Report on Business Strategy Analysis for Tesla Motors

This report provides a comprehensive analysis of Tesla's business strategy, examining its approach to achieve sales growth and market sustainability. It begins with an introduction to business strategy and its importance, followed by an analysis of Tesla Motors. The report utilizes the PESTEL framework to assess the impact of the macro environment on Tesla's strategies, considering political, economic, social, technological, legal, and environmental factors. It then delves into internal and external capabilities through a SWOT analysis and applies the VRIO model to evaluate resources. Porter's Five Forces model is used to analyze the competitive landscape. The report concludes with an overview of strategic planning concepts and their application to Tesla, offering insights into the company's market position and future prospects.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Applying frameworks to analyse impact of macro environment on a company and their
strategies......................................................................................................................................1
TASK 2............................................................................................................................................3
P2 Analysing internal and external capabilities of a company...................................................3
TASK 3 ...........................................................................................................................................5
P3 Applying Porter's Five fore Model for analysing various competitive forces whichS affect
a company...................................................................................................................................6
TASK 4............................................................................................................................................7
P4 Applying some concepts theories, models for Strategic planning of company.....................7
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................9
Books & Journal..............................................................................................................................9

INTRODUCTION
Business strategy is defined as a action which business undertakes to achieve more sales
and survive in the market for long term. These strategies are very important for business in order
to enhance their overall performance of company. Business strategy is very helpful in attaining
company's goals and objectives. This report is on Tesla Motors a company which was founded in
yaer 2003. in this report framework used by organisations to analyse the macro environment and
its affect on business strategies is discussed. In this report framework of macro environment on
business is analysed on company. Internal and external factors affecting Tesla have been
discussed. Porter's five force model is applied. Lastly, various theories, concepts,applications,
plan are applied on company(Eaton and Kilby, 2015). .
TASK 1
P1 Applying frameworks to analyse impact of macro environment on a company and their
strategies.
TESLA is a company known for innovation model they use in their company. PESTEL
analysis is used by by companies to understand external factors present in macro environment
which helps company to prepare themselves in facing challenges and grabbing opportunities in
market. Various factors affecting Tesla are listed below:
 Political: Political environment of a nation always affects the business functions directly
or indirectly. Stability in political conditions of UK leads to effective execution of
business operations in different sectors of country. Such as in case of Tesal company
want to ensure that there is growth of auto mobile industry which can benefit them in
terms of increased area of operations and larger area of market to function. Government
is also taking efforts to develop and help in development of electric vehicles. There have
been decrease in interest of loans which is given to this industry so that more finance can
be used and invested. Political stability will help Tesla in planning its intensive growth
started which can help company in gaining a competitive advantage in
market(Thompson, Strickland and Gamble, 2015).
 Economic: Fortune of a company is affected by various economic factors present in the
external environment of a company. After recession, economic growth has been taking
place in different countries. This improvement in the condition of economies globally has

lead to rise in the sales of electric vehicles. This has been fitted Tesla as the company is
dealing in making of electric cars. There is also drop in the prices of electric batteries
means their reduction in price of raw materials, this has lead to reduction in price of
electric vehicles also. With the same margin of profit now this company is bale to provide
products at more affordable rated to their customers.
 Social: The concept of electric car is very fascinating for some people living in society
and for those who are having concern or environment and prefer environment friendly
products. There is no use of fuel in such cars which is beneficial for environment also.
Auto mobiles in which Tesla is dealing with are environment friendly. Electric car is also
something which can enhance people status in society from that point also people are
preferring its use.
 Technological: Technology is also a factor which is influencing growth of businesses
globally. From production to operations, marketing every department is affected by
technological advancements taking place in external environment and such changes are
adopted by the company also. There has been development of technology which is
focussing on use of embedded technology in case of auto mobile industry. Also, there has
been advancements in technology to reduce overall emission of carbon footprint. Such
advancements lead to development of technology but at same time there is sustainable
development which is taking place in the macro environment.
 Legal: Changes in legal laws made by concerned authorities of a country also have affect
on company's operations. Such legal laws have to be compulsorily adhered by all
companies to whom they are related to. In case of Tesla being in the auto mobile
industry, whenever there is increase in regulations of auto mobile standards by the
government company have to make sure that they are doing compliance with them.
Recently. In 2019 there have been two Crashes in Tesla in that case Transportation safety
board and National highway traffic safety administration investigated main causes for
those crashes. Also, some of legal issues related to patent and consumers regulations have
to be followed by Tesla(Teh and Corbitt, 2015).
 Environmental: External Environment is where every company is functioning and all
their functions are affected by that external environment. Tesla is a company dealing in
electronic cars, this company always focussed on manufacturing of energy saving

