Business Strategy Report: Tesla's Strategic Planning and Execution

This report offers a comprehensive analysis of Tesla's business strategy. It begins with an introduction to business strategy, then proceeds to examine Tesla's mission, vision, and objectives. The report applies the PESTLE framework to assess the impact of the macro environment, considering political, e...Read More

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
P1 Apply frameworks to analyse impact and influence of macro environment........................4
TASK 2............................................................................................................................................6
P2 Analyse internal environment and capabilities by appropriate framework...........................6
TASK 3............................................................................................................................................9
P3 Applying porter's five force model to evaluate the competitive forces in given market.......9
TASK 4..........................................................................................................................................10
P4 Apply range of theories, concepts and models for devise strategic planning......................10
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13
.........................................................................................................................................................1

INTRODUCTION
Business strategy is an competitive move and actions that helps in attract large no. of
consumer base, compete in business environment to strengthen performance to achieve
organisational goals and objectives in proper way. It is an action plan to carried out desired
objectives for end user. This report is based on Tesla which is an American automotive and
energy company, headquarter is in California. It specialize in manufacturing of electric cars with
its solar city subsidiary. This report is based on analysis of analysis of various factors in which
PESTLE and SWOT analysis to gain capabilities with the help of VRIO analysis. To analysis
competitive environment organisation by implementing Porter's five force model with various
strategies directions also plays very crucial role to build strategic management plan to reach at
desirable goals and objectives in proper way. With the help of these tools and techniques
organisation can be able to evaluate their competitiveness in market.
TASK 1
P1 Apply frameworks to analyse impact and influence of macro environment.
Every organisation always want to remain competitive in market place for that they
build various kinds of strategies and tactics and models that are as follows:
In that report Tesla willing to prove that masses do not need to compromise regarding drive
because organisation always focus on produce products as per the needs of them.
Mission:
Tesla's mission statement, “ To accelerate world's transition to sustainable transport.”
Vision:
There vision is to remain establish in market for long time by accessing emerging needs
and wants of consumers.
Objective:
The main objective is to build cars effectively that people do not have to compromise to
drive electric as they are effective, quicker and more fun comparatively to gasoline cars.
Strategy:
Strategy is the action that assist managers in achieving organisational goals and
objectives in proper manner by providing definite path for it. It sets a general path and
components to achieve desired state.

The major role of business strategy that it helps to give direction while starting a new project and
detailed out the proper roles and responsibility to each individual so that they can give their best.
The major kinds of strategic directions are:
culture, ideology, principles and values with grand strategies to get optimum kinds of output in
context of an organisation.
Tesla bring vehicles that are electric which provide better and give quick services in comparison
to gasoline vehicles (Bharadwaj and et.al ., 2013..). Before implementing that plan organisation
have to evaluate various models and strategies to evaluate external environment with the help of
PESTLE analysis that are as follows:
PESTEL analysis is an framework of macro environmental that helps in evaluating various
components of strategic management that are as follows:
Political factors:
The one of the important attribute for Tesla to remain always competitive by satisfying
needs and wants of consumer base and also of environment (Blackburn, Hart and Wainwright,
2013). Tesla is one of the forefront organisation in electric vehicles such as in traditional vehicles
that needed lots of fuel to run. To give best products as per consumer needs and save the
environment provides electric cars with government also support to bring improvement and
development of electric and hybrid engines. In context of Tesla which operates in Asia, Europe
and united states to enlarge business opportunities. Government also provide benefit of tax
credits while buying electric cars. Specifically in context of Virginia and Colorado states
provides tax credits to consumer at time of purchasing electric cars. All these factors sometimes
affect in positive and negative manner for that organisation use various kinds of strategies and
tactics. In context of Tesla political factors affect their business because they are dealing in many
countries simultaneously so they have to build various strategies and tactics to remain always
competitive in market.
In context of Tesla as they operated in large market share such as in Asia, Europe and
USA markets so they have wide opportunities to enlarge business opportunities but on other
hand they suffer from lots of debts and financial instability which hinders their self interest.
Economic factors:

Tesla when introducing electric cars in market by analyse needs and wants of consumers
in proper way which helps them to risen their sales. In 2017 when the economy would grow by
3.5 percent simultaneously sales of Tesla also rises because they are interrelated to each other in
market of Asia. Sales rises particularly in countries Asia and Europe with united states by more
in electric developments (Ghezzi, 2013.). The main factor behind their success that firstly it is
innovative product and price of materials is on decline for Tesla particularly of their batteries
that used in their cars. All these factors helps them to build cost effective vehicles in public that
directly and indirectly proved beneficial for economy. So their innovation helps them to remain
always competitive in market place to grab opportunities in better way. With the advent of
economic stability organisation can easily prosper in dynamic environment.
In context of Economic factors they operate at various nations and share proper roles to
gain profitability but change in economic conditions of a particular nation it affected in their
overall business growth.
Social factors:
It is one of best idea for both public and organisation and particularly people who prefers
eco friendly products and services. That kind of vehicles helps to eliminate fuel that are used in
traditional vehicles which proved harmful for environment of market of Asia and Europe. People
prefer electric vehicles as they are supposed to the cheaper source of transportation in
comparison to traditional vehicles (Grover and Kohli, 2013.). It focused majorly on environment
friendly products and services that are innovative in nature that helps in giving best products as
per needs and demands of consumers.. It is one of string factor in front of Tesla to give best
products that are far away for their competitors.
In context of Tesla social needs and wants of consumers as changes they have to put more efforts
on research and development that are cost consuming activity for them.
Technological factors:
Technology is one of the most important factor that helps to organisation to remain
always competitive in marketplace. Technological up-gradation helps to remain always efficient
for sustainability and usability in marketplace. Electric cars of Tesla are highly upgraded in
comparison to traditional cars in that industry. The another important factor that they majorly
focus on bring innovative products and never use obsolete technology by adopting newest
gadgets and apps to remain always competitive in marketplace. So it is a great hub of artificial

intelligence and automation in their motor vehicles to always lead in marketplace. As the
consumers become more demanding and needs innovation in their products and services in better
way. To give best products organisation have build electric vehicles that are more efficient in
comparison to traditional vehicles.
As Tesla invest time and resources to apply one of best tools and techniques in their
organisation but by using it they have to spend more amount on training and development of
employees.
Environmental factors:
The one of the biggest strength lies that it marketed their products and services as eco
friendly products in marketplace by providing cars that are electric and not consumes fuel
(Hoejmose, Brammer and Millington, 2013). It follow or abide rules and regulations of
environment that less effect on carbon emission. By saving self interest of environment they
become major brand name in which organisation cannot compare by it. In context of Tesla they
by producing eco friendly products and services can enlarge business opportunities.
Due to rising awareness towards environment they bring electric cars in the market and invest in
CSR activities by following carbon emission regulations that hinders self interest of an
organisation.
Legal factors:
Tesla is an multinational brand name to remain always up to date with their international
patents and sometimes they have to face legality issues that hinders self interest of them. As that
organisation focus on eco friendly products and services and promote themselves as as energy
efficient by abiding international rules and regulations. While operating in different nations
where requirement of consumers different from each other such as employee legislation,
environmental laws and many more.
AS the operate in many countries simultaneously so they have to mould their internal works and
activities accordingly then their internal department affected from it.
Shareholder Mapping:
Shareholder mapping is an visual representation of analysis of stakeholders by organising
people as per their criteria during a specific project. In context of Tesla they use power interest
matrix in which they provide power to their stakeholders to stop or change the project and on

