MSc Management Global Strategy and Sustainability Assignment Sample 2023
Introduction
This report will evaluate and analyse the external and internal environment for Tesla with sources of competitive advantages to build and maintain in task one whereas in task two it will elaborate on the organisational strategy in a global environment. More on that, task three of the report will involve evaluating the corporate strategy of Tesla while it will explain the strategic purposes of the company through CSR and the Ethical approach of the organisation.
Task 1
Critical analysis of the internal and external environment forces
Porter’s five force analysis
The Tesla automobile is accelerating the world’s transition towards sustainable energy, gearing up solar energy production and running on the batteries which are mediating the transportation through electric vehicles started its operation in the USA (Tesla, 2022).
| Factors of porter’s five forces | Impact (High/Moderate/Low) | Description |
| Bargaining power of the customers | Low | The automobile units of Tesla are marketed through fixed price ranges where the customer’s bargaining power is low |
| Bargaining power of suppliers | High | Supplier’s bargaining power is high as the solar-powered vehicle and energy industry deals with unique as well as traditional suppliers |
| Industrial rivalry | High | Industrial Rivalry for Tesla is high with its competitors as
Toyota, Ford, Mercedes Benz and Audi |
| Threat of substitutes | Moderate | Substitute Products of Tesla are growing through its limitation and thus considered to moderate impact on the business environment of the Tesla |
| Threats of new entrant | Low | The threats of the new entrant to Tesla’s automobile company are low as the new entrant has to invest a high amount of finance along to build up an entire ecosystem for the electric vehicle industry |
Table 1: Porter’s five forces analysis for Tesla
(Source: Self-Created)
(Chen, 2022) mentioned the low switching cost influences the suppliers to bargain prices where the Substitute products of Tesla are not widely available while maintaining its quality and technological innovations. (Hoelzlhammer, 2018) stated that the threat for new entrants in the automobile industry is low due to the heavy capital requirement and gain the scalability to compete with Tesla.
SWOT analysis
| Strengths | Weaknesses |
| 1. Pioneer in the Electric vehicle segment
2. Innovative company
3. High brand equity and market reputation |
1. Limited market presence
2. Small customer segment to target due to high price range 3. Complications in manufacturing |
| Opportunities | Threats |
| 1. In-house battery production technology
2. Sales expansion in untapped market 3. High brand value and increased market confidence |
1. Financial debt
2. Fierce Market competition 3. Lack of security in its self-driving cars |
Table 2: SWOT analysis of Tesla
(Source: Self-Created)
(Giménez, 2022) demonstrated that Tesla has built its competitiveness through innovations and eco-friendly product design of automobile units which made the company the most valuable car company in 2020. The Company has its strength in innovation in practice in the organisational working environment, high brand equity and positive market reputation which turned the high-tech company into an automobile company with innovations for defying the climate concern.
Discussing three critical factors emerging from the above analysis
The macro and micro environment analysis is done on the above analysis from where it may be stated that Tesla highly relies upon innovative technology and high market value where the critical factors are high industrial rivalry, financial debt and small customer segment for targeting. The automobile industry is highly competitive for the strong market presence of several international and domestic companies which are operating in the industry for a long back and have a fair market share to compete with Tesla.
Guo, (2020) expressed that climate concerns and innovation practices have gained public awareness and attraction regarding electric vehicles for their environmental protection potential. Financial debt in Tesla is another critical factor for the automotive company and raised $40 million as convertible debt to substantially fulfil its ambitious goal of transitioning the world sustainably.
The price range of the Tesla EV’s quite expensive and only affordable for the elites and thus concentrated on a small customer segment which is critical for the company to gain high market return through increased sales margin.
Evaluating the current sources of competitive advantage for Tesla and maintenance
The current sources of the competitive advantage for Tesla are the strong battery supply chain, supercharger network around the globe, in-house battery production, product diversification, technological innovations, and open source patent approach for sustainable transportation.
Additionally, the competitive advantages for Tesla also accounted for its strategic partnership and acquisitions of global companies, participation in hyperloop transportation, innovation of Powerwall, and Gigafactory for manufacturing and supplies of electric batteries. The leadership effectiveness of Elon Musk who is an archetype entrepreneur has had a positive influence on the company to gain a competitive advantage by combining vision, ambition and execution brilliantly.
Gali, (2020) articulated that competitive advantages for the company are built and maintained through the transformational leadership style and attributes, integrated marketing communications and consistent internal HRM practices along with the product differentiation strategy.
