MSc Management Global strategy and sustainability Assignment Sample
Introduction
The global strategy is business guidance that helps the organisation to accomplish business goals. The global strategy is a process of expanding the business worldwide and in a competitive market, global strategy and sustainability are equally important for growth (Haessler, 2020).http://MSc management Global strategy and sustainability Assignment Sample In this report, the first task will show the competitive advantage of the Tesla company with internal and external analysis.
The critical analysis of the global strategy and gaps will be identified to implement an effective global strategy for entering new markets. The report will also include various analyses related to supply chain and CSR for effective practices to enhance the current global and sustainable strategy.
Company Overview
Tesla Inc. is an American Company that was established in 2003, headquartered in Austin, Texas, United States. The company is an American electric vehicle and clean energy company with the most valuable automaker in the world with a market capitalization of $1 trillion.
The company designs and manufactures electric cars, energy battery storage consisting of home grid-scale, solar panels, solar roof tiles related to energy saving (Ajitha and Nagra, 2021).http://MSc Management Global strategy and sustainability Assignment Sample The company sells most of the electric vehicle batteries, plug-in electric vehicles capturing 16% of plug-in electric vehicles and 23% of the battery electric vehicle market.
The company subsidiary Tesla Energy is a major installer of photovoltaic systems in the US and is the largest supplier of battery energy storage in 2020. The current revenue of the company is $31.5 billion in 2020 and the CEO is Elon Musk.
Task 1
External analysis
The automobile industry analysis will be considered in this section with the help of Porter’s five forces model.
Porter’s five forces model
The level of competition: The automobile sector is a very huge industry with less possibility of switching and entering the market as the investment is very costly. The competition for the industry is few and the most focus of the companies are on innovation, for effective expansion of the market globally.
The industry is in the mature stage of the product life cycle and the company tries to collaborate for innovativeness rather than competition. Renault, Nissan, and Mitsubishi collaborated in 2020 to minimise competition also Fiat Chrysler and PSA collaborated as 50-50 agreement on 2019 (Richter, 2020).http://MSc Management Global strategy and sustainability Assignment Sample The graph below will show the trend of collaboration within the automobile industry.
Figure 1 M and A of the automobile industry
(Sources: Richter, 2020)
Bargaining power of buyers: The power of negotiation for battery cars are very medium with a limited number of automobile sector operating in electric cars (Bhatia and Gangwani, 2021).http://MSc Management Global strategy and sustainability Assignment Sample
However, the customer luxury, convenience, covid-19 protocols and increased the industry demand for personal cars lowering the negotiation power.
Bargaining Power of supplier: The supplier power is also very medium as the supplier are largely available across the globe with easy access to local vendors for body parts to manufacture the final unit of the cars (Kirubagharan et. al. 2020).http://MSc Management Global strategy and sustainability Assignment Sample The third-party supplier is also available to distribute the materials which weakens the supplier negotiation power.
The threat of substitute: The substitute is available in terms of bus, bicycle, train, and more. But the convenience of personal cars with various features is not available in the substitutes.
Therefore, the substitute threat is very weak in terms of the automobile industry.
Internal analysis
The internal analysis of VRIO will help to identify the resources and capabilities of the Tesla company to analyse the competitive advantage of the company.
VRIO Framework
| Capabilities | Valuable | Rare | Inimitable | Organised | Advantage |
| Brand image | yes | yes | yes | yes | Sustainable Competitive advantage |
| Innovation | yes | yes | yes | yes | Sustainable competitive advantage |
| Customer experience | yes | yes | yes | yes | Sustainable competitive advantage |
| Product range | yes | No | yes | yes | Temporary competitive advantage |
| Market position | yes | yes | yes | yes | Sustainable competitive advantage |
| HRM | yes | yes | yes | yes | Sustainable competitive advantage |
Brand image: The brand image of Tesla is the one of core competencies of the company as it brings innovation in terms of electric vehicles to battery storage capacity that helps to save money in electricity bills (Hsu et. al. 2021).http://MSc Management Global strategy and sustainability Assignment Sample The company has a solar grid of power installation at home for generating electricity to charge batteries.
