Unit 32: Tesla Business Strategy Analysis and Recommendations

This report provides a comprehensive analysis of Tesla's business strategy. It begins with an introduction to business strategy and the specific context of Tesla, founded by Elon Musk, and its focus on electric vehicles and sustainable energy. The report then applies the PESTLE framework to analyze the macro-environmental factors influencing Tesla, including political, economic, social, technological, environmental, and legal aspects. Stakeholder analysis is also performed. Next, the report uses SWOT analysis to assess Tesla's internal strengths, weaknesses, opportunities, and threats, and the VRIO model to determine its competitive advantages. Porter's Five Forces model is employed to evaluate the competitive forces within the market sector. Finally, the report interprets and devises strategic planning for Tesla, including strategic management plans with tangible priorities, objectives, and tactical actions, culminating in a critique of the data and information gathered through environmental and competitive analysis to produce strategic recommendations. The report concludes with a summary of findings.

Unit 32 Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..............................................................3
M1 Critically analyse the macro environment to determine and inform strategic management
decisions......................................................................................................................................5
TASK 2............................................................................................................................................5
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks..................................................................................................................................5
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set..........................................................8
TASK 3............................................................................................................................................8
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation............................................................................................................8
M3 Devise appropriate strategies to improve competitive edge and market position based on
the outcomes..............................................................................................................................10
TASK 4..........................................................................................................................................10
P4 Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation.............................................................................................................10
M4 Produce a strategic management plan that has tangible and tactical strategic priorities and
objectives...................................................................................................................................12
D1 Critique and interpret information and data applying environmental and competitive
analysis to produce a set of valid strategic directions, objectives and tactical actions.............12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business strategy is defined as collection of competitive actions and moves which helps
in attracting consumers, strengthening performance, competing successfully and achievement of
goal and objectives of organisation (Business Strategy: Definition, Levels, Components &
Examples, 2019). This helps in outline about how business should work for reaching final goals.
It is called long term business planning of business which is for time period of 3 to 5 years. The
business strategy are of three types like corporate, competitive and strategy in general. The
organisation given for assignment is Tesla which was founded in 2003 by Elon Musk. It is
American organisation which focus on manufacturing electric cars that provide solution for
energy and automotive in order to reach success and growth. This report is prepared to discuss
about PESTLE and SWOT analysis for identification of capabilities and internal capabilities.
The competitive environment of business is determined through Poter's five force model. There
are various types of strategic directions which are available for organisation. Strategic
management plan is also prepared with objectives, strategic and tactics.
TASK 1
P1 Applying appropriate frameworks analyse the impact and influence of the macro environment
on a given organisation and its strategies
The organisation has to analyse and evaluate macro environment in order to make plans
and policies for making decisions. These factors helps in making business strategies for
organisation.
Tesla has its own Vision, Mission and Objectives described as under-
Vision-
CEO Elon Musk visions the company to manufacture electric vehicles that are
inexpensive and of high-quality and also to generate the most captivating car for the 21st century
by operating the world transformation to vehicles that are electric.
Mission-
Tesla missions to speed up the world change to continuous energy. The firm trusts that
the quicker and faster the world stops depending on fossil fuels and moves in the direction of
zero-release future, the finer and healthier.
Objectives-

Tesla aims to build sports cars that are high-quality and efficient and design, manufacture
and market vehicles that are luxurious and electrically powered and also manufacture an electric
power vehicle with zero emission.
Strategy-
A strategy is a high-level idea that is designed to reach a desired goal/goals with
conditions of uncertainty and unpredictability with the most effective and efficient use of the
resources available.
Tesla follows a strategy focussing on long-term growth that includes various functions
like inventory management, production and distribution. The firm has a planned strategic
direction of entering into the high end market with a target of customers who are willing to pay
premium and then beat down the market as fast as possible.
Strategic Planning Techniques-
The manager of respective enterprise has to analyse macro environment with help of
PESTLE which are given below:
PESTLE Analysis
This is the concept which helps in describing macro environmental factors that are used
in scanning environmental elements of strategic management. It is the part of external market
which identify all components of environment. They are represented below:
Political Factors- The business environment is impacted directly and indirectly with
political factors for operating their enterprise at marketplace (An Example PEST Analysis of The
UK, 2019). There is frequent change in political condition of country which impact all business
operating at market. The economical instability leads to disrupt business and financial losses.
Environment is effected through political disruptions. Tesla is facing problems through political
factors in terms of week regulations for auto manufacturing, overtime regulations, minimum
wages, industrial safety for business operations. Therefore, such factors create economic
instability and disruption.
Economic Factors- The economy of country depends upon rising of business. Rise in
economic of nations helps in increasing employment opportunities that leads to high spending on
products and services. If there is rise in economic of middle class people then they focus on
purchasing of vehicle brands that is beneficial for auto mobile industry. Therefore, it is good
opportunity for Tesla to target middle class people by manufacturing low cost models that leads

