Global Strategy and Sustainability Assignment Sample

 PART A

Introduction

Globalization places an essential aspect on various markets worldwide. It brings multiple opportunities to multiple organizations and helps increase their working capacity and market share in the economy (Michie, 2019). It also supports numerous countries in exchanging technology and information, bringing growth in numerous sectors and enhancing productivity. With the help of globalization, companies reduce the cost of not only operations but also acquiring raw materials. The companies get exposure to new markets and expand their customer base. These benefits of globalization push the firm to get global in its operations and formulate strategies likewise.

The below-mentioned report is based on Tesla, an American Electrical Vehicle company. The renowned brand is known to have operations in energy store batteries, electric cars, and solar panels. The report focuses on its internal and external environment and its global strategies for working. The report also analyzes Tesla’s response towards society and nature regarding CSR and sustainability plans (Teece, 2018). The report also provides some suggestions that can boost the company’s growth.

Task 1 –Internal and External Environment of Tesla

Evaluation of External Environment

External factors are those forces that work outside the organization’s environment and cannot be controlled by the company. However, the effect of this environment can be mitigated by implying correct policies and strategies. Tesla has also developed various approaches to reduce the external environment impact on its operations. It has also undertaken PESTEL analysis, Porter’s five forces analysis, Competitor’s analysis, and changing economic trends (Kerkhof, 2017).

PESTEL analysis of Tesla

To analyze the impact of various outside factors such as changing technology, government policies, and many more, PESTEL analysis is required. It also talks about how the company is balancing these factors.

Political Factors – With the growing environmental concern globally, many countries have developed policies that provide strict rules and restrictions on firms not working in favor of the environment and provide subsidies to companies operating in the sustainability sector. Tesla has a benefit in this concern as it produces environmentally-friendly electric vehicles. Therefore, the brand can expand its operations globally in almost every country and avail tax benefits and other relaxations. When changes in fiscal or monitory policies happen on regular basis, then it becomes an issue for the company as they have to make changes in their pricing as well.

Economic Factors – Economic factors are the most crucial factors impacting growth and profitability. Consumer income, inflation, deflation, interest rate, and exchange rate significantly affect a firm’s work (Matthews et. al. 2020). Tesla is known to produce luxury cars but provides them at pocket-friendly prices in a society aiming to meet the needs of all income groups in society. The company’s products are low maintenance and require less energy to operate. They are also updated with the latest technology and innovation, giving the brand an upper hand in its growth.

Social Factors – Tesla always takes care of its customer demands and preferences. The social factors refer to consumers’ demands, social culture, and behaviour. The company constantly works to provide a delightful experience to its consumers with proper strategies and periodic market analysis. The brand is known for its customer care and services. Preferences of individuals vary and that also with change in situation. It is important for the company to understand the taste and preferences of customers so that products and services can be provided accordingly.

Technological Factors – Innovation and technology are the key elements for development. Tesla has usefully utilized this factor in becoming one of the top brands in car manufacturing. Its products have the latest gadgets, new innovative items that attract customers. It has an efficient fuel system. Technology has become one of the significant competitive advantages for the company. It has an important growth opportunity to utilize these factors, especially in this environmental concern era. With time, there are changes that take place in respect to technology, it is important to make sure that appropriate steps are taken by the company so that update technology is being used. This way, they can delivered improved products or services.

Ecological Factors – In today’s world, environmental or environmental factors play a crucial role in the success or failure of any company (Weldon et. al. 2018). Tesla has continuously put efforts into formulating its policies and rules in the direction of sustainability and CSR. The product it offers is eco-friendly. This helps Tesla’s growth and expansion opportunity essentially.

Legal Factors – These include the issues related to law and legal factors. The company has a good reputation for its growth percentage and implementation of moral laws in the sector of safety and health, equal opportunities, consumer rights, and many more. It follows the regulations laid down by the host country and the country it expands its operations. It is the responsibility of company to make sure that all the laws or legislations are followed by company and act accordingly.

From the PESTEL analysis of Tesla, it can be analyzed that the company has a positive impact on this analysis. The company strategies and policies are in line with these changing external factors, creating more opportunities for Tesla and expanding to new markets to expand the customer base (Saxena and Vibhandik, 2021).

