologies in its electric
vehicles and related products as well (Parker, Parsons and Isharyanto, 2015). This will contribute
in increasing the chances of attaining competitive success within the automotive industry. For
better understanding about current position of company, Bowman's strategy clock model can be
understood: Low price and low added value: This type of strategy position is focus on keeping the
price of products is relatively low through which company can easily attain competitive
position at market place by serving best quality services at low cost. Along with this, it
also focus on evaluating customers satisfaction in order to add values within their
products so that large number of customers get attracted towards its offerings. Low price: This type of strategy is related to produce large quantities of the products
along with it also valued that may help in them attaining competitive positive at marker
place. In this, company products are sold at a low cost along with high volume of the
output. This will aid in generating larger profitability at competitive market place. Hybrid: It is consider as an effective strategy if the added values are consistent in nature
and at the same time also offered on the regular basis. Furthermore, this type of strategic
position also consist companies focusing on their product differentiation which help in
making customers aware and influenced towards its services (Loon, Evans and Kerridge,
2015). This will contributes in enhancing the chances of attaining competitive success. Differentiation: It is one of the important and effective strategy that help company in
developing their unique brand image at market place. In this, business organisation is
tries to offer high quality products at an average price with the aim of attaining their
satisfaction level. In this regards, company is also focus on the product quality and put
significant impact on enhancing brand values. For this customers willing to pay more for
best quality products as it make image of company more popular and competitive as well. Focused differentiation: This type of strategy is also effective as it applicable to those
brand that focus on the luxury and exclusive products that sold high quality of products at
high price (Albert and Grzeda, 2015). This will contribute in increasing higher
profitability level of company by using targeted promotions, marketing, distribution and
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segmentation strategies. With the assistance of this, company can increase their
competitive image at market place and at the same time also capture larger market share
from its rivals. Risky high margins: This type of strategy is very risky for those company who most
likely to fail in the long term. In this regards, company will look for the better quality
products in the similar price range in order to cut their costs. It may help in increasing
customers satisfaction and at the same time also make them retain. Monopoly pricing: Under this position of the strategy, position of company is monopoly
leader in market place as firm offering the specific type of products in market place that
assist company in increasing their profitability level. As a result, there is no fear of the
competition and they are the one who determine the product price. In this, company serve
their products as per customers choice because their requirement and choice is highly
dependent on the product services offered by monopolistic brand.
 Loss of Market share: This type of strategy is not a very desirable for company as it
means that company is not able to offer products that actually related to the customers
values. In market place, customers do not purchase product if it is too high. Under this,
company opt standard prices of their products offerings in order to keep their image
competitive and relevant in the market and customers mind as well.
All these strategies are important and effective as it help company in gaining competitive
advantage at market place. In context of this, Tesla has a focus on differentiation strategy in
which company only concentrating only small group of people who are risk and eco-friendly.
Along with this, company also look for those customers who attracted from stylish and beautiful
look of company cars (Kenworthy and Verbeke, 2015). In automotive market, it is hard for
company to reach out and compete auto-manufactured brand. Tesla focus on their quality cars
rather than low cost as its uniqueness design and leading edge technologies can easily attract
more and more people to buy its cars. Thus, it has been evaluated that it is one of effective and
very suitable position for Tesla in competitive environment that help them in attaining core
competitive advantage at market place.
CONCLUSION
From the above discussed report it can be concluded that, strategic management is one of
the important aspect through which company can easily attain competitive advantage form its
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