in growing at faster speed. If there is declination in value of money due to recession then
purchasing power of consumers decline that creates decrease in sale of organisation.
Social Factors- The demand of people is influenced through culture factors (PESTEL
analysis of the UK, 2017). There are many products which are perceived by particular group of
people and their acceptance level is changed due to cultural values and believes. There are many
people whose need and demand is change with change in trends and believes. The respective
organisation mainly focus on assisting brand transition for greener, better and sustainable fuel.
Therefore, it is very important for respective organisation to analyse requirements of consumers
and manufacture accordingly so that maximum gain can be achieved.
Technological Factors- It is considered as most important factors that influence success
and growth of business worldwide. This is making business to be efficient and affecting
competitiveness. It is very important for Tesla to move with the modern technology for
increasing their sales and profits every year. Each and every business has to look for new
technology in order to rise their sales and profits. The vehicles should be manufactured with
adoption of latest and new technology.
Environment Factors- These factors has to be considered by organisation while running
their business at marketplace (Blackburn, Hart and Wainwright, 2013). In order to reduce
negative impact to firm, they have to make improvement in environmental factors. Recently, UK
is facing issues in terms of change in weather condition which is impacting manufacturing of
products and supplying it to the user. Though, Tesla is not impacted because of environmental
factors as it has own indoor manufacturing setup for electric cars and auto mobiles. The weather
condition is impacted Tesla for demand unit and delay in delivery for products and services.
Legal Factors- These factors assist business to run their activities and operation in
ethical and legal manner (Burlton,2015). The various laws that are formed by UK government
for successfully running of business at marketplace. In order to manufacture electric cars, auto
mobile, Tesla has to follow all legal rules and regulation for running business successfully. It
helps in developing loyalty for consumers for activities and operations of business that are taken
place at market.
Therefore, PESTLE analysis aid respective organisation for developing proper plan,
policies and strategies to conduct business activities and operations in an effective and efficient
manner.

Analytical Framework-
Stakeholder Analysis-
The process of evaluating a structure and possible changes to it as they connect with
relevant and interested parties. The stakeholder analysis has benefits such as helping projects get
into shape and build understanding. Conducting a stakeholder analysis comprises of following
steps-
 Determining the stakeholders -Methods like brainstorming a list of all attainable
stakeholders within the team is made. The list can be sorted later because if done at an
initial stage there are chances of missing out a potential stakeholder. The list can include
sales and marketing, product and finance, IT/Operations etc.
 Grouping and prioritizing -Once the brainstorming session is completed, categories
should be made on the basis of the stakeholders' interest, influence and levels of
participation. A power grid can be used to categorize the stakeholders in terms of level of
participation in the project.
 Figuring out how to communicate with each type of stakeholder - After preparing a
detailed list, a strategic thinking can be done regarding how best an ongoing support can
be earned from these stakeholders. Think of and have answers to questins such as
what/who motivates a particular stakeholder, their priorities and how can the projects be
aligned to those priorities.
M1 Critically analyse the macro environment to determine and inform strategic management
decisions
According to the opinion of Chen and Jermias, 2014, there are various factors of
environment like political, technological, economic, legal, social, environmental that affect
business decision making. All these factors create positive as well as negative impact to business.
For example, if Tesla has adopted technological factors then it assist in manufacturing products
and services with help of new machinery and equipments which leads to rise brand loyalty and
customer satisfaction. Similarly, on other side, if respective organisation will not adopt
technological factors, then it cannot fulfils current need and demand of people and also there is
increase in cost for adopting new technology for business.

TASK 2
P2 Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks
This is essential for organisation to conduct internal analysis and capabilities for
achievement of business objectives with help of different techniques, approaches and methods.
The internal analysis has performed through SWOT analysis and internal capabilities is done
through VRIO model which is described below:
SWOT Analysis
This is defined as model that is applied by organisation for identification of internal and
external strengths and weaknesses. Tesla has following SWOT analysis which is given below:
Strengths Weaknesses
Innovative Company- Tesla has strength in
terms of innovation which is higher than others.
The customer and market trust organisation for
development of competitive and profitable
products to gain profits and sustainability (Tesla
SWOT Analysis. 2019).
Top Employer Company- The success of Tesla
depends upon its employer as it has highly skilled
capable workforce for business performance. It
has innovation encouraging and diversity culture.
Tesla is regarded as best place to work for young
jobseekers with energy and talents. It is also listed
in Forbes as American Best Employer
organisation 2019.
Shortage of Batteries- The rate of
production is declined because of limited
supply of batteries. This leads in affecting
sales of electric vehicles of Tesla and
storage systems.
Lack of High Volume Production- Tesla is
regarded as Innovator of energy saving cars
but has failed in production of high quantity
of auto-mobiles of models. It is facing issues
in terms of management resources,
production cost and space expansion.
Opportunities Threats
Battery Production Technology in-House-
Tesla is focusing on making own battery cells.
This big game charger leads Tesla for increasing
opportunity in manufacturing along with reducing
Long Term Confidence- The sustainability
of Tesla is maintained through public image
and increasing morale value of customers.
As respective organisation is facing unstable

