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Business Strategy & Macro Environmental Factors

University: King's College London

  • Unit No: 19
  • Level: High school
  • Pages: 18 / Words 4523
  • Paper Type: Assignment
  • Course Code: N/A
  • Downloads: 245
Question :

This sample will let you know about:

  • What is Business Strategy?
  • What are the Macro Environmental Factors?
  • Explain Stakeholders analysis.
Answer :
Organization Selected : N/A

INTRODUCTION

Strategies are the plan of action used for achievement of long term objectives and business strategy are set of actions concerned with motives of a business. They together help a organisation in improvement of present performance level of their workforce to attain a competitive advantage and attract more number of customers. For determining correct path organisation has to adopt in order to attain their desired objectives. Strategies are formed based on goals specified for general business. Strategies have to be formulated based on organisational goals (Ardley and McIntosh, 2019). This report is on Tesla, it is a electric & automotive company having specialisation in batteries, electric cars etc. this report is based on making analysis of tactics, strategic & objectives of a organisation. Various topics discussed in this report includes analysis of External environment, with use of various models. Further a strategic plan of growth is made where strategic objectives & tactic to be used by the organisation are discussed.

Impact & influence of macro environmental factors on functioning of a organisation

All business function of a macro environment that posses influence on their business functions (Bai, Cordeiroand Sarkis, 2020). Organisations have to make a analysis of different external factors that can help them in making use of profitable opportunity for reduction of such threats. Tesla is functioning in a macro environment and is affected by various factors that can be understood by PESTLE analysis as mentioned below: 

Political Factors: These factors are very helpful in determining overall impact of governmental and extend to which it can affect a organisation. Government of UK is taking initiatives for promoting electric vehicles and providing various incentives for encouraging organisations (Bohnsack, Pinkse. and Bidmon, 2019). It has created many opportunities Tesla as demand for their products will increase. Political stability of UK will also provide various growth opportunities without getting impacted by unstable political environment because of events such as Brexit.Need Assignment Samples.Talk to our Experts!

Economic Factors : Economic factors are ones that directly impact operation of a company and includes factors such as exchange rate, interest rate, periods, situations of rising prices, increasing GDP. one such factor is reduction in batteries cost in UK has been favourable for Tescla as it has lead to reduction in prices of auto mobile products that is making it more affordable. Reduction in renewable energy cots is also making their products attractive as it is utilising less sources of renewable energy required for manufacturing of electric vehicles (Belzand Binder, 2017). Increase in interest rates will also posses impact on Tesla as it will become difficult for procurement of funds.

Social Factors : Social factors include factors real to population analysis, cultural trends etc. People have become more conscious for environment as there is a new concept of less emission of carbon dioxide by vehicles. With growing amount of consciousness for sources of renewable energy demands of vehicles with low emission of carbon dioxide has increased. It has a disadvantage that people belonging to middles class are not able to afford such vehicles with high prices. It leads to huge pressure on organisation such as Tesla as they have to increase ether quality and at same time maintain reasonable prices of their products (Gumusluoglu and Acur, 2016).

Technological Factors: These factors are having a association with innovative technology that can be used by companies. In case of an, automotive industry technology is changing very fast and it is necessary for companies in tesla to bring continuous modi9fications & innovations in their products. Tesla has a opportunity that they can introduce automation technology in their products by launching a new online auto-mobile store. If such technology will be adopted early by competitors then it will lead to reduction in overall sales of Tesla.

Enviromental Factors : Environmental factors include association with exeyrmal environmental conditions such as climatic conditions. Weather etc. it is also a part of surrounding in which business is functioning, there is a increase in concern fort environment and it is very important for Tesla to acquirement environmental friendly vehicles so that they can do sustainable development. Tesla is involved in manufacturing of solar panels and batteries suitable from environmental safety.

Legal Factors : These factors are related with various legal rules & obligations. It is having aim of protecting the interest of stakeholders and ensure that business are following all legal rules imposed. There is a criteria that no harmful care emissions have to be done that can affect the quality of air. Tesla has to comply with all legal obligations made by various legal authorities. It also gives protection to Companies in a way that if Tesla wants to protect their patent rights they will be able to exercise this right and prevent it to be used by any other organisation.

Stakeholders analysis:

communities

Communities are stakeholders that have a impact on overall brand image if a organisation. 15 The environmental friendly product manufactured by Tesla helps them in increasing satisfaction level of various communities that will lead to a positive goodwill in the Market and long term sustainability.

customers

Customers are posing impact on Tesla overall revenue. There is maintenance of satisfaction level of customers because of quality and innovative features that are offered by Tesla in their products it leads to enhancement of revenue.

employees

Tesla believes that while designing their CSR strategy employees are one of very important factors for success. Employees posses influence on performance of a organisation and their productivity as if they will not be satisfied then they will leave the organisation and overall turnover of employee will increase.

Shareholders

In initial years, Tesla was depend on shareholders as a source of funding, all these stakeholders are very important for overall growth of business. CSR approach of Tesla has lead them toward addressing long term interest of their shareholders.

Government

Tesla is impacted by actions of government such as recent referendum of Brexit has laid a lot of impact on functioning of Tesla in form of reduction of their sales. But Tesla has successfully adopted all the legal requirements and obligation imposed by government. This leads to fulfilment of their responsibility towards government as their stakeholders. 18

Porter's Five forces Model: 19 Five force model was introduced by Michael porter for making a analysis of various competitive forces that is having impact on operations of a organisation . This model is used for purpose of analysing factors affecting a industry and corporate strategy formation. This model is used by organisation in determination of their strengths and attractiveness in a industry. 20 Five force analysis of tesla is disused below:

  • Threats of substitutes: There is a threat of substitutes in market can be high if competitor are offering products with same quality and similar or lower process (Lozano, 2018). Hence, it becomes very essential for Tesla to identify such sources of threat and keep their customers satisfied enough so that they are not willing to switch to nay other brand. 24
  • Bargaining power of suppliers: This force is related to ability of suppliers to posses influence on business. Tesla is a independent organisation on their suppliers. It is not possible to switch very easily between suppliers as it results in operational functions getting impacted. Hence, Tesla should make attempts to maintain long term relationships with their suppliers which can help them in having continuous supply of raw materials and maintenance of cost effectiveness in overall production process.
  • Bargaining power of the customers : this force is used in identifying ability of customers to influence a business Tesla is dealing in electric vehicles that are more efficient. Vehicles are those that are not purchase so frequently by people so that are very price sensitive for such products. Hence, it becomes very essential for Tesla to reduce the bargaining power of customers so that they are not switching from this brand. If prices increase then consumers will move to products that are being offered at low prices by their competitors.
  • Potential new entrants : When a new entrant is entering the market then it becomes difficult for present organisations in a industry to operate. There is a threat of new entrants in Tesla is low as they are part of automotive industry and it is very difficult for a new organisation to make such huge investments. Examples of threat can be new innovation being done by brands such as BMW, Hyundai ioniq etc. who are continuously involved in making new innovation models.
  • Industrial rivalry: Three is very high level of competition in automotive industry in which Tesla is dealing but at same time Tesla has a differentiation advantage. In terms if their products such as electric vehicles Tesla posses a competitive advantage and it is not easy for their competitor to imitate this product.

Critical analysis of of macro factors to determine the management decisions

To become more competitive every company has to identify various opportunities & threats present in external business environment. Such factors posses influence on company's strategies and to minimise its impact of such changes critical analysis of such factors is very crucial (Hillary, 2017). In case of Tesla there is positive impact of some factors such as political, legal & social at same time with some factors such as environmental and economic changes are required to be done by this organisation for minimizing negative impact of these factors. Want to get Assignment help? Talk Our Expert Now!

Analysis of internal environment and capabilities of the organisation

Internal environment of business is having concern with factors such as members, culture, management all these factors posses impact on overall decision making by a organisation (Johnson, 2016). For making a analysis of these internal factors irt is necessary for organisations to ascertain such weakness. A detailed internal analysis of thee factors will also be very helpful in identification of competencies of a particular organisation. Internal analysis is done to develop a understanding of various opportunities, strengths of business. Below mentioned is SWOT analysis of Tesla for making a analysis of various internal factors as discussed below:

Strengths

weakness

  • Tesla has a very high innovative process which is providing them a opportunity as compared to their competitors.
  • Strong brand image of Tesla is supporting them in planning their expansion strategies in global market.
  • Tesla posses a very strong control on overall production process.
  • Manufacturing capacity is a issue for Tesla as they sometimes face problem of large production and difficulty in meeting their orders.
  • Prices at which Tesla offers its products is very high in comparison with similar products of other competitors, it leads to low level of sales.

 

Opportunities

Threat

  • Tesla has a attractive opportunity for adding value to their products with help of upgraded technology (Kitsios and Kamariotou, 2019).
  • Tesla can plan expansion of their global supply chain expansion for having maximum market reach to their target customers.
  • Tesla has opportunity to increase their present distribution channels for having expansion in countries where they are not operating presently.
  • Major threat for Tesla is that similar companies are also introducing competitive product like Tesla which is providing them increased competition.
  • Prices of goods are fluctuating because of increase in exchange rates it leads to increase in cost for Tesla.
  • For minimization of cost of raw materials Tesla is focussing on purchasing of goods in bulk but again this has a impact on storage cost of Tesla.
  • There are many dealership regulation that is being affected by Tesla while they are planning to enter any new country.
 

 

For every company it is very necessary for making a detailed analysis of their overall capabilities & competencies that can be availed. VRIO framework is used for making a analysis f such capabilities of organisation (Lai, Melloni and Stacchezzini, 2016). It is very helpful in making decision related to competitive advantage for a organisation.

Mckinsey 7 s Model:

There are seven elements that are part of McKinsey 7s model as discussed below:

Strategy: Tesla business strategy is focussing on electric cars for achievement of overall mission of the company to accelerate the world in transition for sustainable source of energy.

Structure: It is not possible to classify structure of Tesla in one category hence, it is said that divisional structure is followed in Tesla.

Systems: There are many systems that are very essential for Tesla such as prospect for long term growth. It includes system of employee recruitment, selection, team development, CSR management etc.

Culture: Overall culture in Tesla that consist of beliefs and values help in ensuring Smooth management of overall workforce of the organisation.

staff:Human resource management is very essential recourse for Tesla which helps them in gaining competitive advantage in their electric vehicles.

Skills: In terms of skills it can be said that human resource of Tesla posses distinctive competencies that helps them in attainment of competitive advantage by innovation which they have in their vehicles.

shared values: The overall guiding concepts and fundamental ideas on which Tesla is based on is very complicated (Kitsios and Kamariotou, 2019). This is the reason there is requirement of highly skilled workforce in Tesla.

VRIO is a commonly used framework where organisation are assess based in four major characteristic such as Valuable, rare, imitability and organisation. This framework is applied in Tesla as discussed below:

Value

These factors are helpful in identification of resources and capabilities being valuable for a organisation or not. Resources in case of Tesla includes strong brand image, distribution change, competent workforce and leadership styles.

rareness

Rarity of a resource is very important in identifying capabilities of a organisation can be defined as are or not. In case of Tesla, their brand image, competent workforce and distribution channels are some of the resources which are rare.

Imitiability

It is identified that capabilities & resources of a organisation can be imitated by other competitors or not. Distribution network and strong brand image of a organisation are very unique and cant be Imitated by their competitors.

Organisation

It is also identified that organisation will be able to utilise their capabilities if they keep their resource organised as these actually help them in achievement of competitive advantage. In case of Tesla, brand image is the most critical resource that has to be kept organised which can help them in long term survival in the external market.

 

 

Valuable

Rare

Imitable

Organisation

Strong brand image

Yes

yes

Yes

Yes

Distribution network

Yes

Yes

Yes

No

Competent workforce

Yes

Yes

No

No

Leadership styles

Yes

No

No

No

After making a detailed analysis of capabilities & factors of a organisation Tesla will be able to formulate effective strategies by making a consideration to weakness & strength that is helping them in achievement of organisational objectives (Linder. and Williander, 2017).

Critical evaluation of internal environment and the capabilities

Internal analysis is very helpful for all organisation in identification of their weakness, strategy. These capabilities are every useful in grabbing of profitable opportunities for minimizing impact of environmental threats. Expansion opportunity can be used for utilisation of extra competence of organisation. It is also very helpful in carrying on of various business functions.

Appropriate strategies for improvement of competitive edge & present market position

Strategies are very helpful for every organisation in planning their activities that have to be done for achievement of these goals. Porters analysis is a great tool that can be used for understanding of various factors present in external environment and posses impact on achievement of organisation's objectives. Different strategies which can be used by Tesla is discussed below:

  • Tesla can start their loyalty program to increase their competitiveness in the market.
  • There must be increase in focus towards quality and innovative designs to attain competitive advantage.

Theories, concepts, models that can help in strategic planning

Strategic planning is a tool that can be used for determination of strategy and direction used for allocation of resources in a organisation. This is a process which is used by leaders & managers in a organisation for determining the vision and how to achieve future objectives, goals of business. Strategic direction is very helpful in determination of how strategies can be combined for increase in productivity of the organisation (Mahmood, Chung, and Mitchell, 2017). Strategic direction includes vision and mission which is further used for defining of purpose of the organisation.

To make a analysis of strategic options Ansoff matrix can be used in Tesla as discussed below:

Ansoff's Matrix: This is a matrix used by Tesla's management for identification of strategies that can be adopted for achievement of business objectives for business growth, various aspects of this matrix is discussed below:

Market Penetration : In this strategy there is use of existing products to increase sales in exiting markets. This strategy is used in Tesla in a positive manner as they are focussing on Model 3 and Model X electric vehicles for capturing larger share of existing market.

