Tesla Business Strategy Report: External and Internal Analysis

This report provides a comprehensive analysis of Tesla's business strategy, beginning with an introduction to the company's objectives and the significance of strategic planning. It delves into the influence of external factors, such as political, economic, social, technological, environmental, and legal forces, using PESTLE analysis. The report critically analyzes these external forces and their impact on Tesla's operations and strategic decisions. Furthermore, it examines the internal environment by utilizing SWOT analysis and the VRIO model to assess the company's strengths, weaknesses, opportunities, and threats. The report also evaluates the competitive forces affecting Tesla through Porter's five forces model, and it concludes with a strategic management plan that includes the company's strategic goals and objectives, including the application of Ansoff Matrix. The report aims to provide insights into Tesla's strategic decision-making processes and its approach to maintaining a competitive edge in the automotive industry.

Business strategy

Table of Contents
INTRODUCTION ..........................................................................................................................1
LO1..................................................................................................................................................1
P1. Influence of external factors ................................................................................................1
M1. Critically Analysing external environment and its impact .................................................3
LO2..................................................................................................................................................3
P2. Impact of Internal Environment ...........................................................................................3
M2. Critical Evaluation of Internal Environment ......................................................................6
LO3..................................................................................................................................................6
P3. Evaluation of competitive forces..........................................................................................6
M3. Designation of proper strategies for improving market position and competitive edge.....8
LO4..................................................................................................................................................8
P4, M4. Strategic management planning....................................................................................8
D1. Critical Interpretation ........................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................12

INTRODUCTION
A business strategy is a competitive actions and moves set which is utilised by an
organisation for various purposes such as in attracting consumers, strengthening their overall
performance and in attaining overall objectives of an enterprise. These strategies serves the
business to identify the way in which a business has to be carried out in order to meet its overall
objectives and goals (Anderson, 2019). This report is based upon Tesla, which is an American
based automotive multinational organisation located in California. This enterprise has expertise
itself in the manufacturing of electric cars by using innovative business strategy.
This report covers the influence of macro environment upon Tesla and its business
strategies. It also covers critical analysation of external forces for determining strategic
management decisions. Further, it includes analysation of internal capabilities, skills set and
structure of this business enterprise by using SWOT analysation and VRIO model. It also covers
evaluation of competitive forces that can affect this enterprise with the help of Porter's five
forces model. In addition to this, it also includes a strategic management plan for this
organisation which covers its strategic goals and objectives.
LO1
P1. Influence of external factors
External forces are the factors that exists outside a business organisation and has large
impact upon its overall operations and strategies. These factors includes political, social,
environmental, technological, economical and legal forces which affects the overall productivity
of an enterprise. These factors can be properly identified and determined by using PESTLE
analysation.
PESTLE Analysation- It is an approach or a framework that can be applied by an organisation
to identify the influence of external forces and factors upon the operations and activities of a
business. These factors are legal, political, environmental, economical, technical, and social
factors that has large affect upon overall functioning of a business enterprise (Tesla, Inc.
PESTEL/PESTLE Analysis & Recommendations, 2019). All these forces affects Tesla and its
strategies which can be determined as follows-
Political- The political condition of UK and many other countries in which Tesla
operates its business activities is stable which facilitates its overall business activities. Tesla can
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grab an opportunity for strengthen its overall financial position by taking incentives from the
government. It relates itself directly towards minimised carbon emissions of products and
operations of an organisation. These factors also helps in determining that expansion of free
trade agreements can open up certain opportunities for Tesla and political stability of countries
where it operates is favourable for this organisation towards its growth and generic competitive
strategy that includes market penetration strategy (Anwar, 2019).
Economical- As per Tesla, the economical factors includes trade levels, currencies,
market growth and other such factors which has influence over automotive business. The
business performance of Tesla has been benefited from the low price of batteries. Also, it helps
in translating towards affordability of electric auto mobile products of Tesla. At the same time,
the issue of economic stability had threatened the financial performance of Tesla particularly in
Asia and Europe. This has negatively affected the market development strategy of Tesla as many
countries has instability in its economies.
Social- Tesla has certain opportunities to grow in multinational auto mobile business. For
instance, this enterprise has growth opportunities due to increased popularity of low-carbon
lifestyles and increased renewable energy preference. This organisation has a chance for
boosting up its financial performance which is dependent upon increased distribution of wealth
in many developing markets. This distribution of wealth has increased the overall number of
customers of expensive cars of this company. This factor can help Tesla to grow its business at
international level as it has certain social cultural opportunities in other countries. This has
positive affect upon its market development strategy.
