Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample Introduction
Globalization offers a variety of opportunities to business organizations. It offers them the capability to attain the desired position in numerous markets (Chen and Perez, 2018).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample
With the help of globalization, business entities can procure raw materials at a significantly lower price and enhance their profitability. This helps expand into the international market and reach new customers.
This present report is based on the electric vehicle company, Tesla. The company mainly deals in electric cars energy, storage batteries, and solar panels. This writing aims to evaluate the company’s internal and external business environment using different internal and external environmental models.
Further, it also involves assessing the strategies that the company adopts to expand in the global business market and the sustainable strategies of Tesla.
Task 1: The external and internal environment
To assess the company’s internal and external business environment, several frameworks and strategies tools can be used. Porter’s five forces model and pestle analysis can be used for external business environment analysis.
Porter’s five forces model
| Supplier bargaining power | The suppliers of Tesla have a low level of forwarding integration, and some of the suppliers of the company use a third party to sell their products. |
| Buyer bargaining power | Several competitors in the industry offer different types of products to the buyers to attract them. However, the force is moderate because Tesla is unique in its way as it offers required and innovative products to the customers. This helps the company in retaining customers (Bilbeisi and Kesse, 2017).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample |
| Threat of substitutes | The force is also moderate for Tesla because Tesla keeps updating its products with the latest innovations, and this is the reason that the customers are attracted to the company. However, it is also noticed that the rivals of Tesla, including Volkswagen and BMW, are also investing in this field and competing with the company (Wang and Peng, 2020).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample |
| Rivalry | The leading giants, including Chevrolet and Volkswagen, are making the industry highly competitive. This is the reason that the company has a strong force in this dimension. Tesla is surviving in the automobile industry with the help of high-level integration strategies and innovative developments. |
| The threat of new entrants | This threat is low for Tesla because entering the automotive market requires well-developed infrastructure and heavy investment (Ahmad and Khan, 2019). http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment SampleAlso, Tesla has a strong brand image and a large customer base globally, which requires years. |
Pestle analysis of Tesla
| Political factors | The government applies numerous regulations and policies pertaining to global warming and pollution to the automotive sector. Tesla, too has to follow the rules and regulations (Liu and Meng, 2017).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample However, the company has the upper hand because it manufactures environment-friendly automobile products. Tesla uses renewable energy sources, and this is the reason that the company has the opportunity to expand into different nations easily, and thus the brand gets enough political support (Hoelzlhammer, 2018).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample |
| Economic aspects | This is concerned with the profitability of the company. The nation’s inflation, economic growth, interest, and exchange rates affect the company’s functioning. The purchasing power of the people of the nation is the most important aspect of the company. Thus, economic growth and conditions affect the company’s success and profitability. |
| Socio-cultural dimensions | These factors are concerned with the lifestyle of the customers, demands, and consumer behaviour (Cheong et. al. 2016).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample Tesla manufactures its products on the basis of the needs and expectations of the target market. Thus, Tesla offers a delightful experience to its customers by conducting market research and applying proper strategies. |
| Technological aspects | Tesla is a well-known company for technological developments and innovation. The company produces automobiles with the latest technologies, sustainable aspects, fuel efficiency, and different aspects. This attracts the customers and provides an efficient competitive advantage to the customers. |
| Legal factors | It covers several aspects, from employment laws to consumer rights. It has been observed that Tesla has maintained a good brand reputation that the company abides by the proper laws and regulations of the host nation (Wieland et. al. 2017).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample |
| Environmental aspects | Tesla is highly concerned about the environmental aspects, and thus sustainability is embedded in the strategy. It not only focuses on sustainable production but also has a sustainable supply chain, sourcing, and services. |
Furthermore, to assess the internal environment of Tesla, Porter’s value chain, SWOT, and VRIO analysis framework can be embraced.
