Significant Business Strategies of Tesla

MAIN BODY

LO 1

P 1 Impact and influence of macro environment on the company

It is very necessary for the Tesla to study its macro environment. This is because of the reason that the company exists in the dynamic business environment and there are many changes within the external environment which impacts the working of the company (Johnson, 2016). The mission of the company is to provide direction to the employees so that they work in the motivated manner and in the direction of achievement of the group goals. The vision of the company is to focus on the expansion with help of innovation and creativity. The objective of the company is to prevent and protect the environment from the pollution to the environment. Therefore, it is very necessary for the company to analyse the changes taking place within the external environment. For this the PESTLE analysis is used as it covers all the aspect of the external environment.

Political- this factor includes the changes taking place within the political and government of the country. This can have both positive as well as negative impact on the business and working of Tesla. If the political environment is stable of the country then it will be beneficial for Tesla as there will not be much impact in the business. The government of the country is supporting Tesla in the production of electric car. This is because of the reason that it is a good concept and this will benefit the whole economy. Also, the government both the state and national encourages manufacturing and sale of electric vehicles.

Economic- this includes the changes taking place within the economy of the country. This impacts the business because of the reason that the business exists in the economy and every change taking place in the economy impacts the working of the company as well. The economy of the country has lowered the prices of the electric batteries so that more of the electric vehicles are being manufactured and sold in the economy. The lowering of the battery price is beneficial for Tesla because now it will get the batteries at lower price and this will reduce the cost for the company and the company will also reduce the price of the vehicle which will increase the sales of the company.

Social- this factor relates to the changes taking place within the attitude, behaviour, perception of the people living within the society. This is because of the reason that the company is only successful if the society and the consumers like the product (Sia, Soh and Weill, 2016). The current trend of the consumers is towards the protection of the environment. Thus, after considering this trend, Tesla has started the manufacturing of vehicles which run through electricity. Also, the company is improving the products with reduction in the carbon footprint and also Tesla is focusing on the use of renewable energy which will attract more consumers (Thompson, Strickland and Gamble, 2015).

Technological- this factor pertains to the changes taking place in the technology sector. in the present globalized environment, there is great changes within the technological sector like the increasing use of embedded technology in the automobile sector. also, there are many advancements in the technology which aims at reducing the carbon footprint. This is an opportunity for Tesla to adopt to these technologies as this will reduce the work of the employees within the company.

Legal- this factor relates with all the laws and rules and regulations which governs the working of the company as well all its operation. For the automobile sector also, there are many different types of laws are being made which needs to be followed by every company. the government has increased the regulations relating to the standards which automobile industry needs to follow. This is an opportunity for Tesla because if it complies with every law and rules and regulations then it will produce good quality products which will increase the goodwill of the company since it has abided by every law.

Environmental- this includes the protection and safeguarding of the environment by Tesla. This is very necessary because of the reason that the consumers and society have become more conscious about the environment protection and this must also be considered by the company. for this the company is working towards the reduction of the greenhouse gas emission. This is because of the fact that this harms the environment and for this the company is becoming concerned.

Stakeholder analysis

This is a model which helps Tesla in identifying the people who are interested in the working and profitability of the company and the products. This analysis is done with some steps to be followed which are as follows-

In the first step Tesla identifies all its stakeholder that is the people who are interested in the performance of the company. The major stakeholder for Tesla is internal and external stakeholders.

The next step of the analysis if identifying the needs and expectations of the stakeholders of the company. With this analysis the need of internal stakeholder is to increase the efficiency of the company, whereas the external stakeholder is just interested in the profitability of the company.

The next step is to manage the needs and preferences of the stakeholders. For this Tesla performs by keeping in mind all the ethical consideration so that the working of the company is ethical and efficient. Also, for meeting the needs of the external stakeholder the company tries to earn maximum of the profits but not by diminishing the ethical and moral values.

The last stage of stakeholder analysis is to review and repeat the actions. This is a stage where Tesla continuously monitors the needs and expectation of the stakeholder and to ensure that all the activities are in direction of their need fulfilment.

With the help of both the stakeholder analysis and the PESTLE analysis it can be inferred that both these model affects and influence the strategies of Tesla. This is majorly because of the reason that if the company is thinking to implement the strategy of differentiation and if the political factor is not supportive to this strategy then the company will not be able to implement the strategy in which they thought. In the same way if with help of stakeholder analysis, it is outlined that all the stakeholders are happy with the strategy of differentiation then it is valuable and profitable for Tesla to go with the strategy of differentiation.

