Business Strategy Analysis: Tesla's Macro and Internal Environment

This report offers a comprehensive analysis of Tesla's business strategy, examining the impact of the macro environment using PESTEL analysis, and evaluating internal capabilities through SWOT and VRIO models. The report also applies Porter's Five Forces to assess the competitive landscape. It delves into the political, economic, social, technological, environmental, and legal factors influencing Tesla, as well as the company's strengths, weaknesses, opportunities, and threats. Furthermore, the report explores the valuable, rare, imitable, and organized resources of Tesla. Finally, the report assesses the competitive forces within the market sector using Porter’s Five Forces model, and concludes with strategic planning recommendations based on these analyses, providing a holistic view of Tesla's strategic position and potential for growth. The report is a student contribution available on Desklib.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
P1. Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies..........................................................1
P2. Analyse the internal environment and capabilities of a given organisation using
appropriate frameworks..........................................................................................................3
P3. Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.......................................................................................................6
P4. Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation..........................................................................................................7
CONCLUSIONS............................................................................................................................10
REFERANCES..............................................................................................................................11

INTRODUCTION
Strategy can define as a action plan that is developed in order to achieving goals and
objective of organisation (Akter, and et.al., 2016). It is very important for business develop
effective and efficient strategies so that desired targets can be accomplished timely. Strategies
are very significant for foresee of future as well as identifying and analysing various factors
which can affect business as well as its operations. Company chosen for this report is Tesla. This
organisation was established in 2003 and this company was foundered by Martin Eberhard, Marc
Tarpenning, Elon Musk, J.B Straubel. Tesla is dealing in automotive and energy storage sector
and it is providing its prodcuts or services to all round the world. Headquarter of Tesla is located
in Pola Alto, California, US. This company is developing Electric vehicles and Tesla Energy.
This report is going to include the impact of macro environment as well as internal capabilities
on the organisation. It consist of Porter's five force model and different theories and models is
also included in order to develop an effective strategies.
P1. Applying appropriate frameworks analyse the impact and influence of the macro
environment on a given organisation and its strategies.
Micro environment refers to all those factors which can have major impact on business
and these factor can not be control by organisation. Tesla company have to deal with various
factors of macro environment and these factor have huge influence on its business operations.
All strategies and important decision of Tesla company should be taken after evaluating business
environment and identifying its effect on company. This company is providing its products to
different parts of the world and evaluating all micro factors are very important as it effect
decision making as well as helps in developing effective strategies. In order to analyse and
evaluate all factors of micro environment Tesla company needs to conduct PESTEL analysis as it
will provide a proper framework for manager to monitor different elements of micro
environment (Amran and et.al., 2016). It includes political, economical, social, technological,
environment and legal factors. All these factor with their impact on Tesla organisation in
mention below.
Political factor: Political factor includes different types of rules and regulation that is
formed in political and government party. This factor is helpful in identifying the impact of
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government on business and its operations. Political factor includes government policies,
stability of political party, foreign trade policy, taxation policy, restriction on trade and many
more. This factor will have both positive and negative influence on strategy making as well as
decision taking for business. Stability in UK political party can be consider as a positive impact
on political factor on Tesla business as it will lead to smooth functioning of business operations
(Bharadwaj and et.al., 2013). There is strict trade restriction policy developed by UK
government which will have negative impact on Tesla as it will affect it's sales and profitability.
Economical factor: Economical factor play a crucial role in developing effective
strategies for achieving goals and objectives of receptive organisation. This factor includes
interest rate, exchange rate, economic growth, inflation, income of consumers as well as business
etc. Economical factor is majorly related to financial condition of a country which affect
business operations. UK has one of the most growing economical condition which lead to
increase customer base of Tesla as they have potential to buy premium products. Negative
impact of this factor on Tesla business is that high interest rate is charges in UK which directly
affect the pricing of Tesla's products. It will lead to increase the price of products.
Social factor: This factor is also considered as socio-cultural factors and it includes
attitude, belief, living standard, culture, custom and many other factors. It is very important to
consider social factor while developing strategies for respective organisation as all products and
services are developed in order to satisfy customers. Social factor will have direct as well as
indirect impact on business operations. Positive impact of this factor on Tesla business is that it
is developing products after considering needs and wants of customers. Respective company is
conducting proper research for identifying requirement of society and buyers. Negative impact of
social factor on Tesla is that customer's needs and want is continuously changing. This will affect
sales of Tesla company.