Technological- Due to increase in technology and innovation, it has developed certain
opportunities for Tesla. For instance, this enterprise has growth opportunities for further
automation of its business process by using latest innovative techniques and innovation. Due to
popularity in online mobile system has lead the company for increasing its systems in company's
auto mobiles (Blank, 2019). For instance, its zero emission electric power generation from giga
factory has been successful due to enhanced technology and innovation. It has positively affected
the product development strategy of Tesla by which it produces products which are made out of
innovative technologies.
Environmental- These factors are important forces that has an impact upon industrial
environment of Tesla. For instance, this organisation has an opportunity for promoting its
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electrical vehicles which is dependent upon the change in climate, increased waste disposal
standards and expansion of environmental programmes. This company's batteries, solar panels
and electric vehicles are determined suitable for developing environmental friendly products.
This factor has positive affect upon product development strategy of Tesla as it develops
environmental friendly products (Danner, 2019).
Legal- Tesla has certain opportunities for expanding its business international, which
considers expansion of international patent protection. In addition to this, this analysation
determines certain opportunities for promoting the electric vehicles of company and its energy
solution products, which is dependent upon the consumption of energy regulation that must be
followed by clients. Also, the enterprise has a chance to develop by direct selling, which is
allowed within many US states.
For carrying out environmental analysis structure conduct performance model is being
utilised in context of Tesla.
Structure-Conduct-Performance Model: The analytical framework that is liable for
explicating interrelationship among market or economic structure, market conduct along with
their performance. It is liable for examining as well as describing communication among
organisational conduct, performance along with their structure. There are three variables or
elements that create an impact on market behaviours which is being experienced by firms like
Tesla. They are specified below: Structure: This denotes construction, formation as well as carrying out make-up of
industrial firm. It will furnish Tesla with having knowledge related with environment
where they render their services. Conduct: This illustrates comportment or behaviour of sellers or buyers to structure of
market. It will enable Tesla, to formulate pricing strategies, make investments, aids
within research and development as well as carry out innovation.
 Performance: This denotes attainment or results derived from specified market. With
respect to Tesla, it can be analysed through the figures associated with economic factors,
value creation and total shareholder returns.
Ansoff Matrix- Ansoff Matrix is determined as a model or an approach which is utilised
by an organisation as an alternative vehicle for formulating effective strategic decisions. As per
this approach, there are four strategies which can be adopted by an enterprise for enhancing its
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competitive advantage and there is a risk that comes with each strategy. Tesla can choose any
strategy which is beneficial for its overall productivity and equity. These strategies are elaborated
as follows-
Market Penetration- In this strategy of Ansoff Matrix, an organisation aims to increase
its sales and profitability by enhancing its production or by increasing its distribution and
promotional channels. In this, products are sold in existing market and there is no development
of a new product (Pucheta‐Martínez and Bel‐Oms, 2019). This organisation can use this strategy
by enhancing its digital promotional measures to make people more aware about its products. It
promotes and focus upon selling its products such as Model 3, Model X and Model S electric
cars in US and other countries.
Product Development- This strategy involved around introducing new product in
existing market by making certain changes in existing product or by developing a brand new
product. An organisation must keep this in mind to develop a product which must meet overall
expectations of customers. Tesla is an innovative automotive company which keeps on using
innovative ideas to develop its new products. Currently, this enterprise aims to produce pick-up
and semi-truck products in market.
Market Development- This mean entering into new market with the existing products at
international level or domestic level. Tesla can enter its products into emerging economies such
as Asian countries which will help this firm to enhance its market share and profitability.
Diversification- This strategy focuses upon entering into new market with new products
and it is the most riskiest strategy. For implementation of this strategy, company requires large
amount of cost of production.
Strategy: The set of actions which are being taken by managers for attainment of one or
more goals of organisation is referred to as strategy. Basically, it provides Tesla with general set
of guidelines for company through which desired state can be attained by them with respect to
future.
Mission
The mission of Tesla is, “ To accelerate the transition of world into sustainable energy
that will focus upon innovation and technology.”
Vision
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The vision of Tesla is, “ To generate most innovative car manufacturer of 21st century and
drive transition of world to electric vehicles.”
M1. Critically Analysing external environment and its impact
The external and macro forces has large impact upon the business operations as well
strategic management decisions of Tesla. These factors determined the decisions which can be
taken by this organisation regarding developing a new product or entering into a new market.
