Business Strategy Report: Tesla's Macro and Internal Environment

This report provides a comprehensive analysis of Tesla's business strategy, examining the impact of the macro environment through PESTLE analysis, the internal environment and capabilities using SWOT and VRIO models, and the competitive landscape. The report delves into the political, economic, social, technological, legal, and environmental factors influencing Tesla's operations. It critically evaluates Tesla's strengths, weaknesses, opportunities, and threats, along with its valuable, rare, inimitable, and organized resources. Furthermore, the report explores strategic planning, including the application of Porter's five forces model, to improve competitive edge and market position. The report concludes with a strategic management plan that outlines tactical and tangible strategic objectives, offering a detailed understanding of Tesla's strategic direction and its ability to navigate the complexities of the automotive industry and achieve its goals.

Business Strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Impact and influence of the macro environment on a selected organisation and its
strategies.................................................................................................................................3
M1. Critically identify macro environment to determine and inform strategic management
decisions.................................................................................................................................5
TASK 2............................................................................................................................................5
P2. Identify internal environment and capabilities of select organisation by using particular
framework...............................................................................................................................5
M2. Critically evaluate internal environment to assess strength and weakness of an
organisation's internal capabilities, structure and skill set.....................................................9
P3. Porter's five forces model in context with an organisation..............................................9
M3. Devise particular strategies to improve competitive edge and market position based on
the outcomes.........................................................................................................................11
TASK 4..........................................................................................................................................11
P4. Different concepts, models, theorises and strategic planing for chosen organisation....11
M4 Produce a strategic management plan that tactical and tangible strategic objectives and
priorities................................................................................................................................12
M4. Produce a strategic management plan that tactical and tangible strategic objectives and
priorities................................................................................................................................14
D1. Critique data of environmental and competitive analysis.............................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Business strategy refers to the course of action and set of decisions by which an
entrepreneur or business owner can achieve their goals and objectives in an effective manner. On
the other side it is a set of competitive actions which is used by business in order to attract large
number of customers successfully and achieve organisational goals. Therefore, it is very helpful
for business as it helps to make unique strategies and plan for the betterment of future. For this
assignment, TESLA has been taken which was formed in the year of 2003 by Martin Eberhard. It
is an American automotive organisation and deals with electric cars, manufacturing and solar
city subsidiary with solar panel manufacturing process etc. Further discussion will be based on
impact of macro environment on business and their strategies. It will also have described internal
environment of an organisation and capabilities as well (Akter and et. al., 2016). At the end this
assignment will cover porter's five forces model as well as various theories and concepts to
understand or interpretation of strategic directions in reference with organisation.
TASK 1
P1. Impact and influence of the macro environment on a selected organisation and its strategies.
Macro environment is the combination of external forces that generally influence
business operations and activities effectively. Whereas, Tesla is one of the best automotive
organisation which always used unique strategies to run their business in a smooth ways and able
to achieve predetermined goals. By using different tools and strategies respective firm can get
better position in market and stay for long period of time. There are different types of external
environment factors which helps firm to operate business activities perfectly. All these factors
will be explained below by using PESTLE analysis:
PESTLE analysis is used by Tesla, with the help of this, manager of respective firm can
monitor and manage overall business process in a better way. Together with, they are able to
give better performance at marketplace. Another reason behind doing this analysis is to get help
in strategic planning for the company which will be possible with this analysis to know about the

impact of external factors and make relevant modifications in the planning as well. The
explanation of the different factors covered under this tools is being provided as under:
Political factor: It mainly identifies the overall impact on the strategies, functions and
operations of business firms (Ansoff and et. al., 2019). In reference with Tesla, they have good
opportunities to increase their business in front of people by using different types of government
incentives and policies. As political environment of UK is stable so firm can expand their
business globally. Therefore, it is good for firm to increase its market department.
Economical factor: In order to maximisation of global economy, overall sales of electric
cars is increased day to day. Due to no improvement made in the economy of Europe, Asia and
US impacted negatively upon car sales of Tesla. Therefore, reducing cost will impact on
profitability of firm and can be the big reason of their decreasing sales. So this makes important
for the companies to have sufficient sources of finance so as to avail new technologies and make
improvements in their economic condition as well.
Social factor: It mainly influence macro environment by customers, employees and lots
of investors. Now a days customers also prefers electric cars as compare to traditional cars.
Therefore, Tesla is fulfilling the demands of customers and increase their standard living (Chang,
2016). So in order to make improvement in the overall working and condition of the company ,it
is important to consider the needs and preferences of the customers so as to get positive response
from them as well.
Technological factor: Due to rapid maximisation of technologies, innovative things and
auto mobile industries always give better services to customers. The company is dealing good in
this factors as the use of latest technology is being done by the company in their electric cars
which are providing the company with competitive advantage. For more benefits firms need to
opt unique strategies by which they can reach their target and able to gain huge profits easily.
Legal factor: In UK, there are different types of legal laws and regulations which should
be followed by auto mobile industries to gain competitive advantages. In reference with Tesla
they are following all legal laws and rules so that it increases their value as well as image in
marketplace. Therefore, it is necessary for this firm to opt unique tools as per the government
rules only. It helps them to achieve organisational goals.

Environmental factor: With the help of focusing more and more on environmental
protection, it will be possible to make improvement in the customer level as well as to create
positive image of the company in the minds of their customers. It is good opportunity for them to
achieve goals with huge profit. However, the working of this organisation is not impacting much
on the environment but the contribution made by it towards environment will help in the
development of company and improvement in the brand image and goodwill of the company in
the minds of their customers as well as marketplace also.
M1. Critically identify macro environment to determine and inform strategic management
decisions.
The macro environment analysis is one of the best step to analyse overall strategic
decisions within the organisation. As per the critical evaluation this can be said that macro
environment helps to identify appropriate strategic decision within the economy that involves
employment, inflation, spending and fiscal policy. By having appropriate macro analysis
respective firm can make unique strategic decision as it is the ongoing planning and monitoring
all the essential terms to achieve appropriate goals and objectives. On the other side if company
is not able to do macro analysis properly then they are not able to take proper decision towards
achieving common goals and objectives. It is because the company is impacted by these factors
and the wrong analysis of these factors will make the company to face severe consequences
impacting negatively on the working of Tesla. For example, wrong evaluation legal factors will
make an organisation to fail to fulfil government rules and regulations and the government will
make the company to pay penalties and fines which is negative impact. Sometimes the fines are
much enough to dissolve an organisation.
TASK 2
P2. Identify internal environment and capabilities of select organisation by using particular
framework.
Tesla is one of the leading automotive organisation deals with electric cars from 2003.
Good thing about Tesla is that it is develop by engineers in different countries to provide unique
facility to people (Leonidou and et. al., 2017). Additionally, internal environment and overall
capabilities of this firm can be easily understood by VRIO model and SWOT analysis in the
following manner:

SWOT Analysis
It is known as most powerful tool that helps business to develop business strategies
within the working place. SWOT always stands for strength, weakness, opportunities and threats.
With the help of this tool, it will be possible for the companies to make improvements in their
strengths, remove their weaknesses, avail opportunities and avoid the threats (swot). This is used
by Tesla for analysing its overall opportunities and external factors for developing unique
concepts, mentioned below:
Strengths Weaknesses
 Tesla is one of the best leading
automotive organisation. As it deals
with electric cars and innovative
vehicles so its sales increased day by
day. At present this firm is delivering
90,000 vehicles for the last quarter
including different model of cars
(Amran and et. al., 2016).
 Tesla left behind so many car brands
in the race of finest electric cars. If it
is compared by other brands, then it
has lots of different cars for each and
every category of people.
 According to overall calculation this
brand sold huge electric vehicles in
2019 and get second position across
the globe.
 In order to gain huge productivity this
firm has launched exclusive insurance
programmes for its vehicles
association with liberty mutual
insurance organisation which is also
known as Insure My Tesla.
 In order to make innovative products
Tesla faced various manufacturing
complications. It increased huge
factor of risk which directly
influenced launching time of vehicles
at marketplace.
 Tesla is very good organisation in
order to make energy savings car. But
sometimes it failed to launch high
volumes of auto mobiles for any type
of models. During the time of
manufacturing process this firms
faces so many production cost issues.
Therefore, they did not receive any
success.
 As per the overall annual report, they
do not have lots of batteries. At the
same time shortage of batteries
directly impact on their sales and it is
loss for an organisation.
 Due to high complications or
complicated procedures supply and
demand of Tesla get highly

influenced. It negatively influences
people and firm as well.
Opportunities Threats
 The most essential opportunity for an
organisation is Asian market. It is
known as the field of automotive and
renewable energy market (Razak and
et. al., 2016). Therefore, this situation
helps them to expand their business
globally with good financial stability
and market presence.
 Services of the company are costly.
But there is an opportunity for the
company to make more innovations
so that reduction in the per unit cost
of production could be made and
products and services could be
provided at an affordable cost to
customers so as to attain more market
share.
 Tesla brings battery production
techniques at workplace which is a
unique concept and helps them to
increase manufacturing process and
reduced production cost.
 Tesla has faced lots of issues as they
launched so many autopilot vehicles
but they did not get success. Along
with respective firm fails to apply
new technologies in their products.
 Tesla faces huge competition from
self driving technology and
alternative fuel vehicles. At
marketplace there are so many
competitors like Toyota, Ford etc.
 Long term sustainability is much
important to maintain overall public
image. At the same time due to
unsustainable manufacturing process
they suffered and not able to gain
success.
VRIO Model

It is a process of business analysis framework which is an essential part of larger strategic
schemes of an organisation. In order to identifying resources and overall capabilities, this is used
by Tesla, mentioned below:
Resources Valuable Rarity Inimitable Organized What is the
result?
Brand
presence
Yes No No No Competitive
Disadvantag
e
Product
offerings
Yes Yes No No Partially
competitive
Advance
technology
Yes Yes Yes No Temporary
competitive
advantage
Personnel
department
Yes Yes Yes Yes High
Competitive
advantage
Valuable
Key elements of valuable factor in context with Tesla are:
Brand presence: Effective brand presence of Tesla influence business activities in a
positive manner (Linder and Williander, 2017). Therefore, it provides huge satisfaction for
customers and make product accordingly.
Product offerings: Tesla always provide better quality of goods and services to
customers and fulfil their needs timely.
Advance technology: In order to make organisation much effective Tesla always used
Retalix system for better development of future.
Personnel department: In order to achieve potential customers this firm always make
unique programmes to satisfy consumer's needs and wants. It helps them to achieve
organisational goals within particular time frame (Yuliansyah, Rammal and Rose, 2016).

Rarity
Key elements of Rarity factor in context with selected organisation are:
Product offerings: The products made are developed by making use of scarce resources
and this helps the company to have a sustainable competitive advantage.
Advance technology: Tesla used Retalix software as a latest technology in order to
develop and design effective business which is suitable for achieving appropriate goals.
Personnel department: This is very important skill which is generally conducted by
business entities to make each and every operation effective.
Inimitable
Key elements of Inimitable factor in relation with selected organisation are:
Advance technology: The company has patented their technology so that the technology
could be used only by Tesla not any other company in the industry.
Personnel department: For betterment of future this firm always gives training and
development programmes to employees about how to deal with tough situation at marketplace.
Organised
Key elements of Organised factor in reference with Tesla are:
Personnel department: Employees who are working in Tesla are very much
knowledgeable with having effective communication skills, so that they can deal with any kind
of difficult situation and overcome errors from an organisation.
M2. Critically evaluate internal environment to assess strength and weakness of an organisation's
internal capabilities, structure and skill set
On the basis of evaluation which have been made of Tesla's strengths and weaknesses, it
can be easily said that the company needs to work upon their quality management of products so
that deviations could be reduced. Along with this focus is to be made on supplies of batteries so
that demand could not deficit. Further, the company needs to work on its strength and to make
continuous improvements in the quality of their vehicles and makes them with new and
innovative technology. This will help Tesla in performing good in the environment.
P3. Porter's five forces model in context with an organisation.
This model can be defined as the analytical framework which is generated by Michael
Porter in the year of 1979 (Evans and et. al., 2017). It mainly represents five forces of individual
in order to give appropriate shape and overall competition within the industry. It is much

essential to understand overall profits and profitability of business and develop unique strategies
accordingly. In reference with Tesla this model is very helpful to know about the position of the
company in the industry as well as the profitability level also. Therefore, there are five forces in
relation with Tesla mentioned below:
Threat of new entrants: New entrants are always known as the new firms which directly
influence overall business activities and process of present businesses. That's why It is one of the
big challenge for electric vehicles which shows the difference between cost and performance of
an organisation. In reference with Tesla, it is much difficult for other firm to beat them. This is
because Tesla has already good image in between customers and market as well as it frequently
fulfils consumer's demand in an effective manner. Therefore, this firm has benefits and
opportunities to gain good output in future. Along with Tesla generally concern with high margin
of economies in order to increase living standard of people. So, external factors like various
competitors cannot beat this firm. Additionally, Tesla needs to maintain this image for future
sustainability.
Bargaining power of buyers: The influence of buyers on automotive industries is high.
Due to lots of competition consumers can easily switch from Tesla to another electric vehicle
like Audi, Jaguar and so on. Therefore, the overall switching cost maximise buying power of
customers. As price is important factor so respective firm needed to have affordable price to
enhance productivity and profitability (Porter's Five Forces, 2018). Additionally wide range of
factors influence bargaining power of Tesla customers it involves in buyer's ability to go for
another substitutes and services.
Competitive Rivalry: Rivalry among existing firm within the electric vehicles has
become very high. Whereas, Tesla is one of the most recognizable brand for electrics items,
therefore this firm has announced that they will more concentrates on their segmenting process
so that they can increase profit easily. Due to high competition there are different brand of
electric cars who always focuses on their business strategies in order to run all business operation
in an effective way. Sometimes it may or may not be difficult for Tesla to bring innovative and
unique things in manufacturing process. If Tesla will implement on new strategies that they can
get better profit in future and able to gain potential customers. It will overcome competition and
beat other competitors effectively.