Technological factor: Technological factor includes new and innovative way of
developing and producing products. It is very important for Tesla company to use advance and
updated technology in this operation process so that they can create better products in order to
satisfy customers (Blackburn and Hartand Wainwright, 2013). Technology factor will have
positive as well as negative impact on business and this will directly affect decision-making of
respective organisation. Positive influences of technological factor is that UK country has most
developed and advance technology which will help in producing better products as well as
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gaining competitive advantages over other rival company. Negative impact of this factor on
respective company is that it require huge amount of money in order to use new or innovative
technology in business operation. Tesla have to provide training to its employees also so that
they can work in effective and efficient way.
Environmental factor: This factor is majorly related to ecological condition, climate,
weather and many more. All these factors of environment will have huge impact on Tesla's
business and this will affect its strategy making (García‐Rodríguez and et.al., 2013). It is very
important to consider this factor while developing a product as well as taking important decision
regarding products. Positive impact of environmental factor on Tesla business is that it is
developing products which is not harming environment. This is very helpful in developing
positive impact in market. This factor has some negative impact on Tesla's business as company
have to follow strict rules and regulation developed by government in order to protect
environment.
Legal factor: Legal factor comprises of various laws and legislations which is especially
developed to protect customers as well as employees. It includes customer protection act,
employment laws, health and safety of customers and employees, wages and salary legislations
and many other factors. This will have positive and negative impact on Tesla's business as
government has set fix rate of income that should be provided to workers. This will direct affect
overall profitability of organisation as they have to pay more salary to employees. Expanding
patent protection and copyrights to internation level will have in making Tesla's products unique.
P2. Analyse the internal environment and capabilities of a given organisation using appropriate
frameworks.
Internal environment can be consider as micro factor as it includes organisation
capabilities and potential. It is very important to identify these factors as they play a crucial role
in developing effective strategies as well as achieving goals and objectives. Internal factors are
essential as it will have major impact on operations of respective organisation as well as its
growth and development (Gilligan and Hir2013). In order to properly evaluate internal
environment and capabilities it is very essential to conduct SWOT analysis. It includes strengths,
weakness, opportunities and threats of business. After identifying internal environment as well
as capabilities of Tesla company, it can develop better strategies and deal with high competition.
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SWOT analysis of Tesla company:
Strengths – It includes the major strong points of organisation which is very helpful in
growth and development of company. This is a well known company and it is providing products
as per needs and wants of customer and society (Johnson, 2016). This is using most advance and
innovative technology in its business process which is very helpful in developing effective and
efficient products. Tesla company is using high technology as well as it has effective team staff
members. Employees can be consider as a major strength as they are responsible for conducting
activities in better manner and achieving organisational goals.
Weakness - There are some weaknesses of Tesla company which is impacting its
business as well as its development. Tesla is producing high quality products and price of its
products are usually high. This can be consider as its weakness because not everyone is able to
purchase Tesla's products. It is targeting premium customers only who have capability to
purchase high priced products. This lead to reduce customer base of this organisation as there are
very few customer's who can purchase its products. Tesla company have high operational and
production cost as it is using new and advance technology in manufacturing its products which
is very costly to business.
Opportunities – There are various opportunities available for Tesla company in current
and future market. Respective company can expand its business at globe level and it should
target new market area and customers. Tesla company should focus on marketing and promotion
of product as it is opportunities for respective company to advertise its products in different and
creative way (Khalili Shavarini, Salimian and Nazemi, 2013). Demand in electric cars is
increasing rapidly so it is a great opportunities for Tesla company company to earn more and
more profits. This company can develop new products which is are of lower price in order to
increase customer base of this organisation.
Threat – Tesla company have major threat form new competition as in this competitive
world company has threat from new competition. It is facing competition in environmental
friendly as well as luxurious automotive brands such as Volkswagen, Ford and Toyota. New
rival will lead to increase competition as well as it can also reduce customer bases. This
company have also threat form changes in rules and regulation of country. This company have to
deal with various rules and laws which is developed by government and these strict policies are
barriers in Tesla's productivity and profitability.
