Business Strategy Report: Tesla's Macro Environment and Plan

This report provides a comprehensive analysis of Tesla's business strategy, examining its macro-environment through PESTLE analysis, internal capabilities via SWOT and VRIO models, and competitive positioning using Porter's Five Forces. The PESTLE analysis assesses the political, economic, social, technological, environmental, and legal factors influencing Tesla's operations. The SWOT analysis evaluates Tesla's strengths, weaknesses, opportunities, and threats, while the VRIO framework assesses the value, rareness, imitability, and organization of its resources. Porter's Five Forces model evaluates the competitive rivalry, bargaining power of buyers and suppliers, and the threats of new entrants and substitutes within the automobile industry. Finally, a strategic management plan is proposed, integrating the findings from these analyses to enhance Tesla's competitive advantage and guide its future growth. This report provides a detailed overview of Tesla's strategic approach within the automotive industry.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Impact and influence of the macro environment on given organisation................................1
P2 Internal environment and capabilities of an organisation .................................................3
P3 Porter's five forces model to evaluate auto-mobile industry..................................................5
P4 Strategic management plan for the organisation....................................................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy can be defined as the instruction or specific set of decisions which are
developed by entrepreneurs for accomplishing the particular goals of an organisation. It is a set
of competitive motion and action which helps an organisation in order to attract more customers
through increasing their performance. The main intention to formulate a business strategy is to
ensure the top position in competitive market by carrying out its business operations with more
productivity. The current organisation chosen for this assignment is Tesla which is operating
their business in the automotive industry. Company is professional in manufacturing electric cars
and solar panel that helps to reduce negative impact on organisation. This assignment covers
Pestle and Swot which helps to predict the macro environment of Tesla. Along with these Porters
five forces model is and different theories will be covered in these report.
TASK 1
P1 Impact and influence of the macro environment on given organisation
To analysing the impact and influence of macro environment, PESTLE is the best
framework that helps an organisation to predict the specific environment of organisation. This
task covers PESTLE analysis of Tesla which helps management in order to develop effective
strategy for the organisation (Almuzel and et. al., 2018).
Political factor- Political factors determines the degree of government policy that is
formulate by ruling government of country. In context of TESLA it is essential for them that to
operate their business which has stable government which signify that they helps multi-national
organisation to expand their business in their country. Like policies on trade with foreign
countries limits the market area of TESLA to influence their customers. For this management of
TESLA influences government by bring awareness about safety of environment and natural
resources. As for operating business operation in other country acquisition strategy is best tool
like Tesla merge and acquire with local organisation of country. So government not create
barrier to operate their activity in organisation.
Economical factors- The factors such as interest rate, tax rate, foreign exchange etc. are
included in economic factors which governs that it directly impacts on the financial condition of
country. TESLA manufactures auto mobiles that are operated through electricity so the growth
rate of solar energy market in a country influences TESLA to operate their business in their
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country. For this low cost of renewable energy works as an opportunity for them such as low
battery cost, large field area that help to establish their factory quickly. Tesla execute prime
skimming strategy for its products which determines organisation earns more revenues as they
innovative products (Asif and et. al., 2017).
Social factor- It is an essential factor of an organisation which focuses on the social
environment which helps to identify emerging and potential trend of a specific country. It
includes several factors such as education level, culture, attitude etc. of society which governs
and identify customers wants and needs. In context of Tesla it positively impact on them as
environment safety is a major concern among overall world. So it elementary for Tesla that their
as their innovative product match with the needs of safety. Growth strategy match with all
aspects of social factors by helping an organisation in order to explore new areas for their
business.
Technological factor- Technology is consider about the rate of innovation and dynamic
changes that impacts on auto-mobile industry. These changes are formulated by the research and
development of an organisation. In context of Tesla it is an opportunity because the whole auto-
mobile industry is moving towards automation. Along with these organisation has advancement
as they have energy solutions that provide opportunity to them as compare to competitors.
Within these changes management implement corporate level strategy which helps them to
influence employees to accomplish long term goals by improving their skills.
Environmental factors- The environmental factors inlcudes recycling procedure, climate,
and wastage that impacts on the surroundings of country. In present business scenario consumers
are more concern about the safety of environment. So they prefer those products which are
friendlily and does not negatively impact on environment this results that TESLA has
opportunity to increasing their goodwill (Balogun and et. al., 2014). For this management of
Tesla implement functional level strategy in which they organise different CSR activities in
order to strength their brand.
