Business Strategy: Tesla's Macro & Micro Environment Analysis Report

This report provides a comprehensive analysis of Tesla's business strategy, examining both its external market environment and internal capabilities. It applies frameworks such as PESTLE to assess the impact of macro-environmental factors (political, economic, social, technological, legal, and environmental) and Porter's Five Forces to evaluate the competitive landscape. The report also delves into Tesla's internal environment using the McKinsey 7S model and the VRIO framework to identify competitive advantages. Key aspects covered include Tesla's mission, vision, objectives, and strategies, along with an evaluation of its strengths, weaknesses, opportunities, and threats (SWOT). The analysis considers elements like competitive rivalry, the threat of new entrants, bargaining power of suppliers and customers, and the threat of substitutes. Ultimately, the report aims to provide insights into Tesla's strategic planning and its approach to achieving sustainable growth and maintaining a competitive edge in the electric vehicle market.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................2
P1 Applying frameworks and analysing the impact of macro environment on organisation and
strategies. ....................................................................................................................................2
LO2..................................................................................................................................................5
P2 Analysing the internal environment and capabilities of an organisation. ..............................5
VRIO framework ........................................................................................................................6
LO3..................................................................................................................................................6
P3 Analysing competitive force applying Porter's Five Force Analysis.....................................6
LO4..................................................................................................................................................9
P4 Strategic planning for organization........................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................10

INTRODUCTION
Business strategy is basically long term business plan for any organization that basically
will cover a time period of minimum three to five years of time. These practices are basically
concerned with major resources issues along with allocation of resources as well. Strategies are
concerned with scope of business like what and where they will produce. Tesla Motors, Inc. id
American automotive as well as energy company which is specialized in manufacturing electric
cars by its solar city subsidiary and manufacturing solar plant founded by Martin Eberhard, Marc
Tarpenning, Elon Musk, J. B. Straubel and Ian Wright on 1 July 2003 headquartered in Palo
Alto, California. The report with applicability of framework will address impact along with
influence of macro environment for the company and it's strategies. Further capabilities along
with internal environment will be analysed based on defined frameworks. The report will also
address Porter's Five Force Model to evaluate competitive forces for particular market sector to
gain effective market conditions. Finally, applicability of concept and models, theories, interpret
along with devising strategic plan for the organization for effective management practices and
efficient working conditions.

LO1
P1 Frameworks and analysing the impact of macro environment on organisation and strategies.
Mission- Its mission is to accelerate the worlds transformation to sustainable energy. The world
is moving through electric vehicles and care of environment so Tesla is on a mission to
accelerate the process.
Vision- Vision is to manufacture most innovative car organisation of 21st century by changing
world transmission to electric vehicles. The aim of the company is to provide electric cars to
people (Scholes, 2015).
Objectives- The objective is to create demand and drive sales up to for TESLA electric car.
Building long term awareness of brand and managing reputation. And to manage the company's
existing customer base to create loyalty and customer referrals.
Secondary objectives of business is to educate consumers about TESLA's goals and to improve
future.
Strategy- Strategy is an action which managers take which assist in achieving the goals of
organisation. Company strategy was to enter premium segment of market where buyers are
prepared to pay high prices and then down the market fastly so that it can higher the volume of
unit and lowers the prices (Akter, 2016).
Different strategy planning techniques are as follows-
Budget planning- Budget planning gives all details about how much fund is available to
TESLA, its current and future expense, allocating them and finding sources of revenue so that
firm can expand the business. Plan is made that how much money is to be spend on which
activity and work according to that.

