Strategic Analysis of Tesla Motors: Environment and Competition

This report provides a comprehensive analysis of Tesla Motors' business strategies, examining both the internal and external environments that influence its strategic decisions and competitive positioning. It begins with an overview of Tesla's strategic management plan, including its vision, mission, objectives, and market development strategies. The report then employs SWOT analysis to evaluate Tesla's strengths, weaknesses, opportunities, and threats, followed by a stakeholder analysis that considers the priorities of communities, customers, employees, investors, and governments. A PESTEL analysis is conducted to assess the impact of political, economic, social, technological, environmental, and legal factors on Tesla's operations in the UK. The report also applies Porter's Five Forces model to evaluate the competitive forces within the automotive industry and discusses strategies for improving Tesla's competitive edge. Ultimately, the report aims to interpret strategic planning theories, concepts, and models to develop a strategic management plan for Tesla, including strategic decisions, objectives, and tactical actions, with the goal of achieving sustainable growth and competitive advantages. Desklib provides access to similar past papers and solved assignments for students.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Analysis of macro environment on the business strategies...................................................1
M1 Evaluate the macro environment to determine strategic management decisions.................3
TASK 2............................................................................................................................................4
P2 Analyse the internal environment and capabilities of an organization..................................4
M2 Critically evaluate the internal capabilities to access on the strength and weakness of an
organization.................................................................................................................................6
TASK 3............................................................................................................................................7
P3 Applying porter's five force model to evaluate the competitive forces.................................7
M3 Invent appropriate strategies to improve the competitive edge............................................8
TASK 4............................................................................................................................................9
P4 Apply theories, concepts and models to interpret strategic planning....................................9
M4 Prepare a strategic management plan...................................................................................9
D1 Critically evaluate the environment and competition to produce strategic decisions,
objectives and tactical actions.....................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES 11

INTRODUCTION
Business strategy is a set of activities that an organization uses to attract customers,
improving performance as well as achieving the objectives in effective manner. This is a
combination of all activities and decisions that are required to accomplish the goals of business
and secure a competitive position in the marketplace. These plans of actions assist the
organization in identifying product strengths, setting value, getting new business concern,
distinguish products etc. For analysing the business strategies and its impacts Tesla Motors is
chosen in this report. It is an American automotive and energy company founded in Palo Alto,
California and established on July 1, 2003. The company specialise in manufacturing electric car
through solar panel and operate multiple production and assembly plants. In this report studied
about the internal and external environment of an organization which effects the strategic
decisions as well as competitive positions. This also disclose the theories and concepts that are to
interpret the strategic planning for an organization by setting up strategic decisions, objectives
and tactical actions. Also, facilitates the recommendation to develop the strategic growth and
achieve competitive advantages.
TASK 1
P1 Analysis of macro environment on the business strategies.
Strategic management plan is a framework which is used to communicate the long-term
goals and measure or evaluate the performance of an organization. It provides a clear
understanding about the mission, vision, objectives as well as strategies of a company which are
needed to achieve the goals and objectives (Ayala, 2016). In the context of Tesla Motors,
strategic management plan can be described as:
Vision: The vision statement of Tesla's is to appoint the most persuasive car
establishment of the 21st century by impulsive the world’s transformation to electric vehicles.
Mission: Tesla's mission is to speed up the world's change of state to sustainable energy
as well as transport.
Objectives: To increase the customer base as well as market shares by 15% & 16%
respectively by expansion in the market area.
Strategies: The company adopts market development strategy to expand their business in
new geographical location to increase the customer base in the marketplace.
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SWOT analysis: It presents the internal report of the Tesla Motors by examining internal
and external strategic factors. Strengths and weaknesses are the internal forces in that strength
helps in examining the positive and valuable aspects of the company. Whereas, weaknesses helps
in understanding the drawbacks of a company which reduces the organizational performance
(Scholes, 2015). Along with this external force includes the opportunities and threats that focus
on the emerging changes of growth for a company and analyse traits that introduce as a
roadblock for the company.
