Detailed Business Strategy Report: Tesla Motors' Competitive Analysis

This report provides a comprehensive analysis of Tesla Motors' business strategy. It begins with an introduction to business strategy and then delves into an analysis of macro-environmental factors using the PESTLE framework, examining political, economic, social, technological, environmental, and legal influences on the company. The report also demonstrates Tesla's internal environmental capabilities through SWOT analysis and Porter's Value Chain analysis, evaluating the company's strengths, weaknesses, opportunities, and threats, as well as the primary and support activities that contribute to its competitive advantage. Furthermore, the report analyzes the competitive forces affecting Tesla, providing insights into the company's market position and competitive edge. Finally, the report applies various theories, models, and concepts to strategic planning, offering a detailed understanding of Tesla's strategic approach. The report concludes with a summary of the key findings and references used in the analysis.

Unit 32 Business Strategy

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P 1. Analysing the influence and impact of macro- environmental factors on organization......1
M 1. Critically analysing macro- environment factors...............................................................3
LO 2.................................................................................................................................................4
P 2. Demonstrating internal environmental capabilities of organization with the help of
appropriate framework................................................................................................................4
M 2. Critical analysis on internal environment...........................................................................7
LO 3.................................................................................................................................................7
P 3. Analysing the competitive forces of the particular organization.........................................7
M 3. Devising appropriate strategy to improve market position and competitive edge. ...........8
LO 4.................................................................................................................................................9
P 4. Application of range of theories, models and concepts which helps in strategic planning. 9
M 4. Strategic management plan...............................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Business strategy is mainly considered to be the set of competitive moves and action
which a company uses in order to attract customers, strengthening performance, attainment of
organizational goals, compete successfully, etc. This is an effective strategy which is useful in
outlining how the operations of the business should be carried out in order to reach the stipulated
goals and objectives. This study will highlight on various macro- environmental factors which
tends to influence the operations of the organization (Johnson, 2016). It will also demonstrate
internal environment capabilities with the use of appropriate framework. Furthermore, this report
will critically evaluate competitive forces in the market sector which in turn is very useful in
determining the competitive position in the market. This study tends to highlight on range of
theories, models and concepts which helps in strategic planning for the organization.
Tesla motors is one of the leading energy and automotive company which was founded
on 1st July 2003 by Elon Musk, Martin Eberhard, Marc Tarpenning, Ian Wright and J.B.
Straubel. Tesla motors is headquartered in Palo Alto, California, U.S. The key products of the
Tesla motors are electric vehicles, Tesla energy, etc.
LO 1
P 1. Analysing the influence and impact of macro- environmental factors on organization.
Business strategy is an effective strategy which is useful in outlining how the operations
of the business should be carried out in order to reach the stipulated goals and objectives.
Vision: “To create one of the most powerful car company of 21st century by effectively
driving the world's transition to electric vehicles.”
Mission: “To accelerate the world's transition to sustainable energy and development
transport”.
Objectives: The key objective of this study is to effectively provide sustainable transport
and energy manufacturing vehicles which in turn results in higher operational performance and
productivity.
PESTLE Analysis
This is an effective management tool which helps in effectively determining the effects of
macro- environmental factors on the company.
Political factor: The political environment factors such as government rules and
regulations, fiscal policy, labour laws, tax policy, foreign trade policy, funding grants, etc.
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mainly influence the working of the business (Sia, Soh and Weill, 2016). Teals motors can
effectively strengthen the financial performance of the company with the help of various other
incentives offered by the government. Consumers can also file with tax credit on the purchase of
the electric car. Political stability is one of the major market which in turn helps in intensive
growth and competitive position to the company (Tesla, Inc. PESTEL & Environment Analysis,
2019). Free trade agreement helps Tesla motors in reaching various market segment in the world
which is useful in boosting up the business. On the contrary, political instability tends to affect
the operations of the business.
Economic factor: The economic factor such as interest rate, economic growth, exchange
rate, taxation, disposable income, interest rate, wage rate, inflation rate, financial capabilities,
etc. largely influence the working of the business. The economic growth of the economy aids to
great opportunity for Tesla motors to capitalize (Thompson, Strickland and Gamble, 2015). Tesla
motors power wall batteries is considered as a great opportunity for the business which in turn
makes it more accessible and affordable. This helps Tesla motors in producing more affordable
electric vehicles. The material cost and other cost to the company are on decline which is very
beneficial for the company. On the contrary, higher inflation and interest rate tends to negatively
affect the profitability of the company.
Social factor: Macro- environmental social factors such as cultural trends, organizational
image, demographics, customer buying trends, etc. largely influence the working of the business.
