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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fully electric sports car. This is the best strategy which company could adopt to gain the market
growth to attract customer target.
Market Development
According to market development which involves starting the business into the new
markets to generate the sales leads and grow the global business environment. Market
development strategy can lead Tesla sales and expand the its market at global level. This
strategic direction can help to achieve Tesla set vision and mission goals. This differentiation
generic strategy helps to grab the customer by producing the unique products when company
enters into the new market (Schaltegger, Hansen and Lüdeke-Freund, 2016).
In other words, by launching the market into the new place would help company to gain
the market growth and make it easier to enter into the new market.
Diversification
Diversification is the another strategy which is less significant for the company. For
example Tesla produce new product development for a different non automotive applications.
So however, such strategy has given less effective on the company financial performance. So
that, it has been analysed that Tesla is more focused on the product development or market
penetration strategies to gain the company profit. Also company requires to invest on the
research & development in order to analyse some more opportunities available for the company
developments.
Justification and recommendation of the most appropriate growth platform and strategies.
Tesla generic competitive strategy is broad and high competitive which is generally
focused on the differentiation. For example: Tesla having the competitive products that are most
integrated advanced environmental friendly products which gives the good impression of the
company on stakeholders perceptions.
Tesla should requires to focus on the product development to gain competitive advantage
and also emphasized the unique strategies for product. Tesla also provides the leading and
advancing product research to gain the market opportunity. Tesla is famous for its unique
concepts of products in the automotive industry (.Linder and Williander, 2017). Rather focused
on making affordable cars Tesla making a compelling cars. This is the reason why company
should only to focused on the market expansion or the product development.
Benefits Of Intensive strategies
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 It helps to creates the differentiation creates value of the product versus other similar
products on the market.
 Product development also allows company to gain non-price competition that helps from
its candy from other different growth.
 It also helps to define the product differentiation strategy creates brand awareness in the
competitive market.
Produce a strategic management plan with strategies, objectives and tactics.
Executive Summary
Strategic management plan is the process under which company planning to implement
the new plan in the company. Present strategic management plan will planning to gain the market
opportunity and brings several opportunities. Furthermore, Study also explained about the new
product development
Vision : Vision of the company is to get the position in the market as a best car leasing
company by driving the worlds transition to electric vehicles. Some components are essential for
Tesla vision such as Most Compelling car company of the 21st Century.
Mission : Tesla mission is to accelerate the new innovations and produced which is
sustainable transport to gain competitive environment (Dahlberg,Hokkanen and Newman, 2016).
Company also plan to shift on the renewable projects where they utilised the resources and
generate sustainable environment.
Strategy : Tesla should need to focused on the product development tactics where the
can more focused on the products which are more environment friendly. Marketing operation to
apply the strategies more effectively and gaining the market opportunity.
Budget
Expenses Cost $
Human Resource 540
Technical Resources 430
Manufacturing cost 550
Marketing expenses 600
Total 2120
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SWOT OF TESLA
Strength : Tesla is the most leading company which is highly famous for its innovation
processes. Also, company having the strong brand in the market to gain the high competitive
edge. It makes the strong control on production process which helps company to create the new
product development.
Weaknesses : Internet technology is the factor which limit the organisational platform.
Some of the factors which affect the company reputation such as limited market presence,
limited supply chain and high prices which indirectly affect the company reputation and long
lasting results. In order to expand the market company require to launch the new innovative
product to gain the market attention. For that, Tesla needs to plan the new strategy to invent
Environment friendly products that helps to reduce its limited market growth opportunity.
Opportunities : There are some opportunities and goals that can help company to lead
the market opportunity (Dahlberg, Hokkanen and Newman, 2016). For Tesla it requires to
expand the market growth by global sales expansion, global supply chain expansion or business
diversification all such strategies helps to define the market opportunity and leading challenges
and growth.
Threats : Threat involves in the market are aggressive market situation, Fluctuations in
material prices and dealership regulation which is not majorly effective for the company. Along
with in order to enhance the market opportunity and bring the long lasting result to take the best
goals. Apart from that, Tesla also need to acquire long lasting results by adopting the new
strategies and goals.
Porter's Generic Strategies
Cost Leadership Strategy : This generic strategy can adopt by the company in order to
implement the new product development goals. This strategy generally adopts for low cost
producer for a given level of quality of products. In this strategy company ca sell the product at
industry price to earn the profit higher goals and techniques in order to gain market share.
This strategy can help to increase the capital to make the significant investment in the
production assets. Also helps in designing the product to gain efficient manufacturing.
Differentiation strategy
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Differentiation strategy calls for the developments of a product or service that offers
unique attributes that are valued by customers (Scholes, 2015). By adding the value of the
product company have the advantage to increase the prices of the products as well. But on the
other side, it helps to gain corporate reputation for quality and innovation.
Focus Strategy
this is the another strategy which concentrates on the narrow segments within the
segment attempts to gain the cost advantage or differentiations. That also helps to bring the long
lasting results to make the best opportunity for the company. By applying this strategy this
reduces the chances of volume and brings the main objectives and goals.
Focus
Focus strategy helps to focus on the market opportunities and also makes the process
more easier and more challenging (Akter and et.al., 2016). This strategy helps to focus on the
core competencies and act as an entry barrier.
However, from the above strategies Tesla required to adopt the cost leadership to launch
the new product development growth and brings the best goals and plans to enhance the target
market. Along with that, Tesla also need to focus on the uniqueness which brings effective goals
and objectives to deal with high advanced material goals.
Tactics and strategies can be used by Tesla
Process to implement the new strategy
Market Research : This is the process to gain the knowledge from the market which also
required to be the most effective and leading generation goals. Such as Tesla needs to research
the market opportunity and threat involves in the market and decide the best way to gain the
market objectives and goals. Along with that, it makes the best deal and leading advancement
goals and opportunity.
Build up the timeline and tasks : Build up the starting and ending date of the task has to
be prior fix. It makes sense to take each project and break it up into the smaller parts.
Monitor and Check List : This is the another step under which manager needs to be
focused on the process and make sure that all the activities has to be done in proper way.
Tactics
 Company can attract buyers by offering new promotional methods such that it should use
social media marketing that helps to draw attention of many customers.
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 Company can also offer the product at low price strategy and also uses competitive
pricing strategy that helps to attract wide range of customers.
 Firm should also use KPI such that benchmarking, balance scorecard etc in order to
monitor the performance level of the company.
CONCLUSION
On the basis of above report and discussion. It has been concluded that business strategy
is the best route to accomplish the market opportunities and gain the competitive advantage
growth. It also helps to bring the new working opportunity and gain the market goals. However,
the present report discussed about the organisational environmental by supporting the marketing
models such as PESTLE, SWOT, Ansoff. In other words, study also explained about the
competitive environment of the company followed by the Porter's five forces model.
Therefore, study also discussed about the different types of strategic directions available
to the organization along with the best opportunity and goals. However, the last segment
discussed about the strategies and tactics that company adopt for their long term performance. It
has been concluded that, Business strategy should have to be according to the external
environment which also gained the market opportunity and attention of the buyers.
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