The political stability of many business entities has positively affected the strategic decisions of
this organisation which makes it flexible to operate its activities in countries like UK. On the
other hand, the economic instability of countries like Europe and Asia has negative impact upon
market development strategy of Tesla. Due to large opportunities of social cultural in other
countries has facilitates this firm in taking decision regarding entering into new market.
Technology and innovation growth has influenced the firm in taking major decision regarding
developing a new product in market with advanced features such as electric power generation car
(Eker and Eker, 2019). Environmental factors has positive impact upon Tesla as it produce
electric cars which limits the harm to environment and legal factors has positively affected this
enterprise.
LO2
P2. Impact of Internal Environment
As the external environment has impact upon the overall functioning of an organisation,
similarly, the internal environment and capabilities within a firm also affects the operation and
processes of a business enterprise. The impact of internal factors and its internal capabilities
upon Tesla can be clearly identified by using SWOT analysation and VRIO model. This will also
helps in knowing the competitive advantage of an organisation and it is elaborated as follows-
SWOT Analysation- This framework refers to the internal factors such as strengths and
weaknesses and external forces such as opportunities and threats which is responsible for growth
and development of an organisation and its overall functioning and procedures (Tesla SWOT
Analysis, 2019). The SWOT analysation of Tesla is determined in following points-
Strengths Weaknesses
Leading Auto mobile Organisation- Tesla has
been determined as the leading electric car
High Price Strategy- With great quality,
comes the higher price, this strategy is adopted
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organisation due to its increased sales. It has
now became the leading automotive brand for
the year 2019, by delivering around 90000
vehicles in 2018 year.
Innovative Organisation- Another weakness
of this enterprise is that it always produce
products which are innovative in nature such as
electric sports car and semi trucks.
Brand Loyalty and Popularity- Another
strength of this enterprise is its brand loyalty
which has made it popular not only in US but
in other countries as well.
by Tesla. Due to this, its cars are not affordable
by many people.
Batteries Shortage- There is shortage in
supply of batteries, due to which, the rate of
production has also decreased which has
negative impact upon Tesla's sales.
Opportunities Threats
Sales Expansion- Tesla can expand its sales in
Asian markets which is unsaturated in
marketing of automotive industries.
Less Expensive Car- Tesla's cars are expensive
which can not be affordable by every person.
This organisation can provide less expensive
cars which will covers large customers.
Extensive Competition- The main threat of this
organisation is that it has large number of
competitors such as Audi, Mercedes, BMW,
and so on (Gans, Stern and Wu, 2019).
VRIO Model- It is determined as an approach and step which helps in forming an organisation
part and its strategic schemes and approaches (Habib and Hasan, 2019). It is developed for
knowing and identifying capabilities and skills set of a firm. This model is applied on Tesla as
follows-
Resource Valuable Rarity Inimitable Organized What is the
result?
Brand Image Yes No No No Competitive
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Disadvantage
Quality
Products
Yes Yes No No Partially
competitive
Use of
Technologies
Yes Yes Yes No Temporary
competitive
advantage
Employees
engagement
Yes Yes Yes Yes High
Competitive
advantage
Valuable
Brand Image- Tesla has strong brand image and market presence which helps this
enterprise in enhancing its sales and build up its customer's trust upon this company.
Quality Products- The products which are offered by this business entity are innovative
and made out of attractive features.
Use of Technologies- This enterprise appropriately uses latest techniques and innovation
such as Retalix system which helps in developing its overall activities (Koh, Singer and
Edmondson, 2019).
Employees engagement- It has skilled and trained employees that works together
towards achieving overall business goals.
Rarity
Quality Products- The innovative products formed by this enterprise are rare and made
out of additional attractive features.
Use of Technologies- The technology used in this automotive organisation is Retalix
System which helps the business in designing and developing new products.
Employees engagement- Tesla's employees have special skills set which helps them to
produce innovative products.
Inimitable
Use of Technologies- The technologies that are utilised by Tesla in its procedures is
relevant towards the business entity (Lavery, 2019).
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Employees engagement- In Tesla, the workers are trained appropriately which helps
them to deal with any typical situation that comes in their way.
Organised
Employees engagement- Tesla's workforce are appropriately organised and always ready
to face the complexity that comes in a business.
Internal environment aids Tesla to ensure that employees work as per the required
standards through which goals as well as objectives can be attained on timely manner. This is
only possible when employees work according to the policies and procedures which are being
formulated by manager of organisation. Furthermore, this results Tesla to have strong brand
recognition within the marketplace.
