Business Strategy Report: Tesla's PESTLE, SWOT, and Porter's Analysis

This report provides a comprehensive analysis of Tesla's business strategy, examining its competitive environment through PESTLE, SWOT, and Porter's Five Forces models. The report analyzes Tesla's strengths, weaknesses, opportunities, and threats, as well as its political, economic, sociocultural, technological, environmental, and legal factors. It includes a stakeholder analysis and a VRIO analysis to evaluate Tesla's resources and competitive advantages. The report also discusses different strategic directions and proposes a strategic management plan with strategies, objectives, and tactics. The analysis highlights Tesla's market position, challenges, and potential for growth in the electric vehicle industry, emphasizing the importance of innovation, cost management, and adapting to market dynamics. The report concludes with recommendations for strengthening Tesla's business stability and competitiveness.

UNIT 32 - Business
Strategy

Executive Summary
Business Strategy is the forecasting future opportunity that helps to meet the company
aims and objectives. However, the present study has been based on the business strategy of Tesla
that define the business strategic goals and objectives to gain the different opportunity and goals.
therefore the present study has been discussed about the business environmental factor that affect
the business activities. That makes clear the opportunity and task to be performed the overall
situation very effectively. Along with that, research also described about the competitive
business strategy that maintained the work goals and objectives. This will help to recontinue the
business growth and also most essential to strengthen the business stability. However, the whole
study based on business directions that makes the business more competitive.

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Analyse the PESTLE and SWOT analysis of the organizational to analyse the capabilities.1
SWOT analysis of Tesla.........................................................................................................1
Prepare the competitive environment of the organization by using porter five forces model.6
TASK 2............................................................................................................................................9
Explaining the different types of strategic directions available to the organization..............9
Justification and recommendation of the most appropriate growth platform and strategies.10
Produce a strategic management plan with strategies, objectives and tactics......................11
CONCLUSION..............................................................................................................................14
REFERENCES .............................................................................................................................15

