Tesla's Business Strategy: Analyzing Growth, SWOT, and the Environment

This report provides an in-depth analysis of Tesla's business strategy, focusing on its growth and the impact of the macro environment. It employs the PESTLE model to examine political, economic, social, technological, environmental, and legal factors influencing Tesla's operations. A SWOT analysis identifies Tesla's strengths, weaknesses, opportunities, and threats, while the VRIO framework assesses the company's resources and capabilities for sustained competitive advantage. Additionally, Porter's Five Forces model is referenced to understand industry competitiveness. The analysis highlights Tesla's valuable resources, such as Elon Musk's leadership, its supercharger network, unique design, and efficient products, and assesses their rarity, imitability, and organizational support. The report concludes by evaluating Tesla's strategic advantages and providing insights into its competitive position in the electric vehicle market. Desklib provides access to this and other solved assignments to support students in their studies.

BUSINESS
STRATEGY

INTRODUCTION
Business strategy can be defined as set of decisions which helps in assisting individuals
for achieving specific business objectives. It assists organisation to secure a competitive position
in the market and helps in achieving targeted goals (Hamilton and Webster, 2018). Under this
report Tesla, and American auto mobile company has been taken. The company deals in
manufacturing electric car, solar roof tiles and solar panel. Tesla is ranked as world’s bestselling
plug-in passenger car with a market share of 12% of sales in this segment. The report will
describe business strategy and its impact on the growth of an enterprise by covering the impact
of macro environment on business. In order to gain an insight of operational capability SWOT
analysis and VRIO framework has been done. Apart from this Porters Five force model has also
been discussed for analysing the competitiveness of industries. The study has also covered
various concepts, theories and models used by the organisation.
TASK 1
P1
In organization there are various elements which have an impact on success of
organization (Quinlan and et. al., 2019). External environment factors considered as the factors
that remain uncontrollable for a company and which influence decision making, performance
and strategies of enterprise. This macro element can be understanding by PESTLE model which
is explained as follows.
PESTLE Analysis:
This model is employed to identify and examine external elements which affect an
organization's performance. PESTLE model include political, social, technology, legal and
environmental factors.
Political factors:
These factors are considered as the factors in which there is high involvement of
government on businesses and economy. This political factors include political stability,
government policy, tax policy, foreign trade policy, etc. Tesla company uses the both type of
vehicle that is of gas and electricity. Most of the Tesla drivers use electronic station to refill their
cars rather than using typical gas station. In company like Tesla political factors works positively
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for them. In this context, government provides incentives for electric auto-mobiles which work
as the opportunity for Tesla and this create strong financial performance also. Government
provides opportunity of opening new global trade agreement which is effective for Tesla to
expanding its operation at international level.
Political Stability is counted one among the greatest strength of the country and it allows
the organisation to make suitable policies for the betterment of the organisation in order to
ensure long term growth and survival of the organisation in the marketplace.
Economic factors:
This economic factors involves exchange rates, economic growth inflation rates,
unemployment rates etc. These economic factors give long term impact on the company and this
factors have an impact on purchasing power of customers, product and services. All economic
factors like trade levels, market growth, currencies and other variable influence the businesses of
automotive (Brown, 2018). In this context, decreasing in renewable energy costs makes the Tesla
product more attractive. In Tesla company sales of electric cars are going high which is effective
in increasing global economy.
With the changes in the interest rates of banks, there could be situations for the company
which will be favourable for them or not. In case there are favourable changes in the interest
rates of banks, it will be possible that this will create positive impact on the working of the
organisation.
Social factors:
This social factors include demographic characteristics, norms, custom etc. social factors
also include population trends such as age, distribution, income, safety health etc. In this context,
manager of Tesla requires to ensure effective implementation of strategy in order to achieve set
objective and to increase the number of profits. Customers are attracting more towards the idea
of an electric cars and especial the consumers who are eco-friendliness by mind. More use of
electric vehicle eliminates the use of fuel as a traditional vehicle and this is beneficiary for
environment. Tesla company improving the wealth distribution in developing market which
work as opportunity for organization.
In case the tastes and preferences of people changes in the favour of the products and
services offer by Tesla this will impact positively on the working of the organisation and in the
other case, it will be vice versa.
