Tesla Strategy Report: Strategic Planning and Competitive Analysis

This report provides a comprehensive strategic analysis of Tesla Motors Inc. It begins with an introduction to strategic planning and its relevance, followed by an assessment of the macro-environmental factors impacting Tesla using a PESTLE analysis, covering political, economic, social, technological, legal, and environmental aspects. The report then delves into the internal environment, employing a SWOT analysis to identify Tesla's strengths, weaknesses, opportunities, and threats. A competitive environment analysis is conducted using Porter's Five Forces model, evaluating the bargaining power of customers and suppliers, the threat of substitutes and new entrants, and the intensity of competitive rivalry. The report concludes by evaluating different strategic planning approaches and recommending the most appropriate growth strategies, culminating in a strategic management plan with specific strategies, objectives, and tactics for Tesla. The report emphasizes the importance of aligning internal capabilities with external opportunities to achieve organizational goals and provide value to stakeholders.

TESLA STRATEGY
REPORT

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P 1 Assessment of impact of macro- environmental factors on organization........................1
LO 2.................................................................................................................................................3
P 2. Analysing internal environmental factors influencing organization...............................3
LO 3.................................................................................................................................................5
P 3. Competitive environment analysis using Porter's Five Force model..............................5
LO 4.................................................................................................................................................6
P 4. Evaluation of different types of strategic planning available to organisation.................6
Justification and recommendation for most appropriate growth platform and strategies......8
Strategic management plan with strategies, objectives and tactics........................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategic planning refers to the process of matching the competencies and resources of
organisation against desired goals and objectives of organisation. The strategic planning is done
through internal and external environmental analysis, market trends, market analysis,
competitors analysis and accordingly strategies are formed to achieve desired outcomes and also
to provide value for all the stakeholders (Mathooko and Ogutu, 2015). The present report is
based on the Tesla Motors Inc. and it is an American Automotive and energy company. Tesla
Inc. specializes in the manufacturing of electric cars, solar pane manufacturing and SolarCity
subsidiary. The organisation operates various production and assembly plants and serves across
the world. The total production output of the company is 245,162 vehicles and it provides
employment to approx 45000 employees. The report briefly explains about the internal and
external environmental analysis. Further the competitors analysis is also done using the Porter's
model. Different types of strategic directions are analysed and the most appropriate is chosen.
Finally the strategic management plan is prepared for the organisation.
LO 1
P 1 Assessment of impact of macro- environmental factors on organization.
Strategic planning can be considered as the management activity which is used for setting
priorities, focusing on resources and energy, strengthening the business operations, ensuring that
employees and stakeholders are working towards the common organisational objectives. This
helps in establishing the agreement for the desired results and also assessing and adjusting the
organisational direction in order to respond to the changing business environment. The external
business environment analysis helps in the strategic planning process. The External environment
analysis of Tesla Motors Inc. is done using the PESTLE analysis.
External Environment analysis of Tesla Motors Inc.
Political Factors: There are various political factors such as government policy, rules
and regulations, tax policy, trade restrictions, etc. influences the operational efficiency of the
business. Tesla motors operates and trades in 17 countries and thus company needs to be aware
about the different political factors that may lead to bring influences on the business activities
and operations (Ansoff And et.al., 2018). One of the major political factor that may affect the
company is laws and regulations relating to the environment protection. Company needs to focus
on meeting strict emission level to make more environmental friendly cars. Since they are built
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on the entire concept of energy efficient cars, this can act as a benefit for the company because
they would be able to garner support of every political party.
Economical Factors: Factors such as inflation, exchange rate, unemployment rate,
economic development, etc. influences the operational growth of the company. It includes
economic growth within the alternative energy industry and also increase in the cost for using
cars due to increase in the fuel prices. There are different economical factors that may lead to
influence the business operations and activities. Such as decreasing battery cost, influences in the
material cost and most importantly, global economic growth. Tesla motor's financial
performance may get affected due to the issues related with economic stability.
Social Factors: Conditions and trends of the society brings great influences on the
business activities and operations. The rising popularity towards the low-carbon lifestyle acts as
the opportunity for Tesla motors and it can also grow its multinational automotive organisation.
There is increase in the demands for electric vehicles which can help in boosting the financial
performance of company (Indris and Primiana, 2015). Tesla motors can effectively build the
strong customer base and increase the number of potential buyers for its expensive cars due to
the trend of wealth distribution. They would also get support from the society in which they are
operating because they are providing eco-friendly technology which has no negative impact on
the resources of the society thus increasing their support which ultimately improves their
strategic positioning.