INTRODUCTION
Business strategy is a course of action or a set of decisions which enables entrepreneurs
to achieving a specific business objectives and goals. In other words, Business Strategy is the
master plan under which management uses tools and techniques to secure the company
competitive position in the market. Therefore, The present study will be based on Business
Strategy with the case study of Tesla which is formed by a group of engineers who wanted to
prove that people do not need to compromise to drive electric. Tesla established in 2003 which is
an American and energy company based in Palo Alto, California.
However, In the study it will outline the company competitive environment to analyse the
capabilities and growth by supporting different marketing models such as PESTLE, SWOT,
Porter's five forces etc. Likewise, It also abstract the evaluation of the different types of strategic
directions available for the organisations. In the end of the segment, study will presenting the
strategic management plan through company can easily implement its set objectives and goals by
using different tactics.
TASK 1
Analyse the PESTLE and SWOT analysis of the organizational to analyse the capabilities.
SWOT analysis of Tesla
Strength
 The Tesla holds the unique position in
the market. Tesla does not only sell
cars but also deliver various innovative
technologies (Scholes, 2015). The
company manufactures energy vehicles
such as hybrid vehicles, battery
operated vehicles and solar powered
cars.
 The Tesla enjoys the monopoly in the
market as the other auto mobile
manufactures deliver affordable cars to
the public whereas the Tesla provides
the luxury electric auto mobiles to the
Weakness
 Tesla has invested a huge amount in
research and development to enable the
new and innovative technologies in its
product as a result the company has
expended to much amount which
results in negative cash flow
(Thompson, Strickland and Gamble,
2015). The Tesla thus been pressurise
to take the debt and sell the large
amount of share.
 The company has only one plant which
is setup on Fremont, California. About
500,000 vehicles is the capacity of the
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public thus dominates the electric auto
mobile market.
plant and the Tesla has been limited to
this figure only as a result it is making
difficult for the company to increase its
target volume (Akter and et.al., 2016).
Opportunities
 As the cost charged by the Tesla is too
high in order to improve profit the
company should lower its cost.
 Currently the company is using
gigafactories which will help them to
improve their profit (Thompson,
Strickland and Gamble, 2015). If the
company increase its volume then
company can take advantage of the
materials that are bought in bulk.
Threat
 The number of competitions in the
market is increasing day by day. The
company face the competition in the
market by Toyota, Google and Ford
though the company target niche
audience.
 Debt load of the company has been
decreased as compare to past few years
which can affect the future of the
company (Takeaki, 2019). As the
company is innovating new
technologies and building factories for
their manufacturing work it can reduce
the profit of the company.
PESTEL ANALYSIS OF TESLA Political factors: The government entities can affect the business of the company. It can
limit the performance of the industry and its revenue (Thompson, Strickland and Gamble,
2015). The company can strengthen its financial performance by taking the various
incentives provided by the government. If the firm did not comply with the laws and
regulations then it affects the negative impact upon the business performance while on
the other side, due to stable political condition of the country will also affect the business
in positive way.
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 Economic factors: The various economic factors such as market growth, trade levels and
other variable can affect the automotive business. For example the growth in the solar
market determines the opportunities for the Tesla as it also use solar power. The company
should also address to the decreasing cost of renewable energy which will make the
product of the company more attractive as the price of the product will also decrease, it
creates positive impact upon the firm. Sociocultural factors: Sociocultural factors can affect the working of the company. The
company managers should take the benefit of this factors such as the increase in
popularity of renewable energy, low carbon lifestyle etc and this creates positive impact
upon business (Amran and et.al., 2016). Tesla has the opportunity to increase its market
by taking proper advantages of sociocultural opportunities in the market. On the other
side, it has been analysed that due to change in customer preference it will create negative
impact upon the firm. Technological factors: As the technology is changing rapidly and the company is always
in a need of making use of new technologies therefore it is the great opportunity for Tesla
to make use of new technology but it is also a threat to the company as it can cause rapid
obsolescence of the technologies which the company is using in its products that creates
positive impact. While on the other side, some security reaches also affect the business in
negative way. Environmental factors: The company can take the advantage of various environmental
changes such as the company can promote its electrical vehicle in respect to the climate
change, rising of waste disposal etc that affect the business in positive way (Buckley,
Burton and Mirza, eds., 2016)). The company can promote their product as it does not
cause a harm to the environment.
 Legal factors: Various laws such as consumption law, international patent protection etc.
can work both in a negative and positive way for the company. Tesla has the
opportunities to expand its business overseas. The laws can also be a threat to the
company for example various states do not allow direct sales of the product they require
the dealership in order to sell their products to the customers in the auto mobile market.
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As the company follow unemployment law and health and safety law that also affect the
business in positive way.
Stakeholders Analysis:
It is the tool that is used in order to identify the stakeholders and there are different types
of stakeholders such as:
 Primary stakeholders: These are the most affected stakeholders and also affected by the
organisation actions as well as such that BOD, Chairman.
 Secondary stakeholders: This are the intermediaries which means the person who are
indirectly affected by the firm's action such as suppliers.
 Tertiary Stakeholders: they are the least affected part of the company such as
government.
 Key stakeholders: they are most affected person and also creates importance for the firm
such as employment and customers.
Informed stakeholders Satisfied stakeholders
 Shareholders
 Investors
 Board of directors
 Employees
 customers
Keep informed Monitor
 Suppliers  Government
It has been evaluated that both the frameworks are used to determine the external
environment of the company such that PESTLE analysis helps to monitor the external
environment of the company while Stakeholders analysis helps to identifies the stakeholders.
Therefore, these both models are help to attain the aim and objectives of the company in better
way so that it will creates positive impact upon strategic management decisions.
VRIO Analyses
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VRIO model stands for value of the resource, rareness of the resource , limitation Risk
and Organizational Competence. The basic purpose of this tool to analyse the effectiveness of
the the resources which company used. Tesla can apply this model to evaluate the sustainable
competitive advantage to better understand the role of resources to achieve the objectives.
Resources Value Rare Imitation Organization Competitive
Advantage
Brand
Awareness
Yes Tesla gaining
the leading
brand
No Tesla can used
this brand
positioning
tool in various
further
segments gain
competitive
environment
(Amran and
et.al., 2016).
Sustainable
competitive
Advantage
Product
Portfolio and
synergy
among various
product lines
Yes, it is
valuable for
the company
to have
various
segmentations
& consumer
preferences.
Some of the
other rival
firms are
trying to enter
in the lucrative
segments
(Wheelen and
et.al., 2017).
This can be
imitated by
competitors.
The firm can
use this for
gaining good
effects.
This resource
can provide
short terms
advantage but
on the same
side this
process also
required a
focus towards
the innovation.
Supply Chain
network
flexibility
Yes Yes This
advantage has
already have
in the
Fully Utilized This resources
can help
company to
keep business
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competitors of
Tesla.
running
(Scholes,
2015)
Ability to
attract talent
pool towards
the company
development.
Yes, Tesla
leaders are
capable to
attract talented
from local or
global markets
(Akter and
et.al., 2016).
Yes, Talent is
critical to
company
growth.
This resource
is difficult to
imitate.
To a large
extent.
This resource
can help to
gain
competitive
advantage and
also helps to
lead the strong
position in the
market.
Prepare the competitive environment of the organization by using porter five forces model.
Competitive environment
Porter's Five Forces
This is strategic management tool to analyse the industry competitive environment. In
other words, by the help of this tool company can also understand and underlying the
profitability ratio of the given industry (Clemons, and et.al., 2019). Porter's five forces model
helps to underline the influences of five competitors forces and how they helpful for Tesla to
gain the productive targets.
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Threat Of the New Entrants
New entrants are majorly given the huge impact on the existing companies through
brings innovation, new ways of doing things. Besides, new entrants also come up with new
products with low pricing strategies, reducing costs and providing the new value statement to the
customers. So In this situation Tesla has to mange all such challenges and built their own
contingencies plans and new product ideas to beet the competitive edge.
In order to minimize the barrier of new entrants, Tesla can develop new product
innovation ideas by building the economies of scale so that it can help to lower the fixed cost.
Also, Company can invest on the R&D to maintained the leading standards against the new
entrants.
Bargaining Power of suppliers
In auto manufactures industry raw material buy from different suppliers. In other words,
when number of buyers are high, suppliers in the dominant position that decreases the profit
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Illustration 1: Porter's Five Forces Model
(Source : Tesla, Inc. Porter's Five Forces Analysis,
2018)

