Business Strategy Analysis of Tesla: PESTLE, SWOT, and Porter's Model

This report provides a detailed analysis of Tesla's business strategy. It begins with an introduction to business strategy and its importance for achieving organizational goals, using Tesla as a case study. The report then applies the PESTLE model to analyze the external environment, considering political, economic, social, technological, legal, and environmental factors impacting Tesla. A SWOT analysis is conducted to evaluate Tesla's internal strengths, weaknesses, opportunities, and threats. The Porter's Five Forces model is explained to assess the competitive landscape. The report further explores strategic directions, including the Ansoff Matrix, and concludes with a strategic management plan outlining strategies, objectives, and tactics for Tesla. The analysis covers market penetration, market development, product development, and diversification strategies, concluding with a comprehensive overview of Tesla's strategic positioning and recommendations for future growth.

BUSINESS
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
PESTLE Model for environment analysis...................................................................................3
SWOT analysis for internal analysis...........................................................................................5
Explanation about Porter Five Forces Model..............................................................................6
TASK 2............................................................................................................................................8
Evaluation of the different types of strategic directions available to the organisation................8
Produce a strategic management plan with strategies, objectives and tactics...........................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy can be explained as the planning and plotting which is required in every
organisation for the purpose of achieving the goals and target. It gives competitive advantage in
the market due to which healthy competition can be continued between different business
organisation. In addition, it has to determine that what are the strength and weaknesses of a
company so that future improvement can be done. The choose organisation is tesla which is
manufacturing company of electric cars. it was founded in the year 2003 by the group of
engineers for the purpose of proving that electric can be much better option to travel from one
place to another.
In context of the file, number of topics will be explained which will include internal and
external factors that affect business organisation porter's five model will be explained for finding
the competitive environment. Also, strategic management plan will be discussed ritual include
strategies objective and tactics will help organisation in achieving their goals and targets.
TASK 1
PESTLE Model for environment analysis
PESTLE analysis is explained as the model which helps to determine external factors
which effect the business organisation in positive or negative manner (Ghezzi, 2013). In contacts
of Tesla, PESTLE analysis will help them to determine that what are those external factors that
can create issues for the company in future period so that better business decisions can be taken.
Below, there is the detailed explanation of PESTLE analysis on Tesla.
Political Factor: This factor of PESTLE analysis helps organisation to determine that
what are the government policies and decisions which is needed to be implement by company for
achieving their goals. In terms of Tesla, they are required to focus on governmental incentive
that are formed for electric automobiles, must try to find new global trade agreements so that
opportunities can be generated for them to perform better within the market. While talking about
the political impact on TESLE, it can be easily said that it has been responding positively as they
in showing favorable response for them.
Economical Factor: This factor includes growth percentage of market, trade level,
fluctuation in currencies which has a direct influence on taking any of the business decisions

(Hoejmose, Brammer and Millington, 2013). In context of Tesla, economic factor can increase
the expenses on manufacturing the vehicle if import charges are high. Or even opportunity can
be generated if Cost decreases related to generating renewable energy. It is important for
organisation to change their cost as per the requirement of situation if they want to sustain within
the market. Sometimes economic factor itself increases the overall cost of the vehicles which
shows the negative impact for the company.
Social Factor: It is a direct connection with believes, norms and values of people. The
demand of Tesla can be fluctuated as per the requirement of public so in order to maintain that
company is required to fulfil the demand of public by manufacturing the cars as per their
demands. TESLE can include some of the additional features in their car which doesn’t affect
their culture, safety and if these things can be done from the side of organization then they can
easily achieve the targets in best possible manner.
Technological Factor: It is one of the most crucial factors for business organisation like
Tesla because they are one of the companies who update themselves by introducing new
business ideas. If they want to sustain within the market for longer period, the they are needed to
enhance their technologies. Also, Tesla is needed to focus that what their customers want from
them in upcoming vehicles so that productivity level can be enhanced (Scholes, 2015). Here,
market wants that product should be latest by including different technologies in it and exactly
the company is doing same due to which they are able to get positive response from the market.
Legal Factor: It is one of the factors which is related with laws and regulation. It is
mandatory for any of the business organisation to comply with legal terms and condition. If
company like Tesla fails to perform the legal duties, then they might have to suffer from number
of problems in future period. It is necessary for them to determine that what are those laws and
regulations which complies on company for attaining the goals of a company. The legal in UK
do not changes a lots which makes comfortable for company to work freely by preparing long
terms policies which is one of the positive sign for them.
Environmental Factor: It is the factor which can easily affect the ecological aspects of
human being due to which demand can be increased or even decreased. Here, Tesla can easily
take the lead as they are one of the companies which manufactures those cars which doesn't
affect the environment and even their vehicles are based on climatic situation. In current

