Business Strategy Report: Tesla Motors Macro Environment and Strategy

This report provides a comprehensive analysis of Tesla Motors' business strategy. It begins with an introduction to business strategy and its importance, followed by an overview of Tesla Motors and its mission. The report then delves into the strategic context, vision, mission, and financial objectives of Tesla. It explores different strategic planning techniques, including stakeholder analysis, stakeholder matrix, and stakeholder mapping. A PESTLE analysis is conducted to examine the political, economic, social, technological, legal, and environmental factors influencing Tesla. The report further analyzes the market sector using Porter's Five Forces model to assess competitive rivalry, buyer power, supplier power, the threat of substitutes, and the threat of new entrants. Ansoff's growth vector matrix is applied to identify market penetration, product development, market development, and diversification strategies. Finally, a SWOT analysis highlights Tesla's strengths and weaknesses. The report aims to provide insights into Tesla's strategic approach and its position in the automotive industry.

Business Strategy

INTRODUCTION
The business strategy refers to an agonistic action which is taken by every business
organization to attract more and more customers, retaining & sustaining in market, for becoming
successfully, enhancing performance as well as to achieve organisational goals. However,
business strategy is an very important role in every organization that helps in attaining their
goals. The current report is conducted on Tesla Motors, which founded in 2003 by some
engineers. Their aim is to prove that electric motor vehicles can also better as well as effective
quick and give more enjoyment to drive as compare to gasoline cars (Adi, 2015). This report
considers appropriate frameworks analyse of macro environment on organisation and its business
strategies. Along with this, companies internal capabilities are considers. In addition to this,
analysis of market sector is done by using Porter’s Five Forces model. At last strategic models,
& concepts, applications and plan is developed fir directing management of business
organization.
TASK-1
P1. Appropriate frameworks impact on macro environment of Tesla company.
The Strategic Context:
The strategy is defined as method, tool or a plan which is developed and chosen for
bringing and achieving desires of future. Like achieving goal, objective or an solution of an
problem. In other words, strategy refers to art as well as science of planning and putting
resources for utilization of them in most efficient and effective manner (Akter and et. al., 2016).
Vision: To be most creative and best company which provides all satisfied product,
service and self-fulfilment needs to society.
Mission: To enhance society by creating, developing high-quality products and become
global leader in auto-mobile industry.
Financial Objective: To increase net profit by 12% within year.
Customer Objective: To developing an potential customer base by proving best quality
product.
Values: To introduce best innovation in market.
Different strategic planning techniques.
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The strategy plays an important role in every business organization which helps
management in achieving their organizational goals, objective, strategic intent as well as
direction. As role of strategy in attaining objective is that it provides effective framework for
operational planning, it also gives clarity in direction of activities, it increases and enhance
organizational effectiveness and personnel satisfaction. Along with this it helps in taking
strategic decision as well as it integrated reviews and does facilitation (Amran and et. al., 2016).
The strategic planning is defined as an process which focuses on developing a strategy
planning that helps in execution of strategy. There are different various techniques which are
used to make plans for formulating strategy. Such strategies are: Business Models,
Benchmarking, Capability Analysis Budget Planning,, Business Case,, Business Plans,,
Competitive Intelligence, Business Analysis forecasting, market analysis, financial analysis and
many more techniques. Thus, management of Tesla Motors is focuses on adopting different
strategic planning techniques in their operation in effective and efficient manner.
Stakeholder analysis: Stakeholders refers to an individuals that are actively involved in
any project of organization and their interests is affected by result of project completion.
Although, stakeholder analysis refers to an essential and crucial method that helps management
in identifying stakeholder and also aid in analysing their needs. Stakeholder can be shareholders,
heads of all affected business units, Consultants, executive staff, suppliers, customers, alliance
partners etc. Thus, this processes project involves various steps and this is followed by
management of Tesla Motors for identifying their profitable stakeholders (Beard and et. al.,
2016).
1.Identifying the stakeholders
2.Documentation of stakeholders required.
3. Analysing stakeholders interest.
4.Managing the expectations of stakeholders
5.Taking corrective actions
6.Reviewing the status and feedback.
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Stakeholder matrix: This matrix is refers to project management tool which is used for
analysing project stakeholder to regulate those actions that are essential to taken and align to
achieve their goals along with their project. There are many variation of the stakeholder matrix
as its simple and very effective tool which helps in analysing stakeholders (Coltman and et. al.,
2015). In context to Tesla motors, the management of company is focusing on formulating and
implementing this effective strategy as it help them in analysing the potential stakeholder in
effective and efficient manner.
Stakeholder mapping:
Stakeholder mapping is a process which finds the key stakeholders that are connected to
project. This process focuses on identifying every individuals who have deeply interest in result
of project. Although, Stakeholder mapping plays an essential role in success of any project.
PESTLE Analysis
Political
Tesla company is automotive company which manufactures electric vehicles.