Legal factors- Under these an organisation must understand about the policy that allows
them to operate their business with in legal territory which are operated by them. In
circumstances of Tesla, human resource management are responsible to identify changes that
impacts on legal policy of industry which determines that laws are crucial part of an organisation
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that impacts on performance of employees. Tesla implement turnaround strategy for these
business because it helps to modify the decision before it impact on profitability of organisation.
TASK 2
P2 Internal environment and capabilities of an organisation
Under this task SWOT is implemented that helps to understand the internal environment
of an Tesla which is given below in tabular form:
Strength
 Tesla developed an innovative product
that it totally different from others. For
this they developed electric train
technology in business that help to gain
competitive edge among competitors.
 Marketing team and management of
Tesla developed strong marketing
policies, it includes creative
advancement, word of mouth
promotion which determines that they
creates loyal customer for their
products.
 Upcoming future industry of auto-
mobile industry is totally automated.
Similarly Tesla is manufacturing their
products with fully automatic process
that helps to generates more profits.
Weakness
 Company has developed auto-mobiles
but it is difficult for them to develop
alternatives sources to charge their
products which is a major loophole for
company.
 Tesla has introduced themselves in past
few years. So they have limited models
which bound customers to purchase as
they manufactured limited models.
 Tesla introduced itself in auto-mobile
industry as a electric manufacture of
cars. While in present scenario society
is not adopting these cars which creates
barrier because people are not aware
about technology and power that is in
implemented in electric cars.
Opportunity
 In present scenario consumers,
employees and government all are
considered about environment safety
which provides an opportunity to Tesla
for converting market into potential
Threats
 Tesla is working to develop effective
supply chain management system
which determines that they has limited
supplier base which develop hindrances
for customers to reach their products.
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buyers.
 By organising CSR activities
management of Tesla developed
achieved their goals by influencing
customers to purchase their products.
For this they aware individuals about
harmful effects of fossil fuel
consumption.
 Their is a cut throat competition among
auto-mobile industry that creates
barrier for Tesla to sale their products.
Along with these companies like
Ferrari, Mercedes etc. are dominant
player that give tough competition to
new players or organisation.
VRIO model to analysis about capabilities of an organisation
Value- This helps an organisation to understand the value that exist in their product. The
major aim of an organisation is to increase their strength which helps them to complete their
work effectively and efficiently. In context of Tesla management has implemented effective
corporate strategy that helps them to increase more productive in its products. Digital strategy
also helps them to complete their goals with in predetermine period through providing necessary
information about electric cars to its stakeholders (Dana, 2018).
Rare- To gain competitive advantage in an industry it is essential for organisation to
manufacture rare and unique product that is different from competitors. In context of Tesla they
manufacture they introduce auto-mobiles with unique concept that is electric cars which
determines that their product bring radical change in society. Along with these management of
Tesla is capable to introduced their product through different market channel which includes
market online and offline effective distribution for organisation. These helps them to generate
effective relationship among customers, retailers and wholesalers.
Imitability- These factor determines the concept in which goals of an organisation are
achieved by combing different resources, the major concern for these factor is that an
organisation analysis that they are capable of producing effective goods that is difficult to copy.
Tesla develop dynamic change in market through the updated technology by which it is difficult
for competitors to manufacture substitute products. Along with these it helps Tesla to gain first
mover advantage in the auto-mobile industry (Chen, Eshleman and Soileau, 2016).
Organisation- The last factor VRIO model is organisation in these they manufacture
products and analysis that they are ready to develop goods as per needs of market and customers.
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In context of Tesla management first analysis and measure imitability, rare and value of their
products the next step is to organise company activities in a way which helps organisation to
utilise all resources of an organisation. Skilled employees and organisational productivity helps
management of Tesla in order to accomplish their goals with in minimum time period.
TASK 3
P3 Porter's five forces model to evaluate auto-mobile industry
Porters five forces model helps an organisation to understand their position in the
industry. This task covers five force analysis which assist in that helps to bring changes in which
organisation experience several external factors such as availability of raw materials, change in
technology etc. that helps to modify strategy in effective way (DaSilva and Trkman, 2014).
