Business Strategy Report: Macro and Internal Environment of Tesla

This report offers a comprehensive analysis of Tesla's business strategy, examining its macro and internal environments. It begins with an introduction to business strategy, followed by an application of the PESTLE framework to assess the impact of political, economic, social, technological, environmental, and legal factors on Tesla. The report then delves into an analysis of Tesla's internal environment, utilizing SWOT analysis to evaluate its strengths, weaknesses, opportunities, and threats. Furthermore, the report applies Porter's Five Forces model to assess the competitive forces within Tesla's industry, identifying strategies to enhance its competitive edge and market position. Finally, the report discusses the implementation of various strategic planning theories and concludes with a summary of the key findings and recommendations. The report highlights Tesla's innovative approach to sustainable energy and electric vehicle manufacturing, while also acknowledging the challenges it faces in a competitive global market.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1: Apply framework that is used to influence the macro environment......................................3
M1: Critically analyse macro environment to determine strategic management decisions.........6
D1: Interpretation of information and data applying environmental and competitive analysis. .6
TASK 2............................................................................................................................................6
P2: Analyse the internal environment of Tesla company............................................................6
M2: Critically evaluate the internal strength and weakness.......................................................8
TASK 3............................................................................................................................................9
P3: Application of five force Porter's model to evaluate competitive force................................9
M3: Strategies to improve competitive edge and market position............................................10
TASK 4..........................................................................................................................................10
P4 & M4: Implement different range of theories to conduct the strategic planning.................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy include the management practices that include the strategy which are
further executed by the company in order to gain the potential success. As an organisation gets
affect by both micro dan macro environment so in order to cope up with the unforeseen
conditions the business take primary actions to strengthen its position within the market. It
basically refer to the long term plan that is created in order to attain the specific objective of the
organisation (Apenko, 2017). For the better understanding of report Tesla company is selected
which is known for the manufacturing of electric cars with the help of solar panel in an efficient
manner. The company has adopted the sustainable methods due to which it has eradicate the use
of fuel which further leads to minimal carbon emission. This report cover different topics like
analyse the impact as well as influence of macro environment within the organisation. Access the
internal environment as well as capabilities. Moreover, apply porter's five factor model within
the given market. Furthermore, application of the models, theories as well as concept to interpret
the strategic direction available to an organisation.
TASK 1
P1: Apply framework that is used to influence the macro environment
Pestle analysis is the efficient strategic management tool that is used to determine the
effect of the external factors in the functioning of company. There are vagarious determinant of
company that has to function on the basis of external factor like the market share of the company
depends on effective technology. So in order to run the business these macro factors need to be
studies and evaluated in detail (Chen, Eshleman and Soileau, 2016).
Political factor: Political factor include the stability within the market as well as support
of government towards the company which are evaluated by the firm before diversifying into
new geographical area. Tesla company unlike other traditional vehicle does not depend upon the
fuels like diesel or petrol to run the vehicle. It only uses the electricity or gas which is beneficial
for the economy.
Positive: The government of various countries supports the contribution of Tesla motors
due to which they take the responsibility in order to improve the hybrid engines like Tesla
Roafstar.

Negative: Although company have gained the positive responses from both public as well
as government due to which they undergo global trade agreement but still Tesla motors finds
difficulty to stretch its business and spread the awarenesses especially in developing markets.
Economical factor: This factor is associated with the different phases of the economy
such as recession or inflation that affect the fortune of company. So based on the per capital
income and the disposable income of the confined geographical area the company indulges into
the market and formulate strategy accordingly (Cubas‐Díaz and Martinez Sedano, 2018).
Positive: Initially the company used to segment only the premium group but later on it
diversified the market and extent product range by focusing on both high as well as middle
income group people like, Tesla Roadstar and Model X falls under the luxury category. Whereas,
Model 3 was launched specifically for the middle income group that help company to leverage
its market suitably.
Negative: Even though people have high purchasing power but still they prefer fuel cars
because of lack of awareness among the people in different parts of the country. Like in UK and
USA the market share of company is high because in other Asian market the company
experiences less loyalty from the end market (Dickson and McCord, 2016).
Social factor: It include the preferences, attitude and perspective of customer which
changes wityh the trend and affect the demand as well as supply of the offerings. So before
launching any product the company need to analyse market situation like today people love the
concept of electric cars due to their efficiency and environment friendliness attribute.
Positive: As the society understand the relevance of using sustainable environment the
fulfil the need to customer as well as does not harm the surrounding for instance, Model X of
Tesla. Hence, the transition in the thinking of customer as offer the wide opportunity to the
respected company in order to incorporate the business effectively.
Negative: Due to the deep understanding the demand of the the Tesla for Roadstar,
Model X and S has increased widely. So it is vital for the company to expand its capacity in
which they are lacking. Due to the huge waiting time to fulfil the demand leads to the chances of
dissonance that is difficult for company to overcome (Pestle analysis, 2018).
Technology factor: It refer to the advance methods that is adopted by company in order
to identify the new and creative methods to carry out the business. In terms of manufacturing