other side the interest which overlap in between stakeholders and project goals to determined
their roles and responsibilities.
TASK 2
P2 Analyse internal environment and capabilities by appropriate framework.
Internal environment of an organisation consist of organisation with their current
employees, management and corporate culture that defines behaviour of an employee
(.Oestreicher-Singer and Zalmanson, 2013.). To reach at desirable goals and objectives
organisation have to adopt various tools and techniques that helps in evaluation of an
organisation strength and weaknesses that are as follows:
SWOT analysis:
SWOT analysis of an organisation helps in delivering right kinds of information
regarding strengths, weaknesses, opportunities and threats while launching electric cars in
market.
Strength:
Tesla unlike other automotive industry they are not emphasise on selling products and
services. Their vision and mission is much larger than that they give revolutionize experience of
their consumer base (Peng, 2017.). They are the first who bring the concept of electric cars in
reality. To remain always lead in marketplace while other organisations focus on giving
affordable products to their consumers, Tesla majorly emphasise on giving innovative and eco
friendly products to consumers. They only targets consumers and market that prefers luxury
electric automotive market in which earlier no competition exist regarding electric vehicles
nearly 20 years ago. So they have large market share in that field by giving best products and
services to ultimate consumer.
From the above discussion it has been summarised that Tesla majorly work on design,
development regarding their products and sell them as high performance fully electric vehicles
that are one of their major competitive strength to get sustainability in marketplace.
Weaknesses:
Tesla who is a giant in automotive industry and millions given to them by government
despite that they faces vast amount of cash over problem. They invest huge funds on research
and development to create new and innovative products in world of vehicles. The another major

factors which is cash evaporation while expanding their business at world wide level. With the
advent of cash over problem and declines their revenue day by day that hinders self interest of
them. With the changes in economic conditions organisation faces various cash evaporation
problems that hinders self interest of them.
There are some issues that are faced by them from last many years that are they burning through
cash crisis and debt load that not possess liquidity in their business which affect on their level of
performance.
Opportunities:
For an organisation, it is very much obligatory to grab opportunities and firstly they have
to reduce the prices of their products and services in proper way (Scholes, 2015). They to
enlarge business opportunities focus on building giga factories that helps in enhance their
production of auto mobiles. By producing in large quantity it is possible for them to take
advantage of bulk buying of materials. From many years Tesla focused on one factory at their
forefront for the development of their vehicles and organisation focus on completed their giga
factories and third one is scheduled in upcoming days. By focusing on driving and developing
ease stress off environment and build products that love eco friendly products and services that
helps to get support of their consumers.
Hence they have large opportunities that helps to lead in competitive marketplace to lead in
market.
Threats:
External factors that hinders organisational performance of Tesla that competing firms limit their
profit from global market in electric vehicles, batteries and solar panels. After that they get
considerable amount of profit. They have to pay attention on some key consideration that are
aggressive competition, fluctuations in material price and dealership regulations. The another
major threat before Tesla which is debt that significantly late but on other hand shows looming
over future of Tesla.
VRIO framework:
VRIO is an business analysis model that are the part of firms large strategic plans and
policies. In context of Tesla they valuable resources that plays major role to give competitive
advantage to remain always potential in marketplace (Sia, Soh and Weill, 2016.).
Value:

They have great manufacturing process that focus on producing products with highly
advance tools and techniques to give eco friendly products to their ultimate consumers that create
value in their products and services and it is difficult to imitate because machinery and labour
force are rare in nature. By giving best products and services that are harder to imitate in
organisational context to remain always competent in market. When they implement products
and services that are rare in nature that gives a distinctive value to consumers in positive way.
Rarity:
With they have work front stores on which they display their vehicles and other attributes
that helps in enlarge business opportunities in better way. These stores that works as an their
identity before their consumers are difficult to imitate. Tasla provides rare goods and services in
which initially the level of rarity is zero but as the time passes rivalries among firms also rises.
But by updating their tools and techniques on continuous basis they remain always competitive
in market.
Inimitably
Charging networks are very much important to rejuvenate their electric vehicles on which
consumers can charge their vehicles in proper way that are valuable source for consumers as well
organisation. Products of Tesla are inimitable in nature because they are primarily those who
launch the fuel free cars in world to remain always competitive.
Organisation:
Self learning cars are very much important to get delighted experience while drive their vehicles
so that are valuable and rare in nature and not imitate. To remain always competitive in market
organisation have to manage all these resources in proper way so that necessary results should be
accomplished.
Factors of VRIO Value Rarity Inimitably organisation
Manufacturing Yes Yes Difficult to
imitate
Yes
Tesla stores Yes Yes Difficult to
imitate
Yes
Charging Yes Yes Difficult to Yes

