12 BPP - Tesla
12 BPP - Tesla
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Global Strategy and Sustainability
Table of Contents
1. Introduction..................................................................................................................................4
1.2 Porter’s Five Force Analysis for Evaluating External Competitive Factors’ Impact on Tesla
......................................................................................................................................................8
1.3 PESTLE Analysis for Evaluating External Environmental Impact on Tesla Corporate
Strategy........................................................................................................................................9
1.5 Evaluating the Factors Offering Competitive Advantages to Tesla Company Using VRIN
Model.........................................................................................................................................12
2.4 Recommendations................................................................................................................17
3.5 Recommendations................................................................................................................19
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2. Self-Evaluation..........................................................................................................................21
3. Conclusion.................................................................................................................................22
4. References..................................................................................................................................23
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1. Introduction
Tesla is a United States based automobile manufacturing company. It was established in 2003 by
group of engineers. The head quarter of the mentioned Tesla Company is situated in Palo Alto,
USA. Tesla Company has been pioneering in manufacturing sustainable cars or other vehicles
that functions using the renewable energy source. The main mission of the company is for
offering the world with the sustainable vehicle options that uses the renewable energy sources in
order for decreasing the carbon footprint on the environment. Company is having clear strategic
vision for decreasing the dependability of the vehicles on fossil fuel by zero percentage. This is
depicting the environmentally sustainable vision of the company for reducing the negative
impact created by the vehicle generating pollution on environment. Tesla Company is the first
company for innovating the use of lithium ion battery to enhance the potential of electric
vehicles.
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Global Strategy and Sustainability
environmental awarded customers enabling them to reduce their negative impact on the nature.
The master plan as formulated by the electric car manufacturing Tesla company included
creating stunning solar segments, expanding EV product line to other major segments,
developing 10 times safer self-driving vehicles, and enabling car owners to make money from
their car when they are not using it(De Wit, 2020).
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Global Strategy and Sustainability
This assignment will detail the internal as well as external analysis of the strategy of Tesla
Company. There will also be discussion on global expansion strategy, CSR strategy, along with
some recommendations to the Tesla Company for ensuring their sustainable growth.
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Global Strategy and Sustainability
Hatmoko, Putri and Hermawan, Poor marketing As per (de Sousa Rusdiansyah, Al
(2021) mentioned that Tesla strategy of the and Castañeda- Rasyid and
company focuses on accomplishing company Ayarza, 2022), Sosrowidigdo,
stakeholder’s interest there has been (2020)
increasing mentioned that
demand for political has
renewable been complexity
energy using creating barriers
sustainable cars for Tesla
company in
USA.
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Global Strategy and Sustainability
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Global Strategy and Sustainability
1.2 Porter’s Five Force Analysis for Evaluating External Competitive Factors’ Impact on
Tesla
Here is the use of Porter’s five force framework for analysing impact of competition on Tesla
Bargaining Power of Buyers Liu, (2021) mentioned the buyer’s bargaining power to
be medium force as there are comparatively less models
working on the Tesla’s sustainable concept. However,
multiple brands have been offering different vehicle
types working on different concept.
Substitution Threat Liu, (2021) mentioned this force also medium as Tesla
cars can get substituted by other fossil fuel dependent
cars, however there are only limited options for
environmental awarded customers.
New Entrants Threats AS per Pietras, (2015), the forces associated with threats
from new entrants is low as entry in cars manufacturing
industry is highly expensive (Pietras, 2015).
1.3 PESTLE Analysis for Evaluating External Environmental Impact on Tesla Corporate
Strategy
Following is use of PESTLE analysis for evaluating impact of external factors on Tesla corporate
strategy:
Political Factors As per de Sousa and Castañeda-Ayarza, (2022), in USA, there is high
level of the complexity in context of the usage of electrical cars/
vehicles operating on concepts of renewable energy. However, in the
viewpoint of Bhardwaj, et al., (2020), The political sector of the USA
is proving as major barrier for the Tesla company in order for selling
as well as marketing their environmental sustainable vehicle products.
In the opinion of Narassimhan and Johnson, (2018), the company has
been getting the positive response from the customer side as they
prefers using environmental friendly electric cars, however, the US
government is continuously targeting against the Electrical vehicles.