LO 2

Internal environment and capabilities of the company

Just analysing the external environment is not enough the company also has to analyse the internal capabilities and strengths of the company in relation with the external environment. For analysing the internal strength and weakness of the company the SWOT analysis is used (Higgins, Omer and Phillips, 2015). The SOWT analysis of Tesla is discussed in connected points below-

Strength- the major strength of Tesla is that it is a leading automotive company and is also delivering more than 90,000 vehicles. This is a strength because of the reason that the company is having a good position within the market and this ensures that the goodwill of the company is good (Strategy, 2017). Another strength is that the company uses a strong marketing policy which helps the company in marketing its product to the best possible manner. Also, the company always try to find and use some ways in order to improve the customer base.

Weaknesses- the major weakness of Tesla is that the company has a single source of supplier who supplies the battery power packs. This is a weakness because of the reason that the supplier demands more as they are the single person supplying for the batteries, so they have an advantage which is the loss for the company. Another weakness is that the company is having less experience in development of new product and also less experience in the handling of the multiple system at a single time. Another weakness is that Elon Musk who is the one man of the company has a lot of responsibilities on himself and this is also a weakness for the company as he cannot overlook in every aspect of the business.

Opportunity- the major opportunity for Tesla is to go for the exploration of the untapped market. The major opportunity for the company currently is the tapping of the Asian market. This is because of the reason that right now the country is not operating within this market so it can expand in the Asian market and can increase the business (Buckley and Ghauri, eds., 2015). Another opportunity for Tesla is to bring in the battery making system within the company itself. This is because of the reason that as there is single supplier of the batteries so is a better option for the company to purchase the technology by themselves and install in the company only.

Threat- the major threat for Tesla is that the competition is very tough and this makes very difficult for the company to operate in the highly competitive market. There are many competitive firms like BMW, Audi, Toyota, Mercedes and many others who are also dealing in the electric cars and alternative fuel vehicles. Another threat for Tesla is the limited supplier network. This is a threat for Tesla because of the reason that the company has to rely upon a single supplier and the supplier also can take advantage of this and may charge high prices from Tesla. One more threat for Tesla is the fast- changing needs and preferences of the consumers. This is a major threat because of the reason that if the consumers trends are changing then the company also has to adapt to these changes (Pisano, 2015). This adoption is necessary for Tesla because of the reason that if the company will not consider these changes then the consumers will not like the products and services of the company.

Porter value chain

Also, for analysing the capabilities of the company another model is being implement that is Porter value chain model. In accordance with this model Tesla is having all the resources which adds value to the company and its profits. According to this model Tesla is having two types of activities that is primary and support activities. The primary activities of Tesla include operations which is manufacturing of the cars and related products. The other activities are marketing and sales. On the other hand, support activities include human resources, infrastructure and technology. These activities are of support to Tesla because these supports the main activities which help in increasing efficiency of the company.

From the above analysis it is clear that for implementing any strategy it is very necessary to analyse the internal environment. This is because if the internal environment is not strong then Tesla will not be able to implement the strategy in the intended manner. Thus, with help of SWOT and Porter values chain it was evident that the company is capable of implementing the strategy in better way as also the primary and supporting activities of Tesla are very strong. Hence, any of the strategy which company is thinking to implement will be implemented successfully.

LO 3

Analysis and evaluation of competitive forces

The analysis of the competition within the market is very necessary for Tesla. This is because of the reason that the competition is tough and for making the strategy for Tesla it is very necessary that it studies and analyses the different strategies used by the other competitors (Yuliansyah, Rammal and Rose, 2016). For this the company uses the Porter five force analysis. This is a framework which is used to know the industry position and the competitive position of the company within the whole industry.

Bargaining power of supplier- this is defined as the power which is in the hands of the suppliers. For Tesla the suppliers are limited thus, the company has to depend upon the suppliers for all the products needed to manufacture the product and other vehicles. The suppliers also need to have to gather complete knowledge of the technology and other resources which the company can need and must provide to Tesla. This force is high because for Tesla the suppliers are limited hence, they have to follow what the suppliers are providing.

Bargaining power of buyers- this refers to as the fact that how much buyer rule the market. In the automotive industry the buyer has moderate power. This is because of the reason that most of the consumers do not have much technical knowledge and this if beneficial for the company as the company can provide whatever they want to provide to the consumers and consumers accepts the product without any changes.

