Strategic Analysis of Tesla: PESTLE, SWOT, Porter's, VRIO

This report provides a comprehensive analysis of Tesla's business strategy, examining both internal and external factors influencing the company's performance. Task 1 involves a PESTLE analysis to evaluate external factors like political, economic, social, technological, legal, and environmental influences. A SWOT analysis is conducted to identify Tesla's strengths, weaknesses, opportunities, and threats. Porter's Five Forces model assesses the competitive landscape. Task 2 focuses on the VRIO framework to evaluate Tesla's resources and capabilities, determining their competitive advantages. The report culminates in a strategic management plan, including recommended growth strategies, objectives, and tactics, based on the environmental analysis and findings. The analysis aims to understand Tesla's current market position and suggest strategies for future success in the automotive industry.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
PESTLE Analysis for evaluating the external factors............................................................1
SWOT Analysis......................................................................................................................3
Porters five forces model on TESLA.....................................................................................4
TASK 2............................................................................................................................................5
VRIO framework on TESLA.................................................................................................5
Justification and recommendation of the most appropriate growth platform and strategies..6
Produce a strategic management plan with strategies, objectives and tactics........................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is defined as the long term business planning that helps to achieve
desire goals within the specific time period. It mainly tells that how organisation is required to do
planning for achieving the goals. It is important because it provide the guidelines to business
organisation that how they are performing in current situation and how they are required to
perform in future. The report will be based on TESLA which deals in the sector of automotive. It
was founded by Elon Musk who have changed the concept of vehicle in this modern era. There
will be the discussion internal and external factors in Task 1 that might have a impact on day to
day activity of company. When it comes to Task 2, various strategic plans will be created that
will be based on environmental analysis and findings.
TASK 1
PESTLE Analysis for evaluating the external factors.
PESTLE is defined as the analytic model that helps to identify all those external factor
through which day to day activity of an organisation can be affected. In context of TESLA, they
are one of the fastest growing company in automotive sector and to maintain the sustainability
within the market place, PESTLE will help them to know the positive and negative impact of the
market for future growth. Political Factor: This part of the analytical tool tells that impact on business can be seen
because of government policies and agreement. In context of TESLA, it can be among
those factor that have the possibility to reduce profit of organisation because changes in
taxation and policies might create issues for the company. If government reduces the tax
rate then company can earn more profit too. For example: if government reduces the tax
rate in electric manufacturing company then TESLA will have the option to earn addition
profit in future (Barberá and et. al., 2012). Economical Factors: This is among one of those factor which has the direct impact on
customer and organisation both as it emphasises on exchange rates, interest rate and
many more. While talking about TESLA, it will directly effect on the revenue of
company because of inflation rate interest rate. Also, it will have the impact on the
purchasing power of customer because increase in rate will not allow company to sell
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more number of cars within the market. For example: if changes will be seen in various
rates such as exchange rates, interest rate then overall profit will automatically decrease. Social Factor: Whenever any of the company deals within the market place they are
required to know about the market trends so that plans and policies can be easily
formulated (Bharadwaj and et. al, 2013). In context of TESLA, this is one of those factor
which gives additional advantage to the company. They always try to find in the
beginning that what is the actual demand of the market and what is the are main features
that are trending in current situation. Because of all this company is able to earn more
amount of profit. For example: they should only try to focus on specific market where
customer attraction is on electric vehicles and also they can spend more money for their
product. Technological Factor: Every organisation is required to understand that technologies are
being changed on regular basis. This factors tells that any of the organisation should try
something new if they want to sustain within the marketplace. In context of TESLA, they
are the leading brand within the world whenever it comes to enhancing the technology.
As they know that market of Great Britain likes more features and uniqueness in any of
the product and even company is doing exactly the same to by introducing the latest
technologies. For example: TESLE add on new features within their electric car which
helps to influence the customer directly. Legal Factors: In this factor, it has been found that problems are being created in every
short interval of time. It deals with the rules and regulation which is required to be
considered by any of the organisation. If company is unaware about laws and policies,
then there are high chances that penalty can be imposed on association (Blackburn, Hart
and Wainwright, 2013). TESLE will required to implement plan and policies which are
enforced by the government of UK. It do have the negative impact on there working
policies because they are required to change them as per the demand of situation. For
example: top level management is required to know about some of the act like
Companies Act, Equality Act, Employment law and many.
 Environmental factors: It is one of those factor that is related to ecological and
environmental aspects and that has the potential to affect the demand of company's
product.This factor is also being important in current scenario and because of that it is
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necessary for any of the organisation that they must manufacture the product which do
not have negative impact on environment. In context of TESLE, this factor has been
beneficial for them as they have built better reputation within the market. They focus that
how they can save energy by manufacturing the energy saving products (TESLA
PESTEL ANALYSIS, 2018).