The traditional vehicles are requires fuel to run but Tesla has used both
electricity and gas for running their vehicle. Along with this, Tesla drivers are
using electronic stations to refill their cars. In context to Tesla, the political
significant influence by governmental payment or profit for electric auto-
mobiles, Political stability, New global trade agreements in markets. Thus, it
gives positive impact to company as they can increase their opportunities or
strengthen along with their financial performance (Echchakoui, 2018).
Economical
This factor includes, inflation and deflation rates, interest rates etc. In context
to Tesla company, if bank rates increase, and company has taken loan then the
profit of company will decreases, which will give negative impact on
company.
Social
This factor focuses on needs and demands of society. However, management
of Tesla focuses on consumer needs, preferences, taste, demands as they
manufactures environmentally friendly products which are electric cars. In
context to present company, the management can grab help of this, Tesla is
focusing on fulling needs of society, as it give positive impact to company.
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Technological
Nowadays, technology is changing very rapidly. Although, Tesla Motors, is
starring innovator of company in transforming automotive industry. So,
current batteries has their own strength and drawbacks. But its essential for
Tesla for adopt an new upgraded technology in their business operations for
effective working. Thus it helps them in staining in competitive market. In
context to current organization, if management uses an upgraded technology,
then it will give the positive impact on their operations as by this they can
effective execute their function and enhance their productivity as well as
performance.
Legal
There are different laws and legislation which every company has to follow.
Although, management of Tesla is facing very difficulty with their state laws
and regulations about integrate sales of product and service rather than selling
through the authorized dealers (Eskandari and et. al., 2015). In context to
Tesla company, the manager is using various employment laws in their
organization by which they can effectively operate and managing their
employees. Along with this, this will leads to the positive impact to Tesla in
effective and efficient manner.
Environmental
Electric cars is manufactured that response to awareness of environmental
issues like global warming and climate change. Thus, impacts of electric car is
noticed by both governments and consumers that encourages expansion of
electric car application by government policies as well as changing consumer
demands. In context to Tesla’s, the top level managers has focused on
manufacturing electric cars which do not produce any carbon emissions and
also don't contribute in carbon footprint, hybrids or in any gasoline cars. Thus,
it is very helpful and leads positive impact on their operation of company.
Porter’s Five Forces model:
Michael Porter has introduced this Five Forces Analysis model as an effective strategic
management tool which helps in understanding impact of external factors on business
organization. Thus, management of Tesla has adopted this tool for analysing their e competitive
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forces which are present within industry environment. This Porter's Five Forces analysis helps
management of company in looking into the all factors of external environmental importance in
automotive industry (Grant, 2016).
Competitive rivalry or competition: In this context of Tesla Motors, the external factors
are responsible for companies weak force. It is because there are very few companies who are
dealing in this sector. So due to low number of competitors, the following power is being
considered as low.
Buyers Bargaining power of Tesla: It has medium force. Thus, consumers are direct
factor which determines the sales revenues of Tesla company. This, bargaining power is low due
to the low switching costs, Moderate substitute availability, Low volume of purchases of their
product.
Suppliers Bargaining power: The business of Tesla is depends on reliability of suppliers,
which helps them in shaping their business environment by influencing the presence and
availability of raw material that firm required. Thus, it has moderate force due to the number od
suppliers is low and the sane as suppliers bargaining power.
Threat of substitute goods: In context to Teals company the threat of substitute good is
low as they are manufacturing an unique and different product which has less substitute (higgins
and phillips, 2015).
Threat of new entry: New entrants gives vast impact on industry environment as well as it
influence productivity and performance of Tesla company. This factor helps management of
Tesla in identifying strength of external factors which creates weak force of threat to new entry.
In context to Tesla Motors, threat of new entry is low as for entreing into the new, the company
as its involves very high cost for brand development as well as huge cost of conducting business
(Ivanaj and et. al., 2015).
Ansoff's growth vector matrix:
One of best strategies that can help management of Tesla business organisation in
growing their business is Ansoff’s Growth Vector Matrix which is introduced by H. Igor Ansof
in 1957. This matrix focuses on considering in identifying best opportunities by offering current
& new products within existing as well as new markets with a high level of risk.
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Thus, top level management of Tesla Motors has adopted this strategy for finding best
area for growth and expansion of their business. However, top managers has concentrated most
on market development, growth strategies, product diversification strategy and product
development. There are are described as below.
 Market penetration is an strategy which focuses on selling more numbers of established
products into current existing markets. In addition to this, by making uses of this strategy,
the Tesla top level management uses this strategy the company can effectively grab the
market at extensive level. As company is sells its Model 3, Model X, Model S electric
vehicles, solar panels, Power pack 2 energy storage products, electrical hardware,
inverters and monitoring devices in different 29 countries.
 Product development focuses on developing new products and placing them in existing
markets for selling. In context to Tesla, the management can make use of this this
strategy infrequently due to it involves high cost for developing new product in power
storage sectors (Jenkins and Williamson, 2015).
 Market development put existing products into new markets for selling them. In regards
to, Tesla, the management is focuses on adopting this strategy as they searches for new
markets to enter as they targeted Indian market for expanding their business operations.