Technological Factors: Advancement in the Tesla's energy and automotive solutions
business may get influenced and affected due to the available techniques and technology. For
example, materials engineering techniques or technology leads to determine the cost-
effectiveness and efficiency of Tesla' batteries. The increase in the automation in the business
and increasing use of mobile system may lead to bring many influences on the working and
operations of Tesla motors. Since company is already operating at a much advanced rate in terms
of technological innovation as compared to its competitors, they would be able to utilize this
factor of macro environment in a better manner.
Legal Factors: The business may get influenced due to the legal systems and regulations
as it shapes the business growth and managerial decisions as well. The laws and legal constraints
influence the marketing mix of company, business partnerships, HRM decisions and even
business strategies. The increasing protection for international patent can lead to bring great
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opportunities for Tesla motors to expand the business in overseas market. It can be a tedious task
for the company to study and work within the legal frameworks of all the countries in which they
are protecting and usually labour laws are the sensitive areas where the company and its
management need to be extremely careful.
Environmental Factors: It may include climatic changes, increasing the environmental
programmes and increasing standards for managing the waste disposal process and various
environmental factors may lead to bring influences on the working of Tesla motors (Salavou,
2015). For example, company may promote the electric vehicles in concern with rising
environmental programs. Tesla motors product list includes batteries, solar panels and electric
vehicles and these are considered as suitable for addressing such external factors as these are
environment-friendly and sustainable products.
LO 2
P 2. Analysing internal environmental factors influencing organization.
The internal environment analysis is done for identifying the internal capabilities of the
business organisation. And this can be done through applying the SWOT Analysis. The internal
business environment analysis helps in the strategic planning process:
Internal Environment analysis of Tesla Motors Inc.
Strengths
 The major strength of Tesla Motors is that it has built effective relationship with dealers
and distributors and has formed strong dealer community.
 Company has maintained strong portfolio of brands and it is extremely useful while
expanding into new categories of products.
 Tesla motors have successful track record for integrating various technological
companies to streamline the operations and also for building reliable supply chain.
 The company has a strong base of the reliable suppliers for raw materials which enables
Tesla for overcoming the supply chain bottlenecks.
 Tesla motors has implemented automation in the business activities that brought
consistency to the product's quality and it enables the organisation for scale up and scale
down according to the market demands (Pearce, Robinson and Subramanian, 2015).
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 Tesla motors has dedicated and effective Customer Relationship Management (CRM)
department that is capable for achieving highest level of customer satisfaction and it has
also maintained good brand image in the minds of potential customers.
Weaknesses
 Tesla motors major weakness is that it has high attrition rate and it has to spend more on
the training and development for the workforce.
 Then, another weakness is that it has gaps in the range of products that creates lack of
options and choices for potential and target customers.
 The company has limited success outside of the core business and thus it face challenges
while moving into other segments of the product due to its current organisational culture.
 The company does not have the capability to effectively compete with leading
organisation within the same industry in relation to creativity and innovation. The organisational structure is compatible only in present model of the business which
leads to limit the expansion and growth in the adjacent segments of the product.
Opportunities
 The greatest opportunity for Tesla motors can be gained through making effective
utilization of technology (Zhao And et.al., 2016). It can be used to practice the
differentiated pricing strategies in the new target markets.
 The new technology can be used by company to maintained loyal customers and also to
lure new potential customers through various value oriented propositions.
 Market development opportunities can be utilized by company for diluting the
competitors advantages and to increase the productivity and profitability.
 The core competency of business can bring successful results in the similar and other
products field. The government agreement can be used for opening up of new markets. Adopting new
technological standards and government's free trade agreement can provide effective
opportunities for entering into new emerging markets.
Threats
 The increase in the raw material prices can bring great affects on the profitability of Tesla
motors.
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 Different regulations and laws in different markets can bring pressure for the Tesla
motors to face lawsuits. The continuous fluctuations in the product standards also act as
threat for the company.
 Volatile political climate and the currency fluctuations can bring challenges for the Tesla
motors as it operates in various countries (Wicker and et.al., 2015).
 The high profitable products generally have the seasonal demand and any unlikely event
in the peak seasons can bring immense impacts on the company's profitability.
LO 3
P 3. Competitive environment analysis using Porter's Five Force model.