vehicle the company remain curious to identify latest technique and use to enhance the
manufacturing process.
Positive: Tesla has implemented the automation as well as artificial technology to gain
the advantage in terms of manufacturing the vehicle effectively (Fontana, Sastre-Merino and
Baca, 2017). There are various competitive company that lack to adopt the advancements but
Tesla has adopted it effectively.
Negative: In order to bring constant innovation Tesla has to incur huge capital
expenditure to manufacture different models and incur expenditure to bring significant
innovation. Along with that if the firm constantly bring innovation then it uplift the preferences
of customer for which they need to incur additional expenditure on regular basis.
Environment factor: Environment refers to the surrounding within which the business
function so all the production needs to be take place after implementing adequate CSR policies
for the welfare of society, employees as well as environment.
Positive: The main strength of the Tesla is that it is environment friendly and abide many
regulation which are related to the environment such as reduction of carbon emission. This can
helped the company to cater the huge market effectively.
Negative: In order to expand the operations the company need to incur various
expenditure in different parts of the country where it plans to diversify its market. It need to
undergo immense expenditure on the development of the gas station in order to expand the
business effectively.
Legal factor: It involve rules and legislation that is prepared by government with the
objective to retain the interest of employee on the company. While expanding from one mnarklet
to the other Tesla nee to update and revise all its policies and regulation associates with the
business (Ghemawat, 2016).
Positive: The company has already expanded in various parts of countries in order to
expand the chances of profitability. So it render each and every international regulation
efficiently.
Negative: The company itself has adopted the sustainable method to perform the business
but still they experience the restricted market to function because of the adoption of various law
that can hamper the image of company.

M1: Critically analyse macro environment to determine strategic management decisions
Tesla has systemically operated in the wide market by analysis both internal and external
market to appeal the interest of customer and carry out the functioning effectively. It widely
depend upon the technology so that it can easily product the innovation or green vehicle fro the
welfare of environment. Due to the company come up with different models like Tesla S or
Roadstar with the objective to eradicate the chances of carbon emission. On other side, although
it has renowned image but the political instability or conflicts with the competitors can hamper
the performance of company. So each aspect has positive and negative affect that need to be
considered effectively (Gumusluoglu and Acur, 2016).
D1: Interpretation of information and data applying environmental and competitive analysis
Information that is grabbed through analysing macro environmental provides with
various factors that affects performance of Tesla organisation. Different factors such as legal,
political, economical, social, technological and environmental factors influences business in
positive and negative manner. All these factors helps in identifying issues that are going to affect
business in future. Environmental factors helps in analysing competitive market and how a new
or existing business will be turned as threat for Tesla. Analysing these factors set of valid
strategies will be designed on the basis of these strategies action plan for Tesla will be designed.
TASK 2
P2: Analyse the internal environment of Tesla company
Tesla has been emerges as the most competitive company so this SWOT analysis helps
to reveal necessary insights regarding each and every factor of the company that is strength,
weakness, threat and opportunities (SWOT analysis of Tesla Motors, 2019). So it helps to
determine the necessary factors that is responsible for the competitiveness within global
automotive market.
Strength
Tesla has dominated the US markets in terms of the sale of electric cars like in 2019 the
company has wide market share in terms of the sales of Model 3 car. Accordingly it keeps on
launching various variants or model in order to maintain its pace and retain its position. Along
with that Tesla Roadster gained recognition due to its innovative energy management technique
which even gained the support from the local authorities in order to strengthen its capability.

