BMAN24442 Business Strategy Assignment Sample
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Introduction
This study provides the strategic planning in Tesla Motors because, in the current market, the company is facing several challenges. The strategic challenges of the company are explained the in the course of strategic planning that is one of the perspectives of the strategy. This report also includes the recommendations for the company’s strategy that is based on this perspective. At the same time, this study also provides a problem that has been faced by the company to use the strategic management and also provides the solution to this problem.
Step 1- Strategic planning of Tesla Motors
Company overview
Tesla Motors is a multinational corporation from America which is a manufacturer of the electronic vehicle, slower panel, and electronic storage. In other words, Tesla is an independent automaker technology organization that has the aim to offer electric cars at affordable price. The organization was founded on 1st July 2003 and headquartered at Palo Alto, California (TESLA, 2018).
Strategic challenges faced by Tesla
The automotive industry is a fastest growing industry in the current competitive environment but it also provides several strategic challenges to the organizations. In this, it is identified that the current technological changes enhanced the challenges for the automotive industry. At the same time, Tesla was also facing several challenges in the current environment (Cafaro and Grossmann, 2014). It is a highly competitive environment for Tesla because there were several competitors for the company who provided environment-friendly cars. In addition to this, the production costs of the electric cars are more as a comparison of engine cars. It is also identified that the infrastructure of the electric cars does not exist such as unavailability of stations to charge the cars. The organization was also facing the challenges in order to profitability because the electric cars provide limited revenues which leads to the limited profitability.
Strategic planning
It is an organizational process that defines the strategy, direction, and potential decisions for allocating the resources in order to peruse the strategy. In addition to this, some specific solutions are also provided for the strategic challenges by making a planning (Malekpour et al., 2015). The major components of the strategic planning are strategic formulation with effective evaluation and control in order to solve past and potential issues. The strategic planning includes a process that contains setting goals and objectives, internal and external analysis, strategic evaluation, and strategy operation.
Setting goals and objectives
The main goal of strategic planning of Tesla was to enhance the profitability of effective market strategy as well as build less costly products for the consumers. In addition to this, it is also defined that strategic plan of Tesla was very strong and effective. The strategic planning of the company is very effective in which the company provides the clear objectives to survive the business in the competitive market. It is because the company got success in this highly competitive market (Channon and Jalland, 2016). The formulation of the strategy was based on the vision and mission of the company where it provided electric cars at a lower price. Furthermore, on the basis of this strategy regarding long-term planning, the organization has selected electric cars which will provide potential benefits to the firm. It is because the fuels cell vehicles will be the potential need of the consumer due to lack of petroleum products in nature. In order to effectively activate the strategic objectives, the organization has focused on the internal and external analysis. In concern to strategic planning, the organization timely provides the SWOT analysis which provides a competitive strategy.
SWOT analysis
| Strengths | Opportunities |
| · First developer of electric sports cars
· A strong competitor of major brands in the industry
· Good proficiency in the electronic technological areas · Technological advantage where the firm uses advanced technical products like electric cars that are the future of the world. |
· Oil supply is limited that increases the demand for the electric vehicles
· The public is more concentrate on the environmental problems · Production of the solar panel as an alternative · Battery technology is the alternative of the power
|
| Weaknesses | Threats |
| · The high cost of production
· Lack of availability of infrastructure around electric cars · Lack of profitability due to limited revenue |
· There are several competitors in the environment-friendly cars.
· Electric cars are more expensive than engine cars. |
As per the internal analysis of Tesla, it can be recognized that the firm has a flexible strategy which is not affected by the change in the political environment, technological changes, enhancement in competition, etc. The most important threat to Tesla is that there is a highly competitive market that also competes the firm with its price (Bryson, 2012). So it can be said that the market has high price competition but the company has developed the strategic plan as per the goals. In which, the organization
Strategic evaluation
The evaluation of the strategy is the last component of the strategic management. At the same time, it is also recognized that the company identifies their consumers in each class but mostly focuses on the upper middle class to the high-income group. As per the targeting approach, the company analyzes the psychographic, behavioral, sociologic and demographic factors of the consumer. The targeting approach is most effective for the success of the company so that the company can achieve long-term objectives (Dibrell et al., 2014). In addition to this, the long-term planning of the company also targeted to the building different new cars like build sports car, building affordable cars for the consumer, provide zero emission electric power generation. The return on the investment strategy of the company is more effective where the company has more focus on the quality as well as the cost that provides the best return to the company.
It is defined that the engineers of the Tesla have designed a power-train first-time that was a sports car named with Roadster. In the year 2008, the company has sold more than 2400 Roadster over 30 countries. It shows that the company has got success on this model and created the brand image among the customers (Cheong et al., 2016). In addition to this, the organization continuously provided several electric car models at the international level that helped the company to promote the business in the sporting car.