production cost. Recently, Panasonic is regarded
as main supplier of battery.
Less Expensive Car- The products of Tesla are
expensive because of innovation which needed
financial help for entertaining new technology. In
recent time period, it has launched Model 3 that is
more cheap version of S model having less
feature, range and power. This creates possibility
for expanding market size of audience.
situation for manufacturing products and
services. This resulted in deficiency of
business development.
Product Defects- With the rise in
engineering for innovative vehicles, the
products such as cars, vehicles of Tesla is
exhibited flaws in different cases. The
defected goods create weaknesses in
manufacturing and designing image of
organisation.
VRIO Model
This is referred as business analysis framework in order to evaluate company's resources
and find competitive advantages (Fox, 2012). The respective organisation has used VRIO model
for determining resources and capabilities for achievement of positive outcomes. Here, VRIO
means Value, Rare, Imitable and Organised. The capabilities of Tesla are explained with help of
VRIO Model. They are mentioned here:
Resources/Capabilities Valuable Rare Imitable Organised Impact of Competitive
Advantage
Design Yes - - - Competitive
Disadvantage
Supercharger Network Yes Yes - - Temporary competitive
advantage
Resources Yes Yes Yes - Unused competitive
advantage
Skilled Staff Yes Yes No Yes Long term advantage
Valuable- It means capabilities which are valuable in nature for organisation. They are
the most important capabilities of business which helps in achievement of goal and objectives
(García‐Rodríguez and et. al., 2013). The valuable resources for Tesla are design, supercharger

network, resources and skilled staff. These all resources are essential for business to run their
activities and operations in proper way. Here, design of Tesla product is attractive and unique
that increase customers to buy it. The vehicles and electric cars has supercharger network that
charge battery very fast than others. There are different resources which are required by Tesla for
running their business operations. It has highly skilled and capable work force for manufacturing
products and services.
Rare- It means resources that are rare for other business which helps in achieving
competitive edge. The components which are rare for others are supercharger network, resources
and skilled staff. The charging system of product used by respective organisation is rare for other
business as specified elements helps to charge battery fast. There are various resources which are
possessed by Tesla which are rare in nature and staffs are highly advanced and skilled for
performing various activities.
Imitable- These are the components which cannot be imitate or copied by others
(Ghezzi, 2013). The various elements of imitable are resources and skilled staff. The resources
are unique in nature which cannot be copied by others. In order to conduct business activities
various resources are required by organisation for better results. Similarly, Tesla has skilled staff
who can work under pressure for achieving their own and business goal and objectives.
Organised- This is referred as those aspects in which all components of organisation
should be arranged in effective manner for achievement of business goal and objectives. The
respective organisation has to organised all resources so that maximum gains can be achieved.
The elements which is organised is skilled staff as Tesla has capable workforce for performance
of work. Such need to be organised for adopting changes in operations and technology.
Therefore, SWOT and VRIO model has analysed for internal environment and
capabilities & resources of organisation for work performance. These practices aid in
achievement of business end goal and objectives in effectual manner.
M2 Critically evaluate the internal environment to assess strengths and weaknesses of an
organisation’s internal capabilities, structure and skill set
According to perspective of Gilligan and Hird, 2013, internal environment assist in
determining strengths and weaknesses of organisation. The strengths includes top employer
organisation and innovative company that assist in running of business operations and functions
in appropriate manner. Along with weaknesses includes shortage of batteries and lack of high

