Business Strategy: Evaluating Tesla's Environment and Capabilities

This report provides a comprehensive analysis of Tesla's business strategy, examining the impact of the macro environment using PESTEL analysis and evaluating the internal environment and capabilities through SWOT analysis. It also applies Porter's Five Forces model to assess the competitive forces within the automotive market. Furthermore, the report utilizes various strategic management models, theories, and concepts to interpret and devise strategic directions for Tesla. The analysis covers political, economic, social, technological, environmental, and legal factors affecting Tesla's operations, as well as stakeholder interests and potential threats to the company's growth. The report concludes by highlighting the key strategic considerations for Tesla to maintain its competitive edge and achieve its business objectives.

Business Strategy

TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
TASK 1.................................................................................................................................................3
P1 Impacts and influence of macro environment on Tesla..............................................................3
P2 Analysation of internal environment and capabilities of Tesla using SWOT.............................6
P3 porter's five forces model for evaluating competitive forces of a given market sector..............9
TASK 2...............................................................................................................................................11
P4 Applying a models , theories and concept to understand interpretation of strategic directions
To Tesla..........................................................................................................................................11
CONCLUSION .................................................................................................................................15
REFERENCES...................................................................................................................................16

INTRODUCTION
Business strategy is the action that business uses to attract the large no of customers. it is the master
plan which management uses to secure a position in the market there are the three level of the
business strategy such as corporate, business, functional level. Under this report Tesla taken as the
company , it is an American auto mobile company which makes electric cars ,its headquarters is
based in the Palo alto, California . It was founded in july 1,2003. Martin Eberhard, Elon Musk, J.B
straubel, Ian Wright are the founders of the Tesla. This report will cover the internal environment
and capabilities of a Tesla using appropriate frameworks, porters five forces model evaluate the
competitive forces of a market sector for an organisation, range of theories , concept and models
interpret and devise strategic planning for a given organisation and the analysis the impact and
influence of the macro environment on a Tesla and its strategies.
TASK 1
P1 Impacts and influence of macro environment on Tesla.
Tesla's vision, mission, objectives and core values.
Vision
The vision of the Tesla motors is to create the most efficient car in the industry of
automobile sector as well as transforming the world towards the electric vehicles
Mission
The mission of the Tesla organization is to present itself satisfactory in terms of fulfilling
company's goals efficiently.
Objectives
The objectives of the Tesla company is to accelerate global translations, improving
communities as well as exceeding expectations towards automobile industry.
Core values.
The core values of Tesla are awareness toward environment, constant learning, respect,
taking risks as well as doing the best.
The impacts and influence of macro environment on Tesla & its strategies can be analysed
by PESTEL analysis.
Impact of political factors on Tesla
It is very essential for Tesla motors to undergo various political analysation before entering a
new market. As different countries has difference in their political system and environment, thus to
get successful in dynamic environment, Tesla undergo following assumptions of market which are
major sector in any countries' economy i.e. Labelling of products & other required things ,
regulating week work, laws related to anti-trust, interference & bureaucracy, political stability &

