Tesla Strategy: PESTEL, SWOT, and Porter's Five Forces

This report provides a comprehensive strategic analysis of Tesla, examining its internal and external environments. It begins with an introduction to business strategy and Tesla's background, followed by a detailed PESTEL analysis, evaluating political, economic, social, technological, environmental, and legal factors impacting the company. A SWOT analysis then assesses Tesla's strengths, weaknesses, opportunities, and threats. The report also applies Porter's Five Forces model to understand the competitive landscape. Task 2 focuses on Bowman's Strategic Clock, recommends a strategy, and outlines strategic planning considerations. The conclusion summarizes the key findings and recommendations, emphasizing Tesla's market position and strategic direction. References are included to support the analysis.

Tesla Strategy Report

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
PESTEL Analysis........................................................................................................................1
SWOT Analysis...........................................................................................................................3
Porter Five Force Model..............................................................................................................4
TASK 2............................................................................................................................................6
Bowman's Strategical Clock........................................................................................................6
Recommended Strategy...............................................................................................................7
Strategic Planning........................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business strategy is considered as actions and plans of an organization that are designed
to get competitive advantage in market place. Main objective of this business strategy is to attract
more and more customer towards the company product and gain maximum revenue by selling
product and services to customer (Kushwaha and Sharma, 2016). This is a tactic based plan that
works with short term and long term goals. Tesla is a multinational organization and serving
people from all over world. Tesla was established in year 2003. Tesla is providing electrical
vehicles to customer and related services to it. Company headquarter in Palo, Alto California,
United States. This report is analysing the internal and external factors that can influence the
business of company. Marketing analysis of Tesla is also covered in report. Different types of
business strategies are explained in report. Business is explained for Tesla to improve its
positioning in market.
TASK 1
PESTEL Analysis
Political Factors
Government is the controlling body of country and it is their responsibility of government
to make right policies and decisions to keep status of nation stable on global platform.
Government makes different policies that are related to various areas. Most of the strategies of
government are related to economic policies, trade policies, foreign policies and tax policies.
This polices can affect both company and employees. It can influence the decision of
organization and working of employees (Rawlinson and Wells, 2016). If government change the
foreign policy for particular country in which organization is operating, this can affect the
business of organization and policies of organization. Economic decision and changes force the
company to change the pricing methods that is currently used in Tesla motors. Trade rules of
country also affects the decisions of organization that are related to marketing policies of
company.
Economic Factors
The economic changes on national or international level also can affect the business and
economy or organization. These different economic factors are related to tax policies of different
countries and economic crisis and recession are also considered as external economic factors that
influences the business of Tesla Motors. Different taxation policies of different nation force the
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company to design individual economic policy for business in each nation. The condition of
economic crisis make the company to deal with various problems that are caused by crisis. These
problems are unemployment, inflation and reduction of sales of company product. This is how
these economic factors affect the business of Tesla Motors.
Social Factor
The social factors are more about personal, social and cultural values of people of
organization. This factors are related to the satisfaction level of people and other issues which are
related to cultural and social values. This factors are also known as socio-culture factors.
Different things are consider in this factor. Education level of people, population of locality and
market place. Tesla is offering electrical vehicles to consumer and if the customer are aware of
sustainability and well educated then this will help the organization to convince them about
product of company(Thompson, Strickland and Gamble, 2015). Sales of organization is
dependent on Population of country and average income of people. Sustainable product will
encourage the people to purchase this product and this can improve the business of organization.
Technological Factors
Technological factors are related to technology used in organization. New and innovative
technology in market is big challenge for organization. If some other company is using the latest
technology in their product then this will reduce the market share of company. Tesla possessing
monopoly in electrical vehicle market and no other company is closer to the technology used by
Tesla. So, this is advantage to company that they are holding technological edge in market. The
other technological factors are about how much efficient technology company have. If the
production line technology of organization is not effective then this will not be good for Tesla
motors.
Environmental Factors
This factors affect the production and methods of company. According to availability of
raw material at company location is most important for continuous production of company
product. If the raw material are out of reach for company location then it will cost much more to
company to arrange raw material for regular product. The geographical location of company is
Important to conduct business. Company location should be selected on the basis of connectivity
to world. For global business organization need to select proper location to control other
branches of organization. Other thing in this factor is about the sustainability of production of
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company (Higgins, Omer, and Phillips, 2015). Cause Tesla is providing electrical automotive
cars to consumers and they are complete pollution free so it is good for environment. This is how
environmental factors have impact on business of Tesla motors.
Legal Factors
Legislation made by legal body are designed to control the companies in country and
protect the right of consumers and employees of organization. This legislation helps the
employees and consumer by providing them with different basic rights. Organizations have to
follow these laws to keep their actions legal. The laws like minimum salary and wages, heal and
safety workplace law and equality law force the organization to make policy accordingly. This is
how legal factor affect the actions of Tesla.