However, As per Metcalf, (2019), the government of USA is in favor
for introducing the law against the DRIVING AMERICAN
FORWARD ACT in order for preventing the citizens to leverage the
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Global Strategy and Sustainability
Economic Factors AS per the opinions of Metthews, (2019), the political complexity as
well as the ignorance of the American government in order for
promoting the use of the electrical is reported to impact negatively on
the economic prosperity as well as revenue generation by the
company. However, in the words of Jenn et al., (2018), the
government in US is reported for less focusing on taking advantages
of the electrical vehicles in order for reducing pollution generated
from vehicles which is impacting adversely on economical
profitability of the company. According to Liu, (2021), in order for
enhancing their profitability, the company is now focusing on
international foreign market which is more environmentally aware.
The economic development of the world is enhancing the economic
development of the Tesla company. The revenue of the company is
anticipated to be increased by 1.5 trillion US dollars by 2025 (De Wit,
2020).
Social Factors De Sousa and Castañeda-Ayarza, (2022), mentioned that the society
in several developed as well as developing countries has been getting
aware regarding the significance of the environment and the negative
impact of the carbon gas generated from vehicle on environment. As
per Tenhundfeld et al., (2020), the peoples/ communities has been
widely adopting the innovation as offered by the Tesla company. This
is why, social factor is considered to be positive for the Tesla
corporate strategy. Demand for Model S and Model X by Tesla has
increased multiple fold times. The company’s attempt for launching
Model 3 is also appreciated by peoples (De Wit, 2020).
Technological De Sousa and Castañeda-Ayarza, (2022) mentioned that the key factor
Factors in the corporate strategy of Tesla company is technological
advancement as well as innovation. The company focuses on
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Legal Factors Mangram, 2012 explained Tesla company is for abiding all the
policies and legislature as developed by the USA and other countries
where they have been functioning/ operating. It obeys all the laws
associated with employees’ rights, environmental safety, healthy
safety, tax policies, and many more.
The thorough analysis of the corporate strategy of the Tesla Company helps in analyzing the
following three critical factors:
The company has been leveraging the concept of sustainability and environmental
protection in order for promoting their product as well as getting recognition in the world.
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Global Strategy and Sustainability
The highly innovative technology and the intellectual properties of the company has been
helping them gaining the competitive strategy
Society has been widely accepting the innovation by Tesla, however, the biggest barrier
for the company is lack of political support.
1.5 Evaluating the Factors Offering Competitive Advantages to Tesla Company Using
VRIN Model
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advantages
Use of VRIN model helps in determining the factors offering competitive advantages to the
company (El-Masry, 2021). These factors includes:
Han, (2021) mentioned that the reason behind the high success of the Tesla Company is their
innovative manufacturing concept that utilizes the renewable energy and reducing the negative
impact on climate/ environment.
Figure 6: Comparison: Solar roof pricing: Tesla’s solar tiles vs. traditional shingles
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Global Strategy and Sustainability
2. Intellectual Properties
3. Sustainability
As per the opinions of (Han, 2021), sustainability is the major concept being used by the Tesla
company in order for gaining competitive advantages.
Following are modes being used by different organization in order for expanding their business
operations in international market:
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Global Strategy and Sustainability
business property of
operations. It is licensor
further (Trademarks,
comprising of patent,
three types: manufacturin
g techniques)
Direct
etc. under
Indirect
Cooper their name in
ative international
market.
Pros Less risk Low risk Shared Established More control over
investment business organizational
Fast entry Less decreases costs processes
investment More control
Less risk over Better
Fast entry organizational
Formation of processes understanding of
local entity local customers
Better
understanding of
local customers
Cons Less local Less Integration issue High investment High investment
customer organizationa
preferences l control Integration High risk
knowledge issues
Higher Slow entry because
Poor chances that of difficult
organizational licensee permission (Yoder,
control become Visichand
competitor Rustambekov,
Negative 2016).
impact of Need for
transportation strong
on nature licensing
regulations
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Global Strategy and Sustainability
Kim, 2020 explained that Tesla Company has been using the unconventional international
expansion strategy. In order for ensuring high flexibility as well as control over their
profitability, company started expanding their market in foreign land via the exporting process.
