QAB020X603S: Applied Corporate Strategy Report on Tesla Motors

This report offers a comprehensive analysis of Tesla's corporate strategy. It begins with an introduction defining corporate strategy and its importance, then proceeds with an external analysis using PESTLE and Porter's Five Forces models to assess the political, economic, social, technological, legal, and environmental factors influencing Tesla, as well as the competitive forces within its industry. An internal analysis follows, employing the VRIO model to evaluate Tesla's resources and capabilities, along with a discussion of its strengths and weaknesses. The report also includes a CC Analysis. Finally, it examines a recent strategy using the SAF model, concluding with a summary of the feedback received and references. The report provides a detailed understanding of Tesla's strategic position and performance in the electric vehicle market.

APPLIED CORPORATE
STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Q1 EXTERNAL ANALYSIS..........................................................................................................3
PESTLE Analysis........................................................................................................................3
Porter’s Five Forces Model of Tesla...........................................................................................4
Opportunities and Threats of Tesla..............................................................................................6
Q2 INTERNAL ANALYSIS...........................................................................................................7
VRIO Model of Tesla..................................................................................................................7
Strengths and Weaknesses of Tesla.............................................................................................8
CC Analysis...............................................................................................................................10
Q3 RECENT STRATEGY............................................................................................................10
SAF Model.................................................................................................................................11
CONCLUSION..............................................................................................................................12
A SUMMARY OF THE ORIGINAL FEEDBACK.....................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
A corporate strategy is clearly defined as, long-term objective that companies or
businesses set for creating their corporate value in the market, and motivate to workforce for
implementing the appropriate actions for achieving huge customer satisfaction. Currently top-
level management within most businesses focuses on making very effective corporate strategy
gain huge competitive advantage in this competitive market. In this modern and dynamic world,
no company can survive in the market without adopting an effective corporate strategy. This
report discusses Tesla motor’s corporate strategy. There is Tesla motors is an American electric
vehicle manufacturing company, headquartered in California, United States. Some other aspects
also have been discussed in this report which has based on Tesla’ corporate strategy. Thera are
external and internal analysis has conducted for the Tesla in this report to deeply analysis its
structure of corporate strategy. Some models and frameworks also has used in this report for
identifying and analysing different business environment factors of Tesla Motors.
Q1 EXTERNAL ANALYSIS
PESTLE Analysis
This is analytical tool which helps business to analyse external factors in the business
environment. This also helps the businesses to develop effective strategy to compete in the
market.
Political Factors
Due to increase in the demand of electrical cars government has imposed high taxation to
earn revenues from the company this has impacted the profit margins to grow in the market.
Economic Factors
Increase in employment in the global economy has also increased the cost of pay
employees more. This has influenced the allocation of resources of Tesla for future innovations.
Social Factors
Change in preferences of customers and increased the sales of company as it reduces the
cost of maintenance of customers. However customer with traditional mindset does not trust
electric cars which have impacted the market size.

Technological Factors
Company has to invest heavily in innovation, research and development as technology is
changing very fast. This is impacting the efficiency of products and services which Tesla offers
in the market.
Environmental Factors
Global environmental concerns like global warming have affected the climatic changes.
As Tesla has developed electric cars it is also helping to increase its visionary cause and brand
value to grow effectively.
Legal Factors
Implementation of high safety and security laws on electric cars has slowed the efficiency
of Tesla to grow. It has also increased the cost to be in compliance and be ethical and legal in its
operations. It is impacting its market share and profit margins negatively.
Porter’s Five Forces Model of Tesla
There are many factors which hells to increase the productivity of the organisation and
provide effective understanding to compete in market and attain higher profit margins
effectively. Porter five forces model helps to analyse the entire factor which can impact the
competitiveness of Tesla to reduce its market share in market and also impact its growth
opportunities effectively (Bolodurina, 2016). This model is also very essential for Tesla to
develop effective understanding of the future trends of customers to increase the productivity and
quality of their cars to provide satisfaction and increase the quality of products to gain higher
profit margins. To evaluate industry attractiveness, it is very essential for Tesla to adopt this
model and increase the productivity of company and attain core competency in market
effectively. Due to increase in the trends of solar energy company also has to understand its
threats and opportunities top gain effective understanding before investing in this sector to gain
higher profit margins effectively.
Threat of New entrants (High)
Increase in demand in automotive industry the threats of manufacturing companies have
also increased due to high risk of new entrants which can impact the market short of the
company and also influence the profit margins of the company. Tesla is having high risk of new
entrants in the market as many companies are very innovative and also invest much on research
and development to increase the performance of the products and increase satisfaction of the