networks imitate
Self learning cars Yes Yes Difficult to
imitate
Yes
Mckinsey 7s model:
In respective model the strategies should be planned by an organisation in order to build
and maintain strong level of competition. There are some important attributes that are as follows:
Systems:
Systems denote all kinds of formal and informal method for operations in respect of Tesla
they use both kinds of method to deliver knowledge and information.
Strategy:
By using organisational vision and mission organisation devoted to achieve
organisational goals and objectives. In context of Tesla they clarify organisational objectives so
that they can give their best.
Style:
Style related with leadership and management style, in context of Tesla they use
situational leadership style that are suitable for every situation and circumstances.
Shared values:
In shared values standards and values with ethical practices in their vision and corporate
values. In context of Tesla they devote their practices in organisational as well as individual
development.
Skills:
skills and development is very much potential for an organisation to deliver one of best
efforts in context of Tesla they retain potential employees that possess adequate skills and
capabilities.
Staff:
In staff consist of potential skills and capabilities and their competencies and job
description. In context of Tesla they to select competent staff build effective job description.
Structure:

structure of the organisation that is build on basis of corporate hierarchy, chain of
command and direction. In context of Tesla in which hierarchy chain of command follows by
management in which higher authority passes all power and decisions to lower level.
TASK 3
P3 Applying porter's five force model to evaluate the competitive forces in given market.
Competitors analysis is one of most important factor in which consist of raw material and
technology based competitiveness of an organisation to remain always competitive organisation
have to evaluate each and every activity of their competitors in proper way. In context of Tesla to
enlarge business opportunities they have to evaluate various factors that helps in building right
kind of strategies and tactics that are as follows:
Threat of new entrants:
In an organisation there are large no. of new entrants in auto manufacturer industry that
majorly focus on innovation, better ways to doing things and attributes that puts pressure on
Tesla. For that they adopt lower pricing strategy, reduce cost and new product propositions are
very much important to beat with new entrants. Tesla manage with these changes to eliminate
barriers in their progress . Threat of new entrants in context of alternative fuel vehicles in
manufacturing industry is moderate in nature.
Bargaining power of suppliers:
Bargaining power of suppliers in context of Tesla that they depends on reliability of
suppliers and they affect to their business only to a limited extent. (Verbeke, 2013.). Suppliers
possess dominant position that lower down the margin that hinders their self interest to earn
profit in positive manner. Also powerful suppliers negotiate in competitive world regarding
consumer goods sector by fixing prices at high in auto manufacturing sector. Overall the power
of suppliers lowers down the profitability of Auto manufacturers to compete in that industry in
business world. To eliminate power of suppliers they purchase products and services from many
suppliers .
Bargaining power of buyers:
Buyers are majorly demanding in that competitive world and always buy those products
and services for that they have to pay less price and innovative in nature. That demanding nature

of consumers put pressure on Tesla to gain profitability in long run. Tesla have small but power
ful consumer base which possess higher bargaining power to get best products in highly
competitive world that limits the bargaining power of buyers. With that attitude they can seek
discounts and offers that hinders self interest of Tesla in competitive market space. To reduce
bargaining power of consumers organisation majorly focus on giving innovative and eco friendly
products and services to their ultimate consumer so that they remain always competitive in
market.
Threat of substitute product and services:
In an industry new products and services sometimes meets similar consumer needs and
wants in different way that hinders profitability of an organisation. In context of external analysis
low switching cost helps substitutes that are public transportation that helps in attract large no. of
consumers (Woodard and et.al ., 2013). In that case Tesla adopts service oriented rather that just
product oriented to enlarge business opportunities. To lessen that effect organisation focus on
adopting low switching cost, moderate substitute availability and performance of substitutes in
proper way. For example public transportation is not a versatile source as a private car that
limits the substitutional effect from Tesla.
Rivalry among the existing competitors:
In automotive industry rivalry among existing firms are very much fierce that forces
Tesla to decrease their prices and also lower down their overall profitability of their business.
The major competitors of Tesla are BMW, Hyundai, Chevrolet Volt and Volkswagen and many
more. To remain always competitive in market they have to bring differentiation strategy and
building a scale that helps in compete in better way. In context of Tesla the competitive rivalry
among the firms are high in nature because all are established brand name in market.
Balance score card:
Respective approach is one of effective to translate organisational vision and mission into
actual actions to get potential outcomes. In context of Tesla they use respective tool to track each
and every activity for execute project on time.
Ansoff matrix:
In ans-off matrix consist of four growth strategies that are as follows:
Market penetration:

In respective strategy organisation sell products in existing market with existing product
and Tesla used it by selling Model s, X and other electric vehicles in existing market.
Product development:
In it new products sell in the existing marketplace. In context of Tesla alternatively their
fuel vehicles manufacturers build semi truck and mini trucks in range of energy truck products.
Market development:
In it organisation find out new market for their existing products, in context of Tesla they
by entering into Indian market with their electric cars are foremost option to enlarge business
opportunities.
Diversification:
In it business develops new products for new market, in context of Tesla motors they
started working on electric vehicles since 2013 and now changed its name as Tesla motors Inc.
TASK 4
P4 Apply range of theories, concepts and models for devise strategic planning.
For an organisation strategic direction is one of important factor to eliminate problems
that face by organisation by applying various models that are as follows:
Porter's generic strategy:
Porter's generic strategy is one of the important factor that helps in taking right kinds of
decision in various circumstances that are as follows:
Differentiation:
The generic strategy that used by Tesla that are differentiation in which few organisations
sell electric vehicles and by adding advance features in their product they become brand name in
whole world. Their cars are superior in terms of utility and luxurious also (Verbeke, 2013.).. It
has two models of Evs that are S and model X in which first one is electric Sudan and second
one is sport utility vehicle. These models have unique features in context of functionality,
convenience and styling that differentiate from other major brands in market.
Focus:
In focus consist of paying attention on single segment or various activities accordingly to
remain always competitive in marketplace. They majorly emphasise on two factors that are
taking cost advantage through target market. In context of Tesla their target market who are
willing of vehicles that are highly innovative and people who interested in giving high prices for

it. So they build products as per the needs and demands of consumers by innovating in well
manner. They have to focus on the limited extent so that they can build one of effective products
and services that are easily utilized by their consumers in positive manner. Such as people who
always demands innovation in products are their potential consumers in respect they have to find
out areas in which improvements are very essential.
Cost leadership:
In that generic strategy organisation aimed to provide products and services
comparatively at low price that rely on industrial structure. In context of Tesla which focus on
innovation and fix prices that are high comparatively from their competitors to remain always in
lead position (Sia, Soh and Weill, 2016.).. With the help of economics of scale and
accessibility of raw material and technological advancement are major factors from which an
organisation can cut their cost and lead in market.
To remain always competitive in marketplace they have to develop new theories and
practices by using differentiation strategy to remain always competitive in market. They focus on
the market penetration and product development to grow in the auto mobile and energy solution
business. By applying differentiation generic competitive strategy the can enhance the likelihood
of success to remain always competitive in the marketplace.
Extended model of Bowman's strategy clock:
Bowman's strategic clock is an important model which elaborates the strategic
positioning with the help of various attributes that are as follows:
Low price and low value added:
In that stage business is in very competitive position and product does not possess
differentiation and consumers not perceive any value despite its low price.
Low price:
In that respect business position themselves as an low cost leaders in the marketplace and
cost minimisation strategy is required to become successful in the marketplace. In context of
Tesla they have to apply cost minimisation strategy to get success in the marketplace by reducing
cost of manufacturing products and services in positive manner.
Hybrid:
In that position involves some attributes of low price but some extent of differentiation of
product. In context of Tesla by adopting that strategy their objective is to persuade their

consumers to build one of great value by adding reasonable price and product differentiation. In
context of Tesla their cars have distinctive features but cars are expensive in nature so they have
to work on that area.
Differentiation:
The main aim of that strategy is to provide highest level of value that helps to provide
satisfaction level to consumers. In context of Tesla branding plays major role to maintain product
quality in proper manner. So they always rely on best quality of their products that can add value
in their experiences.
Focused differentiation:
The major strategy behind it is to position product at highest price level in which
consumers purchase products due to high perceived value. In context of Tesla this positioning
strategies adopted by luxury brands as adopted by Tesla.
Risk high margins:
In that positioning strategy organisation sets high prices without offering any kind of
extra benefit in terms of value.
Monopoly pricing:
If monopoly exist in the market, there is only one business offering the product. In
context of Tesla their cars not establish monopoly in the market but possess potential value in
mind of consumers.
Loss of market share:
This market position work as an recipe in competitive marketplace in which middle
range standard price should be settled with low perceived value to win over consumers to reap
much better options.
In context of Tesla they by using the differentiation strategy that helps to occurs high cost
by building a distinctive image in front of market by allocating potential resources to gain
effective results.
Strategic management plan:
Strategic management plan is an written document that helps to communicate within an
organisation by set priorities, goals and configure resources in proper way. Before implementing
some new thing or attribute in an organisation, planning for each and every aspect is very much
crucial that should be possible with help of strategic management plan.

Summary:
The major goal of Tesla is to build products and services as per the needs and demands of
consumers and build eco friendly products and services.
Cost:
Their main focus is to add some unique feature in their products and services and that
incurs huge cost that are 1,30,000 £.
Time:
To build unique product and services by adding new features as per the demand of
consumers as it is continuous process and takes almost 3 years.
Quality:
The major aim is to build products that totally differ from major competitors and helps in
deliver desirable products and services in proper way.
Scope:
By differentiation they can be able to build brand name in market that helps in remain
always competitive in marketplace and also sustainable enough.
Aim:
The major aim or goal to provide different goods and services to remain always relevant
in marketplace they have to be use advance techniques and tools to give best products to ultimate
consumer.
Segmentation, targeting and positioning:
Their main target market people who loved innovative products and services with
conscious towards environment protection and want luxury products (Peng, 2017.).. With their
vehicles for higher class people that love innovate products.
CONCLUSION
From the above report it has been summarised that strategic management is one of the
most important factor for an organisation to lead in market by evaluating various factors. It is
very much crucial for an organisation to evaluate competitors forces in which Porter's five force
model, PESTEL and SWOT analysis. All these factors helps in reach at desirable goals and
objectives to remain always competitive in to market. For an organisation before implementing
any kind of changes they have to plan each and every attribute with help of strategic
management plan.

REFERENCES
Books and journals:
Bharadwaj, A., and et.al ., 2013. Digital business strategy: toward a next generation of insights.
MIS quarterly, pp.471-482.
Blackburn, R.A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development. 20(1). pp.8-27.
Ghezzi, A., 2013. Revisiting business strategy under discontinuity. Management Decision. 51(7).
pp.1326-1358.
Grover, V. and Kohli, R., 2013. Revealing your hand: caveats in implementing digital business
strategy. Mis Quarterly, pp.655-662.
Hoejmose, S., Brammer, S. and Millington, A., 2013. An empirical examination of the
relationship between business strategy and socially responsible supply chain
management. International Journal of Operations & Production Management. 33(5).
pp.589-621.
Oestreicher-Singer, G. and Zalmanson, L., 2013. Content or community? A digital business
strategy for content providers in the social age. MIS quarterly, pp.591-616.
Peng, M.W., 2017. Cultures, institutions, and strategic choices: Toward an institutional
perspective on business strategy. The Blackwell handbook of cross‐cultural
management, pp.52-66.
Scholes, M.S., 2015. Taxes and business strategy. Prentice Hall.
Schrader, C., Freimann, J. and Seuring, S., 2012. Business strategy at the base of the pyramid.
Business Strategy and the environment. 21(5). pp.281-298.
Sia, S.K., Soh, C. and Weill, P., 2016. How DBS Bank Pursued a Digital Business Strategy. MIS
Quarterly Executive.15(2).
Spender, J.C., 2014. Business strategy: Managing uncertainty, opportunity, and enterprise.
Oxford University Press.
Verbeke, A., 2013. International business strategy. Cambridge University Press.
Woodard, C.J., and et.al ., 2013. Design capital and design moves: The logic of digital business
strategy. Mis Quarterly, pp.537-564.
Online:
PESTLE Analysis of Tesla Inc.: The growth of the eco-friendly electric car 2019 [Online]
Available through<https://pestleanalysis.com/pestle-analysis-of-tesla/>.

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