MSc Management Global Strategy and Sustainability Assignment Sample 2023
PART A: Business report
Introduction
Global strategy can be defined as a set of actions or strategies that are used by an organisation while planning its expansion of business in the international market. Multi- domestic, international, transnational and global are various global strategies that could be used by a firm to grow ahead its business.
Sustainability is the ability of an enterprise to support and maintain the environmental, social and economic condition of a country so that maximum benefits can be enjoyed by a firm. This report is based on the case study of a well-known company named Tesla that has planned to provide electric vehicles, sonar panels and many other benefits to customers.
It will also highlight crucial information related to the external and internal environment that affects Tesla, the strategies it has used to enter into foreign market. Furthermore, it has explained about the corporate strategy and ethical practice being promoted by Tesla through making use of models.
Task 1 -The External and Internal Environment
Models related to external and internal environment for Tesla
External analysis
Pestle of Tesla
Political factors: Tesla is the company which has a good network and outreach in the various parts of the globe in order to achieve the targets and objectives effectively and efficiently. This results in minimal control over the political factors as the company needs to deal with different legal, political and regulatory factors in the process (Friesendorf and Uedelhoven, 2021).
Tesla while performing business activities at international level is affected by the risk associated with the processes that result in decrease of the sale of the brand products in the market. Company has make international trade agreement to cope with external policies of the government (Tesla PESTEL Analysis, 2021). Such as:
Figure 1: Tesla PESTEL
(Source: Tesla PESTEL Analysis, 2021)
Economic factors: Changes made in the economic conditions of the country is the result that is gained with the changes made in other external factors. In some of the developing countries of the world, the automobile industry is known as the luxury segment (Matthewset. al. 2020). Tesla is one of the expensive brands which manufacture cars for the people in order to save fuel and use renewable energy such as electricity.
Social factors: Nowadays everyone in society is looking to decrease the carbon footprint in the environment. So, the idea of manufacturing electric cars in the market sounds to be more interesting and promising in society. Tesla has the good opportunity to cover the demand and supply of the automobile sector in order to earn maximum profits (Pestle Analysis, 2021).
Figure 1: Pestle Analysis
(Source: Pestle Analysis, 2021)
Technological factors: Tesla is all famous because of it capturing the latest technology in the market. A recent launch of Tesla was a self -driving car which is automated by the innovative software prevailing in the car (Kissinger, 2019). This shows the perfect combination of advanced technology used by Tesla in order to capture the luxury market.
Legal factors: For expansion in various countries a company needs to stay tuned in the matter of legal matters such as international patents and copyrights. In some countries direct selling will not be allowed. This results in going with the dealers in that market (Chen and Perez, 2018).
Environmental factors: Everyone in the world is now moving towards a sustainable future. Customers are purchasing electric vehicles to cut off their fuel expenses as well as saving the environment in the process of achieving the environmental goal (Lin et. al. 2022).
Porter’s five Model
Competition in the industry (strong force): In today’s period of time the automobile industry has strong force because it is highly competitive in the environment. Tesla makes the top rank stand in the industry by using innovative technology in the process (An intelligible and comprehensive strategic analysis of Tesla, 2021). The company also has a good marketing strategy which helps in dealing with the competition prevailing in the automobile industry. The below image depict about the market position of the Tesla in automobile industry. Such as:
Figure 2: Comprehensive strategic analysis of Tesla
(Source: An intelligible and comprehensive strategic analysis of Tesla, 2021)
Threat of new entrance (moderate force): In case of Tesla Porter’s five forces the threat of new entrants is low in the industry. For developing a good automobile brand in the market, it involves high cost as well as time in the process (Jing, 2020). So, this discourages new companies from entering this market.
Bargaining power of suppliers (weak force): Tesla is not dealing with one supplier in the process, but it has a number of multiple suppliers in the process to achieve the goal (Shu,2022). This makes a moderate force of Porter’s five forces in the bargaining of suppliers of Tesla in the environment. The graph represents the high demand of Tesla car by customers so less chances to negotiate (Tesla Porter’s Five Forces Analysis, 2021). Such as:
Figure 3: Tesla Porter’s Five Forces
(Source: Tesla Porter’s Five Forces Analysis, 2021)
Bargaining power of customers (strong force): The influences of bargaining power of customers by low volume or turnover. Such as, customers make the purchase of one or two units at the same time for their personal use (Han, 2021). It is easy to switch in the automobile sector as it doesn’t involve much cost which results in strong force in the process.