Weakness
Tesla is unable to meet the surplus demand of the customer due to which the customer
have to wait for long to get their offering which at times loose their interest level and they
switches to the other competitors. One of the reasons for unbalanced demand and supply is
capacity problem because of which company find difficulty to manufacture optimum quality.
Opportunity
After analysing the existing problem of country in terms of carbon emission and
dependency on non renewable resources like fuel is very high. So to cope up with this situation
Tesla adopted the latest technology and strategy the manufacturing of hybrid vehicles that are
considered as green car and received immense support from the society. Hence, it helped to
overcome the problem of carbon emission that leads to climate change by exploiting the external
opportunity effectively.
Threat
In terms of manufacturing electric cars Tesla faces challenges on the basis of design,
attributes as well as functioning in comparison with the other tough competitors like Ford and
General motors.
Stakeholder matrix is the efficient tool that help the stakeholder to determine the
necessary actions which they can align with the perspective to attain the goal effectively. It is
basically the mapping of external and internal stakeholder of Tesla in order to attain its goal.
This matrix comprises of four elements which are explained below:
Keep satisfied: It comprises of the stakeholders who have high in power but low interest
in day to day operations. It comprises of the government that analyse the performance of
renowned companies like Tesla because in case of high profitability they need to pay more taxes.
Monitor: Low power as well as interest involve stakeholders like employee of Tesla who
are only responsible to carry their duties diligently.
Managed closely: High power as well as interest involve shareholders, investors as well
as board of directors to make major contribution by taking valuable decisions and investing fund
in the company with the help of which it can expand its operations suitably.
Keep informed: These stakeholder have high interest in the functioning of business but
low power such as customers of Tesla that help the firm to generate the revenue. Due to which
the manager makes necessary measure to fulfil the demand of ultimate user effectively.

Conclusion
Tesla has systemically operated in the wide market by analysis both internal and external
market to appeal the interest of customer and carry out the functioning effectively. It widely
depend upon the technology so that it can easily product the innovation or green vehicle fro the
welfare of environment. Due to the company come up with different models like Tesla S or
Roadstar with the objective to eradicate the chances of carbon emission. On other side, although
it has renowned image but the political instability or conflicts with the competitors can hamper
the performance of company. So each aspect has positive and negative affect that need to be
considered effectively (Gumusluoglu and Acur, 2016). Information that is grabbed through
analysing macro environmental provides with various factors that affects performance of Tesla
organisation. Different factors such as legal, political, economic, social, technological and
environmental factors influence business in positive and negative manner. All these factors help
in identifying issues that are going to affect business in future. Environmental factors help in
analysing competitive market and how a new or existing business will be turned as threat for
Tesla. Analysing these factors set of valid strategies will be designed based on these strategies
action plan for Tesla will be designed.
P2: Analyse the internal environment of Tesla company
Value chain: This is the prominent business model that consist of the different range of
activities which is required by the company to produce the effective good as well as services.
This possible help the company to maximise the chances of value generated at best possible cost.
In context to Tesla this analysis is used top gain competitive advantage within the electric auto
makers segment.

Illustration 1: Illustration 1: Value chain analysis of Tesla, 2018
Source: Value chain analysis of Tesla, 2018
Primary activities: These activities help to add the suitable value in the to the product
which help to create the unique image and gain competitive advantage. Some of them are
explained below:
Inbound logistics: It refer to the use of different raw materials as well as storage system
used to build fully electric vehicles with the help of solar panel and storage system. Tesla depend
upon various material like steel as well as copper and have the large capacity to store the final
product.
Outbound logistics: Tesla function in 30 countries including US fro which it has wide
distribution network that help to effectively deliver the vehicles to final customers. Most of the
customer select the option of customization while ordering the car via online platform. The
company prefer to sell the car directly for the customer rather than involving roles of dealer
because it's price is already expensive and intervention of middleman can further pushes its
price.
Secondary activities: These are the support activities that assist the primary activities to
function effectively. Some of them are explained below:
Technology: The company believes in adopting the latest technology because the product
is already based on the new concept under which the company took initiative to adopt latest
technique effectively.

