MSc Management Global Strategy and Sustainability Sample
Introduction
Tesla is an automobile company which has had great success in the field of innovation and mounts a good strategic balance situated in the USA. In this report, the discussion will be conducted on the internal and external environment along with other critical factors that are affecting Tesla, the competitive advantages of the company, its strategy with the global environment, the ethical issues of Tesla and many more.
The report has a vivid intensity on the economy as well as the proceedings of the global market along with the planning that it has taken for its development.
Task 1 Internal and external environment analysis
Internal (SWOT)
| Strength | Tesla’s supply of batteries is safely hitched by the gigafactory along with the huge success of the Model 3 recorded in speeding 208 km/h which gave a robust advantage |
| Weakness | Tesla was unable to meet the time limit of the delivery which has been in the record in the incapability of the company. Not only that Tesla has recorded the delays in manufacturing and hence creates a list of the delayed productivity (Lugtu 2019) |
| Opportunity | Tesla has jointly ventured with a few companies which gave the company a robust taxation and revenue collection which may be termed in the opportunity level |
| Threats | Another threat for Tesla is the costs of the drilling tunnels which have been marked in the notice of the companies that were taking the company in the failure. The centres of the delivery are noted to be crowded with too many deliveries and mismanaged procedures which mark the incapability of Tesla that needs to be kept notice (Jiang, 2022) |
Table 1: SWOT of Tesla
(Source: Self-created)
External (PESTLE)
| Political | The USA holds a far-reaching parliamentary status in comparison with the other countries which again in turn affects Tesla in stabilizing the step for the development purpose. Recently the country has recorded in the directing the foreign finance in MNCs with its advancement in the framework which adds up to Tesla’s wish to develop the company globally |
| Economical | The Gross Domestic Product (GDP) graph indicates that in 2021 the GDP has increased up to 23 Trillion than in 2020 which was recorded to 20.89 Trillion hence the acceleration has enormously proved to be a success in strategic planning (Data.worldbank.org. 2022) |
| Social | Additionally, as the USA is a highly populated country and it evidences older people in the country than the youths hence there has been an issue of employment. Yet the issue the country deliberately delivers the employees with skills in the field of Tesla which has marked the growth of the company |
| Technological | Technically USA has kept itself in the foremost position hence Tesla has also kept in the technology development evolution with the high-level achievement of the strategy |
| Legal | The USA legal authority strictly implements several workplace laws such as Title VII of the Civil Rights Act of 1964, Equal Pay Act of 1963, Age Discrimination in Employment Act of 1967 and many more that support all the companies to maintain ethical work culture (Refer to Appendix 2) |
| Environmental | The environment with diversity in its weather and geopolitics encourage Tesla in developing strategies according to the climate and the geographical locations. The pollution in water has disturbed the ecosystem hence the company has developed and enhanced its strategies for an effective manufacturing process for not to be detected with hazards (Song and Pang, 2021) |
Table 2: PESTLE analysis of Tesla
(Source: Self-created)
3 critical factors from the above analysis
The strength has been seen as the critical factor that influences the company as it enhances the capability of Tesla leading to its development with advancement. Another critical factor is the social and the environment. Despite all the ageing factors that are climbing in the country, the skilled and technical and mechanically efficient employees are working effectively at Tesla. The beautiful diversity in the environment has given a robust effect on Tesla’s upbringing with rapid strategic and amendment planning.
Competitive advantages of Tesla and the way to maintain this
The competitive advantages of Tesla have noticeably put the company in the first position in terms of management and advancement which has brought the idea of innovation. Technologically Tesla has made the base concrete as the company is abandoned in the more strategic base rather than obtaining other company’s policies.
Tesla ensures the manufacturing with good effective solar power usage and it further regenerates the power for further use which is balancing sustainability and sales to collect more revenues (Endsley, 2017). Moreover, Tesla has taken its challenges as its positivity that it may change the mantra through its excellent plans the development.
Hence Tesla has brought the mismanagement of the delivery of the cars into consideration which has changed the strategy and has upheld its base to provide a systematic management process to securely handle the customers adequately.
Task 2-Strategy within the global environment
Evaluating how organisations enter foreign markets and the impact of international market expansion on Tesla’s corporate strategy
International market expansion is one of the business moves that every corporation attempts to execute during their reign within the competitive landscape since this said strategy is extremely beneficial for organisations to acquire a significant number of competitive advantages.
In that context, it might be stated that the first relevant strategy or framework that organisations follow to enter an international market is the Uppsala model of internationalisation, which is a step-by-step guide on how to enter a foreign market successfully (Vahlne, 2020).
Following the development of a relevant strategy, the most imperative aspect when it comes to entering the market of a different country is selecting a strategic and efficient market entry mode. In that context, it might be stated that several market entry modes are quite commonly-used by enterprises such as an international joint venture, direct exporting, opening a wholly owned subsidiary and more.
However, regarding Tesla’s business operations it might be stated that the company should initially adopt the strategy of an international joint venture to enter a different market as the given approach might enable the management to learn significantly relevant information about the domestic market of the host country (Nippa and Reuer, 2019).
That way the chances of not gaining any profit through the move of international market expansion will lessen and it is safe to say that, the given factor will be extremely beneficial for the organisation. It needs to be mentioned that the adopted strategy of international market expansion will help Tesla to capture more markets across the globe which will be a beneficial aspect for the financial aspect of the company and along with that, help them to acquire a significant amount of competitive advantage within the automotive industry.
Recommendations on different strategies Tesla might use to compete in the global market
It has already been mentioned that one of the most relevant strategies that Tesla might use to compete in the global environment is by entering the international market through the means of an international joint venture as that will significantly reduce the chance of financial risks.
Apart from that, the company should also attempt to capture the market of emerging markets such as India and other South Asian countries as it is perceived that these nations have a significant potential of becoming an impressive market for the automotive industry. Research has also confirmed that India is one of the nations that have significant potential to integrate disruptive innovation within its automotive sector and for that the automobile landscape in the country is emerging at an exponential rate (Pandit et al., 2018).
By doing that the company will get to spread its wings in various markets across the globe and by entering the markets that Tesla is currently not selling its vehicles in, it will acquire a more competitive advantage over competitors such as BMW, Audi, Mercedez and so on.
On the other hand, Tesla might also focus on the aspect of significant product diversification, meaning developing different kinds of compact vehicles other than cars such as motorbikes, electric scooters and cycles to ensure that their product range seems compelling to the majority of consumers globally.
However, the most significant aspect that might help Tesla to compete effectively within the global market is the corporation reduces the prices of their vehicles to a great extent, as it is perceived by many that Tesla vehicles are quite highly-priced and for that, the majority of people struggle to afford one. According to a report published by Forbes, it has been mentioned that Tesla is likely to lose out on competition from a financial perspective to General Motors, an organisation that is set to release significantly cheaper electric vehicles in the market shortly (Forbes.com. 2022).
Task 3- Corporate strategy
Evaluating the utilisation of vertical, and horizontal integration along with outsourcing or strategic alliances
Horizontal integration- The fundamental idea behind horizontal integration is the merger between two enterprises that are known to operate within a similar business landscape and their activities are also somewhat similar. It needs to be mentioned that by its nature horizontal integration is perceived to reduce competition between organisations in the market as the manufacturers of a certain product or service combine their resources to deliver a single item which could create a monopoly within the market.
According to research, such integration practices through a new generation of a global network of value chains are one of the primary characteristics of Industry 4.0 (Sun et al., 2020). In that context, Tesla has also collaborated with Toyota, which is another automotive corporation to develop technology for self-driving features in cars and that too without the requirement of an expensive sensor (Media.toyota.ca. 2022).
Therefore, it might be stated that by acquiring this given approach the competition between these two firms has lessened significantly as both manufacturers are attempting to develop single technology collaboratively.
Vertical integration- Vertical integration indicates the process of an organisation streamlining its operations at various stages and taking direct ownership of the company’s production processes as compared to depending on external suppliers or contractors. Therefore, it might be implied that a corporation that has implemented the process of vertical integration in its business operations has established a chain of suppliers, and distributors without outsourcing the same (Khurshid et al., 2020).
Figure 1: Vertical integration
(Source: Khurshid et al., 2020)
In that context, it might be stated that a major portion of Tesla’s production-related practices are executed within their in-house production facilities rather than outsourcing same as research has stated a high level of vertical integration is perceived toward recharging and battery network of the company (Chen and Perez, 2018).
Outsourcing or strategic alliances
Outsourcing is the process of hiring a third-party company for services that were otherwise executed within an in-house facility of a company. In that context, it has already been proven that Tesla has implemented the approach of vertical integration for a major portion of their production processes and thus, they are not known to outsource their operations to a great extent. However, if recent reports are to be believed then, it might be stated that Tesla is in talks with Samsung to make the next-generation chips for their self-driving cars (Reuters.com. 2022).
Recommendation on how Tesla might enhance their profitability
Several ways could be adopted by Tesla to ensure that its profitability is enhanced to a great extent and some of the most effective recommended approaches have already been discussed, however, the corporation could adopt different other strategies to improve its financial standpoint even more. One of those approaches that could be adopted by Tesla is outsourcing some of the parts of their business operations to countries in which the wages of employees are relatively low, especially in developing economies.
That way, they could save a significant number of financial resources and could utilise the time to focus on more important business decisions within their home country. On the other hand, Tesla could also focus on the aspect of merger and acquisition with other organisations in different countries as that way the company could also gain significantly more profit because according to research, the aspect of merger and acquisition has proven to be extremely beneficial for attaining the same (Zuhriet al., 2020).
Task 4
Tesla’s CSR strategy
Tesla mostly focuses on stakeholder engagement and has been creating an environment that has let the company be one of the most promising in the progression path of modern electric automobiles. It has been observed that Tesla uses social media for the promotion of Corporate Social Responsibility (CSR) ethics and has a highly sustainable method of market sustenance for a longer period (Corbett, 2020).
The leadership structure, if closely followed, may be addressed as Tesla’s corporate highlight and has made $50.4 million in revenue in a short time, which most companies having autonomous technology had not been able to (IMD business school. 2022). Additionally, the different CSR issues such as the environment; capacity loss and the mismanagement of transition to the consumption of electricity have been a problem in the CSR maintenance for Tesla.
The CSR includes taking care of the stakeholders and of the investors, where Tesla scores high using corporate innovation, through the introduction of the “Tesla Shareholder Platform” which uses fine stakeholder management effectively (Refer to Appendix 3). The sustainable strategy that is best applicable for Tesla may be referred to as the less cluttering of the ambiguity and defining the CSR ethics that goes for the automobile industry (Aybalyet al., 2017).
Tesla scores higher in the matter of representation of different ethnicities in the company culture, as the mix of different crowds and different cultures have been developed by Tesla, letting 62% of the people be in the company (Tesla. 2022).
Figure 2: Tesla’s representation of different ethnic groups in the company
(Source: Tesla. 2022)
Moreover, the company of Tesla had been converging to the differences in climate and restructured the entire climate change by controlling the emissions to reduce the negative impact on the environment, hence creating better CSR.
Ethical issues that Tesla has been facing
There are different ethical issues that Tesla has been facing by letting the exploitation of human resources and the exploration of the resources in a negative manner. In the camps of Uyghur, Tesla had been facing the issues of human rights breaching as the government of China had addressed the company (Refer to Appendix 4).
On a short note, another ethical issue that the company of Tesla has faced is the non-sustainable and lack of transparency in the carbon manufacturing or emission system chart, where the company have been not released any detailed pollution chart.
Recommendations to overcome ethical issues
The most effective way to ensure that all ethical issues faced by the corporation are addressed by the company is to create an efficient board of corporate governance. The fundamental responsibility of the given board is to overlook certain business aspects of a corporation to ensure that the business operations of the corporation are not being conducted unethically.
Moreover, research has also mentioned that the performance of a firm is also significantly related to the aspect of corporate governance and the effective implementation of the same helps firms to successfully improve their business operations to a great extent (Bhatt and Bhatt, 2017). On the other hand, it is also recommended that Tesla attempts to strengthen and improve their strategies of making a more robust Human Resource department.
They will also ensure that the management is treating their workforce fairly and improving working conditions at the workplace to prevent any unprecedented and unforeseen events from taking place. Tesla should always maintain their transparency to their stakeholders and release statements about every business move the corporation makes along with a pollution chart for the amount of emission created by their vehicles to ensure that the stakeholders are well aware of that.
Conclusion
From the above discussion, it may be concluded that the base of companies in this country is seen to be stepping ahead towards success hence the economy is enhancing at a pace that financially encourages Tesla to motivate its business strategy.
Tesla has made progress in the internal as well as the external belt of the management and the environment which gave the company robust success with high profits and revenue collection. Tesla got much appreciation in many other fields and hence has added its name to the world’s leading joint ventures which gave the brand the technological and good strategic planning to ensure sales.
References
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.
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.
Bhatt, P.R. and Bhatt, R.R., 2017. Corporate governance and firm performance in Malaysia. Corporate Governance: The international journal of business in society.
Chen, Y. and Perez, Y., 2018. Business model design: lessons learned from Tesla Motors. In Towards a Sustainable Economy (pp. 53-69). Springer, Cham.
Corbett, K., 2020. UNDERSTANDING HOW TESLA LEVERAGES TWITTER TO COMMUNICATE ENVIRONMENTAL CORPORATE SOCIAL RESPONSIBILITY.
Data.worldbank.org. 2022. GDP (current US$) – United States | Data. [online] Available at: <https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=US> [Accessed 19 September 2022].
Data.worldbank.org. 2022. GDP (current US$) – United States | Data. [online] Available at: <https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=US> [Accessed 19 September 2022].
Endsley, M.R., 2017. Autonomous driving systems: A preliminary naturalistic study of the Tesla Model S. Journal of Cognitive Engineering and Decision Making, 11(3), pp.225-238.
Forbes.com. 2022. How Tesla Lost The Race For Affordable EVs To An Unexpected Rival. [online] Forbes. Available at: <https://www.forbes.com/sites/alanohnsman/2022/08/05/how-tesla-lost-the-race-for-affordable-evs-to-an-unexpected-rival/?sh=4cd7b51e2acf> [Accessed 19 September 2022].
IMD business school. 2022. Research and knowledge from IMD business school. [online] Available at: <https://www.imd.org/research-knowledge/> [Accessed 19 September 2022].
ir.tesla.com. 2022. [online] Available at: <https://ir.tesla.com/_flysystem/s3/sec/000156459021004599/tsla-10k_20201231-gen.pdf> [Accessed 19 September 2022]
Jiang, T., 2022, March. A Business Model to Analyze the Tesla Based on SWOT Analysis and POCD. In 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022) (pp. 2896-2899). Atlantis Press.
Khurshid, F., Park, W.Y. and Chan, F.T., 2020. The impact of competition on vertical integration: The role of technological niche width. Business Strategy and the Environment, 29(3), pp.789-800.
Lugtu Jr, R.C., 2019. Tesla: Testing a Business Model at its (R) Evolutionary Best (Doctoral dissertation, DE LA SALLE UNIVERSITY-MANILA).
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 19 September 2022].
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.
Pandit, D., Joshi, M.P., Sahay, A. and Gupta, R.K., 2018. Disruptive innovation and dynamic capabilities in emerging economies: Evidence from the Indian automotive sector. Technological Forecasting and Social Change, 129, pp.323-329.
Reuters.com. 2022. [online] Available at: <https://www.reuters.com/business/autos-transportation/samsung-talks-with-tesla-make-next-gen-self-driving-chips-korea-economic-daily-2021-09-23/> [Accessed 19 September 2022].
Song, W. and Pang, Y., 2021. Research on narrow and generalized water environment carrying capacity, the economic benefit of Lake Okeechobee, USA. Ecological Engineering, 173, p.106420.
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. 2022. Electric Cars, Solar & Clean Energy | Tesla. [online] Available at: <https://www.tesla.com/> [Accessed 19 September 2022].
Tesla.com. 2022. [online] Available at: <https://www.tesla.com/ns_videos/2020-tesla-impact-report.pdf> [Accessed 19 September 2022]
Vahlne, J.E., 2020. Development of the Uppsala model of internationalization process: From internationalization to evolution. Global Strategy Journal, 10(2), pp.239-250.
Zuhri, S., Fahlevi, M., Abdi, M.N., Irma, D. and Maemunah, S., 2020. The impact of merger and acquisition on financial performance in Indonesia. Journal of Research in Business, Economics, and Education, 2(1).
Know more about UniqueSubmission’s other writing services:
