Business Strategy Report: Tesla's Strategic Planning and Analysis

This report provides a comprehensive analysis of Tesla's business strategy. It begins with an introduction to business strategy and the context of Tesla, an American automotive company specializing in electric car manufacturing. The report then delves into Task 1, which involves a PESTLE analysis to determine the impact of macro-environmental factors (political, economic, social, technological, environmental, and legal) on Tesla's operations and strategies to overcome potential challenges. Task 2 focuses on identifying internal factors and capabilities using SWOT and VRIO analyses to assess Tesla's strengths, weaknesses, opportunities, and threats. Task 3 analyzes Porter's Five Forces model to determine the competitive advantages of the electric vehicle industry and recommend strategies for gaining a competitive edge. Finally, Task 4 explores various strategic planning models and concepts to create a strategic management plan, including both tangible and tactical strategic priorities and objectives. The report concludes with a summary of findings and recommendations, emphasizing the importance of strategic planning for Tesla's continued success.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
Determine affect of macro environment factors on business operation and strategies to
overcome it.............................................................................................................................4
Critically study about factors of macro environment in order to make effective strategic
management decisions............................................................................................................7
TASK 2............................................................................................................................................8
Determine internal factors and capabilities with help of proper framework..........................8
Critically measure internal business environment for analysing strengths and weaknesses of
enterprise to determine their internal capabilities, structure and skill set of organisation...12
TASK 3..........................................................................................................................................12
Analyse Porter’s Five Forces model in order to determine competitive advantages of provide
industry.................................................................................................................................12
Determine proper plans and strategies in order to make improvement to gain competitive edge
and market position based on the outcomes.........................................................................14
TASK 4..........................................................................................................................................15
Various models, theories and concepts for making strategic planning................................15
Make strategic management plan which contain both tangible and tactical strategic priorities
and objectives.......................................................................................................................16
Review and explain information and data by applying environmental and competitive
investigation for producing a set of valid strategic directions, objectives and tactical actions17
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Business strategy is defined as competitory actions as well as moves which firms
uses in order to attract their customers, strengthening performance, competing
successfully and achieve goal and objectives of organisation (Business Strategy:
Definition, Levels, Components & Examples, 2019). This is regarded as master plan
which management of organisation implement for securing competitive position at
marketplace, carry operations, satisfying customers and achievement of desired ends of
business. Business strategy is very important for organisation to carry their activities and
operations in an effective and efficient manner. The different types of business strategy
are cost leadership, differentiation and focus. The enterprise given for project work is
Tesla that was founded in 2003. This is American automotive organisation specialising in
electric car manufacturing. Being the Junior Strategy Manager of Tesla, line manager has
asked for preparation of various report. The micro and macro investigation and strategical
growing direction thought along with analytic tools has been discussed. This report
highlights Porter's five force model for given firm.
TASK 1
Determine affect of macro environment factors on business operation and
strategies to overcome it
It is very essential for organisation to evaluate and analyse macro environmental
factors for making proper plan and decision (Azma and Mostafapour, 2012). This helps
in knowing about various external factors in order to make proper business strategies for
organisation. For macro environment, PESTLE analysis has performed by manager of
Tesla to make business strategy. They are described below:
PESTLE Analysis
This is referred as techniques or framework which is utilized for investigation and
monitor of different element of environment that consequence carrying out activities of
enterprise (Baden-Fuller and Mangematin, 2013). This is applied whenever organisation

wants to start new business or enter foreign market. In context of Tesla, they are
described below:
Political Factors- This is defined as intervenes of government in an economy
which includes foreign trade policy, labour law, environmental law, instability and so on.
The United Kingdom runs under system of parliament. It is stable, fair and provide
opportunity to business for expanding it in other country. In context of Tesla, it is running
business in United Kingdom which has opportunity to expand it in other place easily
because of political stability, proactive government and large influence on inner working.
As it deals in manufacturing of auto mobiles for users which has stability in political
condition for maximum production. There are some negative aspects because of
corruption and Brexit of EU. This can impact Tesla strategy as it can market development
for expanding business in other market.
Economic Factors- This is defined as performance of economy which consider
inflation rates, economic growth, interest rates, exchange rates and many more (Bentley-
Goode, Newton and Thompson, 2017). The economic position of UK is considered as
strong as compared to others. Under the view of respective organisation, it has better
possibility to grow business in other parts of UK. The different opportunities available to
respective organisation are in terms of free market, increase in foreign direct investment,
5th highest GDP and varied economic system in both open and private body. Negative
aspect of expanding business is that huge amount of wealth is spent on free open work
and money assist in slow recovery from recession which occurred in 2008/09. Tesla can
consider such factors for expanding business in other market as there is stability in
economic condition of UK government.
Social Factors- This elements of social factors includes demographic features,
values, population, customs, that business is operating their functions. It consists of
safety, income distribution, health, growth rate and so on. UK carry high social standards
which leads for better all-round circumstance to Tesla for running their business in an
effective and efficient manner. UK consists of 64.1 million densely populated area having
high standard and cheap workforce that assist respective organisation to enhance their

profits and business (An Example PEST Analysis of The UK, 2019). With rise in
education costs, less people buy products of Tesla as study is more important than others.
Thus, it is very significant for organisation to consider respective components for
maximum gains and profits. There is change in current trends of people which can impact
their buying behaviour. With rise in cost, people focus more to make their career rather
than buying auto-mobiles. This thinking of people can impact strategy of Tesla and lower
their sales and profits.
Technological Factors- It refers to innovation in technology which affect
operation of industry (Bentley, Omer and Twedt, 2013). It consists of automation,
technological change, level of innovation, research and development and others. UK is
considered as MEDC (More Economically Developed Country) which does not have
great entree for application of new innovation. It has few positive impact on Tesla
because of prime innovation skills, expertise in IT, science and laws related to intellectual
property. Technological factor impact Tesla in terms of slow technological development
as compared to United States. Though, respective organisation has opportunity for
expanding business in respective market for fulfilling need and demand of consumers in
an effective and efficient manner. Tesla has to update their strategy on regular basis due
to change in technological factors which may impact on their manufacturing process and
other functions.
Environment Factors- Such factors are significant because of increasing scarcity
of raw materials, carbon footprint, pollution targets (Bozkurt, Kalkan and Arman, 2014).
The respective country has made proper improvement in environmental factors for
reducing negative impact to business. United Kingdom is facing problem in context of
weather condition that impact production of firms and manufacturing status. Tesla is not
much affected through such factors because it has their own indoor set up to manufacture
auto mobiles and electric cars. The respective organisation is impacted by weather of UK
for demand unit which bring wait in bringing of goods for customers.
Legal Factors- The different legislation laws include employment, copyright,
patent, consumer protection, health and safety laws. This factors helps in running

business and their activities in ethical as well as legal manner. There are different laws
which has implemented by government of United Kingdom for running business
successfully at marketplace (PESTEL analysis of the UK, 2017). Tesla has to follow all
legal laws while manufacturing their products such as electric cars, auto mobiles for
avoidance of punishment and legal actions. This creates customer loyalty towards
business and their activities which they are performing at marketplace in an effectual
manner.
The above framework assists Tesla for development of plans and strategies for
running business activities, transaction and business in appropriate way for attainment of
end and objectives. Therefore, respective organisation has to consider all these factors for
better outcomes at marketplace and manufacturing of products in effectual mode.
Stakeholder Mapping
It is defined as procedure in order to find key stakeholders that is related to
project. This process involves about identification of individuals who possess interest in
project outcome. They can be a single or multiple individuals depends upon size of
business. There are four stages in respective framework which define stakeholders,
analyse them by their influence & impact, planning manage stakeholder reporting &
communications and engaging with own stakeholders.
Critically study about factors of macro environment in order to make effective
strategic management decisions
As per view of Cheng, 2013, there are different macro environment factors such as
political, economic, social, technological, environment and legal factors which impact
decision making of business. These factors impact on business positively and negatively
such as if a Tesla company adopt environmental factors then it will help them in
enhancing their market value and goodwill by attracting more investors and stakeholders.
On the other hand, it will also impact them negatively because adopting eco-friendly
procedure is costly and time taking as compared to others such as if they implement
process of re-use waste material then it will increase one more procedure for
manufacturing products.

TASK 2
Determine internal factors and capabilities with help of proper framework
This is important for company to perform investigation of inner environment and
capacity for developing plans and scheme for achievement of goal and objectives with
use of methods, techniques and approaches. The junior strategy manager of respective
has to analyse internal surrounding for knowing about strengths, weaknesses,
opportunities and threats accordingly for developing proper strategies to achieve effective
outcomes. Here, Tesla uses SWOT analysis for internal environment and VRIO analysis
for determining capabilities of organisation. They are mentioned here:
SWOT Analysis
This is defined as strategical preparation tools and techniques which is used by
organisation or single for determining strengths, weaknesses, opportunities and threats
related with task design or enterprise rivalry (Hinkelmann and Pasquini, 2014). The
SWOT analysis of respective organisation is described below:
Strengths Weaknesses
Top Employer Company- The main
success of Tesla is because of employing
huge number of people for organisation in
order to achieve their desired outcome. It
follows innovation encouraging and
diversity culture for their employees. This
is regarded as best place for working,
attracting job searcher with their energy and
talents.
Best in Class Electric Cars- Tesla has left
all brands behind in case of providing high
electric cars (Tesla SWOT Analysis, 2019).
The cars of respective organisation cover
Manufacturing Complications- Tesla has
to face manufacturing, launch and
production ramp because of delays in
launching their new products (Tesla SWOT
Analysis, 2019). There are also production
risk and mechanical complications which is
weakness for respective organisation.
Lack of High Volume Production- Tesla
is regarded as innovator of energy
redemption cars but it failed for production
of high volume of auto mobiles for their
users. Recently, Tesla is planning to
manufacture to produce Model 3 vehicle

maximum distance as compared to others.
It has occupied top three place in range
terms. For example, Model S of Tesla
travel up to 600km on single battery charge
and Opel Ampera with 250km.
Innovative Company- Tesla has high rate
of innovation where it has manufactured
world first new sports cars and electric
semi-truck. This lead it to develop high
quality product to beat competition and
gain maximum profits and gains.
but is facing management resources and
production cost.
Shortage of Batteries- The respective
organisation is facing problems in terms of
declination of production rate due to
limited supply of batteries. This leads to
impact sales of vehicles and energy storage
systems for business.
Opportunities Threats
Less Expensive Car- The respective
organisation is expensive in nature because
of unconventional rely on innovation that
need more financial help for entering into
new technology. For example, it has
launched Model 3 that is affordable with
requires less power, fewer feature and
range. It has opportunity for expanding
market size.
Sales Expansion in Untapped Market-
Tesla has chance to spread out their
enterprise at Asian market because it is less
saturated in terms of renewable and
automotive energy markets. It has
opportunity for expanding business for
rising financial stability and making strong
Product Liability Claims- Tesla provide
high quality products and follows higher
standards for manufacturing though it has
to face product liability claims. It has faced
claims and lawsuits because of failure of
technology in products. If such threat
continues then Tesla has to bear great
financial setbacks.
Extensive Competition- Tesla is facing
competition from self-driving and
alternative fuel vehicles. The major
competitors of Tesla in terms of luxury
segment are BMW, Lexus, Audi and in
case of economy segment such as Toyota,
Ford, General Motors. It is facing threats in
terms of prices because there are many

market presence. companies that charge low cost for
vehicles.
VRIO Analysis
It is defined as analytical method for evaluating resources of company and find out
competitive advantages (Lehmann, 2016). It is very important for Tesla to identify VRIO
model in order to determine capabilities and resources in an effective and efficient
manner. VRIO stands for value, rare, imitable and organise component. The capabilities
of Tesla are analyse which is described below:
Resources/Capabilities Valuable Rare Imitable Organised Impact of Competitive
Advantage
Innovative Design Yes - - - Competitive
Disadvantage
Supply Chain
Management
Yes Yes - - Temporary competitive
advantage
Copyright Battery Yes Yes Yes - Unused competitive
advantage
Capable Staff Yes Yes No Yes Long term advantage
Valuable- It is defined as the capabilities that are valuable in nature for system.
With such resources, goal and objectives can be attained in effective manner (López
Salazar, Contreras Soto and Espinosa Mosqueda, 2012). The valuable resource for
organisation are staffs, process, technology and others. Tesla has following valuable
resources such as: Innovative Design- The design developed by Tesla is unique and attractive in
nature for increasing customers to purchase products in order to grow their profits
and gains in an effective (Meckling, 2015).