Competitive rivalry- Auto-mobile industry is a highly competitive market in which
different organisations are operating their business to gain sustainable advantage in market. For
these context it is analysis as high aggressiveness between different firms which determines that
there is strong competition in market. As there are small number of firms are operating their
business in auto-mobile industry so it is not easy to enter and exit in industry. Example- Tesla
enters in auto-mobile industry with totally new concept which signify that with innovation it is
easy to enter in market.
Bargaining power of buyers- In the auto-mobile industry the bargaining power of buyers
is moderately strong because there is small number of consumers are present in market. Usually
more individuals buy their a single vehicle for longer time period which determines that buyers
are in a position to bargain while purchasing a product. As customers has option to switch on
other organisation because there it charge only low cost to switch on other brand. Companies that
are operating their business in this industry increase their brand value by providing better quality
products, executing effective marketing strategy etc. which assist to imporove customer loyalty
for products.
Bargaining power of supplier- Their are only few players present in automotive industry
which satisfy the demands of customers. Form which only few of them are giant in size and
covers large area of market (Gaya Ferre and Tresserras, 2016). For this business houses it is
difficult holds stronger position in which allows them to switch on other supplier. In the context
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of supplier it is essential for them to follow the rules and regulations that are companies due to
which they earn more revenues from customers.
Threat of new entrants- For entering in an auto-mobile industry it is difficult for an new
organisation to enter in the market as they requires large amount of funds to invest that helps to
strat their operations in market. Another major barrier is that there are few companies that are
operating their business in industry which provides tough competition to new company. Further
an organisation wants to manufacture products then it is essential for them that they research and
development position is in stronger position. So customers will easily be attracted by those about
the new product that is totally differ from existing products (Govindarajan and Srivastava, 2016).
Threat of substitute products- Their are different types of modes are present like buses,
taxi, trains are exist in market but however no one is able to replace the comfort and accessibility
of vehicle. In present scenario owing a vehicle helps an individual to convenience from one place
to another quickly and easily which determines that it plays an crucial role in the living standard
of an individual. For this it is evaluated that the impact of substitute products is moderate so
customers does not shift from one brand to another easily. Usually individuals use public
transport only in order to go from one place to another on regular basis.
TASK 4
P4 Strategic management plan for the organisation
In an organisation it is essential for them to bring innovation in existing products so they
develop more products in order to increase their customer base. In this Ansoff matrix is
discussed that helps to decide strategy for new product.
Market penetration- This strategy considers to sell existing products in the existing
market. Tesla is implementing this model in order to approach their customers with similar
products through which determines that marketing team of company put more efforts to increase
sell of their products.
Product development- This factor is considered for the development of new product
which helps organisation to sustain in its existing market. In this context Tesla made little efforts
to develop a product which determines that there is high cost involvement for developing a new
electric vehicle (Halinen, Medlin and Törnroos, 2012).
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Market development- strategy of market development is totally inverse the product
development. Tesla execute these strategy in order to increase the sale of their existing products
into new market. For this some factors are evaluated by company before entering into new
country.
Diversification- This stage is more beneficial for an organisation because it helps them to
develop new products for new market. In current situation Tesla is using these strategy because it
helps them to capture more market.
From all above strategy market development strategy is more beneficial for Tesla because
it helps them to save their cost and time for developing new product. Along with these it
increases the market area for an organisation by selling its products to different areas of world.
Strategic management plan
Executive summary
Tesla is the biggest manufacture of electric cars which determines that they attempt
efforts in order to improve the auto-mobile industry by emerging electric power to run their
vehicles. In these context top management of Tesla decided to launch new electric bike as it is
market need and demand of customers also to manufacture motor bike that operates with
electricity. For launch of new products they decided to implement product development that
helps to capture market for longer period (Schaltegger, Lüdeke-Freund and Hansen, 2016).
Mission
Tesla has the vision to bring radical change in the automotive industry that helps to save
natural resources. For this they manufacture electricity cars and motor bikes that helps to save
resources and reduce harmful effects in environment.
Objective
Specific- For electric bike they target their young customers those who are students and
age of 30.
Measurable- Tesla has achieved high success in their sale of electric cars. Similar for
motor bike they decided to capture 30% of market.
Achievable- Automotive industry is highly competitive so management of Tesla decided
to sell 1,00,000 motor bikes in each quarter to sell their products.
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Time bound- After deciding all activities that are perform by an organisation it is
essential that they decides time in which organisation has to achieve their goals (Sharma and et.
al., 2017).