Threat of substitute (strong force): The threat of substitute is moderate in the process because there are limited substitute options available in the market. There are not many options in the electric versions of the automobile segment in the market (Friesendorf and Uedelhoven, 2021).
VRIO
| Key capabilities | Valuable | Rare | Imitable | Organised |
| The Gigafactory | Yes | Yes | No | Yes |
| Brand image | Yes | Yes | No | Yes |
| Human resources | Yes | No | Yes | Yes |
| Battery pack & power train technology | Yes | Yes | No | Yes |
| Infrastructure | Yes | No | Yes | Yes |
From the above table it can be analysed that the battery pack & power train technology, the Gigafactor, human resources and infrastructure of the company are too valuable. Such as, companies have focused on each and every element to enjoy a high profit margin.
Human resources and infrastructure is not rare as such types of employees and facilities could also be imitated by other organisations (Teece, 2018). At last, all the capabilities are well organised that helps in delivering services to customers in appropriate time frame and cost.
Value chain of Tesla
Primary activity
Inbound logistics: Tesla is the manufacturing company which converts raw material into the best finished product in the environment. This includes storing of raw material and distributing the different components in order to make the perfect product in the process (Alghalith, 2018).
Inbound logistics of the company needs to maintain the records of the raw material entering the manufacturing plant that will be used to manufacture the product in the process.
Operations: Company has various manufacturing units which are working independently in different parts of the world (Teece, 2018). This needs both types of management such as in-house management with managing different units in order to establish coordination to decrease wastage and gain maximum from the resources effectively and efficiently. This is added in the operations in order to add value to the system that leads to covering the competitive advantage.
Outbound logistics: This covers handling of the warehouse in order to schedule the delivery on time to the customer to make them satisfied in the process. The company is more focused towards increasing the satisfaction level of the customer by optimum cost of delivery of the vehicle with guarantees involved in the process (Ingram, 2018).
Marketing and sales: Tesla believe in its product quality which leads to mouth publicity in the process. This increases the promotion between the potential customers and results in increasing the sales volume of Tesla products (Chen and Perez, 2018). Company invests zero in the marketing and sales department but through its quality it reaches the customer by media promotion or reviews in the market.
Services: Tesla provides after sale service by their service centres prevailing in the country. Companies also give home service by taking vehicles through towing vans in the process and make the appropriate service to have the smooth experience by the customer in the market (Jing, 2020).
Figure 3: Tesla Value Chain Analysis
(Source: Tesla Value Chain Analysis, 2021)
Secondary activity
Human resources: The company has around 1,10,000 employees that are highly talented, skilled and qualified to work for the organisation.
Infrastructure: Tesla has strong infrastructure, facilities and several stores that are used to deliver more qualitative services to customers (Tesla Value Chain Analysis, 2021).
Three critical emerging factors
From the above pestle, porter five force, VRIO and value chain analysis, it has been identified that there are three critical emerging factors, such as:
Technology: Automobile industry is hugely impacted because of development or changes in existing technology hence it has provided electric vehicles and stunning sonar roofs that could integrate battery storage (Ahmad and Khan, 2019).
Customers taste and preferences: It has been identified that most of the customers want to have cars that provide them more safety and facilities. So, it has developed self-driving capabilities which are 10 times better than manual fleet learning (Kissinger, 2019).
Sustainability: With a lot of harm being caused by many companies to the external environment, both government and customers have laid emphasis on sustainability (MacDuffie, 2018). Hence, Tesla has provided a sustainable transportation method that could be used by passengers to enjoy their journey.