Bargaining power of suppliers: The following factor takes into consideration about the
power and ability of suppliers to make changes in the prices of the products and services of an
organisation. In reference with Tesla, they have good relations with supplier and have unique
strategies by which they can take raw materials from suppliers. In order to regular selling of raw
material respective firm is required to make good relations with suppliers for better productivity.
From this particular framework, suppliers have choice to sell their items accordingly which
impact firm's size, shape and scope. So firm has to focus on suppliers demand and makes plan
accordingly to gain better results. Along with this, the company has made contract with their
buyers and the material is also easily available so the consideration regarding this power is taken
as low.
Threat of Substitutes: In the following power, the consideration is related to number of
substitutes available with the customers to the products and services of an organisation. At
present scenario, there are different firms who are selling same items so that customers have
various options. In context with Tesla, low switching cost of other goods and services like public
transport will prove to be a negative impact. Therefore, Tesla needs to bring few changes
towards electric vehicles in order to make themselves attractive and unique. It will reduce threat
of substitutes from the organisation (Peng, 2017). Hence, the power is considered as high.
With the help of using Porter's five forces model Tesla can get to know about its strength
and threats. It helps them to make unique plan and strategies in order to take better decision in a
perfect way. Therefore, this model is useful to segment high cost to low cost so that people can
easily buy electric vehicles and firm able to maximise effective profits appropriately.
M3. Devise particular strategies to improve competitive edge and market position based on the
outcomes.
In order to deal with the situation confronted by the company, the company needs to
focus on their strategies and policies for reducing negative impact on the working of Tesla.
Innovation is the best strategy with the help of which it will be possible for Tesla to have
competitive edge over their competitors. Because of innovation, it will be possible for the
company to charge higher prices than that of others as the company is providing their customers
with something different which is still not placed in the market. In this way, it will be possible
for the company to deal with the negative impacts lying in the industry and to have positive
impacts of the situation.

TASK 4
P4. Different concepts, models, theorises and strategic planing for chosen organisation.
For overall understanding, identifying and interpreting decision of Tesla, there are several
concepts, theories and models will be used. In order to gain better business objectives of
company they should concern on adopting valuable strategies. Those strategies will be used to
increase marketing share, profits, strategic marketing plan and so on. In order to analyse overall
strategy Ansoff Matrix can be used, which is mentioned below:
Ansoff Matrix: It refers to the marketing planning model and strategic tool which helps
to provide specific framework of an organisation for analysing various plans and strategic
growth in a particular time. In reference with Tesla this can be used as an alternative strategic
decisions. As per the Ansoff matrix there are various variables for business, those are given
below:
Market Penetration: This strategy includes delivering goods and services within
existing markets. In context with Tesla they are using this strategy by which they can easily
concentrates on selling products like Model X, Model S etc. along with solar panel, racking and
so many devices (Brewster, 2017). Therefore, it is useful for identifying overall information of
new models towards vehicles at workplace.
Product Development: This strategy helps to develop new goods and services in order
to sell within existing market. In context with Tesla, they already engage in the process of new
development of product. This is because sometimes cost can be high so that Tesla has to keep
strong innovations and developments in their products and services so that they can achieve their
targeted goals in an effective way. Therefore, this firm always developed unique products in
order to build relations with people and able to give them better services.
Market Development: It is always involving in finding overall new marketing concepts
and their product. In context with Tesla first of all they always examine their numerous market to
enter across the globe (Wheelen and et. al., 2017). After implementing on this idea they focused
on financial terms and more essential terms by which they can develop new ideas in relation with
business. Therefore, market development is an essential strategy to gain profit for the betterment
of future and growth of an organisation.
Diversification: In the following strategy, an organisation makes development of a new
product which is not related to their older products or product line. Along with this, the company