Business Strategy Report: Tesla's Market Analysis and Planning

This report provides a comprehensive analysis of Tesla's business strategy, examining the impact of the macro-environment using PESTLE analysis, and assessing its internal environment and capabilities through SWOT and VRIO models. The report further applies Porter's Five Forces model to evaluate the competitive forces within the market sector and culminates in strategic planning recommendations for the organization. The report considers various factors such as political, economic, social, technological, legal, and environmental factors influencing Tesla's performance and strategic decisions. It identifies Tesla's strengths, weaknesses, opportunities, and threats, providing a detailed evaluation of the company's resources and capabilities. Finally, the report offers insights into strategic planning, helping to inform effective decision-making within the company.

Business Strategy

Table of Contents
INTRODUCTION .........................................................................................................................3
TASK 1 ...........................................................................................................................................3
P1 Impact and influence of the macro environment on a given organisation and its strategies. 3
TASK 2............................................................................................................................................5
P2 Analyse the internal environment and capabilities of a given organisation using
appropriate frameworks..............................................................................................................5
TASK 3............................................................................................................................................7
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation............................................................................................................7
TASK 4............................................................................................................................................9
P4 Strategic planning for a given organisation...........................................................................9
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategy of the business can be determined as the specific sets of actions and directions
which helps managers of the organisation to function business activities in a proper manner. It
assist the organisation in to have advantage in this competitive world. and helps in achieving the
desired objectives of the business. This report is based on TESLA, which is an American
automotive company, founded in July 1 2003 based in Palo Alto, California (Amit and Zott,
2012). It has major specialises in car manufacturing and deals with all the assembly plants of
cars.. Tesla mission n is to accelerate the world transition to sustainable energy and objective is
to to become the worlds largest branded company and focus towards worlds transition to electric
vehicles, thereby capturing larger market share. This report will cover the impact and the
influence of macro environment on the organisation and also assess company's internal

environment and capabilities. It also determines and evaluates Porters five forces model to a
given market and applies theories and concepts to devise strategic planning for a given
organisation.
TASK 1
P1Macro environmental influence on the organisation
Business environment consist of both internal and external business environment that has
impact and influence of the performance of the organisation. External business environment
consist of forces such as competitors. Suppliers, customers, market conditions which affects the
performance of strategies within Tesla. Therefore it is necessary for managers to analyse the
macro environment factors and take effective decisions regarding the formation of strategies
towards the success and growth of company (What is PEST Analysis?, 2018).
Political Factors- Political factors includes the governmental policy, rules and regulation
and various taxes imposed by the government which has a effect on the performance of the
business and leads problem in the formation of strategies (Aithal, 2016). As Tesla specialises in
electric car manufacturing has a political stability in U. S as lot of initiatives have been taken up
by the government regrading production of electric auto mobile, such as governmental incentives
are provided to the company which strengthens their financial performance and leads to increase
productivity, but as the company operates in various countries is affected by the different rules
and regulations of the government and one of them is the stringent environmental protection laws
demanding to reduce foot prints is on of the factor leading the manager of TESLA to form
effective strategies, this problem can be overcome by thereby manufacturing electric cars by
using the resources optimally as well as using the fossil fuels in a appropriate way as a way that
reduce carbon foot prints.
Economic Factors- This factor consist of the market growth, inflation and the exchange
rate which influences the performance of the business. As with the increase in the fuel prices
creates issues for the auto mobile industry at the same time it provides an opportunity for TESLA
to manufacture more electronic cars and captures the larger market share as customer will
demand e- cars rather then purchasing fuel based cars. Another economic factor is Decreasing
battery cost which helps company to manufacture cost effective vehicles and attains high market
share. Apart from this, inflation rate in US and in most of the developed countries will influence