Business planing- A business plan is a written document of business future, that documents
contains a plan that what to do in future and how business will work in future. What are
resources available and if not how to acquire that, akll these things are containede in business
plan (Thompson, Strickland and Gamble, 2015).
Stakeholder analysis- It is a practise of identifying peoples before starting the project. Grouping
individuals according to the level of participation, and their interest in the task and finding ways
that how to communicate with them and involve them.
Stakeholder matrix- Is is a project management tool which is used to analyse a project. The aim
of this matrix is to satisfy the needs and interest of each stakeholder. Tesla is focusing on needs
of stake holder ie, they are getting required return on investment or not.
Stakeholder mapping- It is a process of finding out key stakeholders which are connected to
project. In this process identification of individuals is done who have interest in the result of
project. As TESLA is expanding their market by electric car so analysis is done that who are the
persons who are interested in knowing the result (Olson, 2018).

SWOT analysis of TESLA:
Strength
Best employees are there by there innovative ideas company is successfully leading the change.
Best in brand in electric cars as TESLA's electric cars covers maximum distance.
Weaknesses
Higher standard of innovation, greater is mechanical complication and production risk factor.
Due to higher experimenting and more complicated process, company is facing an issue of not
meeting demands of customers.
Opportunities
Company can increase its profit as it is being successful in proving electric cars to customers.
It can take advantage of discounts on bulk buying of raw materials.
Threats
Tesla is successful in increasing market though it can not face the market competitors ie, Toyota,
ford etc.
Due to highly complex innovative manufacturing process. Some defective products have been
manufactured which is a biggest threat for organisation.
PESTLE analysis-
Political- Incentives given by government for electric cars. Trade agreement introduced by
government. As government gives more incentives to company less will be the cost incurred in

manufacturing. Other factors affecting Tesla's business are government incentives for electric
automobiles, new global trade agreements and political stability in majority of the markets.
Economic- Factors like market growth rate, trade levels, change in currencies rates etc, as when
currency rates changes company also has to make changes in their policies. As when cost of
battery is low it assist in saving manufacturing cost. Tesla needs to decrese the battery cost,
economic stability issues and decreasing renewable energy costs. (Lieder, 2017).
Social- Social factors like everyone not prefers to use electric car. So according to need company
has to manufacture its products. Company has done a great job in maintaing their place in minds
of people as an electric car which helps in facing competition if arises. Tesla external factors
which impact the business operations are increasing popularity of low carbon lifestyles,
increasing preference for renewable energy and improving wealth distribution in developing
market.
Technical- Tesla uses advance technology in their cars. Efficient batteries are been used by
TESL which provides long and better rides to consumers. Technology is important in determing
sales and profit for business, it is important for marketing and increasing sales. External technical
factors which impacts the Tesla operatios are high rate of technological change, increasing
automation in business and growing popularity of online mobile systems.
Legal: Laws is important factor which affects the business. Laws related to labours affect in this
sense as wages rate is less more labours can be appointed by TESLA. Factors like expanding
international patent protection, energy consumption regulations and dealership sales regulation in
US.
Environmental- From electronic vehicles to products which assists in saving energy. main focus
is on durability and energy saving. Changes in climate affects the company as their battries are
resistant or not that it can survive in hot conditions or not (Pisano, 2015). There are other factors
which impacts Tesla's market are expanding environmental programs, rising standards on wast
disposal.
Porters five forces model-
Competitive rivalry: There are limited companies which are operating in a automotive market.
Tesla has a biggest strength and large aggressive marketing campions, which stops the other
competitors to enter in the market. Company can generate scale which assits in facing
competition.