margin of Tesla. The impact of the higher suppliers bargaining power is that it minimize the
profitability of Auto manufacturers (Takeaki, 2019).
In order to overcome from this situation, Tesla can build efficient supply chain with
multiple suppliers. Also, company can increase their product line so if someday the prices of raw
material is high company can shift to another and gain profit margin.
Bargaining Power of Buyers
Generally, buyers are very high in demanding the products at their own prices. In other
words, buyers wants to get the best priced products available in the market which are at
minimum price. This put pressure on the Tesla profitability and outcomes in long term manner.
In order to handle this barrier Tesla needs to build up the large base for the buyers so that
it reduces the bargaining power of the buyers plus it will provide and opportunity to the firm to
gain its sales and production process.
Threat from Substitute Products
Sometimes, By introducing the new product or services customer get influenced by
different conditions. Apart from that, the threat of a substitute products or services is high if it
offer the new or effective productive outcomes and brings the best outcome results. The threat of
this issue affect the value proposition that is uniquely different from present offering from
present offering of the industry (Takeaki, 2019).
In order to overcome from the threat of substitute products or services. Tesla can increase
their service levels and also increasing the switching cost for the customers. Through it can help
company to handle the uncertain situations.
Rivalry Among the existing Players
This is the another threat and challenges that company faced due to existing players. If
the existing players are competitive then it tends to drive the down prices and decreases the
overall probability of the industry. Tesla deals with competitive market for which company
required to meet out the company aims and objectives.
Collaborating with competitors to increase the competitive process rather than just
competing for small market. In order to increase the productivity for that company can gain a
complete picture of what impacts the profitability of the organization in Auto Manufactures.
Evaluation: the threat of new entrant can be minimized by develop new product
innovation ideas by building the economies of scale so that it can help to lower the fixed cost.
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Further, Bargaining power of buyers can also be minimized by build efficient supply chain with
multiple suppliers. Also, company can increase their product line so if someday the prices of raw
material is high company can shift to another and gain profit margin. Moreover, the company
also faces tough competition and this can be managed by Collaborating with competitors to
increase the competitive process rather than just competing for small market. In this way, the
company also stay ahead in the competitive market.
TASK 2
Explaining the different types of strategic directions available to the organization.
Strategic direction is the ways or routes that helps to fulfil the business objectives.
Therefore, company vision, strategies, tactics are the core elements that contributes to the
establishment of a strategic direction (Cao and et.al., 2019). Strategic directions are the most
significant methods for the organisations which creates internal responsibilities of each
departments.
Ansoff Matrix for product/Market Strategy
Ansoff Matrix model is the another model that can be used by the alternative fuel
vehicles manufacturer to make strategic decisions. There are four different strategy options are
available for the companies market penetration, product development, market development and
diversification. Tesla applies competitive advantage against offer firms in the global automotive
industry. In the present business analysis Tesla focusing on the advanced technologies in its
electric vehicles and products.
Market Penetration (Primary Strategy)
Tesla using this penetration market strategies currently within the business functions in
order to gain the market growth strategy. This strategy of the enables company growth by
increasing the sales volume. Company uses this strategy in aggressive marketing where they sell
out the electric car in the United States. The strategic objective based on this intensive strategy is
to grow the company sales revenues through aggressive marketing.
Product Development (Secondary Strategy)
Product development is the another effective strategy that company could adopt to gain
the market growth (Zucchella and Previtali, 2019). In this strategy company can gain or grow
innovative products to lead the new sales by adopting the advanced technology. For example:
Tesla adopts the solar techniques and produced the Tesla Roadster which was the worlds first
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