 Supply Chain Management- This resources is valuable because Tesla supply
product to their customers at targeted marketplace and time. It assists in fulfilment
of need and demand of customers for higher profits. Copyright Battery- The battery developed by Tesla required high innovation and
technology that helps in attainment of competitive advancement. They have
copyright for their battery so that other cannot copy it.
 Capable Staff- This is the most important valuable resources of respective
organisation to achieve desire results. It has skilled, capable, knowledgeable and
innovative staff for work performance.
Rare- This is defined as those resources which are rare for other organisation
which assist in attaining competitive advancement. The rare resources of Tesla are
described below: Supply Chain Management- Tesla has adopted innovative supply chain
management as compared to competitors. This assist in fulfilling requirement of
consumer at given time period with premium quality. Copyright Battery- The respective organisation uses premium and innovative
value batter for their auto mobile products to meet expectation of consumers. It is
rare resources and cannot be copied by another organisation for their own uses.
 Capable Staff- The working employees of Tesla are capable, skilled,
knowledgeable and innovative for accomplishment of goal and ends in an effectual
and prompt style. With their skills, they can easily create advanced and unique
good for their consumers.
Imitable- This is defined as resources that cannot be copied by other organisation
(Mohelska and Sokolova, 2016). The innovative design and supply chain management of
Tesla are easily copied by other competitors. The different imitable resources of Tesla are
described below: Copyright Battery- The battery manufactured by Tesla is very innovative that uses
high technology which are not copied by other easily. With such resources, goal
and objectives are attained in effectual manner.

 Capable Staff- The respective resources are not copied because Tesla has loyal,
dedicated and hard-working employees for work performance.
Organised- It is defined as those aspects where each and every resources have to
be arranged by business for set outcomes (Niman, 2014). Tesla has to organise different
resources such as innovative design, supply chain management, copyright battery. The
resources which need to be organised are:
 Capable Staff- Tesla possess knowledgeable, capable and skilled employees for
better work performance. This resources are organised when particular firm adopt
any alteration in technology or operations.
Tesla has conducted SWOT analysis to determine internal environment which
assist in finding strength and weaknesses of business. Similarly, VRIO analysis has
performed for knowing capabilities and resources of business for attainment and
achievement of desired targets.
Critically measure internal business environment for analysing strengths and
weaknesses of enterprise to determine their internal capabilities, structure
and skill set of organisation
As per perspective of Oldman and Tomkins, 2018, the internal environment to
assess strengths and weaknesses of respective organisation are described here. The main
strengths are top employer company, best in class electric cars and innovative company
which are important for business to run their activities and operations in an effective and
efficient manner. Similarly, weaknesses of organisation are manufacturing complications,
lack of high volume production and shortage of batteries which creates problems in
achievement of business goal. This helps in analysing internal capabilities, skills and
structure of business for achievement of desired targets.

TASK 3
Analyse Porter’s Five Forces model in order to determine competitive advantages
of provide industry
This model or tool is used for analysing competitive environment of company.
This helps manager of organisation to do proper planning in order to achieve finish and
clinical successfully and effectively. The respective organisation can determine potential
market and competitive forces with help of this model. Porter's five force model is
described here:
Threat of New Entrants- This is defined as situation where new company enter
into market place because of less laws, rules and regulations (Tesla Inc. Five Forces
Analysis (Porter’s Model) & Recommendations, 2019). Tesla has low danger of fresh
entrants because it manufactures advanced and premium value products such as electric
cars, vehicle and deals in auto-mobiles. This has targeted particular range of customer for
buying of products and services. The small firm cannot develop similar type of goods
which Tesla is manufacturing for their consumers. Therefore, it has very low threats of
new entrants at marketplace.
Threat of Substitute- This is defined as situation where there is secondary of
goods and services that are produced or manufactured by specified organisation at
marketplace. The threat of substitute can be high as well low. In case of high threat,
customer easily switch from one organisation to another to get products and services at
low cost. The respective organisation has low threat of substitute because the number of
companies producing premium value auto mobile is very low which does not provide any
option to buyer or consumer to switch their need and demand.
Bargaining Power of Suppliers- It is defined as position where provider has
power to bargain for price of goods at marketplace (Palepu and Healy, 2013). In case of
high bargaining power suppliers demand high prices for bad quality goods. The supplier
of Tesla has high bargaining power as they provide high and premium technology,
materials and resources to their business. In respective situation, Tesla has to pay