In order to analyse and classify the aspects which helps in determining the competitors,
Porter's Five Forces model is being used.
Competitive environment of Tesla Motors
Bargaining power of customers (Medium): Bargaining power of customers is moderate
as Tesla motors depends on Toyota and Daimler. The Tesla motors has partnership contract with
Toyota and Daimler. Tesla tends to become a disruptor in the premium car space like Daimler
and Toyota. (Tesla Motors and Toyota Motor Corporation Intend to Work Jointly on EV
Development, TMC to Invest in Tesla, 2010). This partnership relations is considered as essential
because supplying to these firms helps firms to aggregate the profitability share. The companies
also sell their cars to retail customers and even to government enticements which allows possible
deductions. Such programs helps in dynamiting the electric car's demand and it makes low
bargaining power for customers. The bargaining power of the customers tends to shift on
business which provide better quality goods, high quality services at a reasonable price. This in
turn leads to lower operational growth and profitability for the Tesla.
Bargaining power of suppliers (High): Bargaining power of suppliers is considerably
very high as because Tesla motors is reliant for their suppliers. Tesla buys mechanisms from
more than 200 suppliers around the world. Therefore, this leads to make the threat of suppliers
very high and they contains strong force on the Tesla motors.
Threat of substitute products (Low): The threat of substitute products within the
automotive industry is low as due to there are less options available for substituting the car
(Wheelen And et.al., 2017). Low switching cost of customers can enable substitutes, for
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example, public transportations such as bus, train or taxis. Company offering same range of
products at a competitive price results in major threat to the business.
Threat of competition or rivalry (High): Tesla motors operates in automotive markets
which is highly competitive. There are few business organisation that operates in the automotive
industry and these businesses generally focus on aggressively innovating the products and
promoting it in effective way. There is low impediments for customers for buying the cars from
other manufacturers thus they possess low switching cost. And it leads strengthen the
competitive force. Therefore, Tesla motors have strong force for the existing competitors.
Threat of new entrants (Low): The threat of new entrant is very low in case of Tesla
motors and in automotive industry. Because there are few numbers of competing vehicles which
have their own niche markets (Salavou, 2015). There are various business organisations that are
already collaborating with Tesla motors. Some European organisations are focusing on to
develop their own technology. And all these aspects lead to make the threat of new entrant very
low.
LO 4
P 4. Evaluation of different types of strategic planning available to organisation
There are three types of strategy such as Corporate, business and functional. Business
strategy makes use of corporate strategy for defining the particular tactics for each of the
markets. This can also be used for relating how business units can effectively deliver such
planned tactics. Tesla motors makes use of Ansoff's matrix so that it can focus on strategic
directions.
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Ansoff Growth Matrix:
This is considered as the marketing planning model which can be used by the Tesla
motors for making strategic directions (Pulaj, Kume and Cipi, 2015). According to the Ansoff
Matrix, Tesla motors have four different strategic options such as product development, market
development, market penetration and diversification.
Market Penetration: This strategy describes that business can sell the existing products
within the existing markets. In order to grow and penetrate the customer base, Tesla motors can
focus on cut the product prices, improvise the distribution network, or improving the marketing
markets. Tesla motors can also focus on gaining benefits through economies of scale by
increasing the production capacity.
Product development: This strategy describes that company may focus on development
of new products and selling those in the existing markets. Tesla motors infrequently engage in
the development of new products (Phadermrod, Crowder and Wills, 2019). For example,
company may also bring modifications to the existing products for giving increased value to
customers. Tesla motors can increase the investments in the Research & Development to bring
innovation in the existing products or even introduce new product development.
Market Development: This strategy describes that company can focus on selling the
existing products into new markets. Market development strategy is about increasing or reaching
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new segments of customer. This can be done through targeting the new geographical areas and
expanding the business in international markets. Tesla motors can focus on implementing the
market development strategy as its existing products are doing well in the current markets, thus,
it can even try in new markets as well.
Diversification: This strategy describes that company may enter into new markets by
offering completely new products or it may be related to existing products of the company
(Ansoff Matrix: How to Grow Your Business, 2017). This strategy is considered as the hazardous
growth strategy as it requires both the new products and new markets as well. There is high risk
associated with the diversification strategy.