In the beginning, the company was unaware regarding their sales and customer response in
foreign land, thus adopted exporting mode of international expansion. The first country as
selected by company was UK and other European countries. Company started by opening their
several showrooms in Europe and allowing customers to select their cars which were further
exported from the head quarter company. Further, after getting more confidence, company
increased their commitment, and start offering licensing agreement in countries like China. After
this, company also partnered with Panasonic to develop lithium ion batteries for their cars. The
overall international expansion strategy of the company has been depicting the less risk taking
behavior of the Tesla. Company’s main motive behind expanding their operations in
international market is for making their sustainable and environmental friendly vehicle products
available in environmentally awarded countries. It was their strategy to widen their customer
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Global Strategy and Sustainability
base outside USA, avoiding political complexity from USA, increasing sales, and hence
revenues (De Wit, 2020).
Figure 7: Top-selling electric vehicles by volume, growth rate, and segment in 2016
AS per the opinions of Fleming, 2019, the impact of the international expansion was positive on
the overall corporate strategy of the company. It enabled the company to gain appreciation for
their environmental friendly cars/ vehicles innovation in environmentally awarded countries,
increased their sales, and help them decreasing the impact of political complexity of USA on the
revenue generation power of the company. It impacted positively on the overall profitability of
the company.
2.4 Recommendations
The company should enter in international market using the wholly owned subsidiary mode. The
international market as recommended to the company includes the developed counties like
Germany, UK, etc. where the communities respect for the innovation supporting environment.
The communities within these developed countries are having high chances to respond positive
to the environmental friendly innovation by the company, thus suggesting the company to launch
their wholly owned subsidiary within these markets. Further, the company should sign the
partnership with car manufacturing companies in developing countries like India as well for
expanding their servings.
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Global Strategy and Sustainability
Vertical integration is process where company acquires, or merge with companies working at
different level but within same industry. Tesla company acquired the Solar city is an example of
vertical integration (De Wit, 2020). The main motive of the company behind the vertical
integration is for streamlining their operations and decreasing their dependency on other
organization for the completion of supply chain (Chou, 2014).
Gilbert, 2015 mentioned horizontal integration as the process that involves acquiring as well as
merging with the competitor company working within the same industry and operating at same
level. Tesla Company overtook ford and GM, which was example of horizontal integration
(De Wit, 2020). This helped Tesla in increasing their capital by 57 billion dollars. This strategy
is considered beneficial for the company as it helps them in decreasing the competition, and
presenting themselves as bigger firm with higher market shares. There are three methods that
company can use in order for integrate horizontally. These include the merger option, acquisition
option, and the internal expansion option.
As per the opinions of Mockler and Gartenfeld, 2021, Strategic alliance is widely accepted
strategy in order for expanding business activities in international market. It involves partnering
with international organization in independent manner to expand the business activities in
foreign land. It basically comprises cooperation between two independent entities. Tesla
Company signed several strategic alliance agreement, for example with Tencent (in China),
Panasonic, and Grohmann (De Wit, 2020).
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Global Strategy and Sustainability
According to Milecová, Grznár and Szabo, (2014), companies have been using the outsourcing
with the main motive for reducing their labor cost. It involves hiring any other company in order
for accomplishing particular organizational process/ activities.
3.5 Recommendations
Vertical integration and horizontal integration both are recommended to the company for stream
lining their business activities, decreasing their reliability on other firms, and for expanding their
market share respectively and thus enhancing their profitability. For vertical integration,
company is recommended to establish their own manufacturing unit, supplier unit, retail unit,
and distributing unit for becoming self-independent (Naor et al., 2021). They are recommended
for horizontal integration to expand their firm size, market shares, as well as decreasing the
competition to enhance their profitability. Strategic alliance is another recommendation to
expand in other countries.
Carroll’s Pyramid Model is being used to explain the CSR strategy of the company (Štreimikienė
and Ahmed, 2021):
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Source: Author
De Wit, 2020 in their case study mentioned communities comes on the top most priority for the
Tesla Company. Talking about customers, company prefers offering worthy premium quality
products to their customers. For public benefit, Tesla Company eliminated all their patents
allowing other companies to use their technology and serve the community (De Wit, 2020).
The Tesla Company is reported to be ethical in terms of environment protection, along with
fulfilling the interest of their employees in terms of reward as well as healthy working culture,
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customers in terms of price worthy premium products, shareholders, and other stakeholders (De
Wit, 2020).
According to Kang and Yoon, (2018), the main CSR focus of the mentioned Tesla Company is
environmental sustainability. They works for innovating technology that are more environmental
sustainability and contributing in protecting environment from harmful gases released from fuel
based vehicles. Also, the company pledged for generating net zero carbon.
Tesla Company has created multiple employment options, not only to their employees, but to
suppliers, and others as well. Further, company is also punctual in paying taxes, and thus
fulfilling economical responsibilities (Salman, 2019).
The major ethical issue that the Tesla Company has been struggling with is the discrimination,
sexual harassment, racism, bullying etc. which is leading severe accusation on the company. The
company is reported for discriminating the employees based on their color and has been treating
badly with black peoples (Moolayil, 2018). In order for addressing this issue, it is being
recommended to the company for creating strict policies against mentioned issue. Also, company
should build separate department for addressing the relevant cases.
2. Self-Evaluation
Concrete Experience
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Global Strategy and Sustainability
In this assignment, I applied several business models including the SWOT analysis, PESTLE
analysis, VRIN analysis model, Porter’s five force model, etc. in order for analyzing the impact
of internal factors, external factors, competitive advantages factors, and the competitor forces on
the corporate strategy of the company. Further, I also analyzed the global expansion strategy that
the company uses and find the less risk taking behavior of the company. I also used the Carroll’s
pyramid model for analyzing CSR strategy of the Tesla Company. These all practices helped me
gained experiences regarding the use of different management frameworks.
Reflective Observation
The use of different business models and frameworks helped me in developing my analyzing
skills. It helped me learn how to use different business frameworks in order for critically
evaluating the strategy of the company, and recommending them with the option to fill potential
gaps and thus enhancing the business operations.
Abstract Conceptualization
Critical analysis of the corporate strategy of the mentioned Tesla Company helped determining
several points regarding the strategy of the company such as their focus on innovation, their use
of sustainability factor for laying foundation of their strategy, etc.
Active Experimentation
I will apply the knowledge learned by using different management frameworks in order for
evaluating the business strategy of my organization in future. Using the application of learned
framework, I will identify all the potential gaps, take relevant actions, and will prove myself as
great manager in future.
3. Conclusion
The report provided an introduction to Tesla's corporate and digital strategies. The opening to the
report includes a discussion of the company's internal and external environments. The article
analyses the corporation Tesla's ongoing and steady growth. With knowledge of the external
factors affecting the company, we learn about the PESTEL study of the company in this report.
Since technology advances and changes every day, it is difficult for businesses like Tesla to keep
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Global Strategy and Sustainability
up. Many of the factors, such as technology, have never changed. The company is entirely
dependent on technology, which is essential to its success. Tesla's marketing strategy is excellent
and has a significant positive impact on people. The company intends to expand globally,
opening offices in places like Europe and Asia where people must use electric cars on a daily
basis. As many nations have already begun to accept technology, they are not specifically
adopting the Tesla electric vehicle. The business is also considering implementing ultrafast
technology. In order to grow its company and keep up with evolving marketing communication
trends, it also used hybrid techniques. This electric vehicle manufacturer will purge the air of
pollution in the near future so that the next generation can breathe clean air. In order to make its
products more appealing to consumers, the corporation also pushes technology to advance daily.
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4. References
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Kulkarni, S., 2020. Problems Faced by Automobile Industries: Case Study on
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Chou, C.-H. (2014). Strategic Delegation and Vertical Integration. Managerial and Decision
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Gilbert, C.D. (2015). Horizontal integration and cortical dynamics. Neuron, 9(1), pp.1–13.
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Jenn, A., Springel, K. and Gopal, A.R., 2018. Effectiveness of electric vehicle incentives in
the United States. Energy policy, 119, pp.349-356.
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Kang, K. and Yoon, Y. (2018). The Effects of Corporate Ethicality, CSR Consistency, and
CSR Fit on the Perception of CSR Authenticity: Focusing on the Moderating Effects of Anti-
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