The manner in which Tesla maintained its competitive advantage
Tesla can easily gain competitive advantages through investing a huge amount of capital in research and development so that it could find more innovative methods to provide products and services. The image below depicts the overall growth in sales and profit gained by the company through selling electric vehicles to end customers (Dana, 2018). Likewise, there are more than 500,000 pre-order pertaining to Model 3 with a deposit of around 1000. Such as:
Figure 4 Plug in sales and growth
(Source: What Is Foreign Direct Investment (FDI)?, 2021)
Task 2 – Strategy in the Global Environment
Model used by company while entering into foreign market and why firm have motivated to expand
Company before planning to enter into any foreign market needs to invest in the research and development department to know about the actual taste and preferences of customers, economic conditions and many more. Such as, it will help in knowing about the market condition and planning strategies to attract maximum customers in the firm.
Furthermore, companies make use of different foreign market entry strategies such as- licensing, franchising, joint venture and foreign direct investment and many more (What Is Foreign Direct Investment (FDI)?, 2021). Out of all foreign market entering strategy, Tesla has made use of foreign direct investment as it helps the company in effectively connecting with the customers and satisfying their wants beyond their expectancy level.
Figure 4: Foreign Direct Investment (FDI)
(Source: What Is Foreign Direct Investment (FDI)?, 2021)
In 2009, the company initially internationalised its business through employing a strategy of direct selling by opening new stores and services centres worldwide. It does not have made use of the franchisee model as other companies in the automobile industry, as it thinks that direct selling offers better services, inform customers about the car (Ingram, 2018).
Thus, they are able to make the final decision to purchase products and services and fulfil their wants in the desired manner (Market entry strategy, 2021).
Figure 5: Market entry strategy
(Source: Market entry strategy, 2021)
Ansoff matrix
Market penetration: The company has opportunities to earn high profit margins through selling products in the existing market and existing products by providing offers, discounts and other benefits to customers.
Product development: Moreover, Tesla has made use of transactional strategies in different countries that has helped the company in effectively adapting itself with the changing environment and growing ahead (Artemenko and Yakovliev, 2020).
Market development: For market development it has made foreign direct investment in which it has provided more personalised and qualitative services to customers.
Diversification: Company before planning to enter into a particular market has invested in researching the taste and preferences of customers thereby deciding to offer electric vehicles. This has contributed to reducing the associated risk and enjoying a high profit margin (Brondoni et. al. 2019).
Tesla has been motivated to expand its business in the international market because there is huge demand for electric vehicles, sonar panels and other innovative products among the customers that are living across the world. Moreover, the vision of the company is to “accelerate the world’s transition to sustainable energy through providing electric vehicles that are better than gasoline cars.
Suggestion for various strategies used by firm to stay ahead in global environment
Tesla could stay ahead in global environment through abiding to different suggestion which can be illustrated as:
- Firstly, companies need to focus on improving their customer service as there are many individuals that are not satisfied with its services and there are many recalls. Hence, Tesla needs to improve its facilities, technology used in electric vehicles to meet the expectancy of customers (Dana, 2018).
- Secondly, it is suggested that Tesla needs to understand the changes happening in the external environment and timely adapt itself with them to grow and continue its operation for many years.
Task 3 – Corporate Strategy
Use of outsourcing, horizontal, vertical and strategic alliance
Corporate Strategy is a multi-level strategy being used by a firm with a motivation to clearly define its overall structure and set goals. Through this company is able to plan the manner in which it could utilise the available resources to attain the end objectives.
Companies that are internationally expanding are making use of horizontal, vertical and strategic alliance or outsourcing strategies. While, in the context of Tesla, it has made use of vertical integration strategy and strategic alliance as corporate strategy.
For example, in 2014, Tesla made a partnership with Panasonic Corp which is Japan based company and leading consumer electronic firm and battery technology. It is one of the suppliers of batteries for Model S in the joint factory of Buffalo.
Furthermore, the company wants to have partnerships beyond batteries, that is, self -driving technology and many more (The remarkable story of Tesla’s partner, Panasonic, 2018). Tesla has also decided to make partnership with Tencent (which is Asia’s second high tech firm) and Grohman is taking steps for reconstructing the advanced automation facility of the company to provide extreme qualitative services to end users.
Figure 5: Tesla’s partner with Panasonic
(Source: The remarkable story of Tesla’s partner, Panasonic, 2018)
In addition to this, Tesla has also made use of vertical integration, that is, it is manufacturing all its products in house only as compared to other automobile companies. It has contributed Tesla to reduce its dependency on supply chain and hardware and software (Brondoni et. al. 2019).
