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 Table of Contents

Table of Contents 3

Introduction 4

Task 1: Analysis of the External and Internal Environment 4

1.1 Analysis of the Internal Market 4
1.1.2 VRIO Framework 4
1.2 External Environment 7
1.2.2 PESTEL Analysis 7
Sociocultural Factors 9
Technological Factors 10
Environmental Factors 11
Legal Factors 12
1.3 Noteworthy emerging factors 13

Task 2 – Tesla - Strategy in the Global Environment 14

2.1 The rationale and strategic advantages for Tesla's international expansion 14
2.2 Internationalisation Strategy in the Global Environment for Tesla 15
2.2.1 Global Alliances 15
2.2.2 Exporting and increasing supply chain 15
2.2.3 Licensing 16
2.2.4 Joint Venture 16

Task 3 – Corporate Strategy 17

3.1 Vertical and Horizontal Integrations 17
3.1.1 Vertical Integration 17
3.1.2 Horizontal Integration 18
3.2 Outsourcing 18
3.3 Strategic Alliances 18

Task 4 – Strategic Purpose – Ethics and CSR 19

4.1 Carroll’s Model 20
4.1.1 Economical Responsibility 20
4.1.2 Legal Responsibility 20
4.1.3 Ethical Responsibility 21
4.1.4 Philanthropic Responsibility 21

References 22

Appendix 24
Introduction

This case study was created to better understand Tesla's rapid expansion and the influence it

is having on the US automotive manufacturing sector and its existing financial condition. The

provided report, which is based on a case study, examines Tesla's overall strategy. The first

section of the paper examines the company's external and internal environment, significant

variables impacting the organisation, Tesla's resources and skills, and the source of

competitive advantage over its competitors. The report's second section critically assesses the

many possibilities available to Tesla for developing a worldwide strategy that maximises

productivity level. Furthermore, the report's third section thoroughly examines and proposes

Tesla's business strategy by examining its supply chain and determining what

internationalisation plan the company should follow for worldwide development.

Task 1: Analysis of the External and Internal Environment

1.1 Analysis of the Internal Market

1.1.2 VRIO Framework

The VRIO Framework was developed by Jay B Barney to analyse the relative worth of

resources to a company. VRIO stands for Value of the Resource, Rareness of the Resource,

Imitation Risk, and Organizational Competence.

Based on the material supplied in the Tesla Motors case study, Tesla's VRIO analysis might

result in a resource-oriented analysis. The premise behind resource-based situation analysis is

that strategic capabilities may assist Tesla in developing a long-term competitive edge over

its market competitors.

Resources Value Rare Imitation Organisation Competitive

Advantage

Target Yes Yes,Tesla’s No, Tesla’s It is difficult to Strong

Consumers relation community determine since competitive edge

building with building and data suggests that

their valued goodwill cannot a lot of area to be

client has be imitated that covered yet.

provided them easily

with this edge

Monetary Yes No Financial Tesla consists of Yes

Resources accommodations significant

are available to provisionary

every potential funds

competitor in

market

Supply Chain and Yes No Easy to imitate Yes Yes

Logistics by others

Pricing Yes No Pricing models Yes, Tesla Yes

are adaptable by contains a pricing

competitors by metric system

following the

competitive or
 skimming

methods

International Yes, tesla Yes, the No, Tesla has its Yes Strong Edge

Talent Appeal tends to pave company’s own reputation

and Innovation its way in vision is that cannot be

domestic surfaced on imitated

areas globally technological

and localise disruptions

its business in and new ideas

those areas

Product Portfolio Distinctive Major Yes Yes, the firm has Consistent

range of competitors positioned itself innovation can

features and are trying to in a more safe sustain the edge

segmentations emerge in the area

add value to lucrative areas

the company

International Yes as the Yes Yes Yes, the diversity Strong edge

Presence company distincts Tesla as

remains no a company

longer a

subject to a

specific

economic
 zone

Copyrights and Yes Yes Yes Yes Strong Edge

Intellectual

property Rights

Vision of the Yes Yes No Cannot be Strong edge

Company summarised

According to the VRIO Analysis, the aspects of first movers' dominance contributing to large

scale in proportion to opponents are the source of long-term competitive edge. Another factor

to examine is Tesla's vertical integration, which may be leveraged to generate an additional

competitive edge for the firm (Millar, 2017).

1.2 External Environment

1.2.2 PESTEL Analysis

The PESTEL/PESTLE Framework is a critical management method that assesses how the

industry's remote or macro-environment influences the organisation. Tesla's example covers

the remote or macro-environment of the vehicle business, as well as the energy generation

and storage industries. Additional business factors, such as customers and community-based

organisations, are impacted by external pressures in these industries. Tesla Inc.'s consumer

base and market share, for example, are determined by factors like transportation

technology's cost-effectiveness. The business may enhance its long-term sustainability while

retaining a strong brand image and boosting profitability by incorporating the results of its
PESTEL/PESTLE study into strategy execution. Tesla's business efficiency is a measure of

how well the company controls external factors in its industry.

● Political Factors affecting Tesla

The PESTLE Analysis performed by Tesla Inc. examines governmental impacts on the

company's geographical or macro-environment. Governmental agencies are one of the most

significant societal forces impacting businesses and industries. Trade rules, for example, may

have an adverse effect on industry performance and income. In this external analysis

instance, the following political external issues are crucial to Tesla and the vehicle and

energy solutions industries:

1. Subsidies from the government for electric vehicles (opportunity)

2. New international trade treaties are now being negotiated (opportunity)

3. Political stability exists in the majority of significant markets (opportunity)

Tesla, Inc. has the power to modify its financial performance by utilising government

incentives. This external factor is directly related to the company's actions and products

generating as little carbon as feasible. Furthermore, rising free trade agreements, according to

this PESTEL/PESTLE analysis, create opportunities for the corporation to expand its

operations abroad.

● Economic Factors

This portion of Tesla Inc.'s PESTEL/PESTLE Analysis addresses the impact of economic

conditions on the long-term or macro-environment. Among these situations are market

growth, trade volumes, currencies, and other factors affecting the vehicle business. The rate
of expansion of the solar energy sector, for example, determines the growth potential of the

company's solar panel business. Tesla must handle the following economic external elements

that have an influence on the vehicle market:

1. Reducing the cost of batteries (opportunity)

2. Reducing the price of renewable energy (opportunity)

3. Economic stability concerns (threat)

Decreased renewable energy prices are another external factor that makes Tesla's products

more appealing. The firm grows as renewable energy solutions become more popular.

However, economic instability, particularly in Europe and Asia, threatens the company's

financial success.

● Sociocultural Factors

Employees, customers, and investors all have an influence on a company's remote or macro-

environment as a result of societal conditions and trends. This portion of Tesla Inc.'s

PESTEL/PESTLE Analysis examines the company's alignment with social trends in its

market segments. The company's leaders may ensure that procedures are put in place to

maximise the benefits of such external effects on the company's image. Major sociocultural

external influences in Tesla's company include:

1. Low-carbon lifestyles are becoming more popular (opportunity)

2. Renewable energy is gaining popularity (opportunity)

3. Increased wealth distribution is a top objective in developing markets (opportunity)

This company study identifies growth prospects in the global automotive industry. The rising

popularity of low-carbon lifestyles and a growing desire for renewable energy present
development prospects for Tesla Inc. According to the PESTEL/PESTLE research

methodology, these external variables improve market demand for the company's electric

automobiles and related items. Furthermore, as income distribution improves in developing

areas, Tesla has a potential to enhance its financial performance. As a result of this wealth

distribