Tesla's Business Strategy: Competitive Edge and Market Analysis

This report provides a comprehensive analysis of Tesla's business strategy, examining both its external and internal environments. It utilizes tools such as PESTLE and Porter's Five Forces to assess the impact of macro environmental factors and competitive forces on Tesla's operations. The report also delves into Tesla's internal capabilities through a SWOT analysis, identifying strengths, weaknesses, opportunities, and threats. Furthermore, it explores appropriate strategies for improving Tesla's competitive edge and present market position, outlining strategic marketing plans and relevant theories and models. The analysis critically interprets information and data to provide actionable insights for Tesla's strategic planning and future growth.

Business Strategy

Executive summary:
Tesla is a automotive brand founded in the year 2003 by engineers who proved that no one
needs to make any compromise to drive electric vehicles. In present scenario tesla is a brand
manufacturing electric vehicles but also is involved in practises such as clean energy generation.
They have started their company with a belief that world has to stop relying on fossil fuels and
move towards a world of zero-emission for future sustainability.

Table of Contents
Executive summary:........................................................................................................................2
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
Impact & influence of macro environmental factors on functioning of a organisation........4
Stakeholders analysis:............................................................................................................7
Critical analysis of of macro factors to determine the management decisions....................11
TASK 2..........................................................................................................................................12
Analysis of internal environment and capabilities of the organisation................................12
Critical evaluation of internal environment and the capabilities..........................................15
TASK 3..........................................................................................................................................16
Appropriate strategies for improvement of competitive edge & present market position...16
TASK 4..........................................................................................................................................16
Theories, concepts, models that can help in strategic planning ..........................................16
Strategic marketing plan ......................................................................................................17
Critical analysis & interpretation of information & data......................................................19
CONCLUSION..............................................................................................................................20
REFERNCE...................................................................................................................................21

INTRODUCTION
Strategies are the plan of action used for achievement of long term objectives and
business strategy are set of actions concerned with motives of a business. They together help a
organisation in improvement of present performance level of their workforce to attain a
competitive advantage and attract more number of customers. For determining correct path
organisation has to adopt in order to attain their desired objectives. Strategies are formed based
on goals specified for general business. Strategies have to be formulated based on organisational
goals (Ardley and McIntosh, 2019). This report is on Tesla, it is a electric & automotive
company having specialisation in batteries, electric cars etc. this report is based on making
analysis of tactics, strategic & objectives of a organisation. Various topics discussed in this
report includes analysis of External environment, with use of various models. Further a strategic
plan of growth is made where strategic objectives & tactic to be used by the organisation are
discussed.
TASK 1
Impact & influence of macro environmental factors on functioning of a organisation
All business function of a macro environment that posses influence on their business
functions (Bai, Cordeiroand Sarkis, 2020). Organisations have to make a analysis of different
external factors that can help them in making use of profitable opportunity for reduction of such
threats. Tesla is functioning in a macro environment and is affected by various factors that can be
understood by PESTLE analysis as mentioned below:
POLITICAL FACTORS : These factors are very helpful in determining overall impact of
governmental and extend to which it can affect a organisation. Government of UK is taking
initiatives for promoting electric vehicles and providing various incentives for encouraging
organisations (Bohnsack, Pinkse. and Bidmon, 2019). It has created many opportunities Tesla as
demand for their products will increase. Political stability of UK will also provide various
growth opportunities without getting impacted by unstable political environment because of
events such as Brexit.
ECONOMIC FACTORS : Economic factors are ones that directly impact operation of a
company and includes factors such as exchange rate, interest rate, periods, situations of rising

prices, increasing GDP. one such factor is reduction in batteries cost in UK has been favourable
for Tescla as it has lead to reduction in prices of auto mobile products that is making it more
affordable. Reduction in renewable energy cots is also making their products attractive as it is
utilising less sources of renewable energy required for manufacturing of electric vehicles
(Belzand Binder, 2017). Increase in interest rates will also posses impact on Tesla as it will
become difficult for procurement of funds.
SOCIAL FACTORS : Social factors include factors real to population analysis, cultural trends
etc. People have become more conscious for environment as there is a new concept of less
emission of carbon dioxide by vehicles. With growing amount of consciousness for sources of
renewable energy demands of vehicles with low emission of carbon dioxide has increased. It has
a disadvantage that people belonging to middles class are not able to afford such vehicles with
high prices. It leads to huge pressure on organisation such as Tesla as they have to increase ether
quality and at same time maintain reasonable prices of their products (Gumusluoglu and Acur,
2016).
TECHNOLOGICAL FACTORS : These factors are having a association with innovative
technology that can be used by companies. In case of an, automotive industry technology is
changing very fast and it is necessary for companies in tesla to bring continuous modi9fications
& innovations in their products. Tesla has a opportunity that they can introduce automation
technology in their products by launching a new online auto-mobile store. If such technology
will be adopted early by competitors then it will lead to reduction in overall sales of Tesla.
ENVIRONMENTAL FACTORS : Environmental factors include association with exeyrmal
environmental conditions such as climatic conditions. Weather etc. it is also a part of
surrounding in which business is functioning, there is a increase in concern fort environment and
it is very important for Tesla to acquirement environmental friendly vehicles so that they can do
sustainable development. Tesla is involved in manufacturing of solar panels and batteries
suitable from environmental safety.
LEGAL FACTORS : These factors are related with various legal rules & obligations. It is
having aim of protecting the interest of stakeholders and ensure that business are following all
legal rules imposed. There is a criteria that no harmful care emissions have to be done that can
affect the quality of air. Tesla has to comply with all legal obligations made by various legal
authorities. It also gives protection to Companies in a way that if Tesla wants to protect their

patent rights they will be able to exercise this right and prevent it to be used by any other
organisation.