Threat of new entrant- this refers to the new entrants coming in the automotive industry. This is very low for Tesla because of the reason that there are many barriers to the sentry of new entrant. For instance, the cost of establishing a new business is very high. Also, the investment and expertise to set up a new automotive business is very high and the competition is already very high. Thus, this is beneficial for Tesla as now the new entrants cannot enter in to the industry.

Threat of substitute- this refers to as the threat of other products which can substitute the electric car produced by Tesla. This includes the substitute option available for the consumer to use instead of the electric car by the company. thus, the threat of substitute is also high for the company (Theoharakis, Bicakcioglu and Tanyeri, 2019).

Rival competition- this is the competition which is present in the business world. This is because of the reason that there are many companies which are dealing in automobile sector. So, there are many competitors of the company and the consumers have many options for using the vehicles. But Tesla is the market holder in the field of the luxury electric cars. But then also the company has to take care of the competition and take measures to manage and fact the competition (Buckley, Burton and Mirza, eds., 2016).

Ansoff matrix

This is a model which is used to analyse the competitive advantage and to develop the strategies of development according to that. This model is applied by Tesla in following ways-

Market penetration- this is a strategy adopted by Tesla in which it focuses on the increment of sales of the existing products in the already established market only.

Product development- this is a strategy in which Tesla focuses on the production of new product but for the existing consumers only.

Market development- this is another strategy under which Tesla can enter into a new market but with the existing product only.

Diversification- this is a strategy under which Tesla enters into a totally new market and with a new product in which Tesla is not dealing.

Thus, for the development of product the company will prefer market development. This is because of the reason that this will help the company in expanding the market and this will increase the consumers of the company and in turn this will result in more revenue.

Both these techniques outlined that the strategy of differentiation is helpful for the company to grow. This is because of the fact that the threat of new entrant is low thus the company can go for differentiation without much competition. Also, with help of Ansoff matrix it was outlined that this will not much impact the strategy of Tesla because it prefers market development. Also, the strategy of differentiation will help the company in market development. Thus, the influence of these strategy is positive over the strategy implementation by Tesla.

LO 4

Strategic plan

In this planning, appropriate strategies to be undertaken in respect of determining the strategies of the Tesla company. Thus, the main reason of conducting the strategies planning is resulting in adapting the new techniques which enhances the customer needs and demands towards attaining the products and services (Akakpo and et.al., 2019). It carries various stages which determines the overall planning strategy such as:

Section 1: Executive summary: In this report, the strategic planning is undertaken for the Tesla company regarding bringing the electric vehicle in market. This can be done through promoting their products through social media platform. The main reason of doing this strategic planning is that it helps in determine the overall strategies which enhances the interest of customer towards the company for longer time period.

Section 2: Elevators pitch: In these aspects, the description carries the wider range of services in respect of tesla. As they are dealing in manufacturing the electric car which is one of the most demanding products among the customer in recent times. As the main reason of choosing this innovation is relating to reducing pollution which came out from the vehicles (Živanović and Ihmedat, 2018). As due to changes in time, the climatic condition is also affecting, thus resulting in adapting this innovation no enhances the customer needs toward such products for longer time period. The main concept is brought by martin Eberhard and Marc tarpenning to bring some changes in automobile business. As this is not only the one project which is brought by Tesla, they also deal in wide ranges of products which bring changes in environment and also bring competition to the existing competitors.

Section 3: Company mission statement:

Mission: In respect of describing the company mission, in respect of internal matter, their mission is to give right direction to employees so that they can motivate to bring more innovative ideas at work place. In respect of undertaking the external aspects, their mission is to inspire more investors to invest in such project (Thomas and Maine, 2019). So that they can expand the business globally and also attract customer towards the services.   

Vision: The main focus of the tesla is to expand such innovation in international market and also deal in renewal resources to save energy for further perspective.

Goals: The goal of tesla is to first innovate the electric concept in sports car and then shift their innovation on heavy vehicles.

Aims: Its aim is to spread this innovation around the world and make this concept affordable so that each customer can prefer these services to bring changes in environment condition.

Objectives: Its major objectives are to save the environment from natural calamities which occurs due to heavy range of pollution spread from vehicles (Cheong, Song and Hu, 2016). Also, its objectives is resulting in promoting the business through social media marketing so that they can generate interest or build the close relationship with customers.

