Strategic Analysis and Business Plan for Tesla Inc.

This report offers a comprehensive analysis of Tesla's business strategy, encompassing external factors through PESTLE analysis, internal factors via SWOT and VRIO analyses, and competitive forces using Porter's Five Forces model. The report identifies key stakeholders and evaluates strategic directions, ultimately recommending a strategic management plan for Tesla. It explores the company's objectives, mission, and core values, providing insights into its strengths, weaknesses, opportunities, and threats within the automotive and energy storage industries. The analysis considers political, economic, socio-cultural, technological, legal, and environmental factors impacting Tesla's operations, along with its competitive positioning and strategic choices for growth and improvement.

Business Strategy
Unit – 32

EXECUTIVE SUMMARY
Business strategy refers to the combination of the all the actions, plans, moves,
activities and tactics which is undertaken by the company for the completion of its
objectives and gain competitive advantages (Chang, 2016).
Present report will highlight the external, internal and competitive factors for the
organization. It will also analysis the various strategic directions that company can adopt
for the growth of the business and operations. Report will also demonstrate the strategic
management plan for the company. It will also recommend about how to improve the
business and its operations.

Table of Contents
EXECUTIVE SUMMARY...................................................................................................2
INTRODUCTION...............................................................................................................1
LO1 ...................................................................................................................................2
Pestle analysis of the Tesla Company...........................................................................2
Stakeholders analysis of the Tesla Company................................................................5
LO2....................................................................................................................................6
Swot analysis of the Tesla Company.............................................................................6
VRIO analysis of the Tesla Company............................................................................8
LO3....................................................................................................................................9
Porter's five competitive forces model of the Tesla Company.......................................9
LO4..................................................................................................................................12
Explanation of various strategic directions available to the Tesla Company...............12
Justification of the one strategic direction which is beneficial for the Tesla Company 16
Produce a strategic management plan for the Tesla Company..................................16
CONCLUSION AND RECOMMENDATION....................................................................18
REFERENCES ...............................................................................................................20
BIBIOGRAPGHY.............................................................................................................22

INTRODUCTION
Overview of the company
Tesla Inc. is an American company who is working under the Automotive and
Energy storage industry. It was established on 1st July 2003 by Martin Eberhard, Marc
Tarpenning, Elon Musk, J.B. Straubel and Ian Wright. Its headquarters is in Palo Alto,
California, United States. This company is manufacturing and selling electric cars, solar
panels, power wall, power pack batteries, solar roof tiles and related products etc.
(Moritz and et.al., 2015, p. 90).
Objectives of the company
Followings are the objectives of the Tesla -
 Increase the demand and sales of the electric car.
 Increase the market share of the company.
 Give education to the customers regarding safe driving.
Mission of the company
To deepen the transformation of world by sustainability of energy resources.
Core values of the company
Core values of the company are as follows -
 Committed to electric vehicles.
 Speeding the evaluation.
 A method to storage energy.
1

LO1
Pestle analysis of the Tesla Company
There are various external environmental factors which impact the whole industry
and in turn impact the organization. There are some external factors which impact the
Tesla Company. Thus, analysis of these factors are important and is done by Pestle
analysis.
Pestle analysis of the Tesla Company are as follows -
Political Factors
Political factors are those factors which influence the business by the
government of the country. Government and its related aspects influence the industry
which in turn impact the business positively and negatively. Example of political factors
are change in government parties, tax policies, monetary policy, political conditions of
the country, political stability and foreign trade policy etc.
Government of United States are providing incentives to all those companies
who are working under the Energy storage industry which lead Tesla to get incentives
2
Illustration 1: Factors of Pestle Analysis
Source: Scanning the Environment: PESTLE Analysis, 2016.

which in turn improve its financial performance. On the flip side, there are a lot of
countries where tax rates are high which lead company to pay out more from its profits
(Scanning the Environment: PESTLE Analysis, 2016). Due to government instability in
United State, Company has to face challenges regarding government policy which kept
changed with time to time.
Economic Factors
Economic factors are those factors which influence by the economic conditions
and economic aspects of the country. There are various factors which influence the
industry and in turn impact the activities of firms. These factors are as follows – pricing
of the products in market, economic cycle of the country, foreign exchange rates,
inflation rate, employment & unemployment rate, consumers' demand pattern &
purchasing power, interest rates and saving rates etc.
Due to environmental conscious, consumers are demanding electric vehicles
which lead to increase the sales of the industry and in turn increase the revenue of the
Tesla Company. On the opposite side, due to a lot of economic instability in Asian
market, industry and company's sales are getting impacted which lead to reduction in
their profitability. Due to increasing demand, company has to take loan from banks at
high rates which lead to low profitability of the company.
Socio-Cultural Factors
It includes following factors such as demographic structure of the country, family
structure, cultural aspects, customs, values, lifestyles of the customers, education
conditions and communities structures etc. These all factors are related to the social
conditions of the population of country which impact the industry as well as companies
(Bentley-Goode, Newton and Thompson, 2017, p.65).
In case of Tesla Enterprise, Due to reduction in low carbon lifestyles, Automotive
industry are getting benefits which lead encourage company to manufacturing advance
electric vehicles. Due to unequal distribution of income, middle and lower class families
are not able to purchase the electric cars which cause company not to achieve its
objectives properly. Due to change in customers' perception towards environment,
Company are getting benefits as their products are purchasing by the customers.
Technological Factors
3