STP
Segmentation- Tesla sells their products for all segment of customers as they enhance
large market area to sell their products. For motor bike they execute it all bases for demographic,
psycho-graphic etc. due to which they approach large number of customers.
Targeting- For motor bike company specifically target those individuals who are students
and professional as this is in their budget. Along with these it helps them to reach their
destination easily.
Positioning- Customers are the major factor that helps an organisation to sale their goods
and increases their revenue. For this Tesla approach their customers through different
promotional technique in order to position their product in mind of customers.
Marketing mix
Product- Tesla decided to launch their product in market with new concept that is bike
which operate with the power of electricity. This feature separate them from other motorbikes
that exists in market (Sitek, Sedlackova and Dekan, 2013).
Price- The price strategy for new product of Tesla is pricing premium in which prices are
highly charged from customers as company is develops a totally new product that is fully
automated and innovative.
Place- Organisation such as Tesla operates their business at global level. For this they
decided to sell their products franchising method which helps to approach customers easily.
Promotions- It is the most essential part for an organisation through which they advertise
and sale their products. These helps them to encourage and influence their customers and convert
leads into potential customers.
Budget
Total amount allocated to the budget is 4,00, 000
Particulars Amount
Raw materials 80000
Promotion 100000
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Machines 100000
Human workforce 120000
Monitoring and control
To monitor and control the activities of an organisation it relates as crucial part for the
organisation which includes that they sale and manufacture their products with in specific
budget. These helps them to sale their products within predetermine period and cost as for these
manager is responsible to control activities that helps to achieve goals effectively (Yu, 2015).
CONCLUSION
According to the above report it is concluded that business strategy is the essential part
for an organisation. It helps them to formulate effective plans through which it is easy for
organisation to accomplish their goals within predetermine period. Along with this PESTLE is
explained in this report through which external environment of an organisation will be predicted
due to which necessary modification implemented in organisation in order to sustain for a longer
period in the industry. At last porter's five model and ansoff matrix is executes which emerge
industry and organisational activities together to enhance more productivity in its strategies.
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REFERENCES
Books and Journals
Almuzel and et. al., 2018. Tesla Solar Roof Marketing Plan.
Asif and et. al., 2017, August. Building related PV systems in GCC countries: A SWOT analysis.
In 2017 IEEE International Conference on Smart Energy Grid Engineering (SEGE) (pp.
234-237). IEEE.
Balogun and et. al., 2014. Placing strategy discourse in context: Sociomateriality, sensemaking,
and power. Journal of Management Studies. 51(2). pp.175-201.
Chen, Y., Eshleman, J.D. and Soileau, J.S., 2016. Business strategy and auditor
reporting. Auditing: A Journal of Practice & Theory. 36(2). pp.63-86.
Dana, C., 2018. A Strategic Audit of Tesla, Inc.: Electrifying our Future or About to Run out of
Energy?.
DaSilva, C.M. and Trkman, P., 2014. Business model: What it is and what it is not. Long range
planning. 47(6). pp.379-389.
Gaya Ferre, F. and Tresserras, V., 2016. Brand valuation-Tesla Motors, Inc.
Govindarajan, V. and Srivastava, A., 2016. Strategy when creative destruction accelerates. Tuck
School of Business Working Paper, (2836135).
Halinen, A., Medlin, C.J. and Törnroos, J.Å., 2012. Time and process in business network
research. Industrial Marketing Management. 41(2). pp.215-223.
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E.G., 2016. Business models for sustainability:
A co-evolutionary analysis of sustainable entrepreneurship, innovation, and
transformation. Organization & Environment. 29(3). pp.264-289.
Sharma and et. al., 2017. Structural and magnetic properties of chemically disordered perovskite
SrTi0. 5Mn0. 5O3. Journal of Alloys and Compounds. 693. pp.188-193.
Sitek, J., Sedlackova, K. and Dekan, J., 2013. Some Applications of Mossbauer
Spectroscopy. Journal of Physical Science and Application. 3(5). p.295.
Yu, C.J., 2015. Competitive Analysis on Battery Electricc Vehicle (BEV) Market: A Case Study
of Tesla Motor.
Online
PESTLE AND SWOT ANALYSIS OF TESLA.[Online]. Available Through:
<https://www.swotandpestle.com/tesla-inc/>
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