SWOT analysis
| Strengths | · Global strong brand image
· Focus on innovation and technology · Unique business model |
| Weaknesses | · Customers are hesitant to adopt electric vehicles
· Huge investment and high risk |
| Opportunities | · Expansion in developing countries
· Effective marketing for enhancing the demand for electric vehicles |
| Threats | · Competition in the automotive sector
· Political regulations · Less availability of the infrastructure that supports the production of electric vehicle (Sharma, 2016). |
VRIO analysis
| Resources and competencies | Value | Rare | Inimitable | Organized | Implications |
| Brand Image | yes | yes | no | yes | Provides a strong competitive benefit |
| Procurement of Raw Material | yes | yes | yes | yes | competitive advantage |
| Pricing Strategy of the company | yes | no | yes | yes | Temporary Advantage |
| Human Resource Management | yes | no | yes | yes | Competitive Advantage |
| Financial basis | yes | no | no | no | Temporary Gains |
| Marketing strategy | yes | no | yes | no | Temporary Advantage |
| Logistics and Distribution channel of Tesla | yes | no | yes | yes | Competitive Benefit |
Valuable resources:
It has been identified that the valuable key resource of Tesla is its brand image and identity. Tesla is well renowned for its innovative technological developments and sustainable initiatives.
Rare resources:
Further, the rare resources and capabilities of Tesla have been assessed as to its process and policies of procuring raw materials.
Tesla focuses on sustainable operations and manufacturing facilities, emphasizing sustainably sourcing its materials and having a strong relationship with its suppliers (Strauss and Smith, 2019).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample
Inimitable resources:
From the above table, the critical inimitable resources of Tesla have been evaluated as to its pricing strategy, human resource management, and marketing strategy. Any other organization cannot imitate the expertise and specialization of the employees of Tesla. Tesla embraces a highly strategized approach to recruiting employees.
Organized resources:
Lastly, the organized resources of Tesla are its logistics and distribution channel.
Value chain analysis
| Primary activities | Secondary or support activities |
| · Business operations: The company’s manufacturing plants are in the Netherlands, China, and California. Thus, Tesla needs in-house operations management and coordination between various working units (Wang et. al. 2021).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample
· Marketing and sales: The company’s marketing and sales are dependent on the unconventional model and heavily rely on word-of-mouth marketing. · Inbound logistics: The brand has a specialized line of products, and thus it has a large number of suppliers globally. |
· Infrastructure: In this activity, Tesla involves legal matters, accounting, quality management, and strategic management.
· HRM: Tesla is able to maintain the competitive benefit in the industry through its workforce. · Technology development: The cited company banks on innovation integration in product designing and technology for innovative products aspects. |
From the above analysis, it can be said that the three most critical factors are technological advancements, the innovative business model, and the focused strategic policies of Tesla. These three are the most crucial aspects of Tesla impacting its profitability and productivity.
Task 2: Strategy in the global environment
Global strategy can be defined as a strategy that involves different business elements, including competition, market, suppliers, product, and production site. This comprises the product analysis on the basis of domestic and international standards. In order to maintain its growth and enlarging market share, Tesla enters the foreign market (Shao et. al. 2021).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample
Thus, it can be said that the biggest motive for Tesla expanding internationally is to broaden its market share, develop a large consumer base, and serve all over the world. The company’s international expansion strategy impacts the overall company strategy because Tesla needs to develop its operations and function as per the global business strategy. There are various ways of entry into the international market.
Greenfield investment: Tesla understands the needs of the customers and puts their needs and demands at the top. This is the technique of creating own subsidiary in another country. This approach and technique help the organization understand the customer perspective and build innovation and technologies as per that.
Strategic partnership: It has been identified that to expand the business operations in the international market, Tesla believes in partnership and collaboration methods (Ferreira, 2019).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample
Export: Tesla sells and offers its automotive products globally in accordance with the need of the customers.
Joint ventures: With the help of joint ventures, Tesla is actively operating in several countries from China, America, and other countries.
An engineering company in Germany: Panasonic is a global business organization that is considered one of the most prominent suppliers of Tesla.
Every company has its specific motivation for building a new strategy. In the case of Tesla, the biggest reason is to expand in the international market. Tesla always focuses on developing its profit margin and expanding the customer base worldwide (Niedermeyer, 2019).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample Expansion on a global base gives Tesla a new opportunity to expand into new regions and capture untapped clients in various developing countries.
In this regard, the key recommendations for Tesla are to compete in the global environment and expand the business in established countries and take advantage of the economic and political stability.
Such companies also have a necessary technical advancement, which can further be an opportunistic situation for Tesla. It is also recommended that the company target developing country markets as they have a scope for expansion, and the consumers are likely to pay what the company demands.
Some of the key development and growth strategies that can be used by Tesla are market penetration, development, diversification, and expansion (Bredenfeld et. al. 2020). All these methods will help Tesla expand globally, and on the other hand, current market diversification will help in attracting a new customer base.
Furthermore, the company can strengthen its consumer satisfaction process to allow the company to develop technologically advanced products as per the consumer choices. Tesla is recommended to introduce a new business division that can offer budget-friendly customers. Till now, Tesla has offered high-end vehicles.
Task 3: Corporate strategy
Horizontal integration:
Horizontal integration can be defined as the type of competitive strategy, and in this, all the companies are combined at the same supply chain level under control or coordination. It is evident that before this process, the businesses competed with each other.
Horizontal integration offers numerous benefits, including increasing financial capability, enlarged market share, and cost-effectiveness of the company (Gali, 2020). http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment SampleThe key uses of horizontal integration can be evaluated as knowledge transfer between different entities and reducing the extent of rivalry in the industry. This also increases the bargaining power over customers and suppliers.
Vertical integration:
On the other hand, Tesla implements vertical integration techniques in its business to achieve different strategic objectives. It has been identified that the vertical integration strategy of Tesla helps in innovating new products and introducing the network required for the widespread adoption of vehicles (Alghalith, 2018).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample
Some of the key benefits linked with the vertical integration of the companies are reduced prices for the customers, better quality control, and a decrease in risk in the supply chain. The vertical integration technique is also beneficial in formulating a positive difference equation by anticipating the information and formulating stability.
Strategic alliance:
A strategic alliance is one of the key strategies that help the business achieve success by realizing the business objectives. In addition to this, it is also useful in developing competencies and generating numerous sources of competitive advantages.
The strategic alliances for Tesla are proficient in reducing competitive threats and managing strategic choices (McCain, 2019).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample
Strategic alliances are beneficial in reducing the risks linked to the business. It has been identified that in the year 2014, Tesla came into an agreement of alliance with Panasonic Corporation, which is a Japan-based company and is a world leader in battery technology. With this alliance, Tesla has gained numerous benefits, including sharing expertise and resources and new market penetration.
Recommendations
In order to increase the revenue and profitability ratio of Tesla, there can be several recommendations. As the company aims at increasing its profitability, it has several opportunities to find new customers in the untapped market (Matthews et. al. 2020). http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment SampleNew customers are advantageous for the company in ensuring the growth and development of the business. Finding and attracting new consumers can be said to be one of the most cost-effective ways to enlarge the customer base and thus generate revenue.
Furthermore, it is suggested that the company can review its existing pricing approach or strategy. The prices of the products offered by Tesla are comparatively high than the competitors.
This is not affordable and budget-friendly for middle-level income consumers. Therefore, to target that market, Tesla can develop such a pricing strategy so that more consumers can be targeted. Apart from this, another business strategy can be decreasing the overall expenses of the company in order to increase profitability (Shalender, 2018).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample This is possible by eliminating the direct cost associated with the business.
The decrease in the overall direct cost will positively impact the gross margin. In addition to this, Tesla can focus on managing its warehouse practices and inventory in an efficient manner. An effective and managed supply chain is a crucial aspect of the automotive industry. This is because the equipment, parts, tools, and other supplies are in major demand in manufacturing automobile products. The timely and on-time availability of such stock is an added advantage for Tesla to reduce unnecessary costs, avoid delays, and maintain profitability.
Task 4: Strategic purpose
Carroll’s pyramid describes why a business undertakes its corporate social responsibility and elaborates on the way it carries it out. This model signifies mainly four types of responsibilities of the company (Teece, 2018).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample These have been identified as economic, ethical, legal, and philanthropic responsibilities. Hence to analyze the strategies adopted by Tesla, this pyramid can be taken into consideration.
Economic responsibility:
Economic responsibility is the first dimension in the model. This comprises the company’s commitment to its earnings and generating profit. In the context of Tesla, as the company deals in the electric car market by using sustainability concepts, the company generates jobs for numerous people. It offers millions of employment opportunities for society and thus contributes to economic development.
Legal responsibilities:
It has been analyzed that Tesla functions in fair and lawful legislation regarding legal responsibilities. It expands its business practices in the international market by concentrating on the host nation’s rules, regulations, and laws (Orozco, 2016).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample Moreover, the selected business organization is also committed to abiding by the legal aspects of the nation involving equality, discrimination and wages, and health and safety parameters. It is evident that maintaining legal aspects facilitates the smooth functioning of the business organization.
Ethical responsibilities:
Tesla has been examined as a dedicated organization that follows ethical and moral principles to create a culture of transparent and fair practices in the workplace. The company believes in being loyal and trustworthy with its individuals in the company so that they can also trust the business decisions. Tesla works in ethical business culture (Fisher and McCabe, 2019).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample
Philanthropic responsibilities:
Lastly, considering philanthropic responsibilities, Tesla is the type of Business Corporation that is protected and determined towards nature and the environment.
The selected organization contributes its revenue to the development of society as well as the environment. This is why it is focused on sustainable and eco-friendly initiatives and practices that help reduce the overall carbon footprint.
Ethical issues:
In the context of ethical issues of Tesla, it has been observed that in the year 2017, Tesla was accused of releasing false and misguiding statements about the production of model 3 cars. A proper investigation has also been carried out to audit the manufacturing figures in this case.
Further, after two years, this case was dismissed, and the result announcement was made favoring Tesla. However, the questioning of the misleading statements and accounting policies has badly impacted the corporation’s brand image (Liu, 2021).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample Therefore, in this regard, it is recommended that the company preserve its financial documents and accounting records transparent to not hamper the overall brand image.
Further in 2019, the company was again accused of repeatedly neglecting the quality of air regulations.
Apart from this, it is observed that most of the employees working in Tesla have been symptomized as chest pain, fainting, and abnormal breathing. It has been identified that the symptoms occur because of the inappropriate working conditions.
This incident of Tesla has questioned the company’s work environment and safety precautions. There has also been instancing found when Tesla has not reported the injuries of employees to make their safety records appear clean and better (Strauss and Smith, 2019).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample
The company has faced some other issues in the context of workplace harassment and racial discrimination. An employee of Tesla has elaborated the work environment of Tesla as “a racist place.”
In this situation, it is recommended that the company focus on the health and safety aspects of the employees and stick to the regulations.
Apart from this, to deal with the issues of harassment, the supervisor can be recruited to train the workforce regarding such issues and report this as soon as possible (Shao et. al. 2021).http://Msc management GLOBAL STRATEGY AND SUSTAINABILITY Assignment Sample
Tesla can also offer safety equipment to their employees and assess the work conditions of the workplace on a timely basis. To reduce the cases of discrimination and harassment, opinions and feedback of the workers, mainly female workers, can be taken within a particular time period to identify their concerns and perceptions.
Conclusion
From the above analysis, it can be summarized that Tesla is one of the most sustainable and innovative-oriented organizations. The report discloses the internal and external assessment of the business environment of Tesla using different models.
Moreover, the report summarizes the major ethical issues that the company is facing, and recommendations are also elaborated in writing. Furthermore, it also evaluates the mode of entry strategies in the international market as well as the motive for expansion.
References
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