MSc Management Global Strategy and Sustainability Assignment Sample 2023
Introduction
In this report, the efficiency of Tesla has been taken into consideration from the external and internal verge on account of the in-depth study that visualizes the global environmental strategy. Moreover, corporate strategy is taken for exaggerated discussion of social responsibilities and ethics that made Tesla for advancement.
Task 1- Environmental analysis
Pestle (External)
| Political | The government of the United States has made up the steps for the use of natural resources hence Tesla has advanced for the voltaic cars hence the use has been started with the implementation |
| Economy | The Gross Domestic Product (GDP) rate of the United States has grown from -3.4% in 2020 to 5.7% in 2021 which has influenced the economy of the country along with the business in an innovative way (Data.worldbank.org. 2022) |
| Social | Tesla has made the way for the acceptance of people for electric-powered cars as it is cheap and reuses energy along with the maintenance of sustainability which the country is focusing on |
| Technology | The US is focusing on the development with innovation in technology development however Tesla has made the entry in the list with advanced innovation and power back system |
| Legal | Tesla follows the international environmental regulations as the legal channel of ten USA is fit for the automobile production hence needs to follow all the measures that the nation is offering (O’Sullivan et al., 2019) |
| Environment | The USA is experiencing an arid and hot climate that again is preferred for Tesla hence the focus on electricity moreover the gas is gifting the nation with the preferred addressing |
Table 1: Pestle analysis of Tesla
(Source: Self-created)
SWOT (internal)
| Strength | The most important among all necessary strengths of Tesla is the storage of batteries that influences much along with necessary backups that the company has. The use of solar power has made the gross input and output of Tesla in different and more robust way which also adds up to strength |
| Weakness | The weakness that Tesla has is the drilling shaft’s cost that is bothering the customers hence the manufacturing and the demand did not go hand in hand. Making new partnerships are in a way making a weakness for the company as the stakeholders are facing many issues that are to be compared with other brands |
| Opportunity | Tesla is the first to use solar energy by abandoning the use of gas which adds up to the list of opportunities along with checking the carbon emission from the cars. Tesla compares the previous issues delivered by the company and enhances with the new and ultra-developed technical changes and amendments (Alghalith, 2018) |
| Threat | Too much innovation again leads to an under-demanding situation hence are more captive to the competition which may lead to the downtown of the company. Many customers are not readily accepting the changes that the company makes hence miscommunication happen and leads to a threat to the company. |
Table 2: SWOT analysis of Tesla
(Source: Self-created)
3 factors from the above analysis
From the above analysis, it may be stated that the technical growth of the country USA has enormously influenced the vision of Tesla hence the development happens according to that. Along with the balance of the strength is overpowering Tesla with a huge potential hence solar energy works as a boon for the company. There are many shortages of batteries which count up to the weakness of Tesla and the need to lower the challenge with the help of efficiency.
The challenges that are the weakness needs to be focused on more hence the straight and the technical growth will be kept under the consideration of the knowledge base for the company’s strategy.
Sources of competitive advantages and maintain
Tesla scores high concerning competition as it is made out of connectivity, upheaval, and comprehension that controls the base of the company with the advancement in different ways. The company is subjected to building up vehicles that concentrate on innovative designs that are based on the different dimensions of advancement of the software that makes the customer satisfied in various ways.
From a report, it has been derived that the marketing strategy of Tesla has a robust influence on the global market as it has released many assets at a lower rate so that the selling level may increase to a higher level (Ahmad and Khan, 2019).
Figure 1: Tesla’s competitive advancement and maintenance
(Source: Ahmad and Khan, 2019)
Tesla in the global market has a big touch hence the strategies that are made for growth and decent has marked the changes in the new version. Tesla has always maintained its way towards development hence despite the economic crisis Tesla has remarkably made its way to the attraction of many new customers with effective results (Wang and Peng, 2020).
Task 2- Global environment strategy
Evaluating how companies enter a foreign market
Entering a foreign market might be perceived as a significantly complex task if a business does not have a significant amount of knowledge regarding how to capture different markets efficiently. According to research, the Uppsala model of internationalisation describes some predictions and influential aspects that turn into competitive advantages, their contribution and limitations (Igwe et al., 2021).
Figure 2: The uppsala model of internationalisation
(Source: Igwe et al., 2021)
The given framework is one of the most-used models when it comes to the aspect of a business entering a foreign market and the step-by-step guide provides them with a better understanding of the concept. By adhering to the theory it might be stated that the corporations are firstly required to gather a substantial amount of knowledge about the market they want to enter to determine the relevant strategies that might need to adopt to attain the same.
Moreover, the model also states that businesses that want to expand to an international market often choose a nearby country as opposed to choosing a distant international market initially and in such cases market knowledge is significantly aligned with market commitment.
Furthermore, the firms by adhering to the Uppsala internationalisation model attempt to get hold of the market information by effectively utilising human resources to ensure that they have every detail possible before adopting the most efficient strategy for entering the given foreign market.
The motives of Tesla to enter the international market
The motive of Tesla to enter the international market is quite evident, which is to increase its global presence by capturing significantly more international markets and reach its goal of creating an energy-efficient and sustainable future globally. On the other hand, another motive that could be taken into consideration regarding the corporation’s decision to enter an international market is to increase its competitive advantages to many folds as it has become quite clear that brewing competition is prevalent within the automotive industry.
Especially, the rise of electric vehicles and the alarmingly growing sales of the same are contributing effectively to increasing the competition as the majority of the corporations are attempting to enter the said business domain (Muratori et al., 2021).
It is safe to say that major automobile companies such as Audi, Mercedez, BMW, Lexus and more have a significantly more global presence than Tesla. Moreover, lower-priced models have been introduced by several companies in international markets and that is also increasing the competition for Tesla (Forbes.com. 2022).
For that, it might be implied that the corporation might have lagged in reaching the equal number of consumers as the mentioned enterprises and for that Tesla also wants to enter a different international market. It is safe to say that the given business move might be extremely helpful for the company and will enable them to compete within the global automotive industry more strongly and that will further lead the enterprise to increase their financial gains ten folds as well.
Recommendations regarding different strategies Tesla might use to compete in the global environment
One of the most significant recommendations that might be useful in such a scenario is the selection of the best possible market entry mode for the company and for that, it might further be suggested that Tesla chooses the approach of an international joint venture while entering an international market. The adaptation of the said market entry mode will align with the Uppsala model of internationalisation since it will help them to partner with a local company of the target market and gain relevant information about the same which will make the process of internationalisation easier for Tesla (Parameswar et al., 2018).
On the other hand, it might further be recommended that the company should outsource some of its operational activities to a different country as that will ensure that the core business functions that take place in the home country are being ignored due to the process of taking the firm to a global level.
Task 3- Corporate Strategy
Horizontal integration
The aspect of Horizontal integration is perceived to be a competitive strategy that allows companies operating within the same value chain to merge for creating certain services or products that might increase their competitive advantages in the market. Research states that the implementation of horizontal integration through the means of a global supply chain network is the primary characteristic of the new Industry 4.0 (Sun et al., 2020).
On a broader note, the fundamental gain that could be derived by implementing the process of horizontal integration is a subsequent increase in market power along with fewer chances of acquiring higher-loss.
In the context of Tesla, it has come to light that the corporation has collaborated with companies that operate within a similar industry, such as Toyota to create a product that has supposedly increased their competitive advantages in the market. Reports state that both companies in collaboration have decided to make prototypes for the electric version of the RAV4 electric vehicle in the USA and the same will be made by combining the RAV4 model Toyota along with the electric powertrain of Tesla (Media.toyota.ca. 2022).
Vertical integration
The aspect of vertical integration is an extremely common corporate strategy that allows corporations to streamline their operations by undertaking direct ownership of multiple stages of production as opposed to depending upon any eternal party to do the job for them. On a broader note, a corporation might succeed in acquiring vertical integration by establishing their chains of suppliers, contractors, distributors, manufacturers and other parties involved in a supply chain in comparison to hiring a third party to do the same for them.
That way companies have the significant potential to reduce their operational cost to a great extent as they rely upon their in-house production for several business activities. Research has also confirmed that the production structure of the company includes a significantly high degree of vertical integration which further includes the production of components and infrastructure for proprietary charging (Ahmad and Khan, 2019).