vehicles so that company is able to protect and save environment. They have been
implementing all measures which carbon help them in controlling the emission of carbon
which are otherwise done by other traditional cars. Energy saving and using sustainable
sources have lead this company in conservation of environment. Company' is also trying
to make their supply chain framework more energy efficient. These all efforts has lead to
building of goodwill and brand image of this company(Scholes, 2015).
Above discussed are some of factors which are present on macro environment of every industry
and they have effect on company's internal functioning and strategic decision making
TASK 2
P2 Analysing internal and external capabilities of a company
SWOT analysis helps a company in analysing strengths and weakness which are needed
to maintain their overall profitability. SWOT analysis helps them in developing Strategic reforms
So that company has competitiveness and they are able to achieve long term success.
Strength Weakness
 Tesla has a strong brand image which
helps them in having strategic
expansion and they are able to give
competition to other similar brands on
the industry(Schaltegger, Hansen, and
Lüdeke-Freund, 2016).
 Tesla is also very famous for a
company involved in bringing time to
time innovation, they were first one to
introduce first sports car which is fully
automatic.
 Tesla is a brand which is having a
limited presence in market which
means that they have majority of their
revenue earned from united states, they
posses very small presence in China
and other parts of world.
 Other companies provide price based
competition to Tesla, their products are
available at high prices in comparison
to other companies offering similar
products.
Opportunity Threat
 Tesla can expand their global auto  New emerging brand s are using

mobile market which can help them in
experiencing growth and development.
 Tesla can also make efforts by
expanding in Asian automotive
markets, which can help them in
diversification of their operations.
innovation, price penetration as
strategies which can affect company's
sustainability for long term.
 Tesla is involved in direct sales of its
products which means that they are not
using dealership so this can affect
company in negative manner, as some
places such type of direct sales are
prohibited.
VRIO Model:
Resources Valuable Rarity Inimitable Organized Result
Human
Resource
Human
Resource
Will provide
competitive
advantage
Innovative
products
Innovative
products
Innovative
products
Innovative
products
Partially
competitive
Global
Presence
Global
Presence
Global
Presence
Temporarily
competitive
Autopilot self
driven
technology
Autopilot self
driven
technology
Autopilot self
driven
technology
Autopilot self
driven
technology
Autopilot self
driven
technology
Competitive
advantage
Valuable: these are those resources which have potential that can add customer value and can
provide competitive advantage to this company. Human resource as a factor is discussed below:
 Human Resource: Tesla is company which was founded by engineer group in year
2003. This company always believe in hiring people with strong technical knowledge
which is required as they are dealing in manufacturing of electric cars.
 Innovative products: Tesla is involved in innovating high quality products and they
believe in time to time changes so that they are able to retain their customers.
 Global Presence: Tesla is present in more than 29 countries including United states
which helps them in delivering high value to their customers(Moseley, 2017) .

 Autopilot self driven technology: This technology is present in this company which
provides increased value to its customer and help in increasing overall value of company.
Rarity: This includes those resources which are having unique presence and they help company
in getting a competitive advantage.
 Innovative products: Tesla is amongst the most valued vehicles in America. They are
dealing in electric cars which have gained popularity as they are not causing any harm to
environment.
 Global Presence: Tesla is having a global presence they are present in approx30
countries and are having 4378 motor sales stores throughout the world.
 Autopilot self driven technology: This technology has provided Tesla with new
experience to its customers as because of this technology they are bale to give 40X more
processing power ad advanced technology related to sensor which is rarely found in
electric cars.
Inimitable: This features deals with those resources which cant be easily copied by other
competitors, in case of Tesla also this company is having some characteristics which is
providing a distinguished advantage to them(Marx, 2015).
 Innovative products: Innovations which Tesla brings in its products are very difficult to
be copied, recently they did a innovation by purchasing solar sector in yaer 2016.
 Autopilot self driven technology: This is one factor which cant be easily adopted by any
other brand. This feature is dealing with many innovative features such as cameras
providing high visibility, ultrasonic sensors, sensing everything from a distance of 16 feet
these all features make this a quality which can't be imitated by any other company.
Organized: This feature consists of those resources which have to be very organized so that
overall objectives of company are achieved.
 Autopilot self driven technology: This technology provides Tesla with some features
which are not offered by any other company so they have to make efforts that they are
able to organize such resources in an effective manner(Linder and Williander, 2017).

TASK 3
P3 Applying Porter's Five fore Model for analysing various competitive forces whichS affect a
company
It is very important for companies that they should consider various competitive factors
which can affect the company. Michael Porter has developed five force analysis so that this can
be used as a strategic tool top understand impact of various factors prevailing in the external
environment and have effect on company and its operations. Manager of Tesla has used Porters
five force analysis to evaluate some factors affecting company:

Threat of new entrants:Innovation is a tool which is being used by many companies
today to enter a market and establish there. Such new companies provide huge competition to
already existing brands. For Tesla also companies who are entering the auto mobile industry and
are using low pricing strategy to establish themselves have possess a threat for Tesla. Company
has been taking initiatives to deal with such competitors such as they are willing to make
innovation in their existing products, adding some new features so that customers can experience
change and newness. Also, Tesla is using economies of scale as a tool to deal with their
competitors who are giving price based competition so, as economies of scale will help them in
reduction of fixed cost this will have a positive impact on profit margins of company(Johnson,
2016).
Threat of substitutes: In Today's scenario there are situations always in favour of
customers which means that such conditions make it very easy for the customers to easily find
substitute of a particular product. In context of Tesla, this company is dealing in manufacturing
of electronic c cars which makes it difficult for its customers to find a substitute of this product
easily in market. Tesla can deal with Threat of substitutes by focussing on service part of their
brand apart from just products. They should make efforts to understand what are the core
requirements of the target customers they are dealing with, they must also try that there is
increased cost of switching for existing customers so, that it becomes difficult for their existing
customers to switch to another brand.
Bargaining power of customers: Buyers of Tesla posses rights to easily switch from its
products to another product without incurring any additional cost. This means that there is zero
switching cost from one product to another similar product. There are many brands which can be
substituted easily for Tesla's product such as Jguar's I-Pace, Audi's E-Tron Quattro etc. If there is
nil switching cost then it leads to high bargaining power of buyers for any company. Another
very important issue which affects bargaining power of buyers is the price sensitivity. There has
been an increase in the range of electric vehicles by some newly established auto mobile
companies at low price in comparison with Tesla. This has lead to changing preferences of those
customers who are very price sensitive and they are trying to find out alternative for Tesla's
products(Higgins, Omer and Phillips, 2015).
Bargaining power of suppliers:Tesla as a auto mobile company is depended on their
suppliers for timely supply of raw materials so that business operations are taking place without

any interruptions. Suppliers have influence on functioning of the company, Suppliers of Tesla
have low level forward ingratiation. Which means that suppliers of this company posses limited
control over sales and distribution of the products they are dealing with. Most of these suppliers
are moderate in size which means that they posses very low influence on environment of
automotive industry. Tesla can deal with their suppliers by building effective supply chain
network, experimenting with their products by using, development of third party manufacturers
different supply chain networks. All such efforts can help Tesla in reducing the suppliers
bargaining power.
Competitive rivalry: There is very high competitive rivalry being present in industry in
which Tesla is dealing. There are some recognized brands such as BMW, Volkswagen, Jaguar,
Mercedes-Benz, Nissan and others. There are two brands Nissan Leaf and Chevrolet Bolt who
provide competition to Tesla and these two brands are likely to affect this company in coming
period of 1-2 years. The amount of competition which exists in solar energy system and energy
storage products also increasing. In case of solar Energy Tesla has various competitors in market
such as Trinity Solar, Sunrun Inc., Sun Power corporation and many other solar companies.
Tesla can deal with this by trying to build sustainable differentiation in their products,
collaborating with their competitors so that their market size can be increased(Hart, Sharma and
Halme, 2016).
TASK 4
P4 Applying some concepts theories, models for Strategic planning of company.

Ans off matrix is a model which can be used by companies to make various strategic
decisions. This is one of best matrix which can be used by Tesla in growing and expanding their
existing scale of business. Ansoff matrix was developed by H.Igor Ansof in the year 1957. This
is used in identification of best opportunities which are available for company which they can
use in analysing risk factors while modifying strategies and then adopting them in comapny.
There are four different strategies which are available for business which are discussed below:
Market Penetration: This is a strategy which is used by companies where company is
using existing product and existing market as their strategy to increase their overall sales. Tesla
has also been involved in using this strategy as a tool for strategic planning. This company is
now focussing on using Model X, Model s and Model 3 vehicles, Power pack 2 & Power wall 2.
apart from these products they are also using inverters, solar panels, electrical hardware and
various different types of monitoring devices in United states and other 29 countries of
world(Eaton and Kilby, 2015).

Market expansion: Tesla uses this strategy as a growth strategy. Company uses it when
they want to enter a completely new market. Tesla's vision and mission statement also focuses on
generating more sales and and growth of business globally. Company is also adopting
differentiating strategy as they are focussing on having some different features in their products
so that that can give product based competition to other brands in auto mobile industry. Tesla
wants to attain global leadership in case of electrical cars so this is reason why they are targetting
new markets for their product. This will help them in increasing customer segment and
approaching new customers will become easy for Tesla. They are also willing to form new
alliance with companies which can help them in getting advantage from each other.
Product expansion: In this strategy company is launching or adding some new products
but in existing market only. Tesla is willing to launch new products but many times company is
not able to do so because of some restrictions such as there is high cost which they have to incur
for development of any new product in auto mobile industry. Company is also not sure whether
new product will provide them with required amount of profits and in certain cases product fail
to meet customers expectations then it can fail also. This can lead to bear heavy cost for
company which can lead to strong financial losses to them(Chang, 2016).
Diversification: In diversification strategy company is involved in development of new
product and market in which product is launched is also new. Tesla is using this strategy since
past few years, as this company is always involved into continuous innovations and inventions of
new products. They started business in 2003, and after that in 2016 they did a major change
when they purchased solar city and they entered into energy storage sector. Further, this
company is facing some issues such as price based competition and reduced profitability all this
is forcing them to further diversify their existing products so that sales may be increased.
From above strategies, it can be said that Diversification is a strategy which can be used
by Tesla in expanding its operations as, at this stage what customers are expecting from this
brand is that they want some new innovations in terms of new products. So, diversification will
help company in approaching some new markets and they will be able to approach new segment
of customers. New customer base will be established based n this Strategy for company which
can lead to increase in profitability of company(Burlton, 2015).