SWOT Analysis
SWOT is and analytical tool that helps to evaluate that how organisation is performing in
current situation by find there strength and weaknesses. It helps to find the area in which changes
are required for achieving the better results in future. In terms of TESLA, it will helps to know
the exact area weakness, strength, opportunities so that they can enhance their performance for
achieving the predetermined targets. Strength: It is the area in which company is performing really well and they are just
required to maintain the similar standard for accomplishing the goals. TESLA is one of
the company where they have number of strength and that this helping them the most.
Firstly, have one of the best planning management system and this that reason they come
up some of the best features in the market. They also have a brand image of company as
they do compromise with technology which help them to earn profit. Weaknesses: It is possible that any the organisation will have weaknesses in the working
style and even TESLA do have the same. The major problem is interaction with the
customer because of that they have limited market presence. The supply chain of the
company is weak as they are unable to provide their service to each and every person. Opportunity: In SWOT analysis, opportunity are mainly created from external factors
through which goals can be achieved. In context of TESLA, they have number of
opportunity as there are very few company who deals in the market of electric cars so
company have the chance to earn more profit by expanding their business at global level.
Even they can reduce the price of car to increase the overall sale (Hoejmose, Brammer
and Millington, 2013).
 Threats: It is necessary for any of the organisation that they should focus on threats that
can create negative impact for the company. In context of TESLA, various threats have
come across them for achieving the targets. Increase in competition in the market is one
of the main thread for company because company like Audi and Porsche have also started
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to manufacture environment friendly vehicle. Also, legal and regulation is one the treats
for them because it leads them to increase the price of electric car (TESLA SWOT
ANALYSIS, 2017).
Porters five forces model on TESLA
Porter Five Forces is the business model which helps to identify the five different
competitive forces that helps any of the organisation to implement plans and and policies for
future. This is one of the model that that helps to list out all factors that can create impact on
business organisation. When it comes to TESLE, they will get enough help from porter five
forces model because this will tell them that in which area they are required to work for
achieving the goals. It will also be beneficial as it will provide the guidelines that what are those
essential policies and strategies that can be implemented by the company. Detail information
about five forces have been mentioned below: Bargaining power of suppliers: It is one of the situation where supplier demand higher
price for the product which they sell among the customer. Also, supplier do get the
option to delivery low quality of product within the market because of less number of
distributor for the similar product. TESLA, they do not have better supplier power
because they have very limited control over the market for the purpose of selling their
product. Bargaining power of buyers: When it comes to bargaining power of buyer, it gives
flexibility to the customer to expect good quality of product for minimum amount of
money. Here company do not get the option to demand high price as more number of
companies are present in the market who deals in the same products and services. Here,
buyer of TESLA have high bargaining power because there are number of other
companies who manufacture the electric vehicle at very minimum price (Köseoglu and
et. al., 2013). For example: if TESLA will not reduce the price of their electric car then
they do have the option to switch for Jaguar, Audi and many more. Threats of entry: It is necessary for every organisation to check the probability of new
entrance within the marketplace. It is the situation which can create lots of issue for the
existing companies which it will distribute the profit of a company. In context of TESLA,
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there is high threads form the company like FORD, Porsche, Audi because they always
try to expand their business at greater platform. Threats of substitutes: It is the situation where customer try to find the best alternate so
that they will need to pay minimum amount for the product which they are willing for.
While talking about TESLA, they do have any fear because quality which they provides
to their customer cannot be found in the other company. Although, there are number of
option available with the customer but still quality cannot be found in any of the other
company (Li and Tan, 2013). There is moderate situation for the company as there are
limited number of company who manufactures electric cars but there is high chances that
more company can come into this field also.
 Competitive rivalry: It is very important factor for any of the organisation because it tries
to find out the strength and weaknesses of the rivalries company. This helps organisation
to take additional advantage from the market place. In context of TESLA, there are
number of companies who deal in the same market such BMW, FORD etc., and many
more. But when it comes to sale the product, TESLA leads the market at current scenario
but still other organisation does have the option that they can take lead in future. There is
low competitive rivalries for the company in current situation.
TASK 2
VRIO framework on TESLA
VRIO analysis help in understanding the importance of organisational resources for the
enterprise. It informs that which resource/capability is providing temporary/unused/long term
competitive advantage to the company. Below is VRIO analysis of Tesla Motors where resources
like Marketing expertise, financial resource and Elon Musk (CEO of Tesla) are being evaluated.
VRIO of TESLA
Resource Valuable Rare Imitable Organisation Competitive
advantage
Marketing
expertise
Yes Yes Yes Temporary
competitive
advantage
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Financial
resources
Yes No Competitive
equality
Elon Musk Yes Yes No Yes Long term
competitive
advantage
Financial resource – TESLA has always remained in financial troubles but this company
has survived all the situations in a positive way because of their sound financial position. In last
two quarters, enterprise's earned profit and their valuation also got increased. Their is no doubt
that deep pocket is a valuable resource but it is not rare. Other competitors of TESLA also have
billions of dollar and they are also continuously earning decent amount of profits. Financial
resource is providing competitive equality to the organisation (Ghezzi, 2013).