customer purchase behaviour towards the purchase of affordable cars. It has a major effect in UK
Which has stabilised government policy and high consumer behaviour which wants luxurious
cars and impacts the growth and sales of Tesla cars in such countries as they do not prefer to
purchase electronic cars. and and has influence in strategic planning (Bharadwaj, El Sawy and
Venkatraman, 2013).
Social Factors- This factors is concerned to how the business activities and strategies
align with the social trends in the Target market. As with the increase concern of customers
towards eco friendly environment will provide an opportunity to the company to start
manufacturing its electric cars on a large scale and captures the larger market share but the threat
is the social status among the employees as individuals feel that they are judged on what type of
car they own, this problem can be overcome by the company to design fascinating cars with the
use of high technology so as enhance social status of the individuals by purcahsing electronic
cars and captures larger market share.
Technological Factors- This factors is concerned to the advancements of the technology
which has influence on the performance of the business operations at TESLA. Technology is the
strength of the company which helps them in manufacturing electric cars and gains competitive
edge over high cost fuelled cars. As Tesla majorly operates in US, where they have high
technological advancements and benefits the company by upgrading their cras with the use of
modern technology (Blackburn, Hart and Wainwright, 2013). But this technology is also facing
an threat to the company as with the changing technological factors company needs to update
their electronic cars and manufacture using recent technological trends. This creates high cost for
the company, in order to manage this threat it requires respective company to brings changes in
electronic cars and manufactures using technological advancements in order to attract customers
towards e- cars and sustain competitively in market.
Legal Factors- This factor is concerned to legal issues and legislations which affects the
performance within TESLA. As in the United States and various other countries it doesn't allow
direct sales of the product and requires dealership to transact with the customers within the auto
mobile sector. Moreover this increase regulations by the government related to auto mobile
standards influence the perform of the company and lead manager to develop effective strategies
such as complying with the legal laws and having a dealership of the separate countries which
will help in maximising the sales. Furthermore, it also provides an opportunity as international

patent will allow Tesla to expand its operations overseas and promote company's electric
vehicles (Chang, 2016).
Environmental Factors- This factor is concerned to functioning business activities in
such a manner that contributes in protecting and preventing environment. As with the high
demand of eco friendly products as it manufactures electric cars and reduce the negative impact
of pollution on the the environment but the problem associated is the overuse of electricity which
leads to overutilisation of resources and leads to depletion of resources. Therefore this problem
can be overcome by using the resources optimally and generates the electricity in such a way that
doesn't harm the environment and should make use of alternative resources. These environmental
legislation posses greatest threat and opportunity to the company as when using the resources
optimally and provide sustainable products, it enhances brand image of the company and threat
is that of fulfilling the environmental regulations of the differeSample 4nt nations makes the
complex process for an organisation and leads to reduced efficiency of work (Ghezzi, 2013).
M1 Critically analyse the macro environment to determine and inform strategic management
decisions.
With the help of PESTLE analysis it has led to the company to identify various factors
such as political, social, legal , technological and environment factors has a affect on the
performance of the business and leads to formation of strategies in a effective manner.
ThereforeSample 4 it is necessary for the manager at TESLA to identify the impact of political
factors in various countries as well as should comply with the legal factors such as of acquiring
dealership and avoid direct selling. This will allows TESLA to function effectively.
TASK 2
P2 Determining organisation internal environment using appropriate strategies
In order to function business activities properly, it is necessary for the manager at TESLA
to analyse internal strengths and weakness of the organisation so as to attain frame effective
strategies and maximises profitability and productivity of the given organisation. Therefore
SWOT analysis is considered as an effective tool in order to identify and analyse the business
strengths and weakness and frame proper strategies in order to overcome the weakness. It is
described as follows-Sample 4

 Strengths- It means the strengths of the business which contributes to organisational
growth and improvement. Strengths of Tesla which shapes the capabilities of the business
is the high innovative processes in introducing cost effective electric cars and gains
competitive advantage over fuelled based cars. This is a strong symbol of innovation
moreover unlike traditional cars Tesla doesn't follow the traditional strategy and uses
different business models that doesn't requires services such as oil change and many
which is cost effective to the consumer and has the capability to attract larger customers
(Hoejmose, Brammer and Millington, 2013).
 Weaknesses- The major weaknesses in front of Tesla that they have lower or poor
liquidity to beat with their competitors in effective manner. In comparison to their major
competitors they faces problem of liquidity while operate in various nations. With they
face issues of capacity that Tesla stores only operates in one plant which located at their
forefront in California. With plant has capacity of lakes of vehicles and production of an
organisation limited to some figures that are very much hazardous for target volumes.
Further consumers not aware so much about their specialized products and services that
are very much necessary for environment in regards of sustainability. But due to product
are very much futuristic and not people sure about whether they invest in it to get
experience in well manner.
 Opportunity- This factor presents the opportunity for the business for the potential
growth and development. There is major opportunity for the company regarding its
global sales expansion where the company can enhance its market presence and increase
the revenue through expanding in global market . Also the company can improve its
performance through diversification of business which will help in reducing the risk
associated with auto mobile sector and enhances profitability and productivity of the
company.
 Threats- These are the factors which reduce Tesla's organisational performance and
prevents the company from maximising its sales and profitability. As because of the high
level of competition within auto mobile industry between the luxurious and
environmental friendly cars, this posses threat to the company from the competitors who
could enter into electric car market segment and another threat is the fluctuation s in the
material price of the product which makes the company manufacture and sells cars at a