Porter’s five forces analysis for Tesla

This model of Porter’s helps to know the implications of external forces on its corporate policies. These include: –

• Bargaining power of Suppliers–There is minimal direct selling opportunity for the manufacturers, which leads to a lesser chance regarding forward integration. Therefore, the suppliers have very low bargaining power in this respective industry.
• Bargaining power of Buyers– Globally, various car brands are providing ample benefits to the customers. However, Tesla has its unique way of providing updated and innovative products to its consumers. This helps in retaining them. So the bargaining power of buyers is
• The threat of Substitutes–The company always comes up with innovations in its product and customer attractive features that reduce the threat of new substitutes to a moderate level. However, rival companies like BMW, Mercedes are also investing in the same field to compete with the brand.
• The threat of New Entry–Entering the field of vehicles requires a large-scale investment and a well-developed strategy and infrastructure that is not easy and accessible for many companies. Also, the company has a faithful customer base and a strong brand image, making the path of new entries tough. So, the threat from new entries is very low.
• Industry Rivalry –In this market, competition is very high. There are several big bulls in the field of an automobile, such as BMW, Volkswagen, that makes it challenging for Tesla to maintain its individuality. To secure its position, the company has to periodically develop innovative and cost-effective products.

Evaluation of Internal Environment

An internal environment of a company provides the elements that define the atmosphere within the company’s structure. It helps in the identification of external factors as well as fosters the development of strategies of the company more efficiently and effectively. There are various measures to analyze the internal environment.

VRIO analysis

Valuable resources – These are the sum of all those elements that help the company stay protected from the risks and threats in the industry. These include broadly the company’s logistics and Distribution channel, marketing network, and brand image (Ingram, 2018).

Imitable resources – These are the total of all those factors that can be copied or imitated by the rivals and competitors in the industry. For Tesla, these factors are pricing and HR policies mainly.

Rare Resources – These are those resources that every competitor cannot procure. These are accessible to a few rivals compared to the company. For Tesla, these are the technology, innovations in vehicles that it uses in its product segment.

Value Chain Analysis

SWOT analysis of Tesla

Task 2 – Strategy in Global Environment

Global market strategy

“Global strategy” can be understood as the Strategy that keeps various elements of business like the product, the market, the manufacturing site, the suppliers, and the competitors. There is a proper analysis of the product done, keeping both the local and international market in mind. Tesla Inc. has also developed worldwide plans to maintain its profitability, increase its growth rate and achieve a competitive advantage. Some of these strategies are: –

• Export – The company has involved itself in global operations in terms of selling.
• Joint ventures – Tesla, with the help of joint ventures, is actively grabbing markets in countries like China, America, and many more. This enables the company to reach out to their customers and in delivering their high quality services and products.
• A completely owned subsidy – The brand is known to put its customer’s demands and desires as a top priority (Giacobbe al. 2016). This helps the company understand what the customer wants and their perspective, which leads to innovations and the use of technologies to skim off the new prospective customer layer in the market.
• Strategic partnership and engineering firm in Germany – To extend its operations, Tesla is known to join its hand with various big companies. It also has collaborated with Panasonic, which is now its prominent supplier (Alghalith, 2018).

Global Strategy’s goal for Tesla

Every business that comes up with a strategy has a specific goal or motivation to fulfil. For Tesla, this goal is to operate and expand worldwide (Peng, 2021). They are working continuously to increase their profit brackets and expand their customer base internationally. This expansion will give the brand-new opportunities to expand in new areas and capture untapped prospective customers in developing nations (Perkins and Murmann, 2018 ). The company can also benefit from cheaper raw materials and labour while expanding globally.

Recommendations for Tesla at global level expansion

• Tesla should target to expand more in developing countries as it has more growth prospects to offer.
• The company can work on strengthening its customer satisfaction process to make the products more consumer-friendly, giving the brand a way to build more innovative and technically advanced products according to the customer needs.
• Market diversification, market development and expansion, and market penetration are some of the growth techniques that Tesla can use. These will give an upper hand in the company’s global expansion and market diversification strategies leading to new customer engagement (YANG and LIANG, 2017 ).
• Providing customers with the product at a pocket-friendly rate can be a good plan to expand the customer range for the company. Right now, the products offered are only high-end vehicles that are still out of pocket for most customers.
• The brand can also extend its operation in developed nations as it provides it with a well-developed market and stability both politically and economically. The company also gets access to advanced technologies (Wang and Peng, 2020).