Market development : Market development strategy is related to new markets for existing products. Tesla is using it in a positive manner as they are helping them in getting a detailed evaluation of various markets such as they are identifying different markets that are willing to capture. Tesla is making plans to enter various Asian market such as India where they can expand themselves (Ndubisi, Nygaard and Capel, 2019).

Product development : Strategy of product development is related with new products to launch in existing market of companies. Tesla is having its positive impact as they are involved in new product development so that they are able to cover high cost entering a new market as this requires a huge amount of investment in promotional strategies and make people aware of their brand.

Diversification : Diversification strategy is very helpful in development of new products in new markets. Tesla is making use of diversification strategy since past few years. They started manufacturing of electric vehicles in the year 2003 and then after that their name changed to Tesla Motors Inc. This Strategy has a negative impact as they have to make huge amount iof investment for adoption of this strategy. After they acquired solar city in the year 2016. Fuel vehicle manufacturers have to make strategies for diversifying in new markets this requires large amount of investment to be done by tesla.

From above discussion it can be said that in context of Tesla one of the most suitable strategies is market development as Tesla is expert in manufacturing of electric vehicles. They can utilise this potential for expanding their present market share and expand their share in economy. It also provides them capabilities to diversify their business in other approaching new markets.Get Best Behavior Management Assignment Help from our management experts!

Strategic marketing plan

Strategic marketing plan is very important for every organization as it helps then in developing a understanding of overall steps to be taken by a organisation for achievement of some specified objectives in specified period of time.

Objectives: In the present scenario there are some objectives created management team of Tesla is mentioned below:

  • Increase the present market share of Tesla by 10% that can have a positive impact on enhancement of revenue by 15% in coming time period of two years.

Vision: Tesla has a vision To create most compelling car in 31st century by driving towards world's transition for electric vehicles.

Mission: the mission statement of Tesla clearly mentions that they want to accelerate the world's transition towards a sustainable transport or a complete transition towards use of sustainable energy.

Tactics: Tactics will be developed by Tesla by making use of marketing mix as a strategy as discussed below:

Product

Tesla is a leading manufacturer of electric cars and eco-friendly products. Major products manufactured by Tesla includes solar batteries, solar charging stations, solar panels. Electric cars are the most differentiation product of this brand.

Price

Pricing strategy of tesla is premium pricing . It means that prices at which tesla is offering its products is quiet high and there si a requirement that price have to be kept a little low so as to achieve larger share of market.

Place

Tesla is a UK based brand having its operations spread in different parts of the world and its headquarters are present in California. There is a huge demand of Tesla product in areas where they are present to meet their timely deliveries Tesla has to increase their rate of production as Lithium in batteries is not enough in supply. For overcoming this Tesla is planning to start manufacturing Li-ion batteries for their cars to maintain their production levels.

Promotion

Promotional strategy of Tesla is made with zero marketing budget as they do not have any commercial advertisement or bill boards, advertisement agencies reason behind this is Tesla already has large number of sales and their orders are already pending which is difficult for the, to meet. But apart from this Tesla is involved in online promotions

Implementation:

It is very important for organisation for effectively implement a plan for this there is requirement of finance. In present scenario, Tesla has prepared the budget as mentioned below:

Evaluation: Evaluation of performance is very important to keep a track record on various strategies that have been adopted to keep a record on various activities necessary for the success of a particular business plan (Tsai and Liao, 2017).

Critical analysis & interpretation of information & data

Strategic directions are very important for providing guidance to organisation on who to work towards achievement of gaols in a consistent manner, there is a requirement for developing an understanding of internal & external factors by using of PESTLE analysis, SWOT analysis, porters five force model, ans off matrix, marketing mix strategies are some of the tools that are required for achievement of organisation overall objectives laid in a business plan. It is very important for every organisation to evaluate all the available information in such a way that it can result in understanding of the what can be most profitable strategy for achievement of business objectives. All the strategies have been formed after making detailed evaluation so it will help in increasing the chances of success and achievement of laid objectives.

CONCLUSION

It can be concluded from above report that strategy formulation is required in every organisation for achievement objectives. For every organisation It is essential to identify in detail with use of techniques such as PESTEL analysis, SWOT analysis for understanding various driving forces of internal and external environment on their organisation. VRIO framework, porters five force model are some of the tools commonly applied in every business organisation for achievement of business objectives of a particular business plan.

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