customers effectively. Tesla improves its effective understanding about technology by
developing high performance workforce and also increasing the efficiency of them. This will
helps the company to become more effective in supporting the company and achieving its
objectives effectively. Many companies also have the threat from Tesla due to high potential
growth of company which also attracted more customers.
Bargaining Power of Buyers (Moderate)
Buyers are the king of market and also have the power to influences the market demand
to reduce prices of companies in automotive industries effectively. Tesla has moderate threat of
bargaining power of buyer which can decrease the prices of products to satisfy customers and
also provide them better options (Melissen and et.al., 2018. This is because of high completion in
market although the threat is moderate as the company also deals in electric cars which support
sustainable energy as well. This helps to attracts more customers and reduces their bargaining
power to impact the profit share of Tesla. There is strong threat to company of globalization
which can increase the bargaining power of customers however company has increased its
productivity and improved the quality of products to attract customers with same price range and
even lower to many substitutes.
Bargaining Power of Suppliers (Moderate)
Suppliers of Tesla also ahs the moderate power to impact the profit margins of the
company. The issue of bargaining power is high cost raw materials which increase the
production cost of the products and impact the growth opportunities of the company(Frandsen
and Johansen, 2018. It is also very essential for the company to determine alternate raw material
to reduce bargaining power of the company. As Tesla in investing in solar energy as the new
alternative fuel which will also reduce the cost of buyer to maintain cars and also reduce cost of
raw material to develop this type of car. There are many factors which also helps the company to
develop better supply chain and also increase the profit margins of Tesla and compete in market
effectively.
Threat of Substitute Products (Moderate)
Increase in the competition in the market has also increased the number of substitute
products of Tesla. This has also increased the threat of company to generate more revenue and
market share. This is also very essential for the company to develop its market growth and
increase higher profit margins. The threat of substitute is moderate as there are not many electric

cars available in the market which can impact the sales of company and also reduce the
efficiency of Tesla to grow.
Threat of Existing Competition (High)
There is high threat of existing player in the market as they have the potential to innovate
and invest in the electric cart segments which will also reduce the market share of Tesla and
provide ineffective productivity ion the market. This has also impacted the sales and market
share of the company to become leader in the market. Due to increase in the innovation of
competitors it is very difficult for Tesla to survive in the market and achieve all the factors to
achieve core competency in the market (Schmidt and Redler, 2018). Tesla also has to innovate
its products in order to compete in market and increase its market share.
Opportunities and Threats of Tesla
It is very essential for Tesla to determine its opportunities and threats to increase its
productivity and also gain higher profit margins.
Opportunities
1. Tesla has many opportunities in the market to grow which can also increase the potential
of the company to become more effective and increase market share. As the company has
opportunity to expand in new market which are developing and do not have any electric
car competitors this will increase the sales of their company and increase profit margins
effectively.
2. It is also very essential for Tesla to analyse all the available resources to develop low
budget cars and increase the efficiency to attract more customers from the market
effectively.
3. Tesla also has to opportunity to increase the quality of battery life of their cars which
increases the customer satisfaction and improve the sales rapidly.
Threats
1. As Tesla has developed many high end technology to increase the quality of car and
travel of customer however this has increase the threats of company due to many errors in
technology which has compromised the safety of passengers (Wu, 2018). This has
impacted the brand value of Tesla negatively.

2. Defect in the products has also increased the call backs and reduced the profit margins of
the company to invest in the other segments.
3. It is very difficult for the company to increase the customer knowledge to adapt to new
technology which is also losing market share despite of cost efficiency for customers.
Q2 INTERNAL ANALYSIS
VRIO Model of Tesla
This model is a framework which provides analysis of all the resources which has
competitiveness to increase the market share of the company (Alexandrova, Stankova and
Mladenova, 2016). Tesla uses this strategic analysis model to understand productivity of
resources which helps to increase internal competitiveness of company to increase market share
and profit margins to grow rapidly in market.
Resources Valuable Rare Inimitable Organisation
Capital √
Technology √ √ √ √
Human Resource √ √ √
Intellectual
Property
√ √ √
Valuable
Valuable resources are these which add value in the activities of the company and
increases profit margins to grow. This resources are also helpful to generate all the factors and
analysing these factors also can increase the quality of products and adds value of customers to
increase their satisfaction level and motivate them to become loyal to the company effectively.
Tesla identified resources which are valuable which are capital as it helps to provide better
opportunity for company to develop effective technology. Technology, human resources and
intellectual property are the key resources which increase the value of customer and use all the
opportunity to increase profit margins effectively.
Rare