Tesla is the top leading automotive company as a highly innovative advancements and
processes. Have a positive aspect in product differentiation by introducing electric technologies
and on the top of the selling electric vehicles considered as a strength. The company suffers
more from the manufacturing complications because it delays at a time of launching highly
innovative and new products. Sales of electric vehicles and energy storage system decreased
because of the limited supply of batteries and also have limited marketplace are the weaknesses
of company. Tesla have opportunities to make its own battery cells which helps in increasing
the manufacturing rate as well as decrease the production cost. In relation to weakness, Tesla
must consider the opportunity for expansion in their global sales. Brexit deal between the UK
and Europe is main trait for the company. Large competition in the automotive sectors and
fluctuations in the foreign exchange rates creates a roadblock in grabbing the opportunities.
Stakeholder analysis: Tesla has corporate social responsibility strategy which impacts
on the business at a great extent. The electronic car of Tesla viewed as an antipode to traditional
cars which use combustion engines and impacts negatively on environment. Stakeholder
priorities in accordance with the CSR strategy can be described below: Communities: Tesla is a automotive business that influenced by communities because
they design corporate image. Communities interest as a significant stakeholder is related
to environment protection. Customers: It impacts on the product quality and pricing level which effect the income of
Tesla. To satisfy the customers and fulfil demand by minimising cost of car batteries to
reduce the overall cost of final goods. Employees: They are the crucial factor of the company which impacts directly on the
productivity and profitability. Tesla trying to satisfy them by facilitating competitive
compensation and professional growth.
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 Investors: They are crucial for maintaining cash flow and capitalisation for the company
because they concern on profits and business growth. Tesla CSR needs to satisfy their
interest by using long term strategies.
 Governments: It concerned about legal actions and compliances of company and
contribution to the state economic growth. International expansion strategic plan satisfy
the government interests.
Macro environment factors are existing in the overall economy rather than specific
sector which directly impacts on the operational performance, strategies as well as decision-
making of a company. These factors are uncontrollable that includes political, economic, social,
technological etc. elements are involved. Macro external factors facilitates the detailed
information’s related to the operating challenges which Tesla Motors will face in prevailing the
macro situation rather than competitive forces (Tesla, Inc. PESTEL/PESTLE Analysis &
Recommendations, 2019.). The external factors that can impacts on the Tesla Motors and its
factors:
Political factors It includes the introducing new policies, political corruption as well as
regulations related to the environmental issues, legislations and policies of
automotive industry, taxation etc. impacts on the strategies and performance
of an organization. The government of UK is stable and supportive, so it
positively impacts on the Tesla Motors. Also, initiatives are being interpreted
by the government to cut down the usage of oil and alter to more eco-friendly
energy resources to bring down global warming. Due to the Brexit deal the
changes in adopting the carbon emission regulations are introduced which
negatively impacts on the UK's auto-mobile industries because for
manufacturing car approx 60% parts are imported in this country (Johnson,
2016). However, Brexit may cause instability and uncertainty in UK so Tesla
needs to develop its plan of action in a way that this does not consequence its
operational activities.
Economic
factors
These factors are related to the inflations, growth, income and wealth
distribution, trade etc. which effects the business strategies. The economic
growth of UK is positive which provides more opportunities to increase their
sales in future. Along with this there is a quite fear of fluctuations in currency
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as well as duties. In the UK technologies and batteries are available at a
cheaper rate which can be used by Tesla to produce electric auto-motives thus
minimising its operation costs and prices to made them affordable for their
customers (Oussama, 2017). However, due to Brexit the value of pound can
be a reduced which might force Tesla to change its prices. Brexit might also
affect in fast trade between US and UK which will affect the strategies of
company so that prices can be obsessed.
Social factors Socio-cultural factors includes demographics of population, lifestyles, trends,
preferences as well as culture effects the performance of business operations
and strategies. For taking social advantages a company needs to invest in
heavy R&D activities to meets millions of social media followers
(Chodakowska, 2018). UK has a big consumer marketplace which belongs to
the different cultures and religions with unique mixture of needs and wants.
However, there is a broad income difference in UK as compared to other
developed countries which might influence company plan of actions in
pricing strategies of its products.