In concern to competitive strategy, it is acknowledged that the competitive strategy of Tesla has more useful components that enhanced the brand image of the company in the marketplace. In this component, the management of Tesla ensures that the implemented strategy is reviewed periodically and it is assessed consequently (Moritz et al., 2015). It is because the consequence of the implemented strategy may also be negative for the organizational success. In the evaluation of the strategy, the company compares the results with the different competitors as well as previous years achievements to acknowledge the growth.
Step 2- Learning II
Form the Tesla motors sustainability report depicts that dynamic capabilities (DCs) are able to learn and sustain competitive advantage in changing environments. It is because the company has the significant ability in the context of management of the available resources and strategic planning.
In the context of the first situation, it is found that the main issue of the sustainability for the company is that there are strict rules and regulation in the context of the environmental safety and protection that are major challenges of the company to run the business in the smoothly way. Along with this, it is also found that prefers of the customer is changing that creates the issue for the company to maintain the level of the sales. But, the ability of the employees and the top level of the management shows that dynamic capabilities (DCs) of the company that can be helpful for the company in the context of the developing sustainable competitive advantage in changing environments (Schaltegger et al., 2012).
In the context of the success of the company, it is found that the company has the effective forces of the human resources that provide the competitive advantage to the company in this competitive business environment. Moreover, in the context of the research and development, the company also spends the more that helps the company to keeps the competitiveness in the market. The company hires the talented and skilled staff and employees that have the sufficient experience in the relative field that improves the efficiency of the company in the business environment and provides the advantages over the competitors (Keupp, et al., 2012).
It is identified that the increasing the level of competition is the most important problem of the Tesla. There are several possible reasons for this issue in the current scenario that is enhancing the competition for the company, such as: high pollution by fuel cell vehicle, increasing price of petroleum products globally, reduction in the price of technical machines, enhancement in the demand of the electric vehicles, etc (Bryson, 2018). In addition to this, the top management can develop the potential strategic plans that can provide long-term benefits to the organization. In order to build the potential aim, the company has mostly focused on the model X that will be helpful for the company to keep the trend going on. This model of the car will be helpful for the company to provide an effective price car model which can attract the customer from the external environment. But, the proper strategic implementation can reduce the problem of increasing competition for Tesla.
In addition to this, it is also defined that the Tesla was also facing the problem of raising the funds to upgrade the plant and production capacity (Cassidy, 2016). Moreover, in order to gather the capital, the company should develop the plan where it can issue the share as well as use the fund from different market securities. So, it can be said that the investment policy can be developed by the management that can provide more fund to develop the business capacity. In the year 2015, the production department forecasted for 55000 cars with the use of $500 million funds but the sell was competitively high then the production capacity of the firm.
Conclusion
From the above study, it can be concluded that the strategic planning is the most important part of the success of an organization so that Tesla has used effective strategic planning. In addition to this, it can also be analyzed that the strength and opportunities are more as a comparison of the weakness and threats for the company that provides the effective way to get success. Moreover, this study also concluded that the organization can be able to learn if they have dynamic capabilities. In this, it is defined that in the changing environments, the company can sustain by the effective strategic planning in the competitive market.
References
Bryson, J.M. (2012) Strategic Planning and. The SAGE Handbook of Public Administration, p.50.
Bryson, J.M., 2018. Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement. UK: John Wiley & Sons.
Cafaro, D.C. and Grossmann, I.E. (2014) Strategic planning, design, and development of the shale gas supply chain network. AIChE Journal, 60(6), pp.2122-2142.
Cassidy, A. (2016) A practical guide to information systems strategic planning. USA: CRC press.
Channon, D.F. and Jalland, M. (2016) Multinational strategic planning. UK: Springer.
Cheong, T., Song, S.H. and Hu, C. (2016) Strategic alliance with competitors in the electric vehicle market: tesla motor’s case. Mathematical Problems in Engineering, 2016.
Dibrell, C., Craig, J.B. and Neubaum, D.O. (2014) Linking the formal strategic planning process, planning flexibility, and innovativeness to firm performance. Journal of Business Research, 67(9), pp.2000-2007.
Keupp, M.M., Palmié, M. and Gassmann, O. (2012) The strategic management of innovation: A systematic review and paths for future research. International Journal of Management Reviews, 14(4), pp.367-390.
Malekpour, S., Brown, R.R. and de Haan, F.J. (2015) Strategic planning of urban infrastructure for environmental sustainability: understanding the past to intervene for the future. Cities, 46, pp.67-75.
Moritz, M., Redlich, T., Krenz, P., Buxbaum-Conradi, S. and Wulfsberg, J.P. (2015) August. Tesla Motors, Inc.: Pioneer towards a new strategic approach in the automobile industry along the open source movement?. In Management of Engineering and Technology (PICMET), 2015 Portland International Conference on, pp. 85-92.
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E.G. (2012) Business cases for sustainability: the role of business model innovation for corporate sustainability. International Journal of Innovation and Sustainable Development, 6(2), pp.95-119.
TESLA. (2018) About Tesla. Tesla’s mission is to accelerate the world’s transition to sustainable energy. Retrieved from: https://www.tesla.com/about (accessed at, 7th May 2018)
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