Human resource: To add the value to customer, HR manager of Tesla hire the most
potential employee that can carry out its activity effectively as well as efficiently.
Resource Based view
This framework consist of the tangible as well as intangible resources of Tesla
organisation such as manufacturing plant, equipments, capital, global brand reputation,
intellectual property right and so on. This lead the firm either to produce the heterogeneous as
well as immobile goods. Firm produces the heterogeneous goods in order to differentiate their
services from the other competitors like Tesla. Whereas, due to immobility the firm are not in
able to replicate the resources and uses similar type of strategy. Although whether the firm opt
different type of resources but to sustain they need to follow VRIO model to enhances the
internal capabilities and gain competitive advantage.
Strategic capability refer to the ability, existing skill as well as capability of the firm that
help to gain the competitive advantage over others. It consist of the VRIO model that help the
organisation to recognise its internal capability and makes the best possible use of it in order to
gain organisational success.
VRIO model is used to by the company in order to implement the unique strategy as well
as features that can help the Tesla to gain competitive advantage by securing better place
amongst the competitors (Higgins, Omer and Phillips, 2015). The main purpose of such analysis
is that it help to uplift or improve the competitive position within the dynamic market.
Resource Valuable Rare Imitable Organisation
Financial
capability
Yes No Yes Yes Competitive
parity
Brand image Yes Yes No Yes Sustainable
competitive
advantage
Unique design Yes Yes Yes Yes Temporary
competitive
advantage

Highly
Efficient
Yes No No Yes Competitive
parity
Valuable: This area help the Tesla to identify whether the resources of company helps in
delivering value to the user which acts as an opportunity for company to establish unique image.
In relation with Tesla motors the company has gained the valuable financial capability that can
help the firm to adopt the latest innovation and cater the need effectively. Along with that the
renowned image of company has helped to developed the unique brand image as well as design
that appeal the interest of customer. Further, in terms of function the electronic cars are highly
efficient (Linder and Williander, 2017).
Rare: It's preferable if the company offer the value to customer but along with that these
values need to be rare otherwise it will lead to the situation of competitive parity where business
may find difficult to differentiate itself. In term of Tesla company have the rare product design as
well as brand image that make it relatively easier for the customer to recognise the brand and
differentiate it with others. On other side, there are other major companies like Toyota that too
make huge financial investment in order to offer highly efficient vehicles. Therefore, the
company need to look for the rare component in their product.
Imitable: It refers to the method that is adopted by the other organisation in order to
duplicate the resources as well as capability of the organisation. If the resources are imitable then
it can lead to the temporary competitive advantage under which the company need to make effort
to retain its position. In terms of Tesla the brand image of company as well as its efficient can't
be imitated by the other competitors. Whereas, the financial resources as well as design of the
company can somewhat comped by the other competitors.
Organization: It reflect the structure, processes as well as management system in order
to capitalise the capabilities of an organisation. Without the internal support the company will
only left with unused competitive advantage. Here the string brand image of Tesla helps it to
gain the leverage of sustainable competitive advantage. This is the main reason due to which the
loyal customer stick to the particular brand and avail its offering only even if the switching cost
is high (Holotiu and Beimborn, 2017).
Competitive advantages

This refer to the situation under which the company focuses on their strength and
capability by working on the strength and exploit the opportunity present in the external
environment. It potentially help them to gain the dominance positions and differentiate their
services from the other competitors who deal in similar type of industry. For instance, Tesla took
the initiative to reduce carbon footprint by producing the electric vehicles.
McKinsey 7 s framework
This model consist of the 7 different internal factors that are aligned effectively with the
purpose to attain the overall objective of an organisation suitably. It basically comprises of the
hard element strategy, structure and system as well as soft strategy which include skill, staff,
style and shared values. Tesla needs to adequately focus on each element. Such as it adopts the
differentiated strategy under which it make precaution to deliver the valuable services in
comparison to other competitor, for this it has adopted Functional structure which which
different department such as operations and sales has its own head known as functional head that
overall the performance of whole team. Along with that it carry out smooth system the area to
operate the business where both manager and personnel participate into innovative thinking and
leads to smooth business operations. Further, based on soft elements the manger promote
training session in order to enhance the existing skill, knowledge and capabilities. For which
Participative leadership style is used to coordinate the efforts of employee and interact with them
in order to attain collective goals. Therefore, the share values consist of the particular norms as
well as standard which is common for whole staff and manager in order to maintain systematic
function to build foundation of Tesla company effectively.
Conclusion
Tesla motors due to its global image find convenience to sell appeal the interest of
customer. This further initiate the company to take the advantage of its economies of scale
effectively. For instance, the company has launched different types of SUV and Sedan like
Model X and Model 3 respectively to cover the requirement of middle- and high-income group
people. Whereas, there are various competitors within electric car company like Audi and Toyota
so the company need to incur preferable expenditure in different innovation and technique that is
time as well as cost consuming (Maniora, 2018). Thus, the company need to systematically
prepare the framework of different models such as VRIO model or the McKinsey framework to