Threats of new entrants: Tesla can tackle its competitors by developing new goods and
services. By creating economies of scale which results in this way that it cost can not be lowered.
Bargaining power of suppliers: company can reduce the bargaining power by building suypply
chain with many suppliers. Firm can so experiment with design of products using different
materials (Hsieh, Ma and Novoselov, 2018).
Bargaining power of customers: TESLA can reduce the power of bargaining by creating large
customer base. By speedily creating new goods and giving offers bargaining power can be
reduced.
Threat of substitute: Company can lower its prices if possible. Company can use penetrating
pricing strategy so that it can expand its market share and also assist in dealing with substitutes.
LO2
P2 Analysing internal environment of organisation.
Internal environment of company is composed of elements within the organisation,
which includes employees, corporate culture and management. Role of manager and how
organisation is working inside all these factors are considered as internal factors.
McKinsey 7S model as management tool.
Strategy- Tesla strategy is to focus on electric cars driven by company's mission to boost
transmission to sustainable energy. Company opens galleries and different stores in shopping
centres and moreover other fuel vehicles manufacturer positions low cost of tesla.
Structure- It is not easy to define Tesla structure because it is so unique. Tesla organisational
structure is closed to divisional structure when compared to other structures. The tasks are
divided into different range of diivisions which includes energy, production and engineering
(González-Rodríguez and et.al., 2018).
Systems- There are huge range of systems which impacts the growth of TESLA. These includes
selection of employee, development of team and orientation system, customer relationship
management system and system of knowledge management.
Style/Culture- Culture followed in the organisation is role culture, which means that everyone
knows their role and responsibilities and work according to that. Role of individuals are assigned
and as everyone is serious for their responsibilities greater productivity is generated.

Staff- Staff is so good, all the employees are highly educated and experienced. So this help in
achieving the objectives of the organisation. Managers arrange different training programmes for
staff as new innovations are made time to time.
Skills- all the employee has a great such as communication skills, management skills, problem
solving skills. High skilled employees have talent which assist in development of the company.
Shared values- The values and system and another types of ethics within TESLA which includes
vision, identity of the main elements and corporate culture. As creating shared value is a best
way to achieve economic growth by creating value of social challenges and requirements, and
not only the conventional needs (Chen, Eshleman and Soileau, 2016).
VRIO framework
Vrio stands for valuable, imitable, rare and organised. There are four types of advantages
when a company performs VRIO analysis, these are competitive advantage, temporary
competitive advantage, competitive party and competitive disadvantages.
This advantages which company develops to deal with competitors in the industry. On
order for a resources or quantity to be advantage, it should be rare, valuable, hard to imitate.
Tesla has very few SCA which includes Elon Musk and Gigafactory.
It is concluded that internal environment in Tesla is very good. Employee relation in the
organisation is very good which impacts in this way that more productive work is generated by
the employees. Environments impacts a lot in day to day working as environment is good all
employees in the organisations are happy and work with their full potential. Tesla has a greater
capability of fulfilling their innovative ideas as they have enough resources and high skilled
employees which assist in accomplishing new innovative ideas.
A temporary competitive advantage is both rare and valuable. Temporary advantage for
company is autopilot technology which Tesla has recently integrated into cars. This can be said
as temporary advantage because the organisations are already testing and applying this type of
technology into vehicles as well. Company has created global supercharger network for buyers to
charge their electric cars for free of cost. Super charge network is a TCA because as the market
for electric cars grow organisation will create more charging stations which are open to all
similar eletric vehicles, as similar to gas stations today (Eaton and Kilby, 2015).

A competitive partity is needed to be valuable. TESLA has a few Cps which includes go
green, market trend and partnership between Panasonic and Tesla. Partnership between tesla and
Panasonic is powerful as Tesla decides to integrate the batteries which it used in Tesla models.
A disadvantage is also as important as competitive advantage. CS clears zero VRIO test
and are considered as a disadvantage to company. Company has a CD if oil prices fail. Another
disadvantage is when the organisation is unable to reduce the barrier so that it can enter into
vehicles it sells (Moseley III, 2017).
LO3
P3 Analysing competitive force applying Porter's Five Force Analysis.
Porter's five force analysis is tool to analyse competition for business. The tool helps
draw organizational economics for industries identify their uniqueness and factors generating
profits for them. Tesla as successful manufacture of electric vehicles must prioritize for
multinational business environment. Being one of the vast marketers for electric motor vehicle
Tesla will ensure factors of external environment to face competition from rival auto makers
such as Bavarian Motor Works, Toyota, Ford, Honda, Nissan, General Motor company and
Volkswagen. The applicability of Porter's Five Force model will justify. Tesla for effective
practices tackle external factors manage solution market and storage for energy. Tesla will attain
pressure from substitute, suppliers and buyers in market for analysis for business.
Competition with Tesla/ Competitive rivalry
Operation of Tesla are regulated under high competitive markets. The applicability of this
analysis will justify influence of competition on automotive along with industrial environment
for energy sources. Tesla considers external factors along with their responsibilities for
competitive rivals. Tesla faces competitive rivals through following strong force (Ghemawat,
2016).
 Weak force justifying small number of firms
 Strong force justifying highly aggressiveness of firms
 Strong force justifying low switching cost
Being in auto mobile market that indulge lot of innovation the effect of competition of
business for Tesla is too vast where count of buyers keep on decreasing day by day. The effect of