Likewise, the gigafactory is where the battery for electric car is being manufactured to be provided to the end customers. In short, this has helped Tesla in gaining control on overall production of the company by less depending upon the suppliers (The remarkable story of Tesla’s partner, Panasonic, 2018).
Suggestion related to the way Tesla can increase its profit margin
The manner in which Tesla could increase its overall profit margin is:
- Through adding more products in its portfolio, taking feedback from customers and employees to know what all challenges they face and the manner in which they could be overcome.
- Secondly, through reducing its cost of production of vehicles or any products to be offered to end users for earning high profit margin (Alghalith, 2018).
Task 4 – Strategic Purpose – Ethics and CSR
Evaluate of CSR strategy of Tesla through Carroll model
The Carroll model is a framework that helps in determining how and why social responsibilities are being undertaken by Tesla. Such as:
- Philanthropicresponsibility: Tesla has a vision to bring changes within the society through giving back to the society or doing things that are beneficial for the society (Schultz and Seele, 2022). Likewise, it has introduced the electric vehicle and sonar panel and other products that have changed the lives of people and contribute sustainability.
- Economic responsibility: Tesla has always emphasised on taking decisions related to finance on the basis of earning high profit rather than doing good things for society (Guo and Zhang, 2018). Through offering sustainable products it is only able to earn a certain amount of profit but build a strong reputation to provide products that are beneficial for people.
Figure 6: Carroll’s CSR Pyramid
(Source: Carroll’s CSR Pyramid PowerPoint Template Diagrams, 2021)
- Ethical responsibility: However, Tesla is not able to abided to ethical responsibilities as it has forced employees to work overtime, discriminated against them on the basis of caste, religion and gender and many more. It has also not lay efforts on providing healthy and safe environment, good salary so that the employees could be motivated to work for benefits of company (MacDuffie, 2018).
- Environmental responsibility: Company is highly engaged in the environmentally friendly practices such as- reducing the pollution, wastage of products and services and harmful gases in the environment (Carroll’s CSR Pyramid PowerPoint Template Diagrams, 2021). That is the electric vehicle provided by the Tesla is energy efficient and contribute in ensuring safety of individual. This has led to a healthy and safe environment for people to live.
Discussion of main ethical issue and their relative suggestion
There are many ethical issues which Tesla is facing such as accounting scandal, unethical workplace practices, Misuse of taxpayer money, Musk’s unfulfilled promises and safety issues. The overall suggestion in context of the same are:
- Companies need to improve their workplace, accounting practices through hiring talented workforce and monitoring all the activities or tasks being completed in the enterprise.
- Secondly, Musk needs to think before making promises to retain the trust and confidence of investors, customers and many other stakeholders that are interested in the firm (Gao al. 2021).
Conclusion
From the above report it can be summarised that Tesla is a huge enterprise despite the fact that it has faced several external challenges that have negatively impacted on the overall operation of the business. The study also helped in learning that strategic alliance and use of vertical integration has contributed in delivering more personalised and timely services to customers.
It has also helped in understanding that companies have not effectively abided by ethical practices which have a negative impact on its reputation. At last, it can be stated that through improving its performance Tesla can gain competitive advantages.
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.
Artemenko, S. and Yakovliev, A., (2020). The role of social and media communications in the modern economy.
Brondoni, S.M., Bosetti, L. and Civera, C., (2019). Ouverture de CSR and Multi-Stakeholder Management’. Symphonya, (1), pp.1-15.
Chen, Y. and Perez, Y., (2018). Business model design: lessons learned from Tesla Motors. In Towards a Sustainable Economy (pp. 53-69). Springer, Cham.
Dana, C., (2018). A Strategic Audit of Tesla, Inc.: Electrifying our Future or About to Run out of Energy?.
Friesendorf, C. and Uedelhoven, L., (2021). Macro-Environment of Mobility. In Mobility in Germany (pp. 11-17). Springer, Cham.