TASK 3 – Corporate Strategy

With vertical and horizontal integration plans, the business has various benefits and risks. These integrations schemes are very much dependent on the corporate level plans of a particular firm which are mentioned below: –

Vertical Integration

This kind of integration helps the firm acquire other businesses inside the supply chain to strengthen the working and save costs (Strauss and Smith, 2019). This helps the company to sing the production in-house instead of outsourcing it. When the integration is done with firms providing raw materials, it is known as Backward interaction.

Tesla is very well in its operations and has a good supply chain, mainly engaged in vertical integration. The company has merged with vertical chains like electric motor manufacturing, battery manufacturing, and related systems. This helps the company reduce costs and boost profits (Naor et. al. 2021 ).

Horizontal Integration

When the company purchases or buys a competing company to accelerate its client base, expand the market or grow its profitability, it is known as horizontal integration. Tesla is mainly indulged in Vertical Integration, helping the company in sourcing.

Suggestions for Corporate Strategy in Tesla

The company is focused on vertical integration right now, and benefiting from this won’t be easy (Xue and Sun, 2022). They have currently faced one such disappointment in the Chinese market. To avoid this, they must work on capturing markets slowly and steadily. They should prioritize the company’s development.

TASK 4 – Strategic Purpose – Ethics and CSR

Carroll’s Pyramid

The model of Carroll’s Pyramid aims to get the purpose and way of firms’ engagement in CSR (corporate social responsibility). The below-mentioned Pyramid of CSR shows the basic design and structure that states why the company should take initiatives to accomplish obligations towards society (Ahmad and Khan, 2019 ). The Pyramid focuses on four primary responsibilities of Tesla that are Legal, Economical, Ethical and Philanthropic. Thus, the below-mentioned Pyramid can be used to analyze Tesla’s plans for CSR.

Figure 1: Carroll’s Pyramid for CSR

(Source: Janse, 2020 )

Ethical Problems of Tesla

Employee Regulation –

Health Safety – Tesla primarily focused on employees’ safety and health in 2017. But according to the case study, Tesla was unable to provide a good working environment to its employees resulting in Health-related symptoms like irregular breathing, fainting, and many others. This raised issues about the company’s safety concerns among its personnel (Borenstein et. al. 2017 ).

Workplace Safety – Tesla has received many allegations of workplace harassment and discrimination. According to one of the formal employees, Tesla’s working condition is highly racist. The company has also recorded several injuries to human resources at the workplace.

False and Misleading Statements

In 2017, Tesla was chastised for making deceptive statements in its three automobile models. This was just after the health and safety difficulties. Even though the organization claimed to be in profit in 2019, the claims are dismissed. This kind of action significantly deteriorated the company’s image (Moolayil, 2018).

Recommendation

Tesla is one of the top leading companies globally. From its unique suggestion method, it has gotten its position today. The firm is doing all right in terms of economic and social factors. The requirement here is to maintain proper reliable financial and accounting accounts. It should also stay away from incidents that harm the reputation and image in the market (Aybaly et. al. 2017).

Conclusion

From the above report and case study, it can be analyzed that Tesla’s internal and external environment study is crucial in developing growth plans and global strategies. This helps identify the company’s opportunities, strengths, competencies, and threats. Porter’s five model analysis, value chain analysis, PESTEL analysis, and VIRO analysis can also be used to develop plans. The report also describes Tesla’s business plan, worldwide Strategy, and CSR practices. There are also some suggestions and recommendations for the brand’s future growth and development.

References

Ahmad, S. and Khan, M., (2019). Tesla: Disruptor or Sustaining Innovator. Journal of Case Research, 10(1).

Akakpo, A., Gyasi, E.A., Oduro, B. and Akpabot, S., (2019). Foresight, organization policies and management strategies in electric vehicle technology advance at tesla. In Futures Thinking and Organizational Policy (pp. 57-69). Palgrave Macmillan, Cham.

Alghalith, N., (2018). Tesla: innovation with information technology. International Journal of Business Research and Information Technology, 5(1), pp.37-51.

Aybaly, R., Guerquin-Kern, L., Manière, I.C., Madacova, D. and van Holt, J., (2017). Sustainability practices in the luxury industry: How can one be sustainable in an over-consumptive environment?: Sustainability in the automotive world: The case of Tesla. Procedia computer science, 122, pp.541-547.

Borenstein, J., Herkert, J. and Miller, K., (2017). Self-driving cars: Ethical responsibilities of design engineers. IEEE Technology and Society Magazine, 36(2), pp.67-75.

Giacobbe, F., Matolcsy, Z. and Wakefield, J., (2016). An investigation of wholly‐owned foreign subsidiary control through transaction cost economics theory. Accounting & Finance, 56(4), pp.1041-1070.

Guangul, F.M. and Chala, G.T., (2019), January. Solar energy as renewable energy source: SWOT analysis. In 2019 4th MEC international conference on big data and smart city (ICBDSC) (pp. 1-5). IEEE.

Ingram, N., (2018). Tesla Motors: A Potentially Disruptive Force in a Mature Industry. International journal of management and applied research, 5(1), pp.8-21.

Janse, B. (2020). Carroll’s CSR pyramid. [Online]. Accessed from: <https://www.toolshero.com/strategy/carroll-csr-pyramid/>. Accessed on: 13^th January 2022.

Kauerhof, A., (2017). Strategies for Autonomous, Connected and Smart Mobility in the Automotive Industry. A Comparative Analysis of BMW Group and Tesla Motors Inc. GRIN Verlag.

Kim, H., (2020). Analysis of How Tesla Creates Core Innovation Capability. International Journal of Business and Management, 15(6), pp.42-61.

Mas, S.M., (2018). Tesla Motors. SWOT analysis and corporate strategy. GRIN Verlag.

Matthews, T., Hirve, M., Pan, Y., Dang, D., Rawar, E. and Daim, T.U., (2020). Tesla Energy. In Innovation Management in the Intelligent World (pp. 233-249). Springer, Cham.

Michie, J. ed., (2019). The handbook of globalisation. Edward Elgar Publishing.

Moolayil, A.K., (2018). The modern trolley problem: Ethical and economically-sound liability schemes for autonomous vehicles. Case W. Res. JL Tech. & Internet, 9, p.1.

Naor, M., Coman, A. and Wiznizer, A., (2021). Vertically Integrated Supply Chain of Batteries, Electric Vehicles, and Charging Infrastructure: A Review of Three Milestone Projects from Theory of Constraints Perspective. Sustainability, 13(7), p.3632.

Peng, M.W., (2021). Global strategy. Cengage learning.

Perkins, G. and Murmann, J.P., (2018). What does the success of Tesla mean for the future dynamics in the global automobile sector?. Management and Organization Review, 14(3), pp.471-480.

Pradhan, S., Bashir, M., Roy, S. and Nguyen, B., (2021). Corporate social responsibility and employee volunteerism: A broad overview of CSR through volunteerism. Sustainable Branding, pp.99-112.

Saxena, N. and Vibhandik, S., (2021). Tesla’s Competitive Strategies and Emerging Markets Challenges. IUP Journal of Brand Management, 18(3).

Strauss, N. and Smith, C.H., (2019). Buying on rumors: how financial news flows affect the share price of Tesla. Corporate Communications: An International Journal.

Teece, D.J., (2018). Tesla and the reshaping of the auto industry. Management and Organization Review, 14(3), pp.501-512.

Wang, J. and Peng, X., (2020). a study of patent open source strategies based on open innovation: The case of tesla. Open Journal of Social Sciences, 8(07), p.386.

Weldon, P., Morrissey, P. and O’Mahony, M., (2018). Long-term cost of ownership comparative analysis between electric vehicles and internal combustion engine vehicles. Sustainable Cities and Society, 39, pp.578-591.

Xue, K. and Sun, G., (2022). Impacts of Supply Chain Competition on Firms’ Carbon Emission Reduction and Social Welfare under Cap-and-Trade Regulation. International Journal of Environmental Research and Public Health, 19(6), p.3226.

YANG, S. and LIANG, C., (2017). Analysis on the Competitiveness of Tesla Development Mode and Its Enlightenment to the Development of Chinese Electric Vehicle Industry. DEStech Transactions on Environment, Energy and Earth Sciences, (epee).

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