Strategic Report: Tesla's Macro Environment, Internal Capabilities

This report analyzes Tesla's business strategy, focusing on the macro and micro environments. It implements frameworks to assess the impact of macro environment factors such as political, economic, socio-cultural, technological, legal, and environmental aspects, and evaluates their influence o...Read More

INTRODUCTION
Business strategy exists as the combination of various decision that are taken by the
organisation to make effective decisions. All the decisions that are taken by the organisation are
formulated in a way that can leads the management to ensure a competitive position in the
market. An effective business strategy states as the backbone of business by working them as a
roadmap which leads organisation to achieve their goals in predetermine period. This reports is
based from the perspective of TESLA which is one of the leading organisation of automotive
industry. Along with this they are the larger manufacture of electric cars. Further, this report
highlights on macro environment and the frameworks for various strategies. Internal
environment and capabilities will also be covered in the report. In the last, Porter's five forces
and various theories, concepts and models related with strategic planning will also be covered in
this report.
TASK 1
P1 Implement of appropriate frameworks and its impact on macro environment on the
organisation
Macro environment undertakes all the external factors that are beyond the control of the
organisation and impacts on the decision-making as well as goal of the organisation. It is
mandatory for the organisation to monitor this changes on regular basis because its directly affect
the performance of the firm. So with the implement of the appropriate framework it is easy for
organisation to deal with changes by developing effective strategies for the organisation. Macro
environment factors and its impact on the influence of TESLA and its strategies is as follow:
Political factors- Political factors related with organisation and industry policies and a
country regulation in which a firm is operating their business. Governmental policies, taxation
rates, trade restrictions and many more are some aspects of organisation by which organisational
strategies will be influenced. Political conditions of the UK are stable which makes business
strategies favourable for the organisation. On the other side Brexit, generates a few instabilities
in the country, so to overcome from political factors TESLA formulates new strategies in order
to perform their operations in complex environment (Buckley, Burton and Mirza, 2016).
Economic Factors- Economic factors are one of the crucial part of the organisation as
they are directly related with organisational profits and financial aspects. In context of macro

environment, interest and inflation rate, GDP rates etc. are some of the major aspect of
economical factor. In the present scenario, UK provides sources such as raw-materials, cost and
other essential resources within minimum time period (Dodgson, 2018). So it works as one of the
major advantage for TESLA as it leads them to complete their production at a minimum cost. So
large profits are earned by the organisation as it helps them to complete their work in appropriate
manner due to which large profits are earned by TESLA.
Socio-cultural Factors- The social factor reflects the lifestyle, preference, taste and the
culture factors that leads organisation to perform their operations according to the society of a
country. In the context of UK market, there are large number of consumers belongs to different
culture, religion and race exists. Therefore, the existing demand of the market is unique.
Moreover, the increased concern about the redemption of natural resources works as a positive
factor for Tesla motors. Further, there is high inequality exists for the market of UK as compare
to developed countries. So to decide the pricing strategies for organisation is one of the major
decision which impacts on the market (Drnevich and Croson, 2013).
Technological Factors- The technical aspects of the organisation relate with
technological advancements, innovations and automated process of a country. In the context of
UK, there are various countries present in the market that are high in technology. Due to which
its directly impacts on the business strategies of the organisation. Moreover, the major benefits
which is gained by the organisation as it is easy for management to grab the upcoming
opportunities in the market. Like Tesla introduces electric cars at its initial stage and later with
the impact of technology. Management started to develop electric sports cars in the organisation.
As the major influence which relates with organisational performance is due to constant changes
in society (Hoejmose, Brammer and Millington, 2013).
Legal Factors- They are various laws and order are present in the country which prevails
an organisation to complete their work in a discipline manner. The main motive of UK laws is to
protect the interest of local organisation, so it is easy for them to perform their work in minimum
time period. It is related with organisational performance. So it is easy for the management of
TESLA to perform their work by considering all the laws in an appropriate manner. On the other
side, there are various laws related with pollution works as an advantageous factor for the
organisation. However, TESLA needs to follow the legislations in order to ensure as a legal
framework for country (Johnson, 2016).