importance of auto manufacturers (Buckley and Ghauri, 2015). Those influence the minor sectors of
political factors in countries economy are industry safety regulation, wage legislations, flavoured
trading partners, trade regulations & tariffs, level of consumptions & risk of military invasions.
Impact of economic factors on Tesla
Average demand & average investment in a countries' economy can be determined by macro
environmental factors such as foreign exchange rates, interest rates, saving rate & inflation rate.
Thus, Tesla uses countries economic factor for forecasting the growth trajectory of the organization.
Through PESTEL analysis Tesla considers following economic factors : interest rates, inflation
rates, unemployment rates, discretionary income, economic growth rate, business cycle stage, cost
of labour & their productivity, level of education, skill level of workforce, infrastructure quality,
financial market efficiencies, exchange rates, government interventions & type of economic system
within the organization.
Impact of social factors on Tesla
Impact of culture on organization is dependent on the societies culture & the way of
practising those cultures. Social factors that Tesla must consider while conducting Pestle are: leisure
interests, attitudes, entrepreneurial spirit & broader nature of society (Razak and et.al, 2016). While,
entrepreneurial is encouraged by some societies while some societies doesn't encourage, culture
which includes social conventions, gender roles etc., level of education along with standards of
education in Tesla industry, power structure, hierarchy & class structure & skill level &
demographics of the countries' population. For understanding the customers by Tesla marketers
carried out by attitudes & shared beliefs.
Impact of technological factors on Tesla
Rate of technological diffusion, consumer goods sector impacted the value of chain
structure, in auto manufacturers the impact of cost structure, impact of technology on product
offerings, development by Tesla competitors in technical sector are all the technological factor that
Tesla has to analyse by PESTEL analysis. Technology is the fast changing sector all across the
world. The innovations in the transportation industry has given various chances to the players of the
auto manufacturing industries to cope up with the changes. Thus, for Tesla to be profitable
organization , slow speed of innovations will give more time to cope up with the technological
disruptions (Yuliansyah and et.al, 2016).
Impact of environmental factors on Tesla
Before expanding to new country, organization closely observes the various environmental
issues related to the country in which it tends to expand. These environmental factors greatly affects
the profitability of the organization. Different countries has different standards and norms of
environmental factors. Thus, for Tesla, entering the new market will undergo following assumptions

i.e. support of renewable energy, endangered species, attitude towards ecological product, waste
management, recycling, pollution regulation towards air & water, environment pollution laws,
climate & weather changes. Perhaps for Tesla to be a profitable industry of auto manufacturing will
consider all these environmental factors before entering the new market.
Impact of legal factors on Tesla
The firm entering to new market must carefully observes the all the legal factors associated
with the new market. In most of the countries, laws are not strong enough to protect the overseas
company. Tesla considers following factors that can that could have legal impact on the smooth
running of the organization are: data protections, laws related to health & safety, employment laws,
e-commerce & consumer protection, copyrights, intellectual patents property laws, discrimination
laws & anti-trust laws in the auto manufacturing. Thus, for the protection intellectual property rights
of an organization, the company must properly observe the legal frameworks of the new markets.
From the above analysis it can be concluded that the different external factors will affects
the business such as political factors of Tesla determine the governmental impacts on business. New
global trade agreement and political stability in the major market are the political factors are
significant to Tesla. Decreasing battery costs and renewable energy cost, economic stability issues
are the economic factors which affects the Tesla automotive market. Increasing popularity of low
carbon lifestyle, preference for renewable energy and high rate of technological change , increasing
automation in business are the social and technological factors affect the Tesla automotive market.
Rising standard on waste disposal and energy consumption regulation are the factors that affect the
Tesla automotive market(Zhou and Wen., 2019).
Stakeholders analysis:
Stakeholder Interest Power Strategy
Government They regulate the
activities of the
business operation by
implementing different
rules and regulations.
Their aim is to make
the company profitable
for the country
economic growth.
high Forming rules &
regulation to reduce
pollution
Suppliers Success of business is
depends on the
high Using high-tech
facilities to attract

suppliers also by
maintaining proper
communication, timely
payments and process
of business operations.
customers
Employees They play a significant
role in the business
operations. The
organisation take the
ideas and suggestion
from the employees for
the growth in long run.
intermediate By exploring and
experimenting the
latest technologies that
can be used in Tesla
vehicles
All the people who are involved in the process of business operation are termed as
stakeholders such as customer, employees, shareholders, suppliers etc. For analysing the
stakeholders of the company stakeholder matrix is very essential and effecticve techniques which is
used by the company.
P2 Analysation of internal environment and capabilities of Tesla using SWOT
Strengths of Tesla
Every organization wants its growth and development to cope up with its competitors in the
present market. Thus, organization uses the aspects of SWOT to analyse the strength associated
with the, that will be having contribution in its growth & improvements. Organizational strengths
are factors that influence the organization to compete with the competitors, and to make them
secure for long run in the market along with their profitability. Strategic expansion in global market
is facilitated by strong company brands. The various strengths of Tesla in automotive industries are:
high innovations, strong brand-name & highly controllable production process.
Tesla has recently introduced first electric sport car, Moreover, Tesla in always known for its
innovative approaches in the automotive sector. The company has strong brand name & innovative
image in the market of auto industry, thus due to strong brand name it is easy for Tesla to attract and
retain customers very easily. Tesla has a strong centralized administrative system and its vertical
integration proved that it has a very highly controllable production process (Amran and et.al, 2016).
Thus, strength of Tesla motors derived from SWOT analysation is Tesla's brand & innovative image
in the market.
Weaknesses of Tesla

Weaknesses of an organization is the incapabilities to the of organization that reduces the
businesses growth and its competitiveness. For analysation of organizational weaknesses the
companies undergo SWOT analysis to identify what is limiting its organizational performance. thus,
companies undergo SWOT analysis to identify their weaknesses and their these weaknesses can be
overcomed by applying initiatives, reforming the structures & by applying strategies. Although,
Tesla is a strong brand but than too it has some major weaknesses such as high prises of
automobiles, supply chain is very limited & limited market presence (Lehmann, 2016).
Due to rapid economic development in the overseas market Tesla has suffered due to its high price
whereas its competitors are delivering the same service at a low price. As Tesla has its most of the
presence in the markets of US and a very less in some developing countries. Moreover, due to very
low presence in the overseas market, the company has faced various issues of limited supply chain.
Thus, Tesla undergoes SWOT analysis regularly just to check where it lags behind from its various
competitors of the market and develop the strategies accordingly to overcome those weaknesses.
Opportunities for Tesla
Opportunities of SWOT analysis are the external factors that mainly focuses on the overall
growth & development of the company. These factors help organization in their various aspects of
development. Strategic growth, management effectiveness, business performance can all be
enhanced or improved by finding the various opportunities associated with the particular
organization, thus the various opportunities associated with Tesla that enhance its competitiveness
and financial standing in the market are business diversification, expansion of global supply chain
& expansion of its global sales (Alghazi and et.al, 2017).
The above opportunities of Tesla show that the overall growth of company has been enhanced by its
expansion of global sales and its supply chain in the entire market. Global supply chain of
automobiles proved to be its significant image in the industry. Moreover, the company has
improved its performance & market through business diversification, thus Tesla regularly check it
opportunities that could benefit its performance and to earn huge profit from its business.
Threats facing Tesla.
Threats are the external factors that limit the organization's performance. Threats are the
various factors faced by the organization that reduces there overall growth, so the organization
would not been able to make as much profit as much they are capable of. Thus, to understand the
factors that tend to reduce the organization growth can be analysed by SWOT analysis. Though
Tesla has a significant image in the global market but then too it faces threats. Threats faced by
Tesla are dealership regulations, fluctuations in the material prices & very aggressive competition in
the market (Akter and et.al, 2016).

There if aggressively great competition in the automotive industry in the today's world. At present
Tesla is focusing on its electric vehicles which is having comparatively low competition than that of
general petroleum cars. Thus, some times Tesla faces the threat of aggressive competition of the
market. Fluctuation in the prices of the material required in the production is also the biggest threat
faced by the company. As Tesla directly sold out its cars to the consumer rather than delivering from
any dealer, which increase its auto mobile costs. Thus, analysation through SWOT helped Tesla to
remain sustainable in this aggressive market of high competition & survive in the market for long
run.
VIRN of Tesla
Valuable:
The resources are valuable when the strategies and policies of company increases their
efficiency and effectiveness. The valuable asset of the Tesla is company goal of innovations as well
as hiring the best talents.
Rare:
It refers to the resources which is acquired by only few companies are termed as the rare
resources. The company is situated at Silicon valley which avail the company with excellently
trained, ambitious as well as highly committed individuals are rare resources.
Inimitable:
This resources will gives the benefits of competition to the company because they are very
very difficult to copy by the other companies. The incomparable futuristic designs of the car with
excellence in their performance which revels the most powerful gasoline powered cars and
obtaining a purely electric cars.
Non substitutable:
This refers to that the resources which cannot be substituted with other resources. As Tesla
has the 2000 service providers all across the globe which make it supercharge network that provide
great service to all Tesla consumers.
Resource based view framework:
This models states that the company will identify different resources which which helps to
increases the performance and capabilities of organisation. This analysis helps the business in
gaining the advantages of competition and make the company profitable in the long run.
Value chain analysis:
This analysis is the effective process and practices of company which categories different
activities and operations of business and determine their contribution in creating the value of
products and services. Tesla uses this method in their business to identify their strength and ability

in the competitive market of business. It involves primary activities and support activities of
business which helps the business to achieve the goals and objectives in future.
Mckinsey’s 7 S Framework:
This tools is used to determine and analysis the design of organisation with the helps of
seven important factors such as strategy, structure, system, style, staff, skills and shared values of
business. This model identify that these factors are properly arrange in the business so that the
company will achieve the objectives and goals. These elements are explained below:
Strategy: It refers to the effective plan of the business which helps to gain the competitive
benefits. In the business of Tesla they make the efficient strategy as per the other elements of
business to achieve the success and growth of company.
Structure: It determine the different department of business which are organised and
involves various information and data which is useful for the business growth.
System: It refers to the process and procedure of the organisation which determine the daily
activities of business. So in Tesla system is an essential part of business when the manager makes
any kind of changes.
Skills: It is the ability and capabilities of the company in which the worker will perform
their activities effectively.
Staff: The focus of this part is on the needs and wants of employees in company to
accomplish the future goals.
Style: This states that the business properly managed by the mangers of top level to get the
target done on time. This factors will shows the
Shared values: These are the terms and conditions of the company which guide and directs
the workers and actions of business.
Tesla has the support from the both government and political bodies, Tesla started its
operation due to this Tesla is taking lot of advantage from the government. The CEO of the Tesla
have great leadership and the team spirit, it is inspirational and highly motivating is success factor
for the Tesla. Weakness in the SWOT analysis of the Tesla are the poor liquidity as compare to
other competitors such has ford has USD 20 billion where as Tesla has only USD 3 billion which is
very poor and it is not sufficient for survival of the Tesla. Tesla has only one plant with having
capacity to make 500000, it is difficult for Tesla to achieve higher volume or target(Serra and Kunc
., 2015).
P3 porter's five forces model for evaluating competitive forces of a given market sector
Porters five force model is the model that analysis the business. This model explains why
various organization are able to sustain different level of profitability. This model identifies 5 in-

ignored forces that plays a part in shaping every market & organization in the world. These five
forces frequently used to measure profitability of the organization, attractiveness of the product
among the consumers & intensity of competition (Trevisan, 2016).
The porter five forces are:
Competition in the industry
These aspects show that larger the number of competitors, lesser will be the power of the
organization which are serving the same products. If the company has its monopoly of the product
or service than it will definitely prove to be in power in the market. Thus, Tesla faces so many
problem due to its large number of its competitors. Although Tesla brings innovation in its
automobile industry regularly to stand on the top of the competition. It is always wished of the
organization that it would have the least competition (Zhou and Wen., 2019).
Potential of new entries into the industry
An organization power is influenced by the entry of new entries in the market. The
competitor always tends to take less time & money in comparison to previously surviving
companies. New entrants has not to face the various obstacles as they get guidelines easily by the
existing companies. Ones the new entrants enters the market the monopoly of existing organization
get broke done and thus they can't charge higher price & they have to negotiate in various terms
(Johnson, 2016).
Power of suppliers
The more will be the supplier the lesser will be the power of the organization, similarly
lesser will be the supplier higher will be the power of the company, Moreover, it is benefit for the
organization when there are large number of raw material supplier for them are present, such that
they could keep the prices of their products low. Thus, the power of supply of Tesla is very low, so
Tesla has to face the problem of high cost due to its weak supply chain across the globe (Nickols.,
2016).
Power of customers
A smaller & more powerful consumer means that the consumer has the power to negotiate
for a commodity such that they will tend to get the commodity at the best price or at the best deal.
Organization which has many, smaller, independent consumers will always tends to charge high
prices in order to gain more profits. Tesla does not provide its power to consumers as Tesla always
tends to bring the new product in the market which enable it to keep higher prices of its automobiles
and decreasing its market of competitors (Alghazi and et.al, 2017).
Threat of substitute products
Threat of the substitute product is the problem faced by ever organization. When the
companies sell the product, which has the least close similar product than the company get the

benefit of keeping the higher price of the commodity and thus, easily could gain larger profits. Both
company selling products with more similar product already existing in the market than the
company faces the problem and perhaps has to work on very less profit margin. Threat of
organization are always needed to overcome by bringing innovations. Tesla uses the innovation
techniques to always stand above its competitors. But due to its high prices it sometimes faces
threats (Nickols., 2016).
Benefits & limitations of porter's five force model for Tesla
The benefits of using porters five force model by Tesla is as it allow the organization make
long term plans by looking beyond their immediate business venture of their industry. However, as
porter's five force model play a great role in making the long term plans but I cannot stand as a sole
tool of the toolbox when it comes to building of business strategy of the Tesla. The porters five
forces has mainly two weaknesses, one is its composition. As a strategic model it provides the
image of wide industry at some point in the past, which could serve as a useful information for
short term strategy. Such trends are like globalization.
Being Tesla first in the market able to take advantage of having no competition in the
narket and stable their position in the market, Tesla establish expertise by focusing on particular to
develop specialization in the market Tesla market specific expertise will set apart from the
competition. Tesla study their competitors and learn the skills of there how they target a market
problem , by identifying the market problems tesla see solution in a different way than there
competitor(Aithal., 2016).
TASK 2
P4 Applying a models , theories and concept to understand interpretation of strategic directions To
Tesla
Tesla ansoff Matrix:
Tesla ansoff model is an proper marketing planning that that can be used by different
fuel manufacturer vehicle to make a strategic decision for the company (Gurcaylilar-Yenidogan and
Aksoy., 2018) . Tesla is using the four strategies for growth in the market.
Market predictions: Tesla is having a good market predictions and they are m focusing to
selling the electric cars in the more then 30 countries (Nickols., 2016). They are making a new cars
which can give better mileage I and better concert to the customers. They are having good
reputation in the market because they have better market prediction they are giving competition to
the other motor companies because they are giving better vehicles in affordable price.
Product development: In the product development strategies it employees the new product
which can be sale in the existing market. Tesla is not that much developing the new product because

development of new product cost high and recently they have develop the electric vehicle and
power storage sectors. And also their alternative fuel vehicles manufacturer are working in the
development of pick up trusts and semi trucks. Along with a range of the energy storage products.
They have spent amount of the money on recent projects and still they are looking for better
development of those product .
Market development: Market development strategies are implement in the search of new
market where they can sell their products (Gurcaylilar-Yenidogan and Aksoy., 2018). Tesla
company is bringing new product to evaluating in different markets.
Company is having a join ventures with the many company so they can enter in new market. Tesla
is also using Diversification strategies for company growth. This growth strategies help in the
development ion the company through the different different product development. They are
looking for the new places and different countries so they can enter in those countries market.
Diversification: In this method organization develop new products for their new market so
they can compete with competitors. Tesla was using this strategies past years . In 2003 they only
started a electric cars but after some times they change their name to the Tesla Mothers Inc. then
they purchase solar-city company in 2016 to enter in the energy storage sector (Nickols., 2016) .
The alternative fuel vehicles manufacturer is exacted to the further diversify then it mangers to
overcome To it's current financial issue.
Justification:
In this all strategies product developments strategies are best for Tesla as compare to the
others they can bring new product which can be helpful for company growth and they can give
more competition to the other motor company (Schawel and Billing., 2018). They should research
about the new product and analyse the target market. They have to make new product according to
the demand of the customers because customer satisfaction is the first Aim for company. If they
will satisfy with the product then they will bring new customer for Tesla and it will also increase the
growth of they company. Product should be unique and different from the others so they can give
better competition to the others. Involvement of new trends in the product is also important because
customer always follow the new trends. company can also enter in potential make if they have
better product and better design.
Strategic management plan:
Strategic plans help Tesla to achieve objectives and goals of the company. During the
making of this plan some objectives that the Tesla is trying to satisfy during the execution of the
plan. This strategic plan helps to understand the objectives and main goals of the company.
Goals- The the main objective of those plans are to identify goals of the company and
develop the new ways to use resources of the company to achieve goals (Schawel and Billing.,