Innovation: It is known for its technology and focuses on high-quality products that satisfy human wants. The self-driving technology, touchscreen to control the driving of the car by the owner, the tesla app to control the car from outside are facilities that are highly innovative (Whittington et. al. 2020). http://MSc Management Global strategy and sustainability Assignment Sample
The Tesla car models’ advanced battery is more effective than any EV car in the market and this has helped to bring more other products that are very sustainable and eco-friendly. The battery storage with supercharging features at roof panels of solar energy preservation services are also provided by the company. These are the sustainable competitive advantage of Tesla Inc.
Customer experience: The first experience is the Tesla range of products that gives more superior features than other cars. The EV premium models are very superior in design and are safer to operate with low maintenance costs. Cars are Zero carbon emission that protects the environment (Tantau and Frăţilă, 2021).http://MSc Management Global strategy and sustainability Assignment Sample
As people are concerned about the environment, so this feature is providing a better customer experience. The self-driving experience, with low battery maintenance, no fuel cost are some features that have increased the experience of the customer.
Product range: The product range is limited to Model 3 that gain popularity with mid rage pricing and Model X, S, and Y are premium-priced cars that have various features and benefits. But the company needs to focus on manufacturing units to cater to the popularity of the demand.
Market position: The market positioning of the company is very superior as its focuses on providing higher value to the customer and the battery services are very unique with solar panels that help store energy (Galpin, 2019).http://MSc Management Global strategy and sustainability Assignment Sample The driver safety and self-controlling feature are also market values that is enhancing the market position of the company acting as a sustainable competitive advantage.
HRM: The HRM strategy of Tesla is unique which not only focuses on recruiting a talented workforce but also values creativity and innovation with good training and development centre facility (Johnson and Whittington, 2020).http://MSc Management Global strategy and sustainability Assignment Sample The company enhances employee motivation with well-paid schemes to provide a work culture that values the technology to improve innovativeness.
Critical evaluation of the SWOT
Strength: From the above analysis it can be identified that technology, brand image, and employee are the asset of the company that helps to compete in the market effectively (Griggs, 2021).http://MSc Management Global strategy and sustainability Assignment Sample The electric vehicle features, battery storage is very innovative and unique that provide value to the price paid off by the customers.
Weakness: The product range is limited and it can be a challenge in the future as the customer demand will be high for the variety of product range from a company that provides technologically advanced products.
Opportunities: The opportunity is the low bargaining power of customers and suppliers in the industry. The negotiation power is weak that will provide benefit to the company to charge a price for the technology invented that will minimise the carbon footprint.
Threat: The product range of the cars is very limited with mostly premium sector segmentation. Model 3 is the only mid-priced car available as an EV in the company (Pontes, 2021). http://MSc Management Global strategy and sustainability Assignment SampleThe low rice competitor from the existing brands is increasing which will threaten the company in the future.
Figure 2 World plug-in vehicle sales
(Sources: Pontes, 2021)
Task 2
Models to analyse the strategic benefits for Tesla in international expanding
Exporting (Direct selling strategy): Direct selling is employed by the tesla company for entering the new market. The traditional style of franchising is not used by the company for dealing with clients across the world.
The service coverage of the cars is covered by the company itself without dealers to deal with clients (Liu and Meng, 2017). http://MSc Management Global strategy and sustainability Assignment SampleThe company goes for online booking to direct sales to the customers across the world which is the reason for limited access to cars by clients as compared to other competitors.
The company website booking is the option available for the customer to buy the cars and the online booking with 35 countries access is available for the clients by the company as direct selling mode.
Partnership and strategic alliances: The strategic alliance with the local partnering is another partnership approach implemented by the Tesla company to enter the new market.
The China import tax currently is 25% and the US car import to China becomes more expensive for the company due to tax regulation (Kim, 2020). http://MSc Management Global strategy and sustainability Assignment SampleTherefore, the company alliance with local partner Tencent in developing AI for driverless cars. Tesla became the largest investor in China with this alliance.
Tencent has strong backing from the China government so it became crucial for operating in China market with the establishment of local production of cars in Shanghai.
Acquisition: The company has entered the new market of solar pale while acquiring the solar City in 2016. The solar energy business market has been a benefit for electric vehicle customers where the car owner can generate home energy and store electricity to charge the battery effectively.
The change has diversified the market with better opportunities from EV to clean energy solutions. The 2016 collaboration has increased the market opportunity for EV cars.