Section 4: PESTLE analysis:

Political	In respect of promoting the business through online, the impact raises in respect of carrying the strict government norms (Ferreira, 2019).
Economic	Due to facing fluctuation in inflation rates the impact arise in respect of maintaining the economy in country.Â
Social	As there is different in culture of the people, thus issue arises in respect of promoting the innovation online (Singh and et.al., 2019).
Technological	By having advances use of technology and also appointing the skilled person to resolve the issue in better can reduce the impact of external environment.
Legal	The impact raises in respect of changes in laws regarding importing or exporting such business (Young, 2019).
Environmental	Due to changes in climatic condition, the issue arises in respect of retaining the customer interest towards such service for longer time period.

 

Section 5: SWOT analysis:

Strength	In respect of carrying the renowned brand name in market, the major strength is analysed that they can easily attract customer through their services as they mainly carry the innovate products in motors business (Perkins and Murmann, 2018).
Weakness	It arises in respect of carrying only single supplier which deal in such products, thus in respect of promoting the innovation through social media, the name is limited under whose guidance they can undertake the partnership business.
Opportunities	As tesla carry the untapped products in market, thus this is one the major opportunity to expand the business through these aspects. In respect of their social media marketing promotes the company to build new goal in emerging market (Fernandez Garces, 2018).
Threats	As most of the business are dealing this type of innovation and also innovating their products which seems to be unique and different from others. Thus, threat arises in respect of facing lot of competitors in market regrading promoting the same products (Ingram, 2018).

 

Section 6: Key performance Indicators:

In respect of undertaking the strategic planning related to indicting the key performance indictors thus can be undertaken through examining the sales growth and also the targeting the particular segment to track the standard performance through comparing the actual performance (Sweet, 2018). In this aspect, the targets is to set for the sales team regarding reaching to particular market and then promote tehri products to get better results. Thus, in such manner key performance indictors is determined to set the gaols for longer term gain.

Section 7: Target customer (Ansoff matrix)

By adapting the Ansoff matrix model in which the product development is set regarding targeting the customer. As customer attracted if they find any new concept in market and such products in in their budgets. Through this manner they can undertake various aspects in which they can reach to large customer base (Sharma, 2016). In such manner tesla can use the social media platform to attract customer through promoting the business online. They can also build the close relationship with the customer through personally interacting with them and also resolving the issue if any they face while reaching to tehri products or services.

Section 8: Industry analysis (porters 5 force)

Threats of new entrants	In these threats is examined in respect of promoting the same products in market regarding reaching to large customer base. Thus, threat arises in respect of bring competition regarding promoting the same products.
Bargaining power of suppliers	It helps in giving changes to other suppliers to innovate such batter pack. So that they also get chances to build the strong relationship in market.
Bargaining power of Buyers	In respect of undertaking the electric car, the opportunity for growth arises in respect of providing moderate prices so that they can build the long-term relationship with them (Krebs, 2016).
Threats of substitute	This indicates that the threats arise in respect of promoting the same products in market and also the designing is also same. This distract the mind of the customer in respect of pertaining to which products.Â
Rival competition	In respect of fixing the portion in competition market, it is undertaken in respect of satisfying the customer needs through providing such products which are in demands.

 

Section 9: Competitive Analysis and Advantages

In context of undertaking the competitive advantages, the major advantages or strategy which is identified in respect of undertaking the electric vehicle is that it carries the cheaper rate as in comparison to other companies. The strength of adapting these aspects is that it saves environment and also protect the liabilities of people in respect of reducing air pollution (Teece, 2018). The weakness arises in respect of not loading the cars in respect of planning to travel long. As sometimes it resulting in facing charging issue to charge the electric car.

Section 10: Marketing plan

In respect of undertaking the marketing planning, it is done in respect of carrying various aspects which is relating to attracting the customer towards the services, fulfilling their needs and wants for attracting them for longer time period, offer the products with nominal rates. Customer are to be valued in respect of undertaking them to be the part of the business. By undertaking the 4 P's of marketing to determining the new strategies entering in TESLA is that:

Products: It mainly refers to the goods or services that is offering to customer. In this case the strategies is used regarding offering the electric car to the customer which carry the uniqueness regarding saving cost and also these products is not produced in the market before.

Price: It refers to the amount which is paid by consumer in exchange for particular products or services. In this Tesla mainly adapts the penetration pricing strategies which deal in offering electric car at affordable pricing. 

Place: It mainly carries with the physical stores where the products are easily available. As most of the customer prefer to purchase the products from the stores only, instead of buying the products online.

Promotion: It mainly carries with the advertising mode or other online methods which resulting in building strong links with the customer. Nowadays digital platform is mainly adapted by Tesla to attract the customer through providing innovative and creative ads to retain their interest.

Section 11: Team (VRIO):

In these aspects by undertaking the needs which is mentioned through adapting the VRIO is relating to appointing the skilled, trained and experienced person to attain the post of the customer service executive to train the staff regarding the working techniques. In these aspects, the business is expanding through online and thus interacting with the business through social media platform (Salgueiro, 2017). Thus, in such manner the appropriate person is appointed to handle such task in better way so that they can resolve the issue of the customer easily and also fulfil their needs and demands in better way.

Section 12: Operation Plan

Porters generic strategies

In this operation plan is to be undertaken regarding applying the porter's generic strategies in which it is stipulated as such strategies which is adapted by company regarding developing the company for longer term gain. It mainly carries three aspects such as:

Cost: It is mainly adapted by company in respect of offering lower cost products in market so that they can retain the interest of customer for longer way. It is necessary that cost must be minimal, so that they fulfil the needs of all status of the citizen. 

Differentiation: This is mainly undertaken regarding differentiating the products from the exiting company products. As it is necessary that their must be innovation in the products. So that they can bring competition in market and also enhances the customer needs in better way.

Focus: This is mainly adapted regarding focusing on particular segment so that they can attract the people through fulfilling their needs. It is usually adapted by business regarding targeting the particular segment to examines their choices and taste regarding preferring the particular products.

In these aspects, TESLA company prefers the differentiation strategy to retain the customer towards the products which they are offering. As this is one of the new concept emerging in market and thus, attract the customer and retain them for longer way.

Bowman’s strategy clock

In context of applying the Bowman’s strategy clock model, this is mainly adapted to examine the marketing strategy in comparison with the competitor's strategy regarding attracting the customer interest towards the business. It reflects eight possible way to present this model:

• Low price and low added value: In this the strategy is to be used in relation to offering low price products with low values or cost added on it. The main aspects of applying this factors is that it helps in standing in actual potion instead of cutting off by any competitive business.
• Low price: As in business, the most of the war issues is raised regarding pricing, thus by promoting products with low pricing resulting in longer term products in business.
• Hybrid: It refers to the combination of the low pricing with differentiation in products. This results in gaining profit through promoting the business by these aspects.
• Differentiation: As branding play the major role in these aspects, thus it is necessary that high rated valuable products must be offered in market. Through this manner it results in helping customer to differentiate the products with other company products.
• Focused differentiation: In this positioning of the products is necessary before promoting such products in market. Thus, business must offer their valuable products before focusing on the needs of the customer and also undertake the market situation.
• Risky high margin: If the company sell the products with high pricing, customer but the products for the particular time period but not retain with the business for longer way. This is helpful in sustaining the reputation of the business in market for longer time period.
• Monopoly pricing: If the company is carrying the monopoly in market, they are carrying the right to offering the products in individual terms.
• Loss of market share: This mainly undertakes the disaster in market share which resulting in facing higher competition in market.

In such manner, TESLA carries the differentiation factors in respect of differentiating their electric car products from others. They can also carry the focused differentiation so that they can attract the particular segment of people towards the business. Through this manner, the planning for expanding or promoting the business through social media marketing is useful in respect of targeting the particular group in context of fulfilling their needs.

In respect of undertaking the overall planning, the project is to be started through

Conducting the research regarding the usage of the products: It takes 10 days 

Planning is undertaken regarding establishing the products which takes 5 days to set the particular target

Discussion is to be set with the members with every department: 3 days

Initiation of the project: 5 days

Overlapping is reduced: 7 days

Setting the target with the employee: 4 days

Accomplishing the set targets: 6 days

Launching the project: 8 days

Section 13: Financial projections:

In respect of undertaking the financial planning, the zero-based budgeting model is applied in which by innovating new project in market which is relating to electric car is relevant to be started from starting. Through this model, it helps in making or initiating the planning from the starting and also the budgets are to be made from zero (Lyyra and Koskinen, 2017). By this planning, the budgets are prepared from starting such as conducting the research regarding targeting the customer or setting gaols to increase sale in next months. In respect of undertaking the innovative advertisement techniques, they can reach to large customer base and also increase sale through promoting the business online.

CONCLUSION

Carrying out the above analysis it can be conclude that business strategies play significant role in achieving its desired objectives. Business strategies help organisation for laying the path through which it will achieve its goals and objectives. Senior executives of company use various models like Porter's five forces model that are used for analysing the impact stakeholder have and how they can influence the business of company. Theories and models have hoped organisation to gain competitive advantage over market. Therefore, it is essential for companies to consider business environment and its influence on business. A small change in environment can affect the business significantly.

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