situation, company is manufacturing exactly the same car which do not affect the environment
due to which customers are showing their interest within the product of a company which is one
of the positive impact.
Ansoff Matrix
Ansoff's matrix is among the most effective marketing tools that helps to organization's senior
member while taking any of the decision. One of the larger researchers recognized as Igor
Ansoff introduced the idea of this framework in order to give the organization additional benefit.
It explains about four various types of tactical planning that are illustrated below: Market Penetration: Under market penetration, Tesla has the opportunity to accomplish
their goals in the established market in which they do their day-to-day business. In the
business scope, it is less risky since they are not required to make extra attempts to
market their products (Lehmann, 2016). This is also one of the cheapest ways to sell the
product as the business does not need any advertising to sell the brand since the consumer
is well aware about the product offerings. Through market penetration, Tesla can easily
carry out its everyday basic operation. Market Development: If a corporation attempts to enter the growing market with an
existing design, it must follow market development procedures. This is one of the
policies and ideas that may be expensive, most of the time it succeeds because the market
has the option of taking the review from its past customers. If Tesla is attempting to
follow the theory of market development, then appropriate advertising is necessary. Product Development: This is one of the forms of approach in which the firm attempts to
create and introduce new products in the established market so that the product can
actually respond well. In Tesla's case, they have the choice of introducing new goods in
the established market so that firms do not have to suffer losses. In certain cases, this
form of approach can also be costly for Tesla, as it is not certain that every time
consumers like the service that was launched before them.
 Diversification: It is among the more difficult situations since, under this business, it is
important to launch the new product into the new market due to that extra charges must
be paid. It's the firm's riskiest strategy. If they choose to use diversification in the sense of

Tesla, they need more work on one of the areas because then results can be obtained (Noe
and et. al., 2017).
By looking at the current market situation, it will be better for Tesla to use product
development strategy within the market because it will help them establish their market in new
areas.
SWOT analysis for internal analysis.
SWOT Analysis: It is explained as the model which must determine the internal position
of a company through which opportunities can be generated. Company like Tesla can easily but
what are their strength and weaknesses and what are those areas where opportunities can be
generated for attending their future goals. Below, there is a detailed information about SWOT
analysis.
 Strength: Tesla have high product differentiation as compared to other vehicles due to
which they are the giant of electric manufacturing company and even it has been helping
them to show other companies that why their concept is different from other. In addition,
Tesla manufacture the car which are liked by new generation and that is one of their main
strength (Chen and et. al., 2018).
 Weaknesses: Tesla is one of the companies which have very limited market presence
due to which still there are millions of people who are unable to purchase the product.
Also, they sell their vehicles at a high price due to which company have to suffer in
number of occasions.
 Opportunity: Company like Tesla have the option to enhance their business at global
level which will even enhance their sell and generate more revenue. Secondly, they can
develop awareness about the environment by manufacturing electric cars.
 Threat: If in any of the situation government removes its subsidies for company, then
price may increase significantly and create huge problem in future period of time. Even
other organizations which have started to manufacture similar form of vehicles in the
market might create problem for company in future period of time