Environmental Factors- There are various environment factors related with the country,
along with this from the several past years, NGO, government and also organisation are aware
about the environment policies. As per the UK environment policies it is based on various
principles of the command as well as control. Like the pollution standards, release of harmful
gases as to release them as per the limits decided by government. Tesla manufactures
environment friendly products such as solar-energy batteries, electric used vehicles which are
beneficial to reduce global warming from the world. So the factors related with environment
leads the management to increase their efficiency by reducing the pollution from the world
(Langabeer and Champagne, 2016).
M1 Analyse of the macro-environment factors to determine strategic management decisions
Macro environment reflects all those external factors that are not able to change and
controlled instead of businesses. This strategic management decision is able to deal with the
modifications in external environment of organisation. Business strategies are developed in order
to reduce the impact of external factors. So it is easy for management to achieve organisational
goals and objectives in an appropriate manner. Tesla must improve their business strategies in
order to deal with instability political and economic conditions of the UK. Further, technological
advancements work as a positive factor for Tesla. Environment conditions of the UK are also a
favourable aspect for the organisation which can enhances the performance for Tesla as it
formulates all policies in favour of Tesla.
TASK 2
P2 Analysis of the capabilities and internal environment of the organisation
Internal capabilities work as a positive factor for Tesla because it assists management to
analysis strength and weakness of the organisation. One of the major positive factor for
organisation is to make modifications through controlling and managing them towards the goals
and objectives of Tesla (Lehmann, 2016). Its includes organisational structure, employee’s
values, physical resources, technological aspects and all those factors which are control by the
organisation. Some of the effective frameworks that are related with internal environment and
capabilities are mention as follow:
SWOT Analysis: SWOT analysis provides a detailed analysis of internal factors of Tesla. The
strengths so analysed can be enhanced whereas the weaknesses are to be dealt with so that the

company can remain successful in the dynamic and ever-changing environment. Also, it helps in
realising opportunities for the company which can be captured and also potential threats in the
markets can be analysed so that a proactive approach can be formulated to deal with the threats.
SWOT analysis in the context of the organisation is mention as follow:
Strengths
 Utilisation of updated technology to
design their electric cars.
 Excellent position and awareness about
Tesla brand by providing good quality
of products of them.
 By manufacturing products that are
environment friendly. Like Tesla
electric cars, solar-energy panel etc. are
major strength for them.
Weaknesses
 Low market share that directly impacts
on the presence of market.
 Low investment due to which various
challenges are faced by organisation.
Like R&D requires huge amount of
finance to identify new methods for
completing their work.
 The present share of electric cars is too
low due to less number of power supply
sources.
Opportunities
 The environment aspects and
awareness about global warming works
as a opportunity for them.
 By expanding their market areas on a
global level and to diversify the product
in order to attract potential customer’s
among all over the world.
Threats
 The competition among the auto-
mobile industry is too high. So
consumers has large number of cheap
resources irrespective of their harmful
gases.
 Brexit reduces the value of market and
money. It results the prices of Tesla
products is increased.
The next tool which is used to analyse the internal environment for an organisation is
VRIO. The main motive to implement VRIO model is to determine the competitive advantage
which are holds by the organisation. It leads TESLA to retain at the top position in the market by
utilising their resources in effective manner and to uplift their position as compare to

competitors. The VRIO analysis for this report is also relates with SWOT aspects of the
organisation.
Value- The value factor considers all those products and services that are provided by the
organisation by adding more value to customers. In order to generate more value in their electric
cars management of Tesla focuses on comfort, power and most important fuel efficiency. So it is
easy for them to provides high value to the customer’s as compare to their price. This results it is
for organisation to maintain sustainable competitive advantage in market (Marx, 2015).
Rare- With the implement of rare factor it is easy for organisation to analyse whether
management is able to offer various products and services to customers. It governs that rare
factors show that their products are hard to replicate. Tesla provides electronic cars with two
motors and single speed gear box. There are various parts related with 17 moving parts compared
to internal combustion drivetrain. It results this is easy for Tesla to take more advantage as it not
easy for other companies to complete the products effectively.
Imitable- With the analyses of imitable factors Tesla analysis whether their products or
services are able to imitated or not. This determines it provides unique/futuristic design that be
tough to imitate. It determines that other organisation requires enough time and large amount of
funds. So it is very difficult for other companies to imitate their products. Moreover, most of the
technological aspects related with Tesla are already patent. So by the time Tesla product will be
imitated it covers large market area (Maté, Trujillo and Mylopoulos, 2012).
Organisation- The organisational factors analyse various policies, management system,
culture and policies that is followed by the organisation. In the context of Tesla, they implement
costly and unique resources that enhances capabilities of organisation. This results it is easy for
organisation to gain sustainable competitive advantage in the market or industry.
M2 Evaluation of the internal environment and capabilities with its structure and skills set
With the internal environment evaluation or analysis, it is easy for Tesla to identify their
strength and weaknesses. This results management is able to complete their work by considering
their factors that is related with their actions and decisions. It governs that there are various
factors need to be implemented so they deal with the potential threat that are impacting on the
performance of organisation. Along with this VRIO model also helps the organisation to
generate effective policies and process that helps the organisation to gain sustainable competitive
advantage in market.

TASK 3
P3 Implement of Porter's five force model to evaluate the competitive forces of organisation
Porter's five force model works as one of the most effective tool that is utilised by the
business. This is used that is used to analysing various degree related with competitiveness from
the market. M. Porter developed this model in the year 1979. This is useful for planning and
implementing various strategies in order to increase the potential about the business concern.
Five forces model is used to analyse the entry of new players, bargaining power of buyers and
suppliers, threat of substitutes and existing competitor in market. The Porter's five force model in
context of Tesla is mention as follow:
Threat of new entrant- The competition among the automotive industry is intense due to
the various range of products availability and profits. In the context of electric cars, the threat of
new entrants is low due to which innovative technology. This governs that it is easy for auto-
mobile manufacture to provide their goods at global level in order to earn high profits. On the
other side, the major benefit earned by the Tesla is relates with innovation. Moreover, it is
beneficial to complete their work by determining their goals related with existing customer’s and
attraction of new clients. Secondly, this is beneficial to construct new economics policy by which
it is easy to control the cost of organisation (Moseley III, 2017).
Bargaining power of supplier- There are many suppliers of auto-manufacturing is
present in the market that provides goods in bulk in order to manufacture goods at large scale.
Along with this most of the products are formed by the organisation to complete their
manufactures process with in minimum time period. It governs the power of supplier is too high,
so to overcome from this Tesla need to develop positive relations with different supplier. So it is
easy for management to increase the sales of their products. It is beneficial to focus on needs of
supplier that is fully depend on organisation. This is useful to focus on suppliers that is fully
depend to manage the power of distributors (Sirén, and Kohtamäki, 2016).
Buyer's power- According to the modern era, customer’s is the king of market. The main
motive of buyer's is to purchase all offerings about product. So they are able to get high quality
of goods at low prices, Demands of products is high so this factor works as a beneficial part for
the profitability of business. In this context this approach is high. Therefore, to overcome from
this process managers of Tesla provides free services and accessories to its customers in order to
deal with their power (Suarez,Calvo-Mora, and Roldán, 2016).

Threat of substitutes- In the present scenario, the entry about the new substitute products
is high, as most of the existing customer’s and government prefer those products which are
environment friendly. Like the Fortwo electric as well as Ford are focusing to develop electric
cars because of their upcoming demands of products (Barberá and et. al., 2012). Therefore, to
deal with them management improves the services about the organisation. The company directs
their production towards needs of customer instead of their purchase factors by accelerating
various barriers to deal with existing customer’s.
Competitive rivalry- The competition in the automotive industry is increasing with a
rapid speed, this determines that the rival organisation is focusing on all factors which are related
with market players and profits. Tesla manufactures new electric cars, this determines that with
the implement of Auto-manufactures organisation. It results in the downfall for the overall
productivity of organisation. On the other side, to overcome from this factor management needs
to establish product differentiation and establishing scale in order to deal strategically with in the
market (Drnevich and Croson, 2013).
By monitoring all the above factors, it is analysed that with the implementation of
Porter's five force model. It is easy for the organisation to undertakes all those aspects which are
related with stakeholders of Tesla. On the other side it is also beneficial for organisation to assess
all the changing trends in the industry for utilising favourable opportunities. In the last, with
implement of this model it is easy for organisation to make effective strategies that helps to assist
them to achieve their goals in short intervals (STRATEGIC CAPABILITIES. 2019).
M3 Appropriate strategies to improve competitive edge in the market
Strategies works as an effective roadmap that is followed by the organisation in order to
make appropriate decisions and actions. Porter's five forces leads an organisation in order to
determine five external factors for relating them with the organisational strategies. This helps in
identifying the organisational strength for enhancing weakness in order to deal make effective
strategies. In the last, possible threats are overcome through making proactive actions and
decisions by managers.