Tesla motors tends to focus on improving the use of renewable energy which in turn results in
lower carbon footprint. Equal distribution of wealth in the economy helps Tesla in attaining the
long term financial goals of the company. Company not complying with the current trends of the
customers tend to negatively affect the operation s of the business.
Technological factor: The technological is increasing at an exponential rate which is
very useful for Tesla motors to grow. Tesla motors tend to focus on adapting to newer
technology which helps in making much more affordable and friendly products for the
consumers. Tesla motors tend to take advantage of the artificial intelligence and automated
technology in order to integrate such system into the car systems. This in turn aids Tesla motors
to create upholding demand for unique electric vehicle cars. On the contrary, technology tends
to become obsolete which in turn negatively affect the performance of the buisness.
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Environmental factor: Tesla motors is highly affected by the stringent environmental
laws in order to reduce the carbon footprint (Hart, Sharma and Halme, 2016). The key focus of
Tesla motors is to focus on developing environmental friendly cars which is very beneficial for
the company. Tesla motors tends to comply with various environmental laws within which it
operates which leads to higher sustainable growth and efficiency of the business.
Legal factor: Tesla motors must comply with various health and safety laws, competitive
legislation, equal opportunities, etc. helps in smooth functioning of the business (Tesla, Inc.
PESTEL & Environment Analysis, 2019). Engaging in third party relationship results in less
profitability and more expense to the business.
Stakeholder Matrix
It is an effective process of systematically analysing and determining the interest of
various stakeholders in to the organization.
Employees: Tesla motors is directly affected by the performance of the employees which
in turn influence the productivity of the business. Higher performance and profitability of the
business help employee to gain higher career growth in the company.
Customers: They are mainly concerned with the quality of the product Tesla is offering
to the end customers. Tesla tends to reduce the overall cost of the end finished products by
effectively manufacturing their own batteries.
Government: Tesla is highly dependent on the actions taken by the government which s
mainly concerned with the compliance and legal actions to the company which mainly aids to the
contribution of economic growth (Hsieh, Ma and Novoselov, 2018). Economic stability to the
company results in smooth functioning of the Tesla motors.
Investors: Tesla performance and current market situation helps in gaining attention of
the investors. This aids investors in high capitalization to the business which helps in improving
the performance, market share and brand image of the company.
M 1. Critically analysing macro- environment factors.
Thompson, Strickland and Gamble, (2015) said that, Political stability is one of the major
market which in turn helps in intensive growth and competitive position to the company. Hart,
Sharma and Halme, (2016) evaluated that, Compliance with various waste disposal programs,
environmental change programs helps Tesla in making their business survive greater heights. On
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the contrary, Sia, Soh and Weill, (2016) argued that, Tesla is facing various law suits,
investigations and regulatory issues which in turn is considered to be the main issue for crashes.
LO 2
P 2. Demonstrating internal environmental capabilities of organization with the help of
appropriate framework.
SWOT Analysis
This model is useful in evaluating the competitive position of the company by effectively
evaluating the internal and external factors and also determine the current and future potentiality
of the company.
Strengths: Tesla motors is considered to be one of the leading automotive company
which focuses on manufacturing innovative and luxury cars. It has left every one behind by
producing the finest electric cars. It has ample support from the government which in turn helps
in generating funds and incentives (Buckley and Ghauri, 2015.). Tesla is considered to be one of
the most innovative company which results in sustainable financial gains. It has strong brand
image and also focuses on strongly controlling the production process according to the demand
of the company. It tends to cutting edge technology which leads to high innovation. It has
effective distribution channel which helps Tesla motors to expand their business to various other
market.
Weaknesses: the major weakness associated with the Tesla motors is that of poor
liquidity. Ford the competitor of Tesla tends to have rich cash from several years of operations.
Tesla motors tend to have capacity issues because it only has one plant which is located in the
California. This in turn is making difficult for the Tesla to target high volume of sales.
Customers are unaware of the specialized products produced by the Tesla which in turn is very
essential for the benefit of the environment.
Opportunities: Emergence of new technologies like hybrid vehicles, electric cars, green
cars, battery operated cars, self driven autonomous car which in turn is very useful for Tesla
motors to effectively innovate the products in order to reach greater heights. Tesla motors has a
major opportunity to global sales expansion by effectively expanding their supply chain. It also
has a major opportunity to diversify their business in order to improve the competitiveness and
financial standing of the company (Chen, Eshleman and Soileau, 2016). Production of less
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expensive car, production of the own battery and expansion of sales in the untapped market tends
to have a a major opportunity to the business.
Threat: Tesla motors threat associated with the business is the presence of large number
of competitors in the market which results in lower operational performance, productivity and
profitability for the business (SWOT Analysis of Tesla, 2019). Dealership regulation in countries
such as Texas and Virginia where they tend to prohibit direct sales of the company's products
which in turn also result sin lower profitability to the business.