Figure 3: Vertical integration
(Source: Ahmad and Khan, 2019)
Strategic alliances
Strategic alliances or outsourcing refers to the practice of giving responsibilities for some of their business operations to a third-party company for ensuring that the management is capable of focusing on the more important business aspects for the betterment of the organisation. However, from the above-mentioned analysis, it has become significantly evident that the corporation does not rely much upon outsourcing its activities as the majority of operational activities of Tesla are conducted with the help of its internal teams.
Therefore, in comparison to the aspect of vertical and horizontal integration, it might be implied that the outsourcing or strategic alliances of Tesla are relatively low, based on the evidence found in this report. According to research, the practice of logistic outsourcing has been broadly accepted by organisations to increase operational flexibility and for the effective implementation of these outsourcing aspects, they need to be met with successful governance mechanisms (Zhu et al., 2017).
Recommendations on how Tesla might enhance their profitability
The first recommendation that might be useful for the case of Tesla is that the company should target different markets in every continent and more important emerging economies such as India that hold great potential for the automotive market.
A report published by McKinsey has stated that the sales of automobiles in emerging markets such as India, and Brazil have not only proven to be significantly resilient, it has further surpassed the predictions of experts (Mckinsey.com. 2022).
In addition to that, the company should also focus on creating more charging stations across the countries in which they operate as that might further compel them to buy a Tesla vehicle since it has been reported that the lack of charging stations could be a potential predicament for the sale of electric vehicles (Engel et al., 2018).
On the other hand, the company should also focus on creating different kinds of products such as electric buses, scooters and more to become compelling to a wider range of audiences.
Task 4- Corporate Social Responsibility and Ethics
Evaluation of Tesla’s CSR strategy using Tesla’s theoretical model
The Corporate Social Responsibility or the CSR models followed by Tesla, the leading automotive organisation in the United States of America are Carroll’s pyramid and the stakeholder models of the company. The environmental and economic factors are being emphasised by Tesla according to Carroll’s pyramid framework to bring sustainability in the business operations Tesla is engaged in the environmental contributions towards society by providing numerous eco-friendly efforts such as reduction of Carbon Footprints, lessening GreenHouse Gas emissions and endorsement of zero-emission transport and vehicles.
Moreover, the comparative lifetime impact examination of the Electro Vehicles and ICE vehicles is done to maintain environmental sustainability. Tesla is also concentrating on the formation of factories locally indicates a step ahead towards the economic sustainable situation regarding the profitability of the business. Apart from that, the emission credit system is also embraced by Tesla to preserve the economic equilibrium by the sale of the emission credits for around $1.5 billion in revenue scenario (Tesla.com. 2022).
Figure 4: Carroll’s Pyramid of CSR strategy
(Source: Tesla.com. 2022)
Another CSR strategy model named Friedman’s CSR model is also being followed by Tesla to enhance sustainability and to develop corporate social responsibility strategies concerning business executions. The firm and abrupt belief of Friedman was that the organisation is supposed to be responsible for the optimization of the profitable circumstances for the shareholders and the owners of the organisation (Brin and Nehme, 2019).
Additionally, Tesla is focusing on professional consistency along with the maintenance of social responsibility obeying the Friedman CSR model. Certain ethics and values are supported by Tesla such as dignity, equality respect without any biases and discrimination to maintain the terms with the shareholders in operating regions.
Tesla is also involved with returning the desired profit to the shareholders and keeps an equivalency with the social contribution and responsibilities linked with the business objectives. The shareholder profitability graph of Tesla is tending toward the high-scale quadrant as it has been shown the shareholder transaction has grown from -5.14% as of November 2021 to + 22.78% within July 2022 (Refer to Appendix 2).
Identification and Critical Discussion of the main ethical issues of Tesla
Tesla is suffering from multiple ethical issues that are ceasing the chances of success for the business operations of the company and bringing threats to ethical sustainability. Religious discrimination and harassment are some of the corrupt ethical practices that are circulated extremely within the work environment of Tesla.
The Department of Fair Employment of California filed charges against the company for the strong and exhausting racism over the colour preferences in one of its factories Tesla situated in California (Miah, 2022). Gender discrimination is also high in Tesla as the organization is extensively male-oriented which leads the women employees approximately towards zero power.
Furthermore, there are numerous allegations of sexual harassment violating the ethical aspects of the workforce of Tesla including the sexual preferences towards the promotion of employees. Based on the accusations of a female engineer of Tesla, she has been expelled from the organisation after protesting against the nefarious gender and sexual preferences (The Guardian. 2022.) Tesla is also facing financial threats and destructions surrounding the business operations for the existing toxic work culture and corrupted unethical work environment.
Recommendations for the addressing and mitigation of the issues of Tesla
- It should be recommended to Tesla to show and prove equality and communal unity towards all the employees irrespective of the colour, race, community and genders
- Further, it should be suggested to the organisation to stay away from the vindictive practices and deeds of sexual harassment to the female employees and in any case of sexual disrespect the victim should be prioritized
- It will certainly be suggested to this company that the organisation has to discard the toxic work culture involving the intolerances among the employees and illegitimate sexual preferences on promotions
- More should be advised to Tesla, to build an employee-friendly work- environment for the reason of the eradication of the ragging, bullying and tormenting mindset of the employees toward the colleagues
Conclusion
Finally, it may be concluded that it might be stated that one of the most common approaches that the majority of corporations are known to adopt for their successful venture into a global market is their adherence to the theoretical framework regarding the Uppsala model of internationalisation. However, entering an international market is a relatively complex task as several different aspects are associated with the given matter and for that, the management might be under quite a pressure to ensure that they have made the most effective decision by entering a market.
The overwhelming work pressure might slow down the operational activities within the home country of the company as it is implied that they will be significantly more focused on entering the international market. In the case of Tesla, it might be stated that the corporation has implemented the approach of vertical integration within its business operations as Tesla is known to conduct a significant part of its business activity with an internal production team.
References
Ahmad, S. and Khan, M., 2019. Tesla: Disruptor or Sustaining Innovator. Journal of Case Research, 10(1).
Alghalith, N., 2018. Tesla: innovation with information technology. International Journal of Business Research and Information Technology, 5(1), pp.37-51.
Almenhali, A., Alhajeri, H., Almansoori, H., Aljneibi, N., Almansoori, N., Alsulaity, N., Mohammed, Y. and Nobanee, H., 2021. Financial Analysis of Tesla. Available at SSRN 3896901.
Brin, P.V. and Nehme, M.N., 2019. Corporate social responsibility: analysis of theories
Data.worldbank.org. 2022. GDP growth (annual %) – United States | Data. [online] Available at: <https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=US> [Accessed 29 September 2022].
Engel, H., Hensley, R., Knupfer, S. and Sahdev, S., 2018. Charging ahead: Electric-vehicle infrastructure demand. McKinsey Center for Future Mobility, 8.
Forbes.com. 2022. Competition Heats Up For Tesla In EV Market. [online] Forbes. Available at: <https://www.forbes.com/sites/mikepatton/2022/03/30/competition-heats-up-for-tesla-in-ev-market/?sh=579daac03423> [Accessed 29 September 2022].
Huang, Y., 2019, February. A Potential Company or Not: the Analysis of Tesla. In 2019 4th International Conference on Financial Innovation and Economic Development (ICFIED 2019) (pp. 401-407). Atlantis Press.
Igwe, P.A., Rugara, D.G. and Rahman, M., 2021. A Triad of Uppsala Internationalization of Emerging Markets Firms and Challenges: A Systematic Review. Administrative Sciences, 12(1), p.3.
Mckinsey.com. 2022. [online] Available at: <https://www.mckinsey.com/industries/automotive-and-assembly/how-we-help-clients/emerging-markets> [Accessed 29 September 2022].
Media.toyota.ca. 2022. Tesla Motors and Toyota Motor Corporation Formalize Agreement to Develop Electric Version of RAV4 | Toyota Canada. [online] Available at: <http://media.toyota.ca/releases/tesla-motors-and-toyota-motor-corporation-formalize-agreement-to-develop-electric-version-of-rav4> [Accessed 29 September 2022].
Miah, M., 2022. Black workers sue Tesla over systemic racism. Green Left Weekly, (1341), p.15.
Muratori, M., Alexander, M., Arent, D., Bazilian, M., Cazzola, P., Dede, E.M., Farrell, J., Gearhart, C., Greene, D., Jenn, A. and Keyser, M., 2021. The rise of electric vehicles—2020 status and future expectations. Progress in Energy, 3(2), p.022002.
O’Sullivan, S., Nevejans, N., Allen, C., Blyth, A., Leonard, S., Pagallo, U., Holzinger, K., Holzinger, A., Sajid, M.I. and Ashrafian, H., 2019. Legal, regulatory, and ethical frameworks for the development of standards in artificial intelligence (AI) and autonomous robotic surgery. The international journal of medical robotics and computer-assisted surgery, 15(1), p.e1968.
Parameswar, N., Dhir, S. and Ongsakul, V., 2018. Purpose of international joint venture and interaction post termination. Journal for Global Business Advancement, 11(6), pp.687-705.
Regnery, S., Knowles, B.R., Paech, D., Behl, N., Meissner, J.E., Windisch, P., Harrabi, S.B., Bernhardt, D., Schlemmer, H.P., Ladd, M.E. and Rieken, S., 2019. High-resolution FLAIR MRI at 7 Tesla for treatment planning in glioblastoma patients. Radiotherapy and Oncology, 130, pp.180-184.
Strielkowski, W. and Chigisheva, O., 2018. Social, economic, and academic leadership for sustainable development of business and education in the future: an introduction. In Leadership for the Future Sustainable Development of Business and Education (pp. 3-8). Springer, Cham.
Sun, J., Yamamoto, H. and Matsui, M., 2020. Horizontal integration management: An optimal switching model for parallel production system with multiple periods in smart supply chain environment. International Journal of Production Economics, 221, p.107475.
Tesla.com. 2022. [online] Available at: <https://www.tesla.com/ns_videos/2021-tesla-impact-report.pdf> [Accessed 29 September 2022].
The Guardian. 2022. She took on Tesla for discrimination. Now others are speaking up. ‘It’s too big to deny’. [online] Available at: <https://www.theguardian.com/technology/2017/jul/05/tesla-sexual-harassment-discrimination-engineer-fired> [Accessed 29 September 2022].
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.
Zhu, W., Ng, S.C., Wang, Z. and Zhao, X., 2017. The role of outsourcing management process in improving the effectiveness of logistics outsourcing. International Journal of Production Economics, 188, pp.29-40.
Self-evaluation
Task 1
From Task 1, I have come through the PESTLE analysis of Tesla for the political, economic, social, technological and environmental scenarios of the company over the operation region of the United States of America. I have learnt about technological innovations, the impact of GDP on economic growth, social acceptance of EV vehicles, influences of climate change and environmental factors on the business growth of Tesla. SWOT analysis of Tesla was also observed by me surrounding the existing strength, weak points, opportunities and threats of this Company. I have seen three factors analyzed with proper references regarding the strengths, opportunities and weaknesses of Tesla, especially from a technical aspect along with the sources of competitive advantages of Tesla
Task 2
From task 2, I came to know about the global environment strategic approach of Tesla to expand its business operations and product endorsements over the worldwide market. The evaluation of the ways of the foreign market entrances of the organisations and the reasons for the entry of Tesla in Foreign markets are being observed by me in this task.
I have observed that the4 theoretical model or framework of the Uppsala model of internationalisation has derived the ways of entrance into the global market. I have also come to know that Tesla is planning to enter the global market to enhance its business operations globally and to enhance the brand value of automotive productions on a worldwide basis
Task 3
I have learnt about the corporate strategy of Tesla and the procurement of horizontal integrations, vertical integrations, strategic alliances and recommendations about the increment of its profitability of Tesla. I also got to know that horizontal integration is the form of competitive strategy that initiates the companies within a similar value chain to merge and endorse competitively advanced products.
On the other hand, vertical integration revolves around the concept of the ownership of multiple productions by a company without depending upon any other source party or organisation resulting in the formation of an autonomous chain of suppliers. I watched the matter of strategic alliance as a helpful strategy to enhance the business operations of the company by providing adequate responsibilities to another organisation.
Task 4
From task 4, I have learnt about the corporate social responsibilities of Tesla and the relevance of obtaining Carroll’s pyramid framework and Friedman’s framework model regarding the factors of social sustainability. The environment and economic strategies taken by Tesla are being observed by me with the significant references and instances procured from the CSR report of Tesla.
In addition, the ongoing ethical issues and the consequences such as sexual harassment, gender bias, and religious discrimination in the workplace of Tesla are also being studied by me in this task. Proper recommendations that were given for the removal of these discriminations and corrupt practices to bring ethical sustainability to Tesla were also the key factors of learning for me.