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VRIO Model
VRIO model is a framework which is completely supported by Resource Based View.
This helps in determining valuable, rare, imitable as well as organized resources of organisation.
This model is used by company in order to identify internal capabilities of companies and
identifying most important resources of organisation which helps in gaining competitive
advantages over other companies.
Resources Valuable Rare Imitable Organized
Staff members Yes Yes No Yes
Branded battery Yes Yes Yes -
Supply chain
management
Yes Yes - -
Creative design
of product
Yes - - -
Valuable: It refers to the value of the products offered by respective company. It
includes all those resources which are valuable for Tesla company. It includes capable
employees, battery, supply chain management as well as creative or innovative design of
products.
Rare: It consist of various resources of organisation which is rare and unique for
respective industry (Köseoglu and et.al., 2013). Rare resources of Tesla company are its supply
chain, branded battery and employees. All these resources helps in gaining competitive
advantages over other company.
Imitate: This component includes all those resources which can not be copy or imitate by
any other company. Rare resources of Tesla company is its proprietary battery as well as capable
and skilled employees.
Organized: In this all those resources are included which needs to be organised. It is
important to manage staff members of Tesla organisation in order to conduct business activities
in effective and efficient way.
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P3. Applying Porter’s Five Forces model evaluate the competitive forces of a given market
sector for an organisation.
It is very important for each and every organisation to conduct an analysis so that they can
create effective strategies for the attainment of goals and objectives. In the present context of
TESLA, it is essential for the management team of organisation to conduct Porter’s Five force
model so that they can improve their knowledge about the current environment. All the elements
of five force model are going to be explained as follows:
Threat of New Entrants
It has been analysed that threat of new entrant in context of automotive sector is very
low. Reason behind this is that this is the industry which require huge amount of investment so
that they will be able to develop new business entity. In the present context of TESLA, it has
been said that management team of the organisation do not need to worry about new entrants
and they have to focus in order to improve their current services (Pagani, 2013). This as a result,
assist in enhancing customer satisfaction in an effective manner and within stipulated time frame.
Rivalry within sector
In this case, it has been analysed that competition is quite high within this industry. It has
been analysed that there are ample number of companies who have good market share which
affect the overall share and profitability of the company. There are some companies which
includes Toyota, Volkswagen, Nissan, Ford Motors and many more. It has been determined that
even if company provide electronic vehicles they still face competition within the industry. In
order to avoid or overcome this kind of situation, it is very important for the management team
of TESLA to improve their quality.
Threat of Substitutes
In this context, threat of substitutes in this sector is quite high reason behind this is that
large number of organisation focusing on developing new products and functionality which
attract large number of customers. But in case of TESLA, influence of this factor is quite low
because they already sell hi tech electric cars. This is the situation which mainly works as
advantageous situation for TESLA, as company will easily gain benefits and improve its services
within stipulated time frame.
Bargaining Power of Suppliers
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It is the factor which says that bargaining power of supplier is quite low in this sector.
Reason behind this is that it is the industry which have large number of suppliers available at the
marketplace. It has been said that if regular supplier of the company do not provide raw material
according to the companies quotation then company can easily approach to another supplier. But
on the other hand, according to the perspective of supplier, they do not want to lose their
relationship with companies like TESLA.
Bargaining Power of Buyers
In the present context of TESLA, bargaining power of buyers are relatively low. Reason
behind this is that, there are few companies within this sector who produce electronic cars. This
as a result, act like a advantage for the company like TESLA (Palepu and Healy, 2013). Apart
from this, it is the company which highly influence customer’s interest towards them.
P4. Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given organisation.
Strategic planning can be define as a plan of action which is very important to conduct
business activities in effective ways so that organisational goals can be achieved. It refers to
document which is used to communicate within organisation and provide direction towards aims
or mission. It is very important for Tesla company to develop strong strategies and implement
effective strategic planning for growth and development of business. These strategic planning
provide a framework to managers and employees which reflect the task and time duration that is
required to be completed within selected time period. It lead tom set priorities as well as
identifying what task need to conducted first so that objectives can be accomplished. It ensures
that energy of employees as well as resources are used in appropriate way in order to
strengthening operations of respective business (Peng, 2017). Different concept, theories as well
as models has been used by Tesla company in order to develop effective strategic planning.
Models that are used for this devise strategic planning are Ansoff model and Porters generic
model.
Ansoff model is used as an essential strategic marketing planning which helps in looking
for new opportunities. It was developed in 1957 by H. Igor Ansoff and motive of developing this
model was to provide growth opportunities to business. This is very helpful in enhancing
organisational profitability and sales. This provides new opportunities to businesses by
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developing new product of expanding business into new market area. Ansoff models includes
four different strategies such as market penetration, market development, product development,
diversification. All these strategies in respect of Tesla company in mention below.
Market Penetration: In this strategies company is trying to develop it business by
expanding its current products and services to current market area. Marketing penetration is a
strategy where Tesla will provide same products and services to existing market area (Razak and
et.al., 2016). In this company is seeking growth and development in business thorough existing
products and market. For growing business through market penetration strategies company needs
to develop effective and efficient marketing strategies so that more customers are aware about
Tesla's products and its features. This strategies will help in growth of business by increasing
sales and enhancing profitability of company.
Market Development: This strategy includes development of business by expanding
business operations into new market area. In this strategy company is expanding it business into
new market area as well as targeting new marketing segments. Market development strategies
includes selling of current products to new market area and new customers. This strategy helps in
developing new customers bases who are capable of purchasing products of Tesla company. In
this company have to identify market area where there is requirement of Tesla's current products
and selling it to new market customers.
Product Development: Product development strategies is very helpful in satisfying
current customers by selling new and innovative products to them. In this strategy company is
producing or manufacturing new and innovative products for its current customers. For
developing new products company have to identify needs and wants to current customers and
manufacture products as per their requirements (Scholes, 2015). This strategies will be very
helpful in gaining trust from existing customer as well as developing strong market image. Tesla
company can develop new and attractive product with more advance features this will enhance
sales. It is very important to promote and market new products in existing market area so that
current customer are well informed about new product.
Diversification: Diversification strategies is considered as the most riskiest strategies but
it will have great impact on overall development of business. This strategy is riskier as in this
company needs to develop new product as well as move to new market area. Diversification
strategies refers to expanding business activities into new market area with new products and
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services. Tesla can grow as well as diversify its business by developing products as per
requirement of new market.
After analysing all the above strategies it has been identified that market development
strategies will be most effective strategies for Tesla company. In order to implement this
strategies into efficient manner respect company needs to conduct and effective market research
which will help in identifying which market segment will be more suitable for this business
(Spender, 2014). Tesla company should enter into market of high end customer where consumers
have potential to purchase premium and high valued car products.
Porter's Generic model
Porter's generic model is used to determine company's profitability as compare to other
companies in the industry. This model is helpful in identifying sustainability competitive
advantage of respective company in order to gain growth. It include four different quadrants
which consist of competitive advantages strategies for company. Strategies are cost leadership,
differentiation strategies, cost focus and differentiation focus. All this strategies in respect of
Tesla company is mention below.
Cost leadership: In this strategies company will try to gain competitive advantage over
other rival companies as well as developing edge. In order to adopt this strategy company have
to reduce cost of it's products and selling good and serves in lesser price as compare to other
companies in industry. In cost leadership company needs to develop product and less it to lesser
prices this will help in increase sales as well as getting cost leadership.
Differentiation: Differentiation strategies refers to those plan of action in which
company is developing completely different products from other companies. In this Tesla
company have to develop better and innovative products which is able to provide high value to
its customers (Verbeke, 2013). Differentiation strategies help in developing strong customer
bases as well as increase sales of organisation.
Focus: This strategies is specially developed to target niche market segment. Tesla
company is offering its products and services to different parts of the world and it is not targeting
specific market area. Cost focus refers to seek competitive advantage through cost leadership by
offering in niche market. Differentiation focus refers to offering unique product in selected
market area.
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After comparing all these strategies it has been analysed that differentiation strategies
will be more suitable for Tesla company. This will help in manufacturing new and innovative
products which can satisfy customer's needs and requirement.
CONCLUSIONS
From the above report it can be concluded that developing strategies is a very critical part
of organisation. It is essential to evaluate and analyse micro and macro factor of business as it
will help in developing better strategies for growth of business. There are various models which
provide frame work to business so that effective strategic planning can be done by organisation.
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REFERANCES
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