Justification and recommendation for most appropriate growth platform and strategies
Tesla motors can focus on implementing the market development strategy as it can be
considered as the most appropriate strategy that can bring out best results and outcomes. The
market development strategy requires existing products being offered in new markets (Pearce,
Robinson and Subramanian, 2015). This strategy can be considered as the most appropriate
because it will help in building the customer base more strong, help in increasing the market
share, benefits of economies of scale can be achieved through expanding the production
capacity. Tesla motors should focus on evaluating the list of potential market for entering into.
Entering into new markets with existing products will be strategically most appropriate decision
for the electric automotive company Tesla motors.
Strategic management plan with strategies, objectives and tactics
Strategic management plan is referred as the document which can be used for
communicating within the business organisation about the objectives of company, set priorities,
energy focus, resources, strengthening operations and it also ensures that stakeholders and
employees are working for the common targets (Ouma and Oloko, 2017). The strategic planning
is very essential as it defines the organisation's visions and creates cohesive vision and sets
direction and goals for the future growth and development.
Executive Summary
From the strategic management plan of the Tesla Motors, background of the company
and its business strategy has been covered. The Ansoff matrix is used for suggesting the
techniques for strategic directions and business growth. It also includes the action plan and
implementation of the strategic management plan.
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Background
Tesla motors is an American electric vehicle organisation that was found in the year
2003. Tesla motors has quickly expanded its business and is now also expected to grow worth
more than $50 billion (Mathooko and Ogutu, 2015). The company has got success due to its
reach into the global markets, effective utilisation of advanced technology and also due to its
strong brand image. The company started as electric car firm and then expanded into batteries
and solar panels as well.
Mission and Vision Statement
The mission and vision statement of Tesla Motors describes that it focus on to speed up
the advent of sustainable vehicles and transport through bringing powerful mass market electric
cars to the markets very quickly. Tesla motor's vision statement describes that it focus on to
accelerate the world's transition to the sustainable transport. Its mission statement is to accelerate
the world's transition to sustainable energy.
Strategy and tactics
Tesla motors makes use of Porter's Generic model for determining the strategic
capabilities of the company. Porter's generic model is also adopted for gaining the competitive
advantage. According to the porter's model, company gain competitive advantage through two
tactics i.e. differentiation and cost benefits (Indris and Primiana, 2015). The strategies can be
implemented by business organisation at the business unit level.
Cost Leadership
According to this strategy, company needs to focus on being the lowest- cost producer in
the industry. The company may make use of traditional methods for being lowest-cost producer
by producing large scale and enabling firm to accomplish the benefits of economies of scale. The
business organisation succeeding in cost-leadership, generally have strong internal capabilities
such as higher level of expertise production process or effective and efficient distribution
channels.
Differentiation
This strategy requires that business organisation aims at improving the products and
services that provides specific concepts that are being valued by the target customers (Carraher,
2018). Business organisations implementing the differentiation strategy needs to have internal
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business capabilities such as strong brand image and reputation due to innovative products and
product's quality.
Focus
This strategy describes that business organisation can put efforts for either having value
benefits or for differentiation. The focus strategy can be implemented by business organisation
by adopting to wide range of development strengths within the narrow market section which
company knows about.
Action Plan
Tesla Motors aim at implementing the differentiation strategy in order to gain
competitive advantage. The focus of the differentiation strategy is that to create such products
and services that effectively stands out against the existing competitors (Bull And et.al., 2016).
For example, Tesla motors can develop its business in the niche markets that have little
competition and the products offered have new and unique features. The differentiation strategy
effectively aligns with the vision and mission statement of the company. This strategy can also
assist the company to increase the reputation and image of company by improvising the product
quality and innovative products. The risk associated with the differentiation strategy is that
changes in taste and preferences of target customers.
Implementation
In this section Tesla motors focus on determining the 5M's that are machine, material,
man, minutes and money. These elements are required by the company to effectively implement
the plan. Skilled workforce and man power is required to implement the plan in effective
manner. Different materials will be also needed for implementing the plan into the business
activities and operations (Ansoff And et.al., 2018). As this will assist in the accomplishment of
strategic objectives and targets of the Tesla motors. The company also needs to define fixed time
for implementing the strategic management plan into the business. This will help the company to
enter into new markets and expanding the business at international level and overall achieving
the strategic objectives. Through effective implementation of the Strategic Management Plan,
Tesla Motors can accomplish the desired outcomes.
CONCLUSION
The present report explains about the factors that affects and influences the internal and
external factors of the business organisation. In order to analyse the internal environment of
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