There are many factors which not available win the market which increases its monopoly
in the completive market. Tesla also has some resources which are rare in market and help to
increase brand value of the company (Pramudita, 2016). It is very essential for the company to
understand the rare resources to gain core competency in the market. Tesla has developed and
effective technology like cruise control in which the car become the driver to and handle the
steering. This resources help company to attracts more customers in the company effectively.
Employees of Tesla are also very effective and well skills and trained to havebetter knowledge
which helps them to attracts more customers and satisfy them effectively.
Inimitable
These are the resources which are present in the business and no one can copy those due
to many factors. This resource also provides competitive advantage to company and increases the
profit margins by attracting more customers. Tesla has innovated many technology and digital
tools and registered them in patent act which helps them company to protect their innovation
from other competitors and provides long term competitiveness in market.
Organisation
Organisation is the most important strategy which helps the business to understand the
combination of all the resources which helps them to achieve their objectives. As having rare
resources and not using them optimally can also reduce the efficiency of the company and
impact the competitive advantage in market(Pidun, 2019). Tesla also has the identify the
effective method and also provide better training to employees which increases the cultural
values of organisation to support in achieving objectives of company to increaseprofit margins
effectively.
Strengths and Weaknesses of Tesla
Strengths
1. Currently Tesla has great market reputation, because it always believes in provide quality
vehicle to customers. People who care for natural environment are specially like to buy
its vehicles, because it only produces electric vehicles which never harm environment.
On the other side, Tesla has lots of funding sources, because every investor is currently

wants to invest in this brand. Reason is, the company is fully running on its progressive
path.
2. The founder of Tesla called Elon Musk have great fan following in the whole world,
because people like him because of his hard work and innovation skills. Currently
company has very effective workforce which day or night giving their great contribution
in all over growth of the Tesla (Thomas and Alluru, 2016). On the other side, it has very
large market share in electric vehicle industry. Most people only give priority to this
company when they decide to buy an electronic vehicle.
3. Tesla has exclusive range of vehicles which no other vehicle manufacturing company can
capable to provide in market. For example; Tesla’s cyber truck. Recently this truck has
gained huge popularity in all around the world. People has really liked creativity of
company.R&D (Research and Development) team of company is too goof in their job
role, because it always tries to produce that type of vehicles which can attract lots of
people towards brand.
Weaknesses
1. Tesla mainly focus on producing those vehicles which only rich people are able to afford
in market. Reason is, people who comes from low income groups are not easily able to
afford vehicles which this company has provided. On the other side, if any person
buysTesla’s vehicle, then it need to pay very amount for maintaining that vehicle.
2. In Asian countries, most peopledepend only on petrol and diesel vehicles, so companies
which provides petrol and diesel vehicles in these countries will give very tough
competition Tesla. On the other side, convince people to buy electric vehicles, it is very
big challenge for this company (Manral and Harrigan, 2018). Reason is, currently many
people like to stay with old technology.
3. Many times batteries of their vehicles becomes low in few time, so their customers have
face many challenges to ride it. Many times customers are complaints about quality of
their vehicles, because they not get satisfied with manufacturing quality. From
establishment to date, company has not gained much profit, because some specific people
are only customers of Tesla. Many times their marketing campaigns becomes failed for
choosing inappropriate marketing strategy.