higher price. This impacts the sales of the company e- cars and reduce their capabilities to
expand globally.
In order to determine the capabilities, VRIO model is used-
 Valuable- Tesla resources such as battery packs, super charger networks make the
resources valuable and allows company to gain competitive advantage.
 Rare- Resources present with the company are rare as most of the auto mobile sector
manufactures fuelled cars and therefore such resources rare for TESLA.
 Imitate- These resources present with the company are difficult to imitate by other
competitors as manufacturing electric cars by TESLA follows different business model
which cannot be copied by competitors.
 Organisation- These all the resources provides competitive edge to the organisation but
the direct sales by the company provides them a temporary competitive advantage.
These are the capabilities of the respective organisation which assist them to gain competitive
advantage over rivals.
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities
Tesla has a strength of gaining competitive advantage as with the introduction of cost
effective electric cars it leads the company to attract larger market share but has a weakness of
limits market presence because customers are unaware about the existence of such cars in the
market. But due to the effective strengths organisation has the capability to overcome weakness
and can adopt to formation of strategies regarding creating awareness of its cars and capture
larger market share. This leads the company to grab the available opportunities and overcome
threat of competition and effective gains competitive advantage and maintains sustainability.
Moreover its resources are valuable and rare and difficult to copy it helps Tesla to overcome
weakness and grabs the opportunities.

TASK 3
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation.
In order to evaluate the attractiveness and the competitiveness of the auto mobile sector
for Tesla, Porters Five forces is an effective model which identifies and analyses five
competitive forces and analyses the strengths and weaknesses associated with each factor and
helps manager to take effective decision and frame proper strategic directions so as to gain
competitive advantage. It is described as follows-
 Threat of New Entrants- Threat of new entrants in automotive sector regarding
manufacturing of electronic cars is moderate (Oestreicher-Singer and Zalmanson, 2013).
As manufacturing new innovative electronic cars requires lot of time and leads manager
to form effective strategies. But as the new entrants in auto manufactures brings
innovation in manufacturing cars and adopts to lower pricing strategy this creates threats
to the business and puts pressure on the manager at TESLA to take effective strategic
directions such as by continuously adopting technological advancements and brings
innovation in bringing cars as well as enhance economies of scale so as to reduce and
lower fixed cost per unit and provides cost effective cars to the customers.
 Threat of Substitutes- Threat of substitute refers to large no. of substitute exist in
market that hinders self interest of an organisation to deal in effective manner. In context
of TESLA they deal in electric vehicles but due to public transportation facility and cars
that operates by fuel affect their business. In order to reduce the threat of substitute
products Tesla should provide high quality of products and cost effective in nature as
well as provide differentiated and unique products so that customers do not easily switch
to substitute products. There the power of substitutes is high in the auto mobile industry.
 Bargaining Power of Suppliers- As with the large number of suppliers in the auto
mobile sector they have less control over the price of the product and customers can
higher switching power. Therefore respective company should use raw materials of
different brands and take it from different companies so that if the prices of one supplier
goes up company can purchase it from another supplier. (Peng, 2017).
 Bargaining power of customers- Barraging power of buyers within auto mobile
industry is significant. Customers can easily switch from Tesla Model 3 to another

electric vehicle such as Jaguar 1-Pace, or Audi E- Tron Quattro. This increases the
switching cost and leads to increase consumer bargaining power. Moreover price
sensitivity such as increase range of electric vehicles from various competitors in such
case customers feels that price of Tesla products are expensive which increase the
bargaining power of the customers. In order to reduce switching cost of buyers company
should innovate the products and thereby provides proper after sales services as well as
discounts and offers should be provided so as to limit the bargaining power.
 Rivalry among competitors- It is one of the serious threat for an organisation that
hinders their self interest. In context of Tesla there are large no. of competitors exist in
front of them that grab market share of them that are Jaguar, Volkswagen and BMW etc .
To beat their competitors with sustain in this competitive business environment. it is
necessary for the organisation to provide sustainable differentiated products, at an
affordable rate as well as can collaborate with the competitors to enhance their market
share rather than just competing in a small market.
M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes.
In order to gain competitive edge and maintains sustainability in the competitive business
environment it is necessary for the organisation to develop market development as a strategy so
as to promote its products in the newer market segments and influence the customers to
purchase electric cars rather than high priced fuelled cars . It is also necessary for the business to
develop innovation as strategy by a way of updating and bringing modifications in the existing
models of cars so as to remain competitive and attracts customers towards its products. Therefore
in order to beat the rivalry of competition sustainable differentiated products should be provided
to the customers so as to attain higher growth and success. This will improve market position of
TESLA within globe.
TASK 4
P4 Strategic planning for a given organisation.
Strategic Management is the continuous process of planning, monitoring, analysis of
organisational activities in a proper manner so as to meet the organisational goals and objectives

in a proper manner. It also assist the managers within the respective organisation to use its
resources optimally towards the attainment of realistic goals. There are various theories and
model which assist organisation to identify and grab the available opportunities so as to attain
competitive position within the auto mobile industry. Therefore, Ans-off Matrix is considered as
the effective strategic tool which provides proper directions to the respective organisation in
functioning business activities and therefore leads to the attainment of organisational goals. This
tool is effectively applied By TESLA which is described as follows-
Ansoff Matrix Strategy-
Ansoff Matrix is also known as Market Expansion Grid which provides four strategic
directions to the company so as to grow and develop their business (retorius and Maritz, 2011).
Market Penetration- This type of strategy focuses on expanding the sales of the existing
product in the existing market place. This type of strategy assist the business to target its current
customer through promoting and creating awareness about their product and attains maximum
efficiency in sales and profitability. Tesla has not created many promotional efforts due to which
there is lack of customer awareness and for this promotional activity should be conducted by
TESLA so as to attain higher market growth and position.
Market Development- This strategy assist the business to expand sales of its existing products
in the entirely new market. Tesla majorly deals in Us and serves the customer of the particular
country This could be done by TESLA by expanding business in the new geographical markets
as well as adopts to lower pricing strategy so as to remain competitive and attracts new market
segments.
Product Development- This type of strategy allows the organisation to make huge investments
and develop a new product or make modifications in the existing products in order to cater the
need of the existing market. This could be done by the respective company by analysing its
competitors products and pricing strategy and making modifications in the existing product.
Diversification- This strategy allows the business to change their product line and introduce a
totally different product in order to target different customer base. This is the most risky strategy
as the market and the product is totally new to the business which creates difficulty for the
organisations at the early stage to expand their business. Tesla specialises in electric cars and

has solar panel manufacturing can also diversify its business to another sector in order to
enhance their brand image and attains maximum profitability.
RECCOMENDATIONS
By analysing all the above Strategic directions available to the respective company,
Market Development would be the most effective strategy in which respective company can
increase their market share by targeting customers from different geographical areas and attains
maximum profitability and productivity. This is the most efficient strategy should be adopted by
TESLA so as to target larger number of customers from different geographical markets and
therefore enhance their profitability and productivity level.
Strategic Plan-
It is a effective process used to set priorities and goals and strengthen business
operations to ensure that employees and other stakeholders are putting their efforts so as to
achieve the organisational targets in a proper manner. It also assist the managers to provide
clear guidance regarding formulation of effective strategic plan so that objectives can be attained
within the time frame. Apart from this Strategic plan leads to proper formation of strategies to
the employees within the organisation the goal mission and objectives so as to lead their work
towards the attainment of organisational goals. Strategic Planning for TESLA is as follows-
 Vision- Vision of TESLA includes creating the most compelling car company that
focuses on renewable energy and drive the world's transition to electric vehicles by
increasing and promoting awareness about electric vehicles and therefore attracting
larger customer base.
 Mission- Mission of the Tesla includes of developing products which will consume less
power and energy and sustainable transport thereby helping the individuals to purchase
cost effective electric vehicles ad prevents the environment from degradation.
 Objective- The main objective of TESLA car company includes creating vehicles in
sustainable manner, thereby reducing pollution as well as utilising the resources
optimally so as to meet the present and future needs of the customer. The main objective
of TESLA includes to capture market share by 20 % in upcoming 3 years by providing
quality and sustainable products (Schrader, Freimann and Seuring, 2012).
 Strategies and Tactics- By analysing the micro and macro environmental factors,
organisation needs to frame effective strategies in order to sustain in this competitive