SWOT Analysis
The internal factors of organization are under control of organizations and this factors can
be managed by making changes in different procedures and methods of company (Buckley,
Burton and Mirza, 2016). This internal factors are classified in four categories, strengths,
weaknesses, opportunities and threats of organization.
Strengths
There are different strength Tesla Motors have and they are utilizing these strengths to
gain marketing advantage on global level. There innovative and advanced technology are
designed by Tesla and many companies are using the technology of Tesla to build the electrical
vehicles. This is providing technological advantage to company. Tesla is producing the cars that
are sustainable for environment and 100 % pollution free. That's why governments of different
countries are supporting Tesla to launch their product in their country. This is providing better
opportunity to company. Monopoly is also a advantage for the organization cause customer don't
have any other option of electrical cars so this is also a strength of organization. Leadership of
Tesla is too good to introduce innovation in organization. High educated and skilled CEO helps
the employee to think creative and more innovative (Schaltegger, Hansen and Lüdeke-Freund,
2016). Distribution network of Tesla motors is better than other companies. They are using new
technology for distribution network management.
Weaknesses
different weaknesses of Tesla Motors are big challenge for future business. For better
technology company have to done a lot research work to develop new things in technology of
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Tesla. This company is too young cause it was founded in year 2003 so available capital is not
enough to survive in the future and to improve the capacity of electrical batteries company need
to invest high in research work so it is a weakness of company. Infrastructure available to the
company is not enough to manage the supply for global purpose. Less infrastructure is also a
issue for Tesla Motors. Customers are not that much aware of electrical cars and this is providing
less market to company.
Opportunities
Tesla is highly investing in innovative technology for electrical cars and this can provide
better option to develop more efficient product for the customers to attract them towards the
company. Currently Tesla is dependent on other companies that are providing battery cells to
Tesla Motors (Linder and Williander, 2017). Tesla is working on new battery technology to
come out of dependency on others. This is huge opportunity for company to produce whole
product on their own. Tesla also can work on hybrid vehicles to increase the interest of consumer
in company products.
Threats
There are many companies that are in business of automotive vehicles and they are also
trying to enter the market of electrical cars so this companies are bigger threat to Tesla Motors.
Threat is even bigger cause the company have less capital than BMW, Toyota and TATA motors
so this is a threat to organization. Company is working on new and innovative technologies and
it is important for the organization to take permission to use this technology in vehicles from
legal bodies. The process of patent is also a lengthy process so this can slow down Tesla Motors.
These are the internal factors for Tesla motors that can influence and processes of
organization. The strength of companies can be utilized to improve the business of organization
and gain competitive advantage in market place.
Porter Five Force Model
To find out the positioning of company in market place study of marketing analysis is
important. This can help the organization to gain marketing advantage by maintaining power in
hand of organization (Buckley and Ghauri, 2015). The five forces considered by porter are threat
of new entrants, bargaining power of consumer, bargaining power of supplier and rivalry among
existing competitor.
Threats of New Entrants
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As a new entry in market it is really important to attract new customers in the target
market towards the company product. As a new company in market their market share is on the
minimum level and it important for them to learn the trends of market and take advantage of
opportunity in new market. Tesla is also a new entrant in market place so company can use
different strategies to attract more customer towards company product. This can be done by
offering better quality product at average price.
Threats of Substitute
if any other company introduce same product in market place then company will face
more competition in market. This can reduce the market share of Tesla in market place. There
are many companies are trying to enter market of electrical vehicles (Amin and Smith, 2017).
Tesla has technological advantage cause the technology used and developed by Tesla is far more
advanced than other companies. So it bis difficult for the other companies to meet or compete
with technology of Tesla. So threats of substitute product is low for Tesla.
Bargaining Power of Consumer
Product and services of organization are designed as per the requirement so the power is
on consumer side cause product are developed for consumers. Consumer in power so they can
bargain to the company top reduce the price of product and cause they have higher power then
company have to make arrangement to satisfy the need of consumer. This power can be reduced
by providing high quality product to consumer with the best suitable price. Advance features of
product will force the consumer to buy company product on price that is provided by Tesla
motors.
Bargaining Power of Supplier
Meaning of bargaining power means the company has less number of suppliers and they
can force the company to pay higher price for raw material (Maxcy and Silberston, 2017). In this
cause of less number of supplier company don't have other option so the power of supplier is
high. To get advantage and power in hand of company can increase the number of raw material
supplier. This will reduce the power of supplier and then supplier will not able to put the
company on threat.
Rivalry among Competitors
There are many competitors an organization have in market and they are providing same
product to consumer. This can provide more option to consumers and that is not good for
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company. For Tesla motors there are only few competitors in market place and they are far from
technology of Tesla Motors (Jetin, 2015). This provides edge to Tesla motors in market rivalry.