CC Analysis
In year 2013, Tesla’s price of share shot the range of $20 to $35 over the last some years
to the $190.90 high. In year 2016, the price share was reach around $250, then in year 2017
climbed around $340. But that price is a simple matter of history. On that time the Tesla motors
has very strong cash inflow, and still has. Currently this company is completely running in the
profit. Last year the Tesla motors has generated US$24.578 billion revenue which is really too
excellent to this company.
Q3 RECENT STRATEGY
The Tesla has used merger strategy to merge with Solar city company. Top-level
management of company has decided to acquire that company for using their great assents and
resources. Currently Solar city is the subsidiary company of Tesla. The company has offered
$2.6 Billion to Solar city to complete merger process. This strategy is also a part of corporate
social responsibility where a company owner choose merger strategy to exit and succession from
their existing business. For example; solar city. On the other side, it is also a strategy when a
business owner acquires an established company for growing their existing business operations
(Delmas, Lim and Nairn-Birch, 2016). For example; Tesla. There is merger is the best strategy
which currently chosen by many companies or businesses to exit and succession their business.
That’s why top-level management of company has decided to choose this strategy. The founder
of Tesla, means Elon Musk was really excited to merger with solar city, because solar city has
those all resources on that time which Tesla has required for their own growth. The marketing
team of this company has complete whole market research before merging with that company.
Basically, a set of strategies were used by company to achieve profitable deal.
Tesla’s marketing team is currently too active on their job role, because it has researched
each information about solar city company before merging with it. This was really tough task to
the company, because many times merging strategy becomes failed because of poor market
research. Each business or company should learn with Tesla about how to use merger strategy.
Reason is, many times businesses not capable to achieve expected benefits from this strategy,
that’s why companies need to use merger strategy like Tesla has used during acquiring.
Nowadays solar city is giving great contribution in the all over growth of the company. The

founder Elon Musk always try to learn new things from different things, so he most of the time
takes very risky steps. In this case, this merger was also a very risky deal on time for this
company (Hodge, 2019). On the other side, proper consultancy also played great role in any
merger deal, because a business consultant who has proper knowledge of market is always gives
appropriate strategy to complete a merger deal.
SAF Model
SAF model is very helpful tool for analysing strategic possibilities. Currently many
businesses or companies are taking huge advantages through this model. SAF model was mainly
developed by Gerry Johnson and Kevan Scholes. Basically, SAF refers three major terms of
business environment called; Suitability, Feasibility and Acceptability which has been discussed
below;
Suitability: According to the current situation, top-level management of Tesla should use
diversification strategy, because this the most sustainable strategy for the company. Basically,
this strategy can enable to Tesla for gaining excellent return from its acquisition aspect.
Feasibility: According to feasibility, the management of Tesla need to ensure that existing
strategy will affect company positively or negatively. The management is responsible to analyse
strengths and weaknesses of strategy as well.
Acceptability: According to the acceptability term of SAF model, existing management of Tesla
should prepare a financial plan for systematically implementing that strategy in its daily
operations.
There are three stage SAFe tests is basically agile testing which helps to people for using
a vehicle in proper manner. It is applied in any place, because each business should take
systematic corporate strategy to complete its decided target on time. Currently Tesla is investing
huge fund on developing such corporate strategy which support to company to gaining effective
profit in market. The founder of company is too creative, so it is capable to create some more
strategies like merger. In this recent strategy, company mainly has focused on achieve a
profitable or beneficial deal. Currently precious resources of solar city company are completely
using by Tesla, because the company has complete acquired its all assets and resources with
proper legal work. Most of the time businesses does many mistake while using a corporate

strategy, an at the end these mistakes negatively influence existing business environment of
businesses (Abdullah and Budiman, 2019). That’s why all companies or businesses should use
some effective corporate strategies to gain huge benefits in market.
There is SAFe tests model just teach to companies only one thing that, each company is
responsible to conduct various research and development activities. Reason is, a company can
easily gain various corporate strategy through these strategies. According to Tesla’s top-level
management, an organisation should take high risks for gaining high profit in market. There are
many risk factors are always existing in each investment of Tesla, because it always like to
provide some different products and services to their customers. In this case, Tesla’ this steps
also comes under another corporate strategy called product differentiation. All people knows
about Tesla’s speciality that, it is a brand which always serves some innovative vehicles to them.
There are lots of challenges has faced by Tesla during using various corporate strategies, but
company’s risk taking strategy always provides them huge profit in market. During using merger
corporate strategy, the company was not putted huge efforts to convince solar city for merging
(Frandsen and Johansen, 2018). Reason is, Tesla has great brand reputation and currently it is
running on progressive path, so each company is always ready to merge with it. That’s the actual
impact of corporate strategy.
CONCLUSION
It can be concluded that Tesla has great opportunity to expand their business operations at
the large scale with the support of different corporate strategies. Innovation factor of company is
too excellent, because it can easily produce various attractive vehicles. On the other side,
currently company has large market share in electric vehicle industry. It is basically a strength of
Tesla. it has some weaknesses as well, like only people who comes from high income groups are
only able to afford its vehicles. In this case, top-level management of company is need to use
some effective corporate strategies to remove such weaknesses. Recently, the company were
used merger strategy to acquire all precious resources of solar city. That was really profitable
deal to the company, and nowadays solar city is a major subsidiary company of Tesla.