The company’s global expansion strategy was also with the German company name Grohmann collaboration in late 2016 (Hertzke et. al. 2019).http://MSc Management Global strategy and sustainability Assignment Sample The company acquired the German engineering firm Grohmann engineering for establishing new advanced technology as an automation facility based in Germany. This company was acquired to expand the market of the EV manufacturing units with an automatic process to lower the cost and the optimum utilisation of the resources at the highest quality to reduce the cost per vehicle.
This way the company is trying to decrease the cost to increase the customer base for expanding the international market internationally. The acquisition strategy is also with the Japanese company, Panasonic for exclusive battery supply to the model S in a joint factory in Buffalo, NY (Perkins and Murmann, 2018).http://MSc Management Global strategy and sustainability Assignment Sample The self-driving technology, battery supply are the current resources retained from Panasonic as a joint venture to penetrate the Japanese market. The Japanese taste for automatic cars has been able to expand and penetrate by the Tesla with Panasonic partnership.
Wholly owned subsidiary: Tesla has a subsidiary of Tesla Energy, Tesla Grohmann Automation, and Deep scale. Tesla energy sells solar energy generation photovoltaic, battery energy storage products apart from EV business (Liu, 2021).http://MSc Management Global strategy and sustainability Assignment Sample
The company also expand internationally with Tesla Grohmann automation in Shanghai, Arizona for automatic sensor products for processing electric cars. Lithium battery cells, power steering controllers, car doors were produced by this subsidiary unit. The strategy of the wholly-owned subsidiaries has enhanced the global market reach with quick production of the parts required for better customer services.
Recommendation
Similar product line strategic industry alliance: The Tesla company has not implemented the alliance with a similar industry to minimise the competition and expand business worldwide. The local merger is with energy automated companies for effective innovative parts.
The company needs to make strategic alliances with the company in the automobile industry that provides electric vehicles at a cheaper price to launch product range (Nazir and Shavarebi, 2019).http://MSc Management Global strategy and sustainability Assignment Sample It will help eliminate the shortage of customer demand in the future.
The product range is very limited and prices are very high in terms of EV. So, the company with collaboration with Tata, Mahindra, Hyundai, Ford, Nissan can enhance the market segment of the company with higher market expansion at the international level.
Franchising: The franchising must be initiated to parties where dealers will be operated across the world for better post-sale services and also for selling the cars at ease without waiting for months to get the products.
The company without a franchising strategy is losing the opportunity to expand in areas where internet access is slow but has a higher market opportunity (Burnakova, 2021).http://MSc Management Global strategy and sustainability Assignment Sample The lack of dealers for services may reduce the company market as clients hate to go miles for car services. Therefore, franchising will help to expand the brand showrooms for the effective availability of the cars and the services simultaneously.
Task 3
Tesla supply chain analysis
Vertical integration is used by the Tesla company as they mostly use the vertical backward integration to acquire the supplier that sells the raw materials for the company.
Integration with suppliers: The company used the raw materials of lithium, aluminium, nickel that helps to manufacture the body part of the EV cars. The company has partnerships that act as vertical integration to procure the raw materials forming alliances with local partners (Gianesello, 2017).http://MSc Management Global strategy and sustainability Assignment Sample
Panasonic is a company that was acquired by the Tesla company for supplying batteries and self-driving automatic technology to help in processing the car units with higher automatic technology (Jing, 2020).http://MSc Management Global strategy and sustainability Assignment Sample
The second supply chain strategy is outsourcing with the ABC group, Fisher dynamics for power seats, AGC automotive, LG energy solution, SK innovation, Samsung SDI for procuring the required raw materials. The company used the strategy of vertical integration to integrate with a high level of robotics automation for manufacturing the process of EV cars at ease with supplier collaboration.
The backward integration allows the company to outsource the subsystem in its own manufacturing process for quicker production (Bilbeisi and Kesse, 2017). http://MSc Management Global strategy and sustainability Assignment SampleIt provides the company the authority, flexibility and increases the supply chain with the least barriers to the company. The acquisition of the Solar city, Grohmann, and Tencent were also due to the strategy for accessing available supply with full control over the raw material at manufacturing units without interruption.
Figure 3 Supply chain strategy of Tesla
(Sources: Gianesello, 2017)
Tesla logistic strategy: In logistics, the company used the concept of forwards vertical integration strategy where the direct selling of the products is in the control of the company.