Explanation about Porter Five Forces Model
It is one of the business model which is helpful for business organization as it tells about
the competition which is going on within the market through which company can easily prepare
about the plans and policies. In addition, it tells that how any of the planning and plotting is
needed to be done. In this model there are five different aspects are explained below by
considering Tesla (Amran and et. al., 2016).
 Threat of new entrants: It is one of the situations where similar form of organization
tries to enter into the market. In context of Tesla, it is one of the electric car
manufacturing company where threats from new entrants is moderate because every day
new organization are entering into the market such as BMW, Jaguar and many more.
Although, many other companies are trying the same thing but still they are unable to
manufacture the product which is required by the customers and it is one of the main
strength of the company.
 Bargaining power of suppliers: There are a smaller number of organization which has
been dealing in the similar form of market and due to which there is a low bargaining
power of suppliers (Blackburn, Hart and Wainwright, 2013). For example, if other firm
will not pay supplier at low price even then also supplier will require to purchase from
the same place as there are very few numbers of people who can give the similar products
which is one of the main weakness for the company.
 Bargaining power of buyers: It is the situation where bargaining power of supplier is
very low because there is almost no competition in the market. Even if company will
charge higher amount of money for their products then also it will be necessary for
customers to buy products from same place as they charge higher amount for better
quality of services. By looking at the services which company provide to customers they
are unable to switch to other organization and that has become one of the strength of the
company.
 Threat of substitutes: In present situation, there are number of substitutes which can be
found of cars but in case of electric cars still there are limited option available. But it will
be necessary for organization like Tesla that they must provide suitable form of services
to their customers so that they will not even think to switch to another company which is
one of the strength of the company.

 Rivalry among existing competitors: Companies like Jaguar, BMW and many more
have been entering into the market which means that day by day. In short, it can be easily
said that there is a high competition within the market. It will be important for Tesla that
they must try to distribute their products at law price so that overall sale can be enhanced.
And if company doesn’t give focus to their work by meeting out the demand of a
customer’ and if they fail in it then it might be one of the weakness for them.
VRIO Analysis
The study of VRIO is simplified by value rarity, imitability and organization. It is a tactical
method that organizations use to define assets and existing resources that are available with
company. This might help them reach a market advantage against competitors. In the sense of
Tesla, the study of VRIO is discussed below:
 Valuable: It is crucial for the Tesla management to use their vital resources wisely so
that strong competition can be offered to rivals in an appropriate manner. If a company
have some valuable resources, huge profits could be earned from it. In case of Tesla, their
valuable resources are employees, idea and many more (Li and Tan, 2013).
 Rareness: This factor assists a firm in knowing whether the material they are preparing is
rare. Unusual services offered by Tesla will motivate them to obtain customer satisfaction
by significantly increasing their sales and earnings. Their engineering and processing
equipment are rare items for them.
 Imitable: Tesla is expected to offer goods that competing companies are unable to copy.
When products offered by Tesla are copied by other firm then they can easily sell it in
less amount of price which can reduce the number of customers of company. Raw
material and ideas for manufacturing the car is an imitable commodity for industry.
 Organisation: Business organizations such as Tesla is needed to properly utilize their
available resources. If a company's assets and products are not being used in a
comprehensive manner, it will lead to increased business costs. This will
decline company's revenue, which makes it hard to compete with competitors. In this
sense staff, vendors, customers and business shareholders are different resources
(Scholes, 2015).

TASK 2
Evaluation of the different types of strategic directions available to the organisation.
Strategic Management Plan (SMP) has been one of the ways in which interaction processes
are made easier if companies are able to manage and concentrate on resources. This aims to
guarantee that the business and its staff operate in almost the same way to accomplish their goals
and objectives. There are several methods which can be used in SMP, and Tesla often requires
some of them to accomplish the targets. Some of them have been explained below:
Bowman's Strategic Clock
Bowman strategic clock is a model which often allows a commercial company to analyse
the correct strategic positioning, i.e. how Tesla can place its goods until it can maintain a high
benefit over competing companies in a correct manner. Elements relevant to this structure are
listed below:
 Low price and low value added: This is one of the list competitive place for Tesla.
Consumers consider less quality of goods because products are not distinguished, even if
their price is lower.
 Low price: In this way, Tesla will put itself as leading companies with minimal cost by
using the strategy of minimizing costs. Earnings for each service will also be small here,
but overall revenue will be higher due to the high unit sales (Verbeke, 2013).
 Hybrid: This approach contains elements of reasonable price including variety of goods.
In the scope of Tesla, this placement method will be all successful.
 Differentiation: Within this approach, Tesla should focus on delivering their consumers
with creative products so that profits can be significantly improved.
 Focused differentiation: Because of its extremely monetary value, goods are priced at a
high cost point, buyers may buy the product. This technique is being used by luxury
brands operating internationally like Tesla.
 Risky high margins: The organization has to deal with high threat in this approach,
which may also lead to a financial disaster. In this case, Tesla can set high prices without
giving any additional value (Barberá and et. al., 2012)

 Monopoly pricing: Just one company offers services in the industry monopoly. In this
approach, the cost or creative characteristics of a monopoly company are not involved.
 Loss of market shares: In global market, this economic position is a failure. It requires a
company to offer the standard mid-range value for the item. And because of that there
will be less market shares received by the firm.
Porter's generic strategies
Porter's Generic approaches helps company to understand how they would gain competitive
edge within the competition. There are three types of approaches in total, i.e. differentiation cost
leadership & focus. Such techniques are listed below in connection with Tesla:
 Cost leadership: In this strategy, a business organization can easily identify price-
sensitive buyers. Tesla can sell its products to people at a low price in this approach.
Therefore, the company can offer its regular customer deals and discounts that will
increase their confidence in the business and also promote Tesla promotions to their
loved ones. It will allow the firm to increase its revenue by making it possible to earn a
decent profit.
 Differentiation: In this approach, a company provides its consumers new and exciting
products in order to separate them from other companies that operate in the similar
market. Within this approach, Tesla will give its consumers creative and unique goods to
boost sales in the right way (Hoejmose, Brammer and Millington, 2013).
 Focus: There are two elements to this approach, i.e., focus on cost & differentiation. In
the event of cost focus, Tesla will be expected to provide such items at a lower cost so
that they would be purchased by a highest number of customers.
By looking at both the strategic plan it will be better for TESLA to use differentiation
strategy because it will give the idea to company that how they can deliver the additional
features in the cars which they manufacture of for their customers.
Produce a strategic management plan with strategies, objectives and tactics.
Strategic planning allows an organization to define the set of activities, goals, focus,
manpower, operations, etc. to determine that the organization's people are working against
similar objectives. Tesla's strategic plan to execute the policy is discussed below.
Vision: To become the most popular company by delivering the best cars in the world.

Mission: The core mission is to expand the globe with electric vehicles.
Strategies: Business strategy is the approach which can be pursued by the Tesla because they
have enough resources to use their core skills (Yoffie and Cusumano, 2015). This will be simple
for them to target market as well as receive adequate government assistance because they sell
environmentally sustainable products.
Objectives: The organization's goal is to improve the market share by 20% by starting business
in new countries, which in 12 months would boost their income by 14%.
Tactics: Tactics are short terms which are needed to be prepared by organisation in achieving
their goals. Tesla's tactics is to sell their product directly to customers without taking the help of
dealership but by opening own service stations. Also, it will be important for company to take
the help of marketing mix as it can be the best weapon to sell any of the product in any of the
market.
Product The main product which is being distributed by the organisation like Tesla within
the market are auto-mobiles, electric car with latest technology, batteries and solar
panel. These are the product which can help them to enter into new market. As
company is famous for their electric car, it will be much easier for them to enter
into the new market with the help of previous inventions (Chen and et. al., 2018).
Price The company is selling one of the most advance technology vehicles due to which
they sell their product at premium price strategy. In some of the situation they
also use market-oriented pricing strategy. This can be crucial in expanding the
market share.
Place The main place from where they sell their own product is their own outlets. At the
time of expanding the business, company will required to focus more on
expanding the number of stores.
Promotion The management of Tesla believe in direct marketing but they can also focus on
the advertisement process of television and social media (Chen and et. al., 2018).

Implementation: It will be important for the company to formulate the strategy for the
purpose of using the available resources in best possible manner. Tesla could use the advertising
budget to distribute their resources. While the company may take different steps to limit the
quality, such as internal system auditing, which will allow them to evaluate real and planned
results. It is also possible to take the help of key performance indicators to assess and increase
productivity.
Evaluation: Evaluation is about gathering data and tracking how the strategy is going on
and what are the possible obstacles impacting their success (Amran and et. al., 2016). Tesla must
evaluate and compare their real marketing department output with the quality expected in the
marketing strategy when designing the business.
CONCLUSION
It can be understood that every organisation requires business strategies for computing
within the market and if company fails to do so then they might have to face number of issues in
achieving the targets. Different analyzing tools such as Ansoff Matrix, PESTLE, SWOT can help
company to find that what are those ground which is needed to be considered by company for
future growth. Strategic Management Plan idea to prepare strategies objectives and tractors so
that they can deal with other organisation as per the requirement of situation. Also, business
strategy will give the idea that how company need to prepare plans and policies for future period
of time.

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