M2. Critical Evaluation of Internal Environment
Within an organisation, its structure, strengths, weaknesses and skills has large impact
upon the sales, operations, activities and strategies of a business enterprise. In Tesla, this can be
identified by using SWOT analysation and VRIO model. Tesla is an leading automotive industry
which has helped this company in its growth and development. Being an innovative company is
also considered as its strength as it helps the business to produce products which will help in
meeting customer's expectations. Its weakness is that it charges high amount to its products due
to which it is not affordable by all customers and it can be turned into opportunity by this
company, as it can develop less expensive cars (Li, Peters and Leimeister, 2019). Its competitors
are its threats which are producing innovative products which are less expensive. VRIO model
helps the business in understanding its capabilities and skills such as brand image, employee
engagement, appropriate utilisation of technology, and high quality products of Tesla.
LO3
P3. Evaluation of competitive forces
The competitive forces of companies such as competitors, customers, substitute products
has large impact upon overall business operations of an organisation. Tesla is largely affected by
these factors. In order to identify these factors, Tesla can utilise Porter's five forces model as
follows-
Porter's five forces model- This model is basically an approach and a tool which is brought into
action to analyse business's completion. It can be used by Tesla to identify its structure for the
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purpose of determining its business strategy (Tesla Inc Five Forces Analysis (Porter's Model &
Recommendations), 2019). This framework is applied on Tesla as follows-
Competitive Rivalry- It outlines the impact of competition upon energy solutions and
automotive solutions of industry environment. The marketing mix of Tesla has strengthens its
competitors effect against its business. The low impediments for consumers for purchasing
vehicles from other producers has strengthen the competition force. It also points out that
competitive rivalry is a high priority of strategic management decisions in automotive industrial
environment.
Bargaining power of customers- The customers of Tesla can be recognised as an direct
force that helps in determining the sales and revenues of a company. The low cost of switching
had reduced the barriers for consumers of Tesla for purchasing cars from different providers. It
imposes a strong force which is against the organisation and other manufacturers in automotive
industry. Moreover, the low volume of purchases by customers had reduced the impact of buyers
upon Tesla.
Bargaining power of suppliers- The suppliers of Tesla has low margin of forwarded
recognition. This factor refers as limited control of suppliers in sales and distribution of
company's products. For instance, some of these suppliers take the use of third parties for selling
and distributing company's products. The medium supply level has empowered the suppliers for
affecting Tesla but only up to a limited degree. This factors also indicates supplier's bargaining
power as a secondary priority of management.
Threats of substitutes- The low switching prices has enables the substitutes of Tesla such
as public transportation facilities for attracting consumers. It has imposed a strong force which is
against industrial environment of Tesla. Moreover, substitutes moderate availability limits the
impact of suppliers (Madsen, 2019). For instance, consumers have limited options of substitutes
in market. The threat of substitutes is considered as a secondary management decision
consideration for the purpose of company's strategies.
Threat of new entries- It is tough for the new entries to match the strong brand image of
Tesla as this company has strong market presence in market. As the automotive manufacturing
has high margin of cost which has imposed barrier upon new organisations. Moreover, Tesla is
benefited from increased economies of scale by which the new entries can attain on increasing
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the production. The threat of new entry has been recognised as a minor strategic management
concern in industrial environment of Tesla.
Stakeholder Analysis
Stakeholders are critical as well as relevant part within the firm who have power to be an
effectual part within the decision-making processes as well as create a impact on activities that
are carried out by firm consequently. Stakeholder analysis matrix acts as a strategic tool that is
liable for segregating stakeholders with respect to their interest as well as power with respect to
firm. With respect to this, the external stakeholder as well as their impact on Tesla have been
illustrated below:
Stakeholder Influence on Tesla
Customers They acts as key for success within the business, this leads Tesla to render
their operations in an effectual way through which satisfaction can be
derived from customers. If Tesla do not offer products that are being liked
by their customers then there is possibility that they might be out-powered
by their competitors.
Suppliers They implies the one who are liable to supply the resources which are
being needed by firm. Suppliers of Tesla needs that business must make
payments to them within timely manner in context of credit sales.
Trade unions The major concern and interest of trade unions within Tesla is to render
higher wages by which Tesla can deliver their services with reference to
healthy environment to employees.
Local
communities
Relevant actions are being taken by Tesla when there is influence on
community and therefore, firm operates with respect to interest within
society and environment.
Governments The Government of UK has formulated policies as well as procedures
which are being considered by Tesla for ensuring sustainability within
market for longer duration of time.
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