Technological
factors
These involves the technological advancement, automation and innovation in
techniques as well as introducing new ideas by developing in the business
strategies to take a competitive advantage. Tesla has a large opportunity to
spread out its business in UK as technologies for advances in renewable
energy is accessible in UK (Akter, 2016). Auto-mobile industry concentrate
on creating a changed business state of affairs, developing technology road
maps for CO2 emission free vehicles and hydrogen propelled cars, it also
centring on the research and development schedule of the UK automotive
industry.
Environmental
factors
It includes the weather condition, climate, temperature, availability of water
as well as environment protection and pollution act which effects the
performance of an organization. Environmental determinants affiliated to
CO2 emission, petrol and gasoline usage etc. if the auto-mobile has a high
CO2 emission rate there will be high TAX charges (Velazquez, 2017). The
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UK government has introduced financial measures to favour vehicles with
lower CO2 emissions, Environmental policies in the UK are based on rule of
command and control, which may yield polluters certain standards which
cannot be overstep.
Legal factors These are the law of command that dominate in a country which are
compulsory to remain for all the businesses to run with success. These laws
are related to protect the interest of customers and investors, assure ethical
and CSR practices in a business’s etc. UK has highly positive lawful
constitution for Tesla to operate in the country (Ghez, 2019). The UK system
of rules supply plug-in car grant up to £5,000 for electric and hybrid vehicles.
Also, many laws are being formed against polluting vehicles which is
favourable opportunity for Tesla. However, the company requires to precede
with UK legislations so as to insure working within the legal framework of
the country.
Stakeholder matrix: It is the first stage of stakeholders management that it is essential
which a successful people used in order to win support from others. It helps in ensuring about
that project succeed or fail. It can be considered as follows:
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(Source : Figure 1: Power/Interest Grid for Stakeholder Prioritization) Manage closely: It is defines as a high power and highly interested people from which
management of Tesla must fully engaged these people and make efforts to satisfy them
appropriately. For example: Shareholder. Keep satisfied: This defines as a high power and less interested people as it put enough
work to satisfied them but not so much as they bored with messages. For example: Board
of directors. Keep informed: It is related to the low power and highly interested people in this
adequately inform these people and talk them to make sure that issues are not arising. For
example: customers.
 Monitor: It defines as a low power and less interested people monitor those people on a
continuous basis without getting bored. For example: suppliers.
Evaluate the macro environment to determine strategic management decisions:
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By using the SWOT analysis tool, a company able to understand their internal and
external strategic forces that are strength, weakness, opportunity as well as traits. This helps in
grabbing the market opportunity at a time and able to take a competitive advantage. Macro
environmental factors cannot be controlled or change so the company needs to take a strategic
decision to deal with the changes and its impacts. Business strategies are required to manage the
changes effectively as well as take competitive advantages in an appropriate manner. Tesla
Motors faces many difficulties due to the political and technological changes due to the
instability in the political and economic situations or conditions (Higgins, Omer and Phillips,
2015). Although, advancements in technologies provides an opportunity to Tesla, it can also be a
threat as the changing technologies can lead to quick devolution of products as the customers
preferences keeps on changing. The stakeholder matrix helps in identify the power of people by
using several aspects and manage their stakeholders appropriately and win supports from others
in order to succeed projects in the market. This will helps in making strategic decisions for the
purpose of reducing challenges of external factors and manage business effectively as well as
efficiently.
TASK 2
P2 Analyse the internal environment and capabilities of an organization.
Internal environment is a basic element of every business environments which
comprises of several determinants that are available inside the organization and can affects the
decisions and strategies (Amran, 2016). It involves the culture, climate, equipments, work
process, management, resources, practices as well as structure. The internal environmental
factors can be varied and disciplined so as to stay competitive in the marketplace and for
successful operational activity of business. There are several ways which helps in analysing the
internal capabilities and environment of Tesla Motors that are as follows:
Strategic capabilities: It can be defined as resources and competencies of a company
which are needed for the long term survival of business. Strategic competencies refers to the
business strengths like, humans, skills, resources, capabilities etc. that helps in taking
competitive advantages.
Components of strategic capabilities:
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 Ability to compete: Strategic capabilities focuses on assets, resources, market positions of
an organization in order to gain competitive advantages.
 Identifying critical competencies: Property and patent contributes to the ability to
formulate and employ strategies. Human resources and organisational structure etc.
contribute towards business competitiveness.

McKinsey's 7's model: It is a model which illustrate the seven elements of businesses
that can be straight to increase the effectiveness. On the basis of structure, system and strategy
are considered as a hard element whereas shared values, skills, staff are presents as a soft
element. Strategy: Tesla strategy is based on the electric cars which is driven by the company's
mission to accelerate world's transition to sustainable energy. Structure: The structure of the company into a single category because of its unique
nature. There is no organisational chart or public list of senior leaders at Tesla. System: A wide range of systems which are useful for long term growth prospects that
involves recruitment, selection, development, oriented, customer relationship
management etc. Shared values: Specific oriented goals are the core values of Tesla which helps in
demonstrated in general work ethic and corporate culture. Skill: Competencies and skills of staff who are employed in Tesla are important for the
company’s productivity and profitability. Strong and competitive skills leads the success
and growth directly. Style: It includes the leadership approach which is adopted by the company to ensure the
effective participative and effective management.
 Staff: Employees are considered as a competitive factor which helps in the
accomplishment of organisational objectives.
Resource based view strategy:
This is considered as a managerial framework which are used to examine strategic
resources for accomplishing sustainable competitive advantages. Resource-based view
framework of Tesla helps in maintaining company's ability to perform better as compared to its
competitors by using unique features and resources. These are used to take sustainable
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competitive advantages that requires to meet the four criteria of being valuable, rare, imitable
and organised business. Through resource based view analysis strategic capabilities of Tesla
needs to be evaluated by considering tangible and intangible resources. Tangible resources are
classified into financial, physical, technological and organizational structure. In addition,
intangible resources includes human resource factors only.
(Source : Resource based view, 2019)
VRIO analysis: This tool is used to understand the internal environment and capabilities
to take a competitive edge as compared to other rivalry companies. It is an analytical technique
of Tesla Motors resources and competitive advantages (Buckley and Ghauri, 2015). VRIO
analysis is used for rising in the business positions in the market and helps in implementing some
unique strategies to cope up with their competitors. This model can be analysed in the context of
Tesla which are as follows:
Value This factor analyse the products, services as well as resources which are
provided by the company that adds something value for customers. With the
context of Tesla Motors this factor is presents because the products of this
company is going to solve a major problem for the humanity. This will help in
taking a sustainable competitive advantage.
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Rare It analyse those products which are control scarce resources and capabilities or
can say that which are rarely available in the market. Tesla Motors proprietary
technology and R&D activities to develop innovative energy products are rare
such as cars and batteries. Technological advancement satisfy the pertaining
rarity that gives an advantage of not being imitated by the other companies.
Imitable This factor identify that the resources and capabilities of a particular company is
expensive to duplicate by other organizations. Tesla's technology, strengths,
R&D activities, energy space as well as positioning are difficult to imitate. The
company spent more time and efforts on that to reach the current stage that are
complex to replicable by other companies (Song, Sun and Jin, 2017).
Organization It means examining the internal structure, procedures, culture, system as well as
structure of an organization is well managed and organised. Tesla Motors deals
with the strong leadership, practices and culture to make company capable for
sustaining in the competitive market for a long time by exploiting opportunities.
Value chain analysis: M. Porter presents the generic value chain model in 1985 which
enables the internal activities of business related to the production of goods and services. It is a
set of activities which a business operating in specific industry in order to deliver the valuable
products and services in the market. Value chain analysis is a process in which Tesla identifies
their primary and support activities that adds some value in final products and analysed that to
reduce the cost along with increase differentiation. This analysis helps in identify the source of
competitive advantages and complex interdependences or inter-relationship as well as improve
the flow of money, information and material. In addition, a company may lose their vision and
overall strategies by dividing their operational activities into different functions as well as Tesla's
information system is not structured properly.
Critically evaluate the internal capabilities to access on the strength and weakness of an
organization:
Internal surroundings and competencies plays an important role in an organization which
assists in developing practices, structure as well as develop constructive culture at their
workplace (Pan, Chen and Zhan, 2018). In the context of Tesla Motors, a company takes
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