MSc Management Global Strategy and Sustainability Assignment Sample
Introduction
In this report, a detailed discussion will be made on the various important aspects related to the business model of Tesla which will assist in maintaining a competitive advantage in the global context.
Task 1- The external and internal environment
Identification and critical analysis of the external and internal environment for Tesla using appropriate models
External (Porter’s Five Forces)
| Five forces | Impact |
| Bargaining power of suppliers | High |
| Bargaining power of buyers | Low |
| Competitive rivalry | High |
| Threat of substitution | High |
| Threat of new entrants | High |
Table 1: Porter’s five forces
(Source: Self-created)
Considering the above table, the suppliers of Tesla enjoy high bargaining power as the number of suppliers is limited and the electric vehicle industry is new which makes an impact on the supply chain system too. Most of the vehicle parts of Tesla come from Germany and for this reason, any instability in the economy of Germany directly impacts the business of Tesla (Tesla. 2022). http://MSc Management Global Strategy and Sustainability Assignment SampleThe bargaining power of the buyers is low as the number of Electric Vehicle (EV) manufacturing companies in the industry is comparatively low and Tesla makes its products premium and offers class apart features.
The management and marketing department of Tesla always pays attention to a premium market segment as the levels of competition in the lower end market are extremely intense.
The competitive rivalry is also high as other companies and several start-ups are also focusing on the EV industry which has further intensified the existing competition in the market. Porter’s five forces provide a strategic framework for analysing and evaluating the competition existing in any industry for the betterment of an organisation (Bruijl, 2018). http://MSc Management Global Strategy and Sustainability Assignment Sample
Figure 1: Porter’s five forces model
(Source: Bruijl, 2018)
Tesla has a high threat of substitution as other companies such as Honda, General Motors, Hyundai Motor Company, Nissan, Toyota and Volkswagen are also focusing on increasing the market share in the field of EVs.
Changes in rules and regulations of several governments and changes in geopolitical situations also have an impact on the business model of Tesla which is related to the threats related to substitution in the global context. Apart from this, threats of new entrants in the industry are also high as there are extremely low barriers to entry in the industry.
Internal (VRIO)
Valuable
The employees of the company are considered to be vital resources of Tesla motors and the patents of the company are extremely valuable which assists in gaining a competitive advantage in the industry.
Tesla focuses on advanced technologies and innovations for manufacturing high-performance vehicles and the company aims at leading the global automobile industry by analysing the threats and opportunities in a detailed manner (Han, 2021).http://MSc Management Global Strategy and Sustainability Assignment Sample
The distribution network of Tesla is another valuable resource of the company which aids in expanding the customer base.
Rare
The employees of Tesla are rare as the employees are highly trained and skilled which provided Tesla with an added advantage in gaining a competitive advantage in the industry.
The distribution network of Tesla is considered to be a rare resource along with the patents the company has 3304 patents globally and these patents are unique (Tesla. 2022). http://MSc Management Global Strategy and Sustainability Assignment Sample
Imitable
The financial resources of Tesla are extremely difficult to imitate as it will require huge margins of profit for other companies which will require prolonged success in the industry.
The patents of Tesla are also immensely difficult to imitate as the company does not allow the patents to be imitated by implementing a strong legal framework.
Organised
The financial resources, patents and employees of Tesla provide a competitive advantage to the company, however, the cost of the products is a competitive disadvantage to the company.
The VRIO analysis helps in understanding the business strategy of an organisation in a global context which aids in maintaining sustainability (Alexandruet al., 2020). http://MSc Management Global Strategy and Sustainability Assignment Sample
Figure 2: VRIO framework
(Source: Alexandruet al., 2020)
Discussion on the 3 most critical factors emerging from the analysis
It may be asserted that the 3 most important factors for the success of Tesla as an internationally reputed brand are its employees, financial resources and patents which make a significant contribution to the growth and development of the company.
Tesla’s current sources of competitive advantage and critical evaluation of the ways to maintain and build this competitive advantage
Employees
The skilled and talented employees of Tesla are an important resource of the company which provides a competitive advantage for driving innovation as well as creativity and for this reason, the management of the company needs to keep the employees satisfied and motivated.
Modern organisations face various challenges where managing the employees as well as keeping them satisfied is one of the most challenging issues (MADAN, 2017). http://MSc Management Global Strategy and Sustainability Assignment Sample
Financial resources
The availability of financial resources also provides an added advantage to Tesla and for this reason, maintaining a steady profit margin becomes immensely essential.
Technologies
Technological advancements and the presence of a large number of patents are the reasons for the company’s success in the field of EVs and this reason, attention needs to be given to the research and development department of Tesla.
Technological advancements such as Artificial Intelligence (AI) have revolutionised modern businesses to a considerable extent and have added value to the business (Ross et al., 2019).http://MSc Management Global Strategy and Sustainability Assignment Sample
Task 2- Strategy in the global environment
Foreign market entry strategies
The market entry strategy for different companies is different as it helps the companies to flourish and helps in the progress of the company quite well. Additionally, a company such as Tesla has to make sure that the company needs a suitable entry strategy as the company has a good competitive market and the company has to make sure that the company may make better business expansion.
The company may invest in the new market by making sure that companies may make a local presence with the help of mergers and acquisitions that help in expanding the company effectively (Sandler et al., 2019).http://MSc Management Global Strategy and Sustainability Assignment Sample The companies may implement various models of entry mode such as joint venture and franchising that helps the companies to expand well and even helps the companies to gain good customers from the market.
The companies also may be able to follow the process of partnering and also with the help of licensing help in expanding in the new market without any kind of hindrances from the government and other local investors. The management developments of the companies have to be good so that it helps the companies to make a global reach and helps in the strategic development of the company (Direction, 2019).http://MSc Management Global Strategy and Sustainability Assignment Sample
Critical evaluation of Tesla’s business expansion and the impact on the company’s strategy
Tesla expands the electric vehicles in the competitive market and the company is always inclined toward sustainable development as it helps the company to expand well in the global market.
Moreover, the company’s motive is in making a sustainable environment by making sure that the company may educate people regarding the environmental problems and even the problems the society may face due to climate change. The company maintains a framework while expanding the business in the new market by maintaining innovation that helps in maintaining the performance of the company effectively (Thomas and Maine, 2019).http://MSc Management Global Strategy and Sustainability Assignment Sample
The company sells electric cars and the motive of the company is to make sure that innovation is maintained and the technological development of the company becomes effective for the customers.
The company tries to make market opportunities by providing high properties for maintaining the loyalty and trust of the company so that it helps the company to gain a competitive advantage in the new market (Harvard Business Review. 2022).http://MSc Management Global Strategy and Sustainability Assignment Sample
Figure 3: Product Life Cycle of Tesla
(Source: Harvard Business Review. 2022)
The company expand in the competitive market and the company with the help effective business expansion management has helped the company to manage the supply chain of the company.
Additionally, the company with the introduction of an internal combustion engine that helps maintains the greenhouse gas emission of the vehicles of the company that puts a positive impact on the environment of zero-emission of the transport and energy products by managing the lifecycle management of the products of the company (Refer to appendix 7).
The company has to incorporate an appropriate strategy that helps the company to benefit from the strategic management of the company that helps the company to become profitable effectively (Wu and Wang, 2021).http://MSc Management Global Strategy and Sustainability Assignment Sample
The company with the effective strategies is trying to reduce the carbon footprint from the environment by making sure that the companies manufacture the vehicles locally so that it helps in reducing the shipping which causes a lot of carbon footprint.
The electric vehicles boom has attracted several investors to invest in the company yet the business strategy management of the company has helped in maintaining the sustainability of the company effectively (Shao et al., 2021).http://MSc Management Global Strategy and Sustainability Assignment Sample
Recommendations on using different strategies which Tesla may use to compete in the global environment
The recommendations for Tesla are as follows:
- The company should use diversification so that it helps the company to expand well in the global market and even helps the company to sustain well
- The company should also try to collaborate with the local market even though the company is big still the company needs to reach the niche in the market
- The company should cooperate with the government of different countries regarding implementing the policies of licensing and franchising so that it helps the company to progress well
Task 3- Corporate strategy
Evaluation and critical analysis of using horizontal integration, vertical integration, outsourcing or strategic alliances
Horizontal Integration of Tesla
There have been immense strategic changes that have occurred within the industry of automobile manufacturing and thus the industrial components of changes have been reflected in the way of horizontal integration, which is nothing other than the merging of firms for efficiency increment.
Tesla, the electric automobile manufacturing giant may be said to follow the Horizontal Integration quite meticulously by merging with SolarCity, where according to Tesla, the horizontal integration merging with SolarCity may be said to be an advancement in the energy sustainability (Tesla. 2022).http://MSc Management Global Strategy and Sustainability Assignment Sample
In easier terms, the term horizontal integration may refer to the fact that the way the firm creates the strategic alliance to have the value chain efficiency be increased considering the consumer demands, and the overall period for rectification in manufacturing (Sun et al., 2020).http://MSc Management Global Strategy and Sustainability Assignment Sample The horizontal integration may be said to be the spin-off from the original Industry 4.0 evolution systems, where there have been numerous advancements in the digital innovation regarding horizontal interaction as some research papers suggest (Pérez et al., 2020).http://MSc Management Global Strategy and Sustainability Assignment Sample
Vertical Integration of Tesla
The vertical integration strategy that Tesla follows is the systematic development of the automobiles may be said to lie in the framework of the internalisation and the processes that the factory of Tesla follows to design by internal sources.
The term vertical integration is entirely different from horizontal integration, the disease that the firm makes most of the things in a local operating way, without resorting to external channels, whereas Tesla makes the vertical integration by the fusion of data dynamics technology (Chen and Perez, 2018).http://MSc Management Global Strategy and Sustainability Assignment Sample Tesla’s Chief Executive Officer (CEO) Elon Musk often has been quoting the vertical integration that Tesla follows by saying that the company attempts to design most of the things within the source industry, where the process has been described by Elon Musk as a shift from the classical supply chain (Refer to Appendix 3).
It is evident from the company profile that Tesla is much more inclined to the reduction of excessive costs and thus has made vertical integration the most sought after way to create a fluid mechanism of operation, almost manufacturing most components within the factory (Refer to Appendix 4).
Research studies about the vertical integration strategy of Tesla have shown that the company has been manufacturing the components, where the supply chain of Tesla may be said to be the theme of strong innovation (Cooke, 2020). http://MSc Management Global Strategy and Sustainability Assignment SampleThus, the underlying research has provided strong evidence that Tesla mainly has vertical integration as a prime tool (Chen et al., 2019).http://MSc Management Global Strategy and Sustainability Assignment Sample
Figure 3: Vertical Integration strategy of Tesla
(Source: Chen et al., 2019)
Outsourcing or strategic alliances of Tesla
The outsourcing or the strategic alliances that Tesla has chosen to flow is the creation of the structure of the company in terms of building an alliance with Samsung Electronics, where most of the components required for the digitalisation of the automobile have been decided to follow outsourcing.
The outsourcing strategy or the strategic alliances may not always refer to the systematic arrangement that makes the clear implication from the alliance, where Tesla has to show that the company has made Samsung Electronics a firm for the supplier of the chipsets, which is a great outsourcing strategy followed By Tesla (Refer to Appendix 6).
Another outsourcing or strategic alliance that Tesla may follow is the Chinese market penetration by bringing in different Chinese components and creating a fusion, which has been implied by different scholarly articles (Gereffiet al., 2021).http://MSc Management Global Strategy and Sustainability Assignment Sample
Recommendations on increasing profitability
Tesla needs to follow certain factors for the increment in the profit margin and thus the following recommendations for the same have been cited below:
- Tesla has to follow the route that the other electric automobile manufacturing companies have been taking of following a strong risk management system which may let Tesla figure out the problems in the supply chain of the Gigafactory and handle the cost clearly
- Tesla needs to make the manufacturing of the electric cars less dependent on the humans and more driven by automatic robots, where the error of manufacturing may reduce, and per unit labour cost may drop down, increasing the profit standard
Task 4- Strategic purpose of Ethics and CSR
Evaluation and analysis of Tesla’s CSR strategy
The Corporate Social Responsibility (CSR) strategy of a company helps the company to observe the kind of actions the company is taking which helps the company to put an impact on the environmental and social well-being of the community. Furthermore, the CSR management of the company helps the company to manage the environmental issues and helps the company to manage the business quite well and even make the stakeholders satisfied.
The company Tesla always tries to make the company’s customers aware of the environment through the use of Twitter where the company’s 6.1 million followers are aware of the issues of climate change (Corbett, 2020).http://MSc Management Global Strategy and Sustainability Assignment Sample The company has always used the social media platform to talk about issues regarding environmental problems and the company aims at selling 20 million electric vehicles per year so that it helps in saving carbon dioxide emission from vehicles with the use of electric cars (Refer to appendix 2).
The company maintains Environmental, Social and Governance (ESG) that helps in provisioning a better framework for the company and it helps the company to work well and that helps in enhancing the performance the company effectively (Bo et al., 2022). http://MSc Management Global Strategy and Sustainability Assignment Sample
The company tries to make sure that the ESG policies the company helps to manage well and the material analysis by the company’s key stakeholders such as Tesla’s Board of Directors, employees, suppliers, customers and investors with the help of local policymakers help in managing the impact of the manufacturing process of the business.
Moreover, the CSR strategy of the company benefits many people due to the technological advancement of the company and the company’s mission and vision policies help in maintaining the sustainable energy solutions of the company (Pradhanet al., 2021). http://MSc Management Global Strategy and Sustainability Assignment SampleBy maintaining the CSR strategy, Tesla maintains the environmental problems by making sure in 2020 that the vehicles of Tesla are implemented with solar panels that help the vehicles from emitting 5 million metric tonnes of carbon dioxide (Refer to appendix 5).
The company has to make sure that with the help of solar panel implementation the company maintain zero emissions for the future and helps in making sustainable global manufacturing processes quite well (Tesla.com. 2022).http://MSc Management Global Strategy and Sustainability Assignment Sample Therefore, the company has to make sure that the company maintain the CSR strategy quite well so that it helps the company to flourish well in the competitive market.
Figure 5: Tesla’s consumption of energy
(Source: Tesla.com. 2022)
Identification and critical discussion on the main ethical issues faced by Tesla along with recommendations
Ethical issues faced by Tesla
The major ethical issue that Tesla has made is that few architects of the electric automobiles that the company has designed, and thus it has created a faulty system of automobiles that is against the legal design.
Tesla earlier has been in multiple lawsuits against the breaching of law, and there has been a report of a fatal collision of a Tesla automobile, which questions the ethical puzzle for the company.
Earlier, research articles have strongly suggested that the ethical problems that catch up with the company are making autonomous automobiles have the driving and data privacy issues, which is a great problem for Tesla (Borensteinet al., 2017).http://MSc Management Global Strategy and Sustainability Assignment Sample
The major issue that one may say against the creation of autonomous vehicles of Tesla is that the cars have been making the people not lean or have the knowledge of driving, or pay attention to little important details. Furthermore, Tesla has the ethical issue of creating faulty cars, which implies that the company has been getting quite poor monitoring of the supply chain and production channel.
Recommendations on ethical issues
The recommendations for ethical issues are as follows:
- The company should make effected legal system and policies so that it helps the company to expand well without any kind of hindrance
- The company should make sure that the technological innovation of the company is good as the company sells electric cars as it helps the company to attract and retain customers
- The company should make sure that the company’s manufacture of the cars is good so that it helps the company to retain customers and also helps the company to gain profit from the market
Conclusion
From the above discussion, it may be concluded that adopting global strategies has become an inevitable part of Tesla whereas maintaining sustainability has also become an extremely vital part of achieving Tesla in the long run.
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