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Technological factors:
This technological factors works favourable and unfavourable for organization. This
technological factors includes level of innovation, automation, research and development etc.
This technology factors works as friend and as well as foe to Tesla company. Most of the work
which is completed by the management with the help of using different technologies. High rate
of technology changes works as the opportunity for Tesla to enhance its product technologies.
Some external factors threaten a company in term of speedy obsolescence of technology which is
used in its product. Technology factors play effective role for Tesla in term of increasing
popularity of online mobile systems. This factor of PESTLE emphasizes on opportunities which
growth is based on technology environment (Alles and et. al., 2018).
There could be changes in the way of working of organisations such as in the case of
technological changes and in case these changes are positive than in this case, there will be a
positive impact which will be created on the working of the organisation.
Environmental factors:
This environmental factors consists ecology and environmental aspect that is weather,
climate, tourism, farming etc. Tesla have opportunity of changing climate For example Tesla
produce electric vehicle so they have opportunity to promote that electric vehicle based on
concern on climate change, expanding environment programme and increasing in the standard on
waste disposal. This factor of external analysis create its positive impact and growth
opportunities which are based on nature of its different products and services.
However, the working of this organisation does not impact much upon the environment
but the contribution made by the government towards the growth and development of the
environment. It will help in creating good image of the organisation in the minds of customers
and will also increase brand awareness.
Legal factors:
These lawful factors include laws such as employments laws, customer security acts,
discrimination law, copyright and patent laws and health and safety laws (Calabrese and et. al.,
2018). Tesla operate its business at international level so it is essential to keep up to date their
international patents. Strategies of Tesla include various legal external factors. Expanding its
international business which requires patents protection because this is the way to harmless
spread out its businesses and considering enlarge global patent security. Dealership sales
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regulations are established in the united state other state don't allowed direct sale instead
dealership to interact with customer in the automotive market.
There are also some rules and regulations which are made specially for some businesses
such as the Advertisements Act which says that organisations do not make any advertisement
that could distract or mislead the customers so it is important for the organisation to fulfil legal
requirements in order to stay away from the intervention of government.
P2
SWOT analysis of Tesla:
Tesla famous for the sustainable creation. The brand of Tesla company is renowned for
its environmental conveyance and energy product which its make (Lee and Shin, 2018). This
company compartment and maintain solar and strength entrepot merchandise. Tesla brand name
is famous all over the world. This SWOT analysis is effective in lighting on the capability,
weakness, opportunities and threats of Tesla company.
Strengths
 Advanced production specialization, the electrical
cognition train technology is one of the biggest strength of
Tesla.
 Tesla is reasoned as well constituted brand and this draw
sizable supported content by its distinguished business
concern model.
 Sales of Tesla have unbroken increasing at global level.
This organization markets and sell its at global level
through its closely-held retail store.
 This company has effective marketing policies that
supports in increase its customer base.
 Tesla has fast flourishing super charger network which play
necessary role in distributed acceptation of the Tesla
product (SWOT analysis of Tesla Motors, 2019).
 Tesla company has its single source of cells for the battery
power backs.
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Weaknesses
 This company has its constricted occurrence in term of new
creation improvement and in handling multiple models.
 Cost of Tesla vehicle is high than the ordinary vehicle
(SWOT analysis of Tesla Motors, 2019).
 The cost of production and operation is also high.
 In comparison to its competitors this company has poor
liquidity.
Opportunities
 This organization researched and launched many products
in these rising profession areas.
 This company give more attention towards reducing
consumption of the fossil fuel.
 Tesla company expand its ecosystem to explore the related
market opportunities.
Threats
 Tesla facing the high competition from both sides
environment friendly brand and luxury brands and apart
from this Audi, Porsche also a competitive threat.
 This company has is limited supplier base.
 In this company threat of foreign currency exchange rate.
 For this company there is huge competition in auto mobile
market.
VRIO Framework
Factors Value Rarity Inimitable Organised Results?
Elon Musk Yes Yes Yes Yes Sustained
competitive
Advantage
Super Charger
network
Yes Yes Yes No Temporary
Competitive
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Advantage
Unique/
Futuristic
Design
Yes Yes Yes Yes Sustained
competitive
advantage
Highly
efficient
Yes No Yes No Competitive
Parity
For identification of the capabilities of Tesla, four resources have been considered i.e.,
Elon Musk, Super charger networks, Customer network and loyalty and Highly efficient. The
VRIO constructed above highlights Competencies and strategic advantage of Tesla (Cepel and
et. al., 2018).
Valuable: It refers to all the elements that adds value in an organisation and leads to
attainment of objectives and goals of an organisation. Elon Musk: It turned small start-up companies into billion dollar companies by hiring
only best talents. Super charger network: This system has aid the customers to assertion their electrical
conveyance for free. Unique/ Futuristic Design : The unequalled plan of cars along with execution reinforced
a strong tendency for driving and obtaining a pure electric car. (Tesla Motors VRIO
Analysis. 2019) Highly Efficient: The products are highly efficient in nature.
Rarity: It refers to the extra features provided by the organisation which are rare and
leads to attain competitive advantage. Efficiency is not found to be rare because many
competitors are present in the market which are efficient in providing their services.
Inimitable: It refers to those capabilities that any competitors/rivals cannot copy. In the
context of Tesla, the products and services offered by the company cannot be copied by others
such as Semi-Trucks by the company which were launched in 2017 as well as supercharged
version of their Roadster (Tesla Motors VRIO Analysis. 2019).
Organised: It refers to all those elements which are required to be effectively organised
for attainment of organisational goals. In context of Tesla the super charger network and
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efficiency of the organisation are not organised in nature. Some innovative practices and
trainings must be provided in order to improve organisational performance.
Based on the above analysis, many resources and capabilities support organisation in
attaining sustained competitive advantage as Tesla has sold more than 1lakh cars and many
advance orders (Tian, Sigamani and Malhotra, 2018).
TASK 2
P3
This model refers to a framework employed by companies to examine and evaluate the
competition prevailing in the market (Manninen and et. al., 2018). These forces are composed of
five sections in order to determine how a firm can effectively minimise the costs and set prices.
The significance of these forces helps in making appropriate business decisions. This model was
adopted by Tesla in order to determine the competition prevailing in the market. The five forces
are mentioned as follows: Bargaining power of supplier: It refers to the extent to which a supplier bargains for a
product. In Tesla, the bargaining power of supplier is high. Suppliers refers to those
individuals who are providing raw material for the company. Many suppliers were not
willing to change their production when Tesla entered the auto mobile industry. As a
result, Tesla became less selective with its taste of suppliers and has to pay more to
suppliers due to minimal competition. By becoming more flexible with suppliers the
company attempted to reduce its costs. Bargaining power of Buyers: It refers to the extent to which a buyer wants to avail a
product or service with lower price and high quality. In context of Tesla, the bargaining
power of buyers is low. The choice to make purchase or not, is totally in hands of buyers
so the company will set prices according to the premium of utilising their battery. The
pricing will be done by including all the costs incurred in building proprietary along with
super charger stations. Tesla can tackle the bargaining power of buyers by innovating
new products and by building large customer base (Chu, KrishnaKumar and Khosla,
2014). Threats of New Entrants: It refers to brining innovation and new ways of doing existing
things. In Tesla, the threat of new entrants is high. The unique aspect of offered by Tesla
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is its proprietor y lithium-ion batteries with varied range which is not offered by any
other company till date i.e., no other company could beat Tesla in this case. The desirable
nature of zero emission electric power and the image created by beautiful and modern
cars have raised customers’ expectations (Tesla Porter’s Five Forces Analysis. 2019). Threat of Substitute products: It refers to when a new product satisfies the needs of
customers in different way which act as a negative factor for the company. In Tesla, the
threat of a substitute product is low. It is because, till date no other company have
achieved same success with regards to fully electric vehicle. Many companies are
providing same services like plug-in hybrid electric vehicles, lithium-ion battery, etc. as
that of Tesla but none of them was successful in providing fully electric vehicle. To grow
and develop in the competitive market the companies are required to innovate beyond
Tesla and have to develop a superior product to be an acceptable substitute.
 Rivalry Among Competitors: This force determines how competitive and profitable an
organisation is (Kasemsap, 2018). To gain a market share organisations have to compete
aggressively with their competitors. In Tesla, the intensity of rivalry against competitors
has steadily increased and is moderately high. In order to compete with Tesla, many
competitors present in the market has attempted to create a n electric smart car but they
were never successful. For an aggrieved competition competitors are required to design a
car that looks beautiful with a performance such that they can be compared to Tesla.