Due to change in technology and its related aspects also impact the industry
which in turn influence the business operations. Technology incentives, research and
development activities, level of innovation in industry, change in technologies and
automation etc. are the examples of the technological factors.
The degree to which change in technological changes impact the automotive
industry which in turn will impact the manufacturing process of the Tesla company.
Changes can positively and negatively impact the organization according to its
competitors. Due to technological changes, there are a lot of ethical and social issues
such as cyber crimes and lack of security which create loss of customers' trust.
Legal Factors
Legal factors are those factors which influence by the laws, regulations, rules,
legislations and guidelines impose by the government on the industries and companies.
Change in these laws, regulations, rules, legislations and guidelines impact the
companies and industry. Examples of these factors are employment laws, commercial
laws, accounting standards, contract laws, foreign exchange laws and company laws
etc.
Due to a lot of change in aspects of various laws, Tesla has to face a lot of legal
actions between the year of 2008 to year of 2018. But these laws are the reason behind
the successful of the company because they are following all the legislations imposed in
the various countries (Fontana, Sartre-Merino and Baca, 2017, p. 370). Due to foreign
exchange law, company has to sell limited units of vehicles which impact the company's
brand image.
Environmental Factors
Environmental factors are those factors which arise due to change in
environment where companies are operating its businesses. Example of these factors
are change in climate & weather, level of emission of CO2, usage of natural resources
etc.
Tesla company is manufacturing fuel less electric vehicles which is considered to
be environment friendly. This lead company to create brand image easily. Due to
elecrtic vehicle, customers are required to use energy which is generated through water
which lead to increasing consumption of water.
4

Stakeholders analysis of the Tesla Company
It is techniques which identify the needs and expectation of stakeholders. It is the
essential technique which helps identify and analyse the problem of stakeholders by
identify the needs and requirements. The main aim of using the stakeholder analysis
method in the business which is developed a strategic view of the human and
institutional landscape, and improve the relationships between the different
stakeholders and the issues they care about most. Therefore, while using this process
in the business its creates the positive impact on the business because it reduces
problem of stakeholder. Therefore, it increases the motivation among the stakeholders
and it helps to achieve the goal of the Tesla.
5

LO2
Swot analysis of the Tesla Company
There are various internal environmental factors which impact the organization.
There are some internal factors which impact the Tesla Company. Thus, analysis of
these factors are necessary and is done by Swot analysis.
Swot analysis of the Tesla Company are as follows -
STRENGTHS WEAKNESSES
Increasing demand of electric vehicles
Enhanced brand image
High price
High debt load
OPPORTUNITIES THREATS
Technological advancement
Cost-Reduction Initiatives
Lack of awareness
Competition
Strengths of the Tesla Company -
Increasing demand of electric vehicles
6
Ill
ustration 2: Internal factors
Sources: Section 14. SWOT Analysis: Strengths,
Weaknesses, Opportunities, and Threats, 2018.

Due to increasing in environmental issues, government and consumers are
becoming conscious for the environment which lead them to increase the demand for
electric vehicles which are considered to be run without fuels and good for environment.
Thus, this lead to increase in the demand of electric vehicles of the Tesla Company.
Enhanced brand image
Due to providing different car models which have different features, Tesla is able
to attract the attention of their customers towards their products which helps in building
brand image and brand value for the company.
Weaknesses of the Tesla Company -
High price
Due to a lot of usage of technologies in the electric vehicles, the cost of
manufacturing the vehicles are high which lead company to have keep the prices of
their products high. Due to high price, all customers are not able to buy the vehicles.
High debt pressure
Despite getting the financial support from government, company is not able to
make profits since its inception. Company is completely burning out its cash which lead
to imbalances in cash flows. This lead company to face high debt pressure (Section 14.
SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats, 2018).
Opportunities of the Tesla Company -
Technological advancement
Due to high investment in research and development, company is able to
produce different kinds of electric vehicles. Due to this technological advancement,
company can gain competitive advantages over its competitors who are providing same
electric vehicles to their customers.
Cost-Reduction Initiatives
Company is able to reduce the costs of the manufacturing by building more
Gigafactory where firm can able to produce vehicles in a large quantity with good
qualities. This lead company to reduce the costs and provide their products to the
customers at bulk.
Threats of the Tesla Company -
Lack of awareness
7

Due to lack of awareness regarding electric vehicles models and their features,
customers are not buying vehicles manufactured by the company. This lead company to
face issues regarding not able to sale the vehicles.
Tough Competition
Tesla company is facing a lot of competition from its competitors such as Toyota,
Audi, Ford and Google who are manufacturing good quality electric vehicles at low
manufacturing costs (Schaltegger, Hansen and Lüdeke-Freund, 2016).
VRIO analysis of the Tesla Company
Vrio analysis is a strategic tool which is use for the evaluation of the company's
resources availability which in turn helps company to gain competitive advantages.
VRIO analysis of the Tesla Company are as follows -
V – Value – Company are using such resources in their production which creates value
for the customers. This lead company to gain a lot of opportunities for grow more.
R – Rareness – Company's resources are not rare as many other companies are
making electric vehicles.
I – Imitability – It is difficult for another companies to make exact same products which
Tesla is offering to their customers.
O – Organization – Company has properly managed their systems, procedures,
structures and organizational culture in order to proper utilization of their resources.
8

LO3
Porter's five competitive forces model of the Tesla Company
It is the tool that defined as process of analysing the competition in the internal or
external environment. Therefore, this helps to determine the organization competition,
strength and weakness. Henceforth, model includes five forces model which identify the
competition of the firm such as it includes three forces of horizontal competition — The
Threat of new entrants, threat of substitutes, Threat of rivals and there are two other
forces of vertical competition — Bargaining power of supplier, bargaining power of
buyers (What is Five Forces Analysis?, 2016). Thus, its defined in below contexted
manner as-
9
Illustration 3: 5 Forces
Source: What is Five Forces Analysis?, 2016.