this practice of Porter's Five Force analysis will help survive through rival to gain high
profitability strategic management for automotive energy solutions for industrial environment.
Bargaining power of Tesla buyers and consumers
Customers of automotive enforce effective influence on industries. Company sales of
Tesla is directly affected by determinations of customers affecting company's revenue and sales
respectively. The external factors and intensities affected the bargaining power of customers in
following ways.
 Strong force justifying low switching cost
 Moderate force justifying moderate suitable availability
 Weak forces justifying low volume of purchases
Reduction in switching cost will lead to elimination of barrier for Tesla promoting business to
other dealers in respective business practices where availability of substitute limits the customers
bargaining power of Tesla. Inc. Therefore intensity of external factors of Porters Five Force
analysis will affect the bargaining power of customers as moderate force and secondary
management priority. The practices will reflect Tesla Inc. strategy for generic type and
intensities (Raghunath and Rose, 2016.).
Bargaining power of Tesla suppliers
Reliability of suppliers is basic for business operations in Tesla. The function covers the
part where suppliers play vital role in shaping environment of industry by influencing
availability of resources required by the firm. Bargaining power of suppliers are affected by
following factors in the process such as
 Moderate force that is moderate forward integration
 Moderate force that is moderate size of the suppliers
 Moderate force that is moderate level of supplies.
Suppliers of Tesla having low forward integration referring to limited control of suppliers for
selling their products. Factor affecting moderate level of effective supply empowering affects
Tesla in limited approach.
Threats of substitute
Impact of substitutes on automotive and energy solutions industrial environment is
experienced. The intensity of external factors lead to moderate force of threats substituting
against company (Gumusluoglu and Acur, 2016).

 Strong force that is low switching cost
 Moderate force that is moderate substitute availability
 Moderate force that is substitute of moderate performance
Porter's five field analysis for Tesla will prove to be low cost switching pausing them back into
competition among their rivals. The lost cost practices of Tesla enabled substitutes limit to
address attain customer's benefits along with reducing operational cost a well. At time many
substitutes only focus on satisfying partial needs of their consumers and customers as well.
Threats of new entrances
Companies like Tesla have a hue impact on industrial environment along with
performances where intensities of external factors are created threat to new entrance as follows.
 Weak force that is high cost involved in brand development
 Weak force for high cost involved in business operations
 Weak force that is high economies for scale
Operations of business involves high cost for development of their brand involving enormous
popularity of Elon Musk. Thus makes tough to Tesla if new companies come up with more and
effective technologies and effective market innovations. Based on external factors for Five Force
Analysis new entry is minor strategic management for industrial development of Tesla. Inc
(Teh and Corbitt, 2015).
Evaluation of applicability of Porter Five Force analysis for Tesla -
The evolutional of Porter Five Force Analysis will be analysed by the applicability on
Tesla will be justifies by following manner -
Advantages of model -
 The applicability will help Tesla in gauging competition in the market by having rising
power along with earning good profits. The practice will help Tesla in making plans for investments along with managing
competitive pricing for sustaining in the market type.
Disadvantages of model -
 The applicability of this factor for Tesla will lead to ignorance of all other factors such as
human values, operational activities etc.
 The may find that Tesla is perfect fit for all type of working conditions and may create pit
fall in such operational activity for Tesla.