Stakeholders analysis:
communities Communities are stakeholders that have a
impact on overall brand image if a
organisation. 15 The environmental friendly
product manufactured by Tesla helps them in
increasing satisfaction level of various
communities that will lead to a positive
goodwill in the Market and long term
sustainability.
customers Customers are posing impact on Tesla overall
revenue. There is maintenance of satisfaction
level of customers because of quality and
innovative features that are offered by Tesla in
their products it leads to enhancement of
revenue.
employees Tesla believes that while designing their CSR
strategy employees are one of very important
factors for success. Employees posses
influence on performance of a organisation and
their productivity as if they will not be satisfied
then they will leave the organisation and
overall turnover of employee will increase.
Shareholders In initial years, Tesla was depend on
shareholders as a source of funding, all these
stakeholders are very important for overall
growth of business. CSR approach of Tesla has
lead them toward addressing long term interest
of their shareholders.
Government Tesla is impacted by actions of government
such as recent referendum of Brexit has laid a

lot of impact on functioning of Tesla in form of
reduction of their sales. But Tesla has
successfully adopted all the legal
requirements and obligation imposed by
government. This leads to fulfilment of their
responsibility towards government as their
stakeholders. 18

Porter's Five forces Model: 19 Five force model was introduced by Michael porter for making
a analysis of various competitive forces that is having impact on operations of a organisation .
This model is used for purpose of analysing factors affecting a industry and corporate strategy
formation. This model is used by organisation in determination of their strengths and
attractiveness in a industry. 20 Five force analysis of tesla is disused below:
 Threats of substitutes: There is a threat of substitutes in market can be high if
competitor are offering products with same quality and similar or lower process (Lozano,
2018). Hence, it becomes very essential for Tesla to identify such sources of threat and
keep their customers satisfied enough so that they are not willing to switch to nay other
brand. 24
 Bargaining power of suppliers: This force is related to ability of suppliers to posses
influence on business. Tesla is a independent organisation on their suppliers. It is not
possible to switch very easily between suppliers as it results in operational functions
getting impacted. Hence, Tesla should make attempts to maintain long term relationships
with their suppliers which can help them in having continuous supply of raw materials
and maintenance of cost effectiveness in overall production process.
 Bargaining power of the customers : this force is used in identifying ability of
customers to influence a business Tesla is dealing in electric vehicles that are more
efficient. Vehicles are those that are not purchase so frequently by people so that are very
price sensitive for such products. Hence, it becomes very essential for Tesla to reduce the
bargaining power of customers so that they are not switching from this brand. If prices
increase then consumers will move to products that are being offered at low prices by
their competitors.
 Potential new entrants : When a new entrant is entering the market then it becomes
difficult for present organisations in a industry to operate. There is a threat of new
entrants in Tesla is low as they are part of automotive industry and it is very difficult for a
new organisation to make such huge investments. Examples of threat can be new
innovation being done by brands such as BMW, Hyundai ioniq etc. who are continuously
involved in making new innovation models.
 Industrial rivalry: Three is very high level of competition in automotive industry in
which Tesla is dealing but at same time Tesla has a differentiation advantage. In terms if

their products such as electric vehicles Tesla posses a competitive advantage and it is not
easy for their competitor to imitate this product.

Critical analysis of of macro factors to determine the management decisions
To become more competitive every company has to identify various opportunities &
threats present in external business environment. Such factors posses influence on company's
strategies and to minimise its impact of such changes critical analysis of such factors is very
crucial (Hillary, 2017). In case of Tesla there is positive impact of some factors such as political,
legal & social at same time with some factors such as environmental and economic changes are
required to be done by this organisation for minimizing negative impact of these factors.

TASK 2
Analysis of internal environment and capabilities of the organisation
Internal environment of business is having concern with factors such as members,
culture, management all these factors posses impact on overall decision making by a organisation
(Johnson, 2016). For making a analysis of these internal factors irt is necessary for organisations
to ascertain such weakness. A detailed internal analysis of thee factors will also be very helpful
in identification of competencies of a particular organisation. Internal analysis is done to develop
a understanding of various opportunities, strengths of business. Below mentioned is SWOT
analysis of Tesla for making a analysis of various internal factors as discussed below:
Strengths weakness
 Tesla has a very high innovative
process which is providing them a
opportunity as compared to their
competitors.
 Strong brand image of Tesla is
supporting them in planning their
expansion strategies in global market.
 Tesla posses a very strong control on
overall production process.
 Manufacturing capacity is a issue for
Tesla as they sometimes face problem
of large production and difficulty in
meeting their orders.
 Prices at which Tesla offers its products
is very high in comparison with similar
products of other competitors, it leads
to low level of sales.
Opportunities Threat
 Tesla has a attractive opportunity for
adding value to their products with help
of upgraded technology (Kitsios and
Kamariotou, 2019).
 Tesla can plan expansion of their global
supply chain expansion for having
maximum market reach to their target
customers.
 Tesla has opportunity to increase their
 Major threat for Tesla is that similar
companies are also introducing
competitive product like Tesla which is
providing them increased competition.
 Prices of goods are fluctuating because
of increase in exchange rates it leads to
increase in cost for Tesla.
 For minimization of cost of raw
materials Tesla is focussing on