Porter's value chain analysis
This model helps in differentiating the products of the company by effectively analysing
the chain of events within the company. It is used to systematically analyse the internal firm
activities of the business. It is very useful in demonstrating which activities are important and
valuable in order to provide competitive advantage.
1. Primary activities
 Inbound Logistics
Tesla inbound logistics mainly consists of the shortage of raw material in order to effectively
build electronic vehicles. The company tends to focus on building strong relationship with the
suppliers in order to receive and distribute the goods and services.
 Operations
Tesla motors operations are effectively and systematically carried out which in turn arise at the
time of arrival of raw material to the manufacturing of finished goods. It mainly consists of
machining, designing, assembling, testing and installing (Eaton and Kilby, 2015). It helps in
improving the productivity, profitability, maximising efficiency and higher competitive success.
 Outbound Logistics
Tesla outbound logistics is mainly concerned with warehousing, order processing, scheduling
and distribution of the EV cars, solar panels, energy storage systems effectively produced by the
company. Majority of customers tend to customize their products by placing orders online.
 Marketing and sales
Tesla motors tends to engage in various marketing and promotional activities which in turn helps
in attracting large number of customers from across the globe. The company tends to use
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marketing funnel approach which in turn helps in advertising, promotional activities, channel
selection, channel members, word of mouth, social media marketing etc. helps in improving the
functioning and customer base of the company.
 Services
Tesla motors deals in large number of customer services which in turn is very useful in
effectively addressing the client complaint in order to reach long term sustainable growth and
efficiency of the business. The key strength of Tesla is that it focuses on providing pre sale and
post sale services which in turn helps in developing customer loyalty (Moseley III, 2017). It also
provides online services
2. Supporting Activities
 Firm infrastructure
Tesla motors tends to focus on various range of activities such as legal matter handling, quality
management, planning, financing, controlling, monitoring, production, manufacturing and
strategic management. Effective optimization of the infrastructure activities tends to strengthen
the competitive position in the market.
 Human Resource Management
Tesla motors can effectively analyse the human resource management which in turn helps in
evaluating various HR aspects such as recruitment, selection, rewarding, training, development,
personnel management and performance management activities. This helps Tesla motors in
reducing competitive pressure by hiring highly skilful, knowledgable, motivated and committed
employees within the workforce.
 Technology development
Tesla motors major strength is that it tends to carry out its value chain activities with the
advanced technological support. Integration of advanced technology in the production,
manufacturing, distribution and marketing leads to higher sustainable growth and advancement
for the company.
 Procurement
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This is referred to as the process which is mainly involved in the purchase of the inputs and in
turn ranges from raw material, equipments, machinery, supplies, etc. which is necessary for the
production of finished goods (Fontana, Sastre-Merino and Baca, 2017). This helps in making a
strong value supply chain which h is beneficial for the operations and benefits of the company.
M 2. Critical analysis on internal environment.
Chen, Eshleman and Soileau, (2016)said that, the key strength of Tesla motors is that it
tends to dominate the sales of the electronic vehicle cars which in turn leads to higher
profitability and productivity for the company. On the contrary, Buckley and Ghauri,
(2015)argued that, Tesla motors tend to have capacity issues because it only has one plant which
is located in the California. Eaton and Kilby, (2015). evaluated that, Tesla motors major strength
is that it tends top focus on delivering goods directly to the end customers. The major weakness
of Tesla is that it has ineffective firm infrastructure which in turn affects the operations of
business.
LO 3
P 3. Analysing the competitive forces of the particular organization.
Porter's five force model
This is an effective framework which helps in identifying and analysing the various
competitive forces which in turn helps in determining the strength and weakness of the particular
industry.
Bargaining power of the suppliers: Suppliers at dominant position tends top decrease
the profit margins of the Tesla motors. Tesla can effectively maintain bargaining power of
suppliers by effectively building strong supply chain. It must also focus on developing a strong
and dedicated suppliers which h in turn helps in effectively tackling bargaining power of the
suppliers. The major drawback of Tesla motors is that its have a low level of forward integration
which in turn states that the supplier has a limited control over the sale and distribution of the
particular products.
Bargaining power of the buyers: Customers of Tesla have a direct impact on the sales
and revenue of the company. Customers tend to have low switching cost for the business which
helps in higher customer base, profitability and productivity for the business. The key strength of
Tesla is that, it has the bargaining power of buyers for EV is significant where there is no cost for
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the customers to switch from Tesla electric vehicles. Buyers have high switching cost when
better quality substitute product is available in the market at affordable price (Oldman and
Tomkins, 2018). In order to effectively tackle with the bargaining power of buyers, Tesla must
focus on building a large customer base across the globe. This is very useful in streamlining the
sales and production procedure.