Additionally, none of the other competitor was successful in replicating the similar
network of about 2000 charging stations all over the globe.
This model will help in understanding the key areas which are required to be develop in
Tesla and will also help in processing various strategies such that the company can
enhance its sustainability in the market.
TASK 4
P4
Ansoff Matrix is a tool that assists the executives and managers for the growth and
development of a company. It includes four strategies which contributes in success of the
company (Bocken, Schuit and Kraaijenhagen, 2018). This matrix suggests that a business needs
to enter in new market or should offer new products to its customers in order to sustain in market
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for long run. In Tesla, this matrix can be used by the option fuel vehicle manufacturer to form
strategic judgements. The four strategies are explained as follows: Market Penetration: It refers to the extent to which a product is recognized by
customers and sold to them to enhance market share. In its business focuses on selling
the existing products in the existing market. This strategy is extensively used by Tesla as
the company is focussing on selling its various models. Product Development: This strategy focuses on developing a new product with
different characteristics in order to sell in existing market. It will offer additional and
new benefits to customers (Suselo, 2018). Tesla does not engage in product development
frequently as the cost of developing new products is high. Presently, the company is
working on developing semi-truck and pick-up truck, along with a varied range of
energy storing products (Tesla Ansoff Matrix. 2019). Market Development: It refers to a strategy for growth that helps in identifying and
developing new market segment for existing products (Alles and et. al., 2018). Tesla is
evaluating a number of new markets to enter in order to increase its market share and to
create a unique brand image.
 Diversification: It refers to developing a totally different and new product in order to
increase the market share. This strategy has been used by Tesla in the past years, as
earlier the company was manufacturing only electric vehicles but now it has extended its
offerings. Diversification can be done in order to overcome the financial issues.
Justifying and Recommending the most appropriate growth strategies.
From the strategies explained in above matrix, it can be analysed that strategies play
different role in different organisations (Geissdoerfer, Vladimirova and Evans, 2018). Adoption
of any of these strategies will help in growth and development of Tesla. The best suited Strategy
for Tesla will be market development amongst all of them. Adoption of this strategy will help the
company in extending its market share from different countries and will also develop awareness
among customers. As the company is already having competitive offerings so it will be easy to
Tesla to enter new market. Application of this strategy will help the customers also to have
unique offerings and products.
Produce a strategic management plan with strategies, objectives and tactics.
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A strategic management plan refers to a document that describes the goals, objectives,
vision, mission of an organisation to the desired customers ((Kasemsap, 2018). The strategic plan
of Tesla is explained as follows:
Vision: The vision is “To be the most compelling car company by driving the transition of world
to electric vehicles”.
Mission: The mission is “To intensify the world's transition to sustainable transport”.
Objectives: The main objective of the company is to extend its market which can be done by
launching a new product or developing its market. Tesla is required to adopt SMART objective
to attain success in the market place. It says that the objective must be specific, measurable,
attainable, realistic and time bound.
 To capture 10% of market, share by 2021. The other objective is to increase its sale by 20% by 2020.
Strategies and Tactics: Strategy refer to a plan designed to achieve a long -term aim. The
strategy adopted by Tesla will be Market development. This strategy will help in extending the
market share and will lead to increase the profitability. Tactics refers to a strategy which is
carried out carefully with all efforts to achieve specific task. The various tactics which were used
by Tesla to grab customer attention was Innovation and its pricing strategy.
CONCLUSION
Thus. it has been analysed that strategies used in business helps in identifying, measuring
the performance of an organisation and achieving the desired objectives. Tesla has adopted
market effective strategy for which it is required to perform PESTEL and SWOT analysis so that
the enterprise can identify the external and internal factors easily. Application of Porters five
force model will help the company in determine its position in the competitive market. Mission,
vision, objectives of Tesla has also been determined in this study. Moreover, Ansoff’s model has
been used to make action plan which was made by considering all the risk factors residing in the
market. For effective working of an organisation it is important to determine an effective
business strategy such that it can support the business organisation to stay competitive.
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