Marketing expertise – TESLA has become a world renowned brand in short period of
time and its credit goes to their marketing expertise. TESLA brought revolution in auto-mobile
industry by proving that Electric cars are sustainable. They are very active on social media which
can be considered as the main reason behind their remarkable reputation. This capability of
company is has high value and their marketing expertise is rare. These are many organisations
who are also selling electric cars but no one among them has even half of the popularity which
TESLA has at this point of time. Rarity can provide competitive advantage but for a time being if
resource/capability of company is imitable. Marketing expertise of TESLA is rare but they can
be copied by others. It provide temporary competitive advantage to the organisation.
Elon Musk – He is CEO and Product architect of TESLA. Elon Musk is key person
behind success of the enterprise as he is face of the company. This engineer is considered as the
brain behind a car which can use electricity as fuel. Elon Musk is among most valuable asset and
there is no doubt that he is a man with rare talent (capabilities). Personality of TESLA's CEO
cannot be imitated by others and company is using his talent in best way possible. Elon Musk
provides long term competitive advantage to this successful electric car manufacturing enterprise
(Grover and Kohli, 2013).
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Justification and recommendation of the most appropriate growth platform and strategies.
It can be defined as the model which is used in order to know about the product and
market growth strategy of an organisation. The following model focuses on four dimensions
which are discussed as under:
 Market Penetration: In the following strategy adopted by the company, it tries to
increase the sales of the products of the company in the existing markets only such as by
focusing more on advertisement.
 Market Development: In the following strategy the company seeks to sell the existing
products in the new markets or areas. This is made possible by the companies by finding
new geographical markets for the company or by making use of new distribution
channels (Hoejmose, Brammer and Millington, 2013). Product Development: The following strategy focuses on making development in the
current products and services of the company in order to gain competitive advantage over
the competitors.
 Diversification- The most difficult situation for any of the company is trying to enter
into the new market by manufacturing any new product which have been launched for the
first time. Here, TESLE do not depend upon diversification as it one of the most risky
thing to do for any of the company.
In addition, TESLA have the option to think differently where they adopt Market
Development because number of people are willing to use the electric vehicle which is
manufactured by TESLA.
Produce a strategic management plan with strategies, objectives and tactics.
Strategic Management Plan is the method through which organisation find the best
alternate ways for developing the suitable communication system. It is very useful because it
helps to ensure that organisation and their employee's are working on the similar objective for
the purpose of achieving goals and targets on the specific time period. In context of TESLA,
they uses Bowman's Strategic clock model for the purpose of having appropriate communication.
Detail information about Bowman's Strategic-clock has been explained below:
Bowman's Strategic Clock
It is the business model that explores the option of strategy that how any of the product is
required to be position so that better competition can be given within the market. In Bowman's
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strategic-clock, there are eight different position into which position of the product can be
planned. All those position have been categorised below in detail: Low price and low Value Added: It is not the suitable situation for any of the company
because customer do not want to buy product at high price and because of that company
is required sell this at low price (Maté, Trujillo and Mylopoulos, 2012). In context of
TESLA, this is not favourable situation for company to sell their electric car in the
market. Low Price: If company wants to sustain in the market they are required to sell their
product at low price so that sale can be increased through which overall profit can be
increased. TESLA, need to minimise the cost of their product if they are willing to
sustain in the market for longer period of time (Verbeke, 2013). Hybrid: This can be the best appoach that can be adopted by TESLE. Here, they are
required to sell the at low price by ensuring the customer that still the quality of vehicle is
not reduced. Differentiation: It is the fourth position under Bowman's Strategic clock under which
TESLA is required to ensure that how they deliver the best services to the customer. The
brand image of TESLA will help them to take more advantage from it. Focused Differentiation: In this position the main motive of organisation is to distribute
the product at very high price by including the best form of services in the market. If
TESLE is willing to earn heave profit then they can easily use forced differentiation as it
will be beneficial for them (Amran and et. al., 2016). Risky High Margins: Under this position it is not sure that whether company will
perform better or not in the market because sometime demanding high price can backfire
the company because there is no surety that customers are willing to pay for it. In context
of TESLE, it might create number of issues in upcoming period of time. Monopoly Pricing: This position is only possible if there is single supplier of any
particular product else it is not possible at all. TESLE will not be able to create
monopoly as there are number of company who is dealing in the similar market (Scholes,
2015).
 Loss of Market Share: This is the worse situation for any of the company because
similar form of company charges higher price for the same product. This will not affect
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TESLA because they are the one who charges high price for any of the product in market
compared to competitors.
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CONCLUSION
It can be concluded from the above file that business strategy is one of the most essential
things for any company. It gives the idea to business organisation that how company is require to
work in future so that targets can be achieved. Whenever organisation wants to give there best in
the market they can take the help of internal and external factor because it about the strong and
weak area of the company. If organisation is required to acquire the market position then they
have the option to take the help of Ansoff's matrix because it clears all the doubt that which
market is better for the company.
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