TASK 4
P4 Implement of strategic planning in the context of organisation
Strategic planning works as one of the organisation activity that aids management to
make effective strategy and direction. This results it is easy for organisation to allocate the
resources within the organisation. Along with this strategic planning is defining various purpose
in order to relate with the mission that is related management so it is easy to gain effective
results. There are various theories, models which is used to make effective strategic plan. This
results with the making of strategic plan in order to formulate the organisational culture,
organisational size and environment (Grover and Kohli, 2013).
In order to implement this, Ansoff matrix works as a strategic planning tool that was
developed by Igor Ansoff to provides the framework in order to help management of
organisation. There are various strategies are developed to make effective strategies in future.
Some of this theories are mention as follow:
Market penetration- This strategy involves various factors related with existing
products and markets. In this it works as the last strategy because its relates with products and
market. There are various goals is also considering through making effective strategies as it
related with customer’s. On the other side, it is beneficial for Tesla because it leads management
to sale their products in the existing market (Wang and Verma, 2012)...
Product development- The strategy related with product development is beneficial to
make strategies which are related with the development of management strategies. In the present
scenario, it works as one of most effective strategies as it leads the organisation to perform their
work in effective way. Tesla is manufacturing their products with this strategy to make an
effective approach in order to increase the sale of their electric cars (Köseoglu,and et. al., 2013).
Market development- In the present scenario, large number of organisation are selling
their products into new markets. It works as the strategy that helps the management to increase
the area of market. Moreover, with the implement market development strategy, Tesla sales their
existing products into new market due to which the performance of organisation increases.
Further, the main benefit achieved by Tesla is to increase their market share (Oestreicher-Singer
and Zalmanson, 2013).
Diversification- This works as the last strategy which enhances the performance of
organisation through expanding the size of their businesses. In order to implement diversification

strategy effectively, Tesla needs to introduces and expand their market area by considering and
introducing new markets and products (Scholes, 2015).
In the context of Tesla, market development strategy works as one of the growing
strategy that is related with market area. This governs the broader area of market is untapped, so
the organisation focuses on formulating new strategies that helps them to cover more number of
potential customer’s.
M4 Formulation of effective strategic plan
Strategic plans help the organisation to develop vision and mission for organisation
through analysing internal and external factors. This results it is for management to manage their
long term goals in order to evaluate the performance of organisation.
Vision- For making the most effective electric car that leads to bring drastic change in the
society.
Mission- To make changes in the organisation by directing them towards sustainable
transport.
Strategies- Market development is one of the major strategy which helps organisation to
increase their market base.
Objectives- The main objective of organisation is to increase market share within a year.
Tactics: Tesla offers its products by direct marketing through its stores rather than through
any other agencies. Tesla offers their products by using all marketing methods which are online,
offline and E-commerce store.
D1 Strategic directions objectives and tactical actions along with their interpretation
In the present scenario, detail analyse of the organisation is related with external as well
as internal aspects that is related with growth of a firm. Moreover, with the analysis of
organisational factor it is essential for management to develop those approaches which are
related with business goals. Along with PESTLE, SWOT also works as one of the major factor
that provides information about the internal and external aspects of the organisation. The overall
benefits which is gained by organisation is to boost profitability and sustainability of business
operations.

CONCLUSION
In the last, from the above report it is evaluated as well as concluded that, an organisation
evaluates its environmental factors by utilising effective tools in order to understand the micro as
well as macro environment of organisation. Moreover, it is beneficial for organisation as it leads
the management to improve their business strategies. So it is easy for organisation to deal with
various problems and to achieve their goals in predetermine period. Tools and techniques are
also used by organisation to make an effective strategic plan by utilising key components and
resources that are present in the organisation.

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