Figure 1: Competitive advantage of Tesla
(Source: Gali, 2020)
Task 2
Relevant models for analysing the way those help organisations enter into a foreign market
Exporting
Exporting refers to the process which amplifies the sale of domestically developed products and there are three types of exporting such as direct exporting, indirect exporting, cooperative exporting and so on. Along with that, export is quite a popular strategy which helps to improve global companies’ proliferation of international operationalisation, capture emerging chances and so on (Chen et al., 2019).
Lincoln and McCallum, (2018) depicted in the research that there are several factors which affect exports such as trade agreements, foreign income growth, several types of market trends and many more whereas in the age of globalisation it helps to take competitive advantages effectively.
Joint Venture
A joint venture refers to the process of collaborating with one or two other companies with common objectives such as joint product development, advancement of technology, utilising competencies and so on. The joint venture is preferred by several companies because it may help Tesla to access new markets as well as distribution networks, share risks and costs with partners, access larger resources and competencies and many more. Considering the research it is quite clear that joint ventures or strategic alliances are implemented as alternative foreign entry strategies whereas it helps to touch desirable profit margins in an effective manner (Nippa and Reuer, 2019).
Figure 2: Joint venture as a strategy
(Source: Nippa and Reuer, 2019)
Wholly owned subsidiary
A wholly owned subsidiary is another foreign market model which depicts the process of taking total ownership of another company in the foreign market. There are two ways of the foreign market such as greenfield operation or acquisition and through these foreign market entry strategies which provide support to the organisations to limit the risks and enhance the exposure as well as profit in the international market.
Greenfield operation is the creation of a new organisation or legal entity whereas acquisition refers to the process of undertaking a new organisation by not changing the identity of the company. It may help Tesla to bring diversity, manage the work process, reduce the risks and so on which also enhances the scope of business expansion in the foreign market in an effective way.
According to research, wholly owned subsidiaries provide immense support and the legal control over products, operations, and processes help to reduce the possibilities of conflict among the companies (Sestu and Majocchi, 2020).
The way Tesla expands internationally and impacts the overall company strategy
Tesla is one of the popular automobile companies and it implements different strategies such as multi-domestic, global, transitional and so on to expand its business in national as well as international range. Multi-domestic strategies are used by Tesla because it helps to implement strategies or take initiatives according to the demand of the local market.
On the other hand, global strategy provides immense support to the company to take competitive advantages in both global and local markets by following standard strategies. In the age of globalisation, rising competition is a real challenge for the company and this reason, Tesla often implements a transitional strategy which is a combination of both international and global strategies.
Alsharari (2022) articulated in the research that Tesla adopts green technology as a global strategy and the range of products of the company such as electric vehicles, solar panels, solar roof tiles and many more are launched for consumers in a global range.
Figure 3: Different market entry strategies of Tesla
(Source: Alsharari, 2022)
Recommendations for the way Tesla increase its competencies
There are some recommendations which may help the company in future to develop its activities to boost the foreign market expansion strategies. BMW is another automobile giant and it focuses on high-end segments in the international range, prefers global strategy and constantly implements premium brand identification to achieve success.
It may be argued that the implementation of the above-mentioned strategies provides immense support to automobile companies to expand their business in different foreign markets. Tesla has already collaborated with the companies such as Panasonic, Grohmann, and Tencent to enhance product quality, and implement strategies and in future, the company needs to boost the relationship for further achievement. Ford is another international company which implements a common vision and it helps to increase the efficiencies of the company in the international range.
Task 3- Corporate Strategy
Horizontal integration
Horizontal integration management helps in understanding the business strategic development by making effective operational development which puts the company in managing effective revenue and competition development quite well. Moreover, Tesla does not much follow horizontal integration as the company has its supply chain development which helps in managing the costs of the company effectively.
The company does take help from various suppliers which helps the company to manage the manufacturing of the products and helps the company to make product development a much better way. The horizontal integration helps in managing the manufacturing sector development by managing low carbon products for the company which helps in managing effective demands and supplies of the company quite well (Xu et al., 2020).
Vertical integration
Tesla follows vertical integration as the company manages every supply management by developing automotive industry development by making effective production steps with the help of effective battery manufacturing development. Additionally, the company manages the control of the systems management through effective production development by managing the self-driving algorithms managing effective software development by managing innovative management and development through effective product development of the company.