volume production that leads problem in supplying of raw materials to business. It is also
essential for respective organisation to formulate strategies as per structure of business in order
to provide goods and services. The internal capabilities and skills guide business to achieve their
desired objectives in effectual manner.
TASK 3
P3 Applying Porter’s Five Forces model evaluate the competitive forces of a given market sector
for an organisation
Porter's five force model is used by organisation for analysis of competitive surrounding
of company (Grayson and Hodges, 2017). Tesla has used this model for determining competitive
forces and potential market. They are explained below:
Threat of New Entrants- It means entering of new organisation into market for
providing products and services (Tesla Inc. Five Forces Analysis (Porter’s Model) &
Recommendations, 2019). Tesla carry low threat for new business because it focus on
manufacturing of highly premium goods like vehicles, auto-mobiles and electric cars. They have
particular target segment to buy goods and services. Therefore, it is not possible for small
organisation to compete with products and manufacturing process of Tesla.
Threat of Substitute- It means producing secondary products for original one in order to
fulfils need and demand of consumers. Substitute threat is low and high that depends upon
organisation and their products. In case of Tesla, it has low threat for substitute as it focus on
high premium value goods which is not possible for other organisation to compete with it.
Therefore, consumers does not carry any options for buying auto-mobile products from other
firms which is beneficial for respective organisation.
Bargaining Power of Suppliers- It means bargaining power of suppliers for products
and services in the market (Grover and Kohli, 2013). In context of Tesla, bargaining power of
suppliers are high as they focus on providing premium and high value products, materials,
resource and using technology. The supplier can charge any price from Tesla and they have to
pay as they don't have other options to purchase raw materials, resources from other suppliers.
Bargaining Power of Buyers- It is referred as situation where users has power to change
value for goods and services according to their need and requirements. In case of Tesla,
bargaining power of buyers are low as it focus on providing high and premium value products

and services with use of technology and consumers are liable to pay whatever has been charged
by organisation.
Competitive Rivalry- It means offering of products and services by organisation at same
or low prices to consumers (Iacob, Quartel and Jonkers, 2012). In order to run business and their
activities and operation at marketplace, it is very essential for organisation to know about their
competitors and their strategies so that better decisions can be made for achievement of goals
and objectives. Most of the organisation has to face competitive rivalry for sustaining and
surviving at market. Tesla is facing high rivalry as there are many other reputed brands in market
offering same types of products and services such as Mercedes, BMW, Audi, Fords and many
more.
Therefore, the respective model helps Tesla for identification of their position in market
for development of proper strategies and plan in order to achieve goal and objectives.
Ansoff Model
It is the model which was founded by Ignor Ansoff in 1957. This model is also called as
strategic planning framework which assist manager, marketers and senior for developing
strategies in order to grow in future (What is the Ansoff Matrix, 2019). The various strategies are
as follows:
Market Penetration- In this strategy, organisation sell same products in existing market.
In order to adopt such strategy, Tesla need to use their capabilities and resources for
enhancement of market shares and profits. It carry less risk as both market as well as product is
familiar to customers.
Market Development- It is the strategy that focus on selling existing products at fresh
market. The respective organisation has to enter into new market with existing products for
enhancement of profits, market shares and success. In this strategy, market research has to be
performed in effective and efficient manner.
Product Development- This is the strategy where new product is launched in existing
market (Murthy, 2012). This strategy is adopted for manufacturing of products for specified
target group of people. Product development carry high risk as new product is launched into
market place that may or may not be liked by consumers. The respective organisation can adopt
strategy after analysis of market in an effective and efficient manner.

Diversification- It is defined as those strategy where product and market both are new to
customers. Such strategy has high risk as comparing to other and leads to high profit margins.
After analysing all above strategies, it has summarised that respective organisation need
to adopt market development where they can expand business in Tajikistan with same existing
products. This provide to increase customer base and enhance profits.
M3 Devise appropriate strategies to improve competitive edge and market position based on the
outcomes
The organisation has to implement strategies in order to improve market position and
achieve competitive edge (Martinez-Simarro, Devece and Llopis-Albert, 2015). For achievement
of competitive advantage, they can implement strategies such as taking feedback from users,
developing and maintaining relationship with shareholders, stakeholders, providing high quality
product, analysis of consumer requirements and so on. In order to gain market position,
strategies can be in terms of conducting market analysis for fulfilment of requirement of
customers which helps in increasing brand value and loyalty. Therefore, they can also follow
innovative technology for manufacturing products and services.
 Cost Leadership – Tesla can use the strategy of cost leadership where it can offer its
products with the same quality but at lower prices than its competitors. This will help it to
stand out against its competitors and gain a competitive edge. In order to achieve this, the
company should identify various ways of reducing undesirable costs that are associated
with manufacturing the product.
 Differentiation – Many organisations use the strategy of differentiation which can also
be used by Tesla to differentiate itself and its products from its competitors. The
respective company can identify various attributes that its products have which can help
it set apart in the market. It can then identify the customers who value such attributes and
then market its products to them.
 Competitive Strategy based on Technology – Advancements in technology have
proved out to be extremely beneficial for organisations today as they can gain
competitive advantage against their competitors by implementing the latest technologies
and luring customers. Adopting this strategy will help Tesla in increasing its customer
base and reaching out to new segments of the market.