But company can keep this power in hand by keep developing technology of product and
production.
This is how different factors affect the marketing position of Tesla motors in market
palace. This can help the company to design strategy as per market situation.
TASK 2
Bowman's Strategical Clock
In this strategical clock different directional strategies are suggested that can be used by
Tesla motors to launch product in market place. This eight directions strategies of bowman's
clocks are low price & low added value, low price, hybrid, differentiation, focused
differentiation, risky high margins, monopoly pricing and loss in market share.
Low Price and Low Added Value
in this strategy company provide product to consumer on less price with less added value.
This type of strategy is used by the company which are producing the products that are for fast
use. This strategy is not good for high profit. It is also not considered as best suitable competitive
position for business.
Low Pricing
In this type of strategy company focuses to keep the price of product as low as possible to
attract more consumer. In this method focus of company is on low manufacturing cost so quality
of product is not good. In this strategy profit only can be earned by selling product in high
number.
Hybrid
In this strategy company try to provide the best quality product on possible minimum
price.
Differentiation
This strategy is all about providing good quality product to consumer at normal pricing
with high efforts of marketing and promotion.
Focused Differentiation
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In this strategy company select and target particular type of customers and promote
company product to get their attraction. Pricing in this strategy is decided as per quality of
product.
Risky High Margins
The product developed by company is of high quality and pricing of product is also too
high (Turner, Clack and Roberts, 2017). This strategy is used by organizations that focus more
on quality not on affordability of product. This strategy is not good for long term business.
Monopoly
This strategy is used by the organization that are only services provider in market and
they keep pricing of product higher and don't care about consumer because consumers didn't
have other option.
Loss of Market Share
This strategy is used by companies that are only manufacturer of product in which
customer don't have interest so they are not affected by pricing policy of product.
Recommended Strategy
The best suitable marketing and business strategy for Tesla company is Hybrid Strategy.
In this company can target new consumers by providing the best combination of pricing and
quality. By this strategy company can improve number of sales to get more profit.
Strategic Planning
Aim- To Improve the profit of Tesla Motors.
Vision- Improve the sales of company to generate higher profit.
Mission- Design better business strategy for Tesla to Improving marketing position of
company.
Strategy- Use best and advance technology in the Company to reduce manufacturing cost of
Tesla motors to provide product to consumer on less price with good quality.
1. Develop battery cells in company by investing in research and development department.
2. By using automation and Artificial Intelligence in technology to reduce production cost
with higher accuracy.
3. Provide luxuries product and services to the consumer at cheaper price.
4. By targeting the best suitable market to launch product to gain better revenue.
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CONCLUSION
This report is concluding the importance of business strategy for Tesla. The external and
internal factors are analysed to improve the business of Tesla motors. The marketing analysis is
performed to get better report of market place to decide most effective strategy for higher
productivity. Direction of strategies has been learned and most suitable strategy is suggested for
Tesla Motors. Different types of business strategies has been learned and evaluated in the report.
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REFERENCES
Books and Journals
Amin, A. and Smith, I., 2017. Vertical integration or disintegration? The case of the UK car
parts industry. In Restructuring the global automobile industry (pp. 169-199).
Routledge.
Buckley, P.J. and Ghauri, P. eds., 2015. International business strategy: theory and practice.
Routledge.
Buckley, P.J., Burton, F. and Mirza, H. eds., 2016. The strategy and organization of
international business. Springer.
Higgins, D., Omer, T.C. and Phillips, J.D., 2015. The influence of a firm's business strategy on
its tax aggressiveness. Contemporary Accounting Research. 32(2). pp.674-702.
Jetin, B. ed., 2015. Global Automobile Demand: Major trends in mature economies (Vol. 1).
Springer.
Kushwaha, G.S. and Sharma, N.K., 2016. Green initiatives: a step towards sustainable
development and firm's performance in the automobile industry. Journal of Cleaner
Production.a 121. pp.116-129.
Linder, M. and Williander, M., 2017. Circular business model innovation: inherent
uncertainties. Business strategy and the environment. 26(2). pp.182-196.
Maxcy, G. and Silberston, A., 2017. The motor industry. Routledge.
Rawlinson, M. and Wells, P., 2016. The new European automobile industry. Springer.
Schaltegger, S., Hansen, E.G. and Lüdeke-Freund, F., 2016. Business models for sustainability:
Origins, present research, and future avenues.
Thompson, A., Strickland, A.J. and Gamble, J., 2015. Crafting and executing strategy: Concepts
and readings. McGraw-Hill Education.
Turner, H.A., Clack, G. and Roberts, G., 2017. Labour relations in the motor industry: A study
of industrial unrest and an international comparison. Routledge.
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