The company controls the distribution channel of the cars with direct exporting through online booking in websites rather than indirect selling or through third-party selling (Valentin, 2019).http://MSc Management Global strategy and sustainability Assignment Sample
It has its own prominent company-owned showrooms and galleries in urban centres for distributing the products. The service plus centre and showrooms have been widespread in 225 locations and online internet sales where customisation service is available for the customers with higher standards.
The vertical backward and forward components are the main approach for the company to integrate the supplier and also distribution channels with owned controlling power for managing the supply chain process.
The after-sale services and sales service centre are colluded to provide effective results and within 7 days the customers are approached in terms of unsatisfactory results within 1000 miles of radius.
Recommendation
Horizontal integration strategy: The supply chain strategy for better outcomes in product range must be to implement the horizontal strategy where the similar product line company must be merged. Also acquired for operating at the same level in the EV industry to eliminate the competition.
The horizontal integration will help to expand the company into the middle-income group segment that will help to enhance the range of products available in the market (Manna, 2017). http://MSc Management Global strategy and sustainability Assignment SampleThe company of Ford, Nissan, Hyundai, Tata will help to expand the business and also the distribution channel of the acquired companies to remote areas that needs customer services.
Volkswagen has a market value in the UK and BMW has EV market value in Germany. So, the strategy must be to merge with these companies for better market reach. The local distribution centres can be easily accessed with a higher product range by the Tesla company with horizontal integration.
Task 4
The triple bottom line to analyse the CSR issues
The Tesla CSR strategy will be analysed with these models.
Profit: The profit is the financial stability the company retains that helps to grow the company, expand the business and provide social facilities effectively. Tesla has good revenue every year due to the customer experience and level of technology provided to the customer by the company (Akakpo et. al. 2019).http://MSc Management Global strategy and sustainability Assignment Sample
However, the company is found in profit declination in 2020 as compared to 2019. $862 million was the profit in 2019 but in 2020 the profit is only $721 million and the reason is the limited range of product availability in the market. The cost efficiency is not able to be fulfilled by the company due to huge expenses on technology innovation and acquisition of suppliers than similar companies to expand the business.
People: The people are the asset of the company and Tesla values HR with more focus on innovation and training programs to bring creativity. However, the company increases the pressure on the employee regarding the technology up-gradation that overwhelm the employees.
The monetary benefits are equally distributed and fair enough as per the policy of the company (Coiro, 2021).http://MSc Management Global strategy and sustainability Assignment Sample The only problem of the workforce is the overwork load on the employees to develop skills for competing in the market. Fair treatment in terms of equality is maintained by the company. But with higher work pressure the company turnover rate of employees rated to 27% in 2020.
Planet: The planet is the environmental responsibility that stakeholders are concerned about and Tesla follows the protocols effectively with more focus on solar panels usage to minimise the energy usage.
The fuel usage has been reduced with EV cars and the solar grid concept minimised the electricity usage with the regeneration of energy through a battery storage facility (Tsai and Tan, 2021). http://MSc Management Global strategy and sustainability Assignment SampleThe carbon footprint reduction was the main objective of the company and the environmental responsibility are effectively been managed by the company.
Recommendation
The exporting strategy and vertical integration are the main reason for the profit decline. The company has to focus on expansion with franchising, acquisition, and merger with similar companies to integrate a distribution channel that will help to penetrate remote areas to expand the business.
The next is to increase the product range with an EV car manufacturing company that provides cars at a lower price to penetrate the middle-income group segment for enhancing the market internationally (Jennings, 2019). http://MSc Management Global strategy and sustainability Assignment SampleThe tax imposition is very high with direct selling, so the strategy must be to enhance franchising dealers to provide the cars and services for cost-effectiveness.
The acquisition with a local company will help retain the existing market with less tax imposition enhancing the international market base.
The company in terms of turnover issues should focus on motivational aspects focusing more on valuing employees rather than providing only monetary benefits (Maamoun, 2021).http://MSc Management Global strategy and sustainability Assignment Sample The counselling towards workers, the limited work to workers every day with less comparison in terms of performances will help reduce the turnover rate.
Conclusion
Thus, it can be concluded that the company has huge market value among customers. The company needs to focus on expansion with a more cost-effective approach for a better product range.