Threat of substitute: The threat of new business entering into the automotive industry is
moderate because Tesla motors has positioned itself in the market and has a good brand image
which is a major strength for the company. Tesla tends to develop various models which are
fully electric which in turn results in higher performance and probability for the business (Habib
and Hasan, 2017). In order to effectively tackle the threat of new substitutes, Tesla must focus on
being service oriented and also effectively understand the switching cost for its customers. Tesla
must also focus on determining the needs of the customers which leads to higher productivity.
Threat of new entrants: Established market players tends to benefit from economies of
scale, which in turn states that the large benefit is not available to the new entrants. This force is
mainly low because of the barriers to the entry into the automotive industry. Technology and
knowledge is also a major factor which in turn affects the efficiency of the business. In order to
effectively tackle with the threat of new entrants, Tesla must focus on developing new and
innovative products and services which h helps in attracting large number of customers. The
company should also focus on attaining economies of scale which in turn leads to higher
profitability to the business.
Competitive Rivalry: Tesla motors ends to operate in a highly competitive environment
which in turn affects the operations performance and productivity of the business. Large
aggressive competitors tends to affect the competitive position of the company which results in
lower performance and productivity (Ghemawat, 2016). In order to effectively tackle the
competitive rivalry, Tesla must focus on building strong scale which in turn helps in competing
better.
M 3. Devising appropriate strategy to improve market position and competitive edge.
Tesla needs to focus on making strong supply chain which in turn helps in reaching end
customers. Threat of new entrant can be improved, Tesla motors must focus on carrying out
research and development which helps discouraging new company to enter into the market
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which is a major strength for business. In order to improve competitive rivalry, Tesla motors
must also focus on building a sustainable differentiation and also focus on collaborating with the
competitors in order to effectively increase the market share and size.
LO 4
P 4. Application of range of theories, models and concepts which helps in strategic planning.
Post generic strategies
These strategies are developed by Michael Porter which in turn helps in understanding
the competitive advantage of the company. Cost leadership: It helps in developing the lowest cost of operation for the business
which in turn helps in attainment of economies of scale. Cost leadership is an effective
strategy which helps in establishing competitive advantage. This in turn aids to the
lowest cost of operation to the company.
 Differentiation: This strategy helps Tesla in developing differentiated products such as
electric cars from its competitors. This helps in attracting those customers who tends to
purchase unique, innovative and volatile products.
Market Penetration
Tesla tends to consider market penetration as one of the primary strategy which aids in
business growth by effectively increasing the sales and revenue in the current market. The
company tends to develop competitive advantage which in turn is based on increasing the market
share of the business. This in turn helps in growing the sales and revenue of the company with
the help of aggressive marketing. Suitability: This proposed strategy is suitable for Tesla motors as it helps in improving
the functioning of the business which in turn leads to long term sustainable growth and
development of the business. Acceptability: This strategy is effectively acceptable by the large number of stakeholders
of the company. The customers will accept market penetration strategy as they will get
high level of products and services. Increase in the market share of the products helps in
increasing the wealth of the shareholders (Mahmood, Chung and Mitchell, 2017). This
strategy is accepted by the employees and internal stakeholders of the company as it will
help in improving the working environment which leads to higher productivity for the
business.
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 Feasibility: In order to penetrate in the existing market, Tesla motors focus on producing
more quality and innovative products by taking advantage of available quality resources
and competent position in the market. An effective brand reputation of Tesla motors
helps in successfully implementing the market penetration strategy into the business.
Market Development
Tesla motors tends to focus on market development which in turn is considered to be as
the tertiary intensive growth strategy. The company tends to focus on entering into new market
which in turn helps in generating higher sales and growth to the global business. The
differentiation generic method is useful in market development as it helps in creating unique
diversified products which in turn helps in attracting large number of customers from across the
globe (Cubas‐Díaz and Martinez Sedano, 2018). Tesla motors should focus on effectively
establishing alliances with other established firms and countries in order to make it easier for the
company to enter into new market. Suitability: This proposed strategy is useful because expansion of business into the new
market helps in increasing the market share of the company and in turn results in higher
probability. This is suitable whose economic condition is good. This helps in improving
the functioning and operations of the business. Acceptability: This approach is highly acceptable by wide range of stakeholders in the
organization. Increase in the market share of the products helps in increasing the wealth
of the shareholders. This strategy is accepted by the internal stakeholders of the company
because of higher career growth opportunities.
 Feasibility: This approach is way to feasible for the growth and development of the
company as this in turn helps in attaining higher market share and profitability. An
effective brand reputation of Tesla motors is very useful in expanding business in various
national and international market. This in turn results in higher market share, high
customer base and profitability to the business.
M 4. Strategic management plan.
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