The vertical integration of the company allows the company to manage effective strategies and development by effectively developing the growth strategies of the company by managing vehicle manufacturing in a more systematic manner (Movsesyan and Anokhina, 2020).
Innovative production management helps in developing effective networking of the organisation that helps the organisation to flourish well and putting emphasis on the software development by managing effective competitors by implementing better manufacturing and logistics management.
Strategic alliances
The strategic alliances of the company have to be managed well which helps in better development of the company in a much more effective way by managing the relations between the companies with the company to manage effective technological innovation quite well.
In addition to that, the company recently has made a strategic alliance with Panasonic for better technological innovation by managing the working of the company by managing effective battery technology so that it helps the company to flourish well. The company’s innovative technological development by better profitability management helps in managing potential risks through effective technological innovation of the company quite well (Chen, 2022).
Outsourcing
It may be stated that Tesla has made the effort in making most of the parts of the production in-house, the company includes selling Electric Vehicles (EVs) directly to the target audience through websites and showrooms. The decision not to opt for outsourcing the production of the materials in Tesla has benefited the company greatly by tackling the high costs and eliminating the use of resources to pay the suppliers (Sypko, 2022).
Furthermore, Volkswagen through the use of strategic outsourcing of production and minimization of development costs has been able to create a greater value among the target audience in the global market (Kim et al., 2022).
Figure 4: Sales growth in Volkswagen and Tesla
(Source: Kim et al., 2022)
Evaluate the ways through which Tesla improve profits
Tesla has been able to improve its profit in the global market by the introduction of new products and the use of a differentiation strategy to develop n products to meet the needs of the consumers along with maintaining sustainability in production. Furthermore, the company has created its energy solution which has been able to meet the global battery demand along with its Power wall, which has the capability of energy storage and also charges the EVs.
The strategic alliance with companies such as Panasonic and Grohman has resulted in the company getting hands with the latest technologies such as the Advanced Automation facility and self-driving technology that have helped Tesla in building integrated systems in low-cost production (Liu, 2021).
Task 4 – Managing Strategic Purpose of Ethics and CSR
Evaluation of Tesla’s CSR strategy
Tesla’s Corporate Social Responsibility (CSR) management has helped the company’s management by understanding the environmental impact assessment which helps in managing the environmental evaluation through the help of electric cars management quite well. Moreover, the company is trying to reduce carbon emissions and even reduce its carbon footprint by making 20 million electric vehicles which help in reducing environmental degradation by 2030 (Tesla.com. 2022).
The company manages Greenhouse gas emissions which helps in developing effective customer and employee management through effective stakeholders’ management and better managing the development of the vehicle through the help of recycling vehicular management by effective supply chain management. Considering the case study, the company tried to analyse the environmental problems and is able to manage the automobile industry by managing effective energy development such as 80 MWh which helps in powering 2,500 households in a day.
Tesla has believed that by 2020 the company is able to enable customers in avoiding the emission of 5 million metric tons of CO2 through effective sustainable development and management by making effective profit development from the company’s production management (Tesla.com. 2022).
Figure 5: Carroll’s Pyramid of CSR
(Source: Lu et al., 2020)
The climate change management of the company has to be managed well so that it helps the company to organise well by managing effective greenhouse gas emission that helps in managing the transportation and effective electricity generation for managing manufacturing capabilities.
Effective organisational performance management has to be managed well by developing the company’s disadvantaged position by making effective economic management for developing better energy sectors development through effective sustainable council development (Lu et al., 2020). The CSR strategy management through the help of Carroll’s pyramid helps in better organisational development and social responsibility development of the organisation has been done by understanding the effective corporate theories.
Better development of organisational management is possible by understanding effective theory development which has helped in managing the problems quite well. Effective Supply Chain Management helps in better development of effective energy management by implementing solar panels that help in better energy storage development of the organisation which has helped the organisation to flourish well.
Identification and evaluation of the ethical issues of Tesla
Tesla has to manage effective Consumer’ Carbon Management that helps in managing eco-friendly product development by manufacturing essential solar panels management by effective policy development quite well. The company even manufactures electric cars yet it has affected the environment by not managing its chemical policies of the company for which the company has to pay a penalty of 1 million dollars in 2021 for better air quality violations management (Ethical Consumer. 2022).
The company has managed effective Supply Chain management that helps the organisation to flourish well and it helps in managing various kinds of policies such as Conflict Minerals Policy and Practice and takes care of the Responsible Mineral Initiative by better managing the human rights development for the employees.
The better air quality management and effective development of the company’s environmental development by managing human rights management for better environmental performance has put the company into the worst ranking of Corporate Human Rights Benchmark (CHRB) by managing effective brand development quite well (Ethical Consumer. 2022).
Tesla’s different marketing management has helped the company to progress well in the competitive market by managing effective innovation and development through effective management by effective leadership development of the company effectively (Kim, 2020).
Recommendations
The recommendations for the CSR and ethical issues are:
- Tesla should have to manage employee engagement by increasing effective employee management by providing the company with effective progress for the organisation
- The company should also keep in mind that effective waste management has to be looked after by effective Supply Chain Management and effective manufacturing sectors development
- The company also looks after the ethical issues management by developing better sustainable solutions for the company
Conclusion
From the above discussion, it may be concluded that Tesla is one of the automobile giants in the international market and in recent time’s implementation of technologies boost its competitive advantages for the company. The company has also taken several initiatives to maintain sustainability within the work process and there are several recommendations for the company which provide great scope to develop its strategies in the future to maintain consistency.
References
Alsharari, N.M., 2022. Financial Reporting and Analysis of Tesla Green Technology in the United States Market. Banking and Accounting Issues, p.3.
Cecil, T., Irwin, K., Maruyama, R., Pyle, M. and Zorzetti, S., 2022. Snowmass 2021 IF01: Quantum Sensors Topical Group Report. arXiv preprint arXiv:2208.13310.
Chen, F., 2022, July. Analysis of Key Factors for Tesla’s Success. In 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022) (pp. 758-763). Atlantis Press.
Chen, J., Sousa, C.M. and He, X., 2019. Export market re-entry: Time-out period and price/quality dynamisms. Journal of world business, 54(2), pp.154-168.
Chen, Y., 2022, July. The Impact of Strategic Alliance on Corporate Performance: Evidence from Tesla. In 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022) (pp. 206-212). Atlantis Press.
Ethical Consumer. 2022. How ethical is Tesla, Inc? | Ethical Consumer. [online] Available at: <https://www.ethicalconsumer.org/company-profile/tesla-inc> [Accessed 19 September 2022].
Gali, G.R., 2020. Corporate and Business Strategies of Tesla Company. NOLEGEIN-Journal of Entrepreneurship Planning, Development and Management, 3(2), pp.10-23.
Giménez, M.C., 2022. Case Study: A Five Year Business Strategic Plan for Tesla.
Guo, H.X., 2020. Report on Assessment of the New-Energy Vehicle Industry and Competition Environment. Sci. J. Econ. Manag. Res, 2(8).
Hoelzlhammer, A., 2018. A Strategic Audit of Tesla.
Kim, H., 2020. Analysis of How Tesla Creates Core Innovation Capability. International Journal of Business and Management, 15(6), pp.42-61.
Kim, J., Paek, B. and Lee, H., 2022. Exploring Innovation Ecosystem of Incumbents in the Face of Technological Discontinuities: Automobile Firms. Sustainability, 14(3), p.1606.
Lincoln, W.F. and McCallum, A.H., 2018. The rise of exporting by US firms. European Economic Review, 102, pp.280-297.
Liu, S., 2021, March. Competition and valuation: a case study of Tesla Motors. In IOP Conference Series: Earth and Environmental Science (Vol. 692, No. 2, p. 022103). IOP Publishing.
Lu, J., Ren, L., Zhang, C., Rong, D., Ahmed, R.R. and Streimikis, J., 2020. Modified Carroll’s pyramid of corporate social responsibility to enhance organizational performance of SMEs industry. Journal of Cleaner Production, 271, p.122456.
Movsesyan, E.K. and Anokhina, M.E., 2020. Tesla Vertical Integration Strategies: Theory, Practice, Results. Business Strategies.
Nippa, M. and Reuer, J.J., 2019. On the future of international joint venture research. Journal of International Business Studies, 50(4), pp.555-597.
Sestu, M.C. and Majocchi, A., 2020. Family firms and the choice between wholly owned subsidiaries and joint ventures: A transaction costs perspective. Entrepreneurship Theory and Practice, 44(2), pp.211-232.
Statista. 2022. Tesla: vehicle sales by quarter 2022 | Statista. [online] Available at: <https://www.statista.com/statistics/502208/tesla-quarterly-vehicle-deliveries/> [Accessed 19 September 2022].
Sypko, D., 2022. Time-Based Competition in Tesla´ s Supply Chain in the Era of Industry 4.0.
Ted Lucas Andersson, T.L., 2020. Tesla: a sequence of belief (Doctoral dissertation).
Tesla. 2022. About | Tesla. [online] Available at: <https://www.tesla.com/about> [Accessed 19 September 2022]
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Vig, S.G., Suta, A. and Toth, A., 2022. Corporate Reporting of CO2 Emission Disclosures in Electric Vehicle Manufacturing: an Overview of Tesla Inc. Chemical Engineering Transactions, 94, pp.391-396.
Xia, T., Wang, Y., Lv, L., Shen, L. and Cheng, T.C.E., 2022. Financing decisions of the low-carbon supply chain under chain-to-chain competition. International Journal of Production Research, pp.1-24.
Xu, C., Wang, C. and Huang, R., 2020. Impacts of horizontal integration on social welfare under the interaction of carbon tax and green subsidies. International Journal of Production Economics, 222, p.107506
Self-evaluation
Task 1
In task 1, I engaged with the external and internal business environment analysis for Tesla and identified critical factors for its business environment along with an evaluation of the competitive advantages of Tesla and how it maintains and builds these competitive advantages.
I acknowledged the industrial rivalry remains high with the presence of dominant market leaders such as Toyota, Ford, Audi and several others while counting the threat of substitution as moderate and the threat of new entrants as low due to lack of high capital and market intensity. Here I have reflected on the strengths, weaknesses, opportunities and threats of the company which encompasses, high market value, innovation in practice, pioneering in the electric vehicle segment, in-house battery technology, limited market presence, financial debt and high market competition.
The three critical factors for Tesla are identified as high industrial rivalry, financial debt and limited focus on the customer segment which are critically influencing the business efficiency of the company. I have also analysed the competitive advantages of the company which are in-house battery production, supercharger network, product diversification, vertical integration of the company, merger and acquisitions and leadership effectiveness.
Task 2
I have understood from Task 2 that there are different types of foreign market entry models such as joint venture, exporting, wholly owned subsidiaries and many more which help in expanding the business in different foreign markets. I have noticed that the joint venture strategy is one of the lucrative strategies which enhances the opportunities for the international market whereas wholly-owned subsidiaries help to reduce legal complications during foreign entry.
I have observed that in the age of globalisation, rising competition has become a real threat for automobile companies. I have assessed that for this reason, Tesla implements different types of strategies such as globalisation, multi-domestic strategies, internationalisation and many more to enhance the profit margins despite the high competition.
Apart from that, I have evaluated that there are several automobile companies such as Ford, BMW and so on as well as the companies that may follow those companies’ strategies which enhances the scope for development in the future. I have no idea about the different market entry models and the way it impacts the business process and now through this task, I have understood the matter.
Task 3
In task 3, I dived into the corporate strategies of Tesla in different foreign markets by analysing the strategy of business process integration both through the lens of horizontal and vertical integration where the company follows vertical integration to propel business growth.
I have gained insights into the process of outsourcing and its engagement with Tesla in the business portfolio with strategic alliances and business mergers to support the market demand with innovative technology and quality design. The company highly utilises its competitive advantages to develop sustainable transportation with the use of solar energy and electric batteries which are similarly useful to power the home and factories.
The in-house battery production technology with the solar cell development and transferring the power into the electric batteries and use in Ev’s is the perfect example of vertical integration of the business process.
Task 4
In task 4, I have generalised the ethical and CSR engagement of Tesla to determine the organisational culture and ethical code of conduct for a fair business process. The CSR policies are driven by achieving a high market reputation by satisfying the stakeholder’s interest and gaining high public confidence to enhance the sales margin for an increased profit ratio.
In my opinion, the CSR strategy of the company largely contributed to positive climate concerns with zero carbon emissions, development of renewable energy sources and delivering high climate goals for sustainability and sustainable transportation around the globe.
Here I also acknowledge the internal engagement procedure of the company with the leadership effectiveness and resolution of employee issues in the organisation to coordinate and actualise the motion of growth through the business ethics and CSR practices in both internal and external business environments. Task 4 also correlated my learning with the ethical issues in the Tesla organisation which further elongated through providing appropriate recommendations to fill the gap in ethical practices for the company.