The horizontal integration, franchising, will help to acquire a local similar company that will help expand the company business into remote areas with more access to financial investment. Tesla Inc. has increased costs due to technology up-gradation and the company requires new product development with middle-income group market segmentation to expand and enhance its profitability.
References
Book and journals
Ajitha, P.V. and Nagra, A., (2021). An Overview of Artificial Intelligence in Automobile Industry–A Case Study on Tesla Cars. Solid State Technology, 64(2), pp.503-512.
Akakpo, A., Gyasi, E.A., Oduro, B. and Akpabot, S., (2019). Foresight, organization policies and management strategies in electric vehicle technology advances at tesla. In Futures Thinking and Organizational Policy (pp. 57-69). Palgrave Macmillan, Cham.
Bhatia, M.S. and Gangwani, K.K., (2021). Green supply chain management: Scientometric review and analysis of empirical research. Journal of cleaner production, 284, p.124722.
Bilbeisi, K.M. and Kesse, M., (2017). Tesla: A successful entrepreneurship strategy. Morrow, GA: Clayton State University.
Burnakova, V.Y., (2021). The impact of marketing innovations on international business.
Coiro, M., (2021). Tesla: Is Now the Time to Invest? An examination of Tesla, social media, and its effect on stock. An examination of Tesla, social media, and its effect on stock (August 19, 2021).
Galpin, T., (2019). Strategy beyond the business unit level: corporate parenting in focus. Journal of Business Strategy.
Griggs, S., (2021). Expanding Innovation Through Challenging Organization Endowments. Journal of Innovation Management, 9(1), pp.1-24.
Haessler, P., (2020). Strategic Decisions between Short-Term Profit and Sustainability. Administrative Sciences, 10(3), p.63.
Hertzke, P., Müller, N., Schaufuss, P., Schenk, S. and Wu, T., (2019). Expanding electric-vehicle adoption despite early growing pains. McKinsey & Company.
Hsu, H.Y., Hwang, M.H. and Chiu, Y.S.P., (2021). Development of a strategic framework for sustainable supply chain management. AIMS Environmental Science, 8(6), pp.532-552.
Jennings, M.M., (2019). The Social Responsibility of Business Is Not Social Responsibility: Assume That There Are No Angels and Allow the Free Market’s Touch of Heaven. Berkeley Bus. LJ, 16, p.325.
Jing, X.U., (2020). Analysis of the Operation Strategy of Tesla Inc. in China. Frontiers in Economics and Management Research, 1(1), pp.21-25.
Johnson, J. and Whittington, R., (2020). Exploring Strategy. Pearson UK.
Kim, H., (2020). Analysis of How Tesla Creates Core Innovation Capability. International Journal of Business and Management, 15(6), pp.42-61.
Kirubagharan, R., Ramesh, C., Pragalathan, P. and Harish, N., (2020). Geometrical analysis of automobile radiator using CFD. Materials Today: Proceedings, 33, pp.3124-3130.
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Liu, S., (2021), March. Competition and Valuation: A Case Study of Tesla Motors. In IOP Conference Series: Earth and Environmental Science (Vol. 692, No. 2, p. 022103). IOP Publishing.
Maamoun, A., (2021). Elon Musk and Tesla: An Electrifying Love Affair. SAGE Publications: SAGE Business Cases Originals.
Manna, D.R., (2017). Integrating Exploring Sustainability and Supply Chain Management in the Development of Smart Tiles by Tesla (p. 32).
Nazir, N.M. and Shavarebi, K., (2019). A review of global automotive industry’s competitive strategies. World Journal of Science, Technology and Sustainable Development.
Perkins, G. and Murmann, J.P., (2018). What does the success of Tesla mean for the future dynamics in the global automobile sector?. Management and Organization Review, 14(3), pp.471-480.
Tantau, A.D. and Frăţilă, L.C., (2021). Business Development in the Renewable Energy Industry. In Research Anthology on Clean Energy Management and Solutions (pp. 1439-1474). IGI Global.
Tsai, H.Y. and Tan, T.M., (2021). The impact of artificial intelligence on sustainable corporate brand: a netnography study of Tesla.
Valentin, M., (2019). The Tesla Way: The disruptive strategies and models of Teslism. Kogan Page Publishers.
Whittington, R., Regnér, P., Angwin, D., Johnson, G. and Scholes, K., (2020). Exploring Strategy Text and Cases. Pearson UK.
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