As it will be very helpful as well as beneficial for Tesla company.
 Diversification strategy focuses on developing new products and sell them into new
markets at same point of time. In context to Tesla company, it is identified that, this
strategy is very risky as well as complex because expanding business in outside area of
their core activities is very complex for targeting a potential audience. Along with this,
Tesla has to invets a lot of money in the process of NPD. (Marin and et. al., 2015).
SWOT analysis of Tesla
Strength Weakness
 The main strength of Tesla is that
company has highly innovative process
due to which they are on a leading
 The major weakness of Tesla
organization is that they have limited
market presence as well as Limited
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position in country.
 Along with this, the company has
strong brand image and effective
goodwill of their company in
competitive market, as they customers
are aware about their product.
 The next strength of Tesla company is
strong control on production process
due to this, company focuses on there
production process and manufacture
and does production according to the
needs as well as after market analysis.
supply chain system.
 Along with this, main lacking point of
company is that they are lacking in
Shortage of resources.
Opportunity Threat
 The best opportunity for the Tesla
company is expanding their business in
untapped Market.
 The next opportunity for company is
global sales expansion as well as
decrease in prices of cars. So, that more
and more customers can buy their
products.
 The one of the main threat to the
management of Tesla company is that
they have aggressive competition in
competitive market.
 The another threat is fluctuations in the
prices of raw material as well as
customer adaption.
P2. Internal environment and capabilities of Tesla.
Organisational internal environment: Internal environment is main and effective
component of business that consist of different factors that are available within organization
which can affect with activities as well as decisions of organization (Mathooko and Ogutu,
2015). There are some factors which can affected by business are discussed below:
Employees are important assets in every organization. As their dedication and motivation
will impact upon their performance. In case they are positively motivated, results will be positive
and vice versa.
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Managers are individual who are associated with management of different task
performing in organization. Their good Woking will impact positively and in case bad
performance result be be negative.
McKinsey’s 7S model: McKinsey 7s model is introduced by McKinsey consultants
Julien Philip & Tom Peters, Robert Waterman in 1980s. The main objective of this model is to
how 7 elements of company can be aligned together for achieving effectiveness in business
organization. Such elements are : Staff, shared values, Structure, skills, Strategy, Style and
Systems,
Structure defined division of business units. It construct organizational chart which shows
different level of management. In context to Tesla Motors, the management has focuses on their
structure as they has an effective organizational structure which follows an hierarchy of level of
management.
Strategy refers to implemented plan in an organization which are formulated for specific
purpose for achieving organisation goals and objective. In regards with present company,
management of Tesla Motors has focuses on formulating an effective strategies for gaining
objective of their organisation. As it will aid management in attaining an more competitive
advantage for the competitive market (Ramírez and Selsky, 2016).
Skills refers to abilities, competences and capabilities of organization employees by
which perform very well. In regards to management of Tesla Motors, it has been said that, that
have effectively focused the skills while hiring an effective and skilled candidates for their
business organization which will help them in attaining their objectives.
Staff refers to workforce of an organization, which they need for achieving their goals. In
context to Tesla Motors, the management of company is focusing on their employees effectively
and efficiently as they recruited, trained, motivated as well as rewarded them for gaining more
productive work (Razak and et. al., 2016).
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Style defines approach and method of management which helps them in leading their
company, influencing performance & productivity of employees as well as corporate culture. In
context to Tesla Motors, the management had concentrated on adopting an different and unique
style as it is very beneficial approach that helps manager in managing as well as leading their
organisation in effective way (Scholes, 2015).
Systems of company is defined daily workflow, procedures as well as decisions which
makes operations effective within an business organization. In context to management of Tesla
Motors is following effective system and procedure in their company which aid them in
operating their functions in effective and efficient manner.
Shared values is core element of McKinsey 7s model. It refers to norms and standards
which guides employee behaviour as well as action of company actions. In context to Tesla
Motors, the management has focuses on formulating and implementing an effective and proper
values in their organization, as these will help management in building and creating an effective
relation with their employees.
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Analysis using the VRIO framework: Its an strategic analysis tool which helps
organizations to expose and protect all resources and capabilities that can give organization to
long-term competitive advantage (Thompson and Gamble, 2015).
Value: These are those resources which gives value to organization. In context to Tesla
Motors, the employees, technology and goodwill are resources which provides value to company
in effective manner.
Rarity: In context to Tesla Motors, employees are not rare resources as company has
number of workforce. Where as technology and goodwill are rare resources as Tesla Motors uses
an effective and unique technology in their operation which helps in building their goodwill. In
context to Tesla motors, the management of Tesla is providing quality products to customers and
utilising it's resources in an effective manner.
Imitability: This factor includes those resources which are not be possible to copy.
Employment, goodwill and technology are imitable resources for Tesla Motors, as other
company can not copy these. In context to Tesla motors, the management is focus son using an
effective artificial intelligence in their operation as well as system.
Organization: There factor consider those factor which value, rarity and imitable to
company. In context to Tesla Motors, employees, technology, goodwill are resources which
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