Gao, J., Ji, W., Liu, J., Shao, S., Wang, Y. and Shi, F., (2021), December. AMF-CSR: Adaptive Multi-Row Folding of CSR for SpMV on GPU. In 2021 IEEE 27th International Conference on Parallel and Distributed Systems (ICPADS) (pp. 418-425). IEEE.
Guo, P. and Zhang, C., (2018), December. Performance Prediction for CSR-Based SpMV on GPUs Using Machine Learning. In 2018 IEEE 4th International Conference on Computer and Communications (ICCC) (pp. 1956-1960). IEEE.
Han, J., (2021). How Does Tesla Motors Achieve Competitive Advantage in the Global Automobile Industry?. Journal of Next-generation Convergence Information Services Technology Vol, 10(5), pp.573-582.
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.
Jing, N., (2020), December. Research on Tesla’s Customer Care Innovation. In 2020 Management Science Informatization and Economic Innovation Development Conference (MSIEID) (pp. 469-478). IEEE.
Kissinger, D., (2019). Tesla, Inc. PESTEL/PESTLE Analysis & Recommendations-Panmore Institute.
Lin, P., Lu, Y. and Xu, Z., (2022), March. Tesla’s Dilemma and Future Development Trends. In 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022) (pp. 2174-2180). Atlantis Press.
MacDuffie, J.P., (2018). Response to Perkins and Murmann: Pay attention to what is and isn’t unique about Tesla. Management and Organisation Review, 14(3), pp.481-489.
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.
Schultz, M.D. and Seele, P., (2022). Ethics and Sharing Economy Platforms: A Pathway to Data-Driven and Peer-to-Peer Platform CSR. In New Economies for Sustainability (pp. 139-152). Springer, Cham.
Shu, J., (2022), April. Analysing the External Environment and Industrial Competition of High-tech Companies. In 2022 7th International Conference on Social Sciences and Economic Development (ICSSED 2022) (pp. 76-80). Atlantis Press.
Teece, D.J., (2018). Tesla and the reshaping of the auto industry. Management and Organization Review, 14(3), pp.501-512.
Pestle Analysis, 2021, [Online]. Available Through: < https://stock.adobe.com/bg/search/images?k=pestle+analysis >.
Tesla Value Chain Analysis, 2021, [Online]. Available Through:< https://www.edrawmax.com/article/tesla-value-chain-analysis.html>.
The remarkable story of Tesla’s partner, Panasonic, 2018, [Online]. Available Through: <https://www.teslarati.com/tesla-partner-panasonic-history/>.
Carroll’s CSR Pyramid PowerPoint Template Diagrams, 2021, [Online]. Available Through: <https://www.slidesalad.com/product/carrolls-csr-pyramid-powerpoint-template/>.
What Is Foreign Direct Investment (FDI)?, 2021, [Online]. Available Through: <https://blog.investyadnya.in/what-is-foreign-direct-investment-fdi/>.
Understanding Porter’s Five Forces Model (How to Use It + Template), 2021, [Online]. Available Through: < https://www.semrush.com/blog/understanding-porters-five-forces-model/>.
Tesla PESTEL Analysis, 2021, [Online]. Available Through:<https://research-methodology.net/tesla-pestel-analysis-2/>.
An intelligible and comprehensive strategic analysis of Tesla, 2021, [Online]. Available Through:<https://assignmenthelp4me.com/strategic-analysis/tesla.html>.
Tesla Porter’s Five Forces Analysis, 2021, [Online]. Available Through:< https://research-methodology.net/tesla-porters-five-forces-analysis-2/>.
Market entry strategy, 2021, [Online]. Available Through: < https://fourweekmba.com/market-entry-strategies/>.
Self-evaluation
| Analysis | Grade |
| Task 1 – The External & Internal Environment | Make use of internal and external model, mentioned about 3 emerging factor so will get merit. |
| Task 2 – Strategy in the Global Environment
|
Mentioned about foreign direct investment and use Ansoff so get distinction. |
| Task 3 – Corporate Strategy
|
Will get merit mark as mentioned about partnership, vertical integration being used by Tesla. |
| Task 4 – Strategic Purpose – Ethics and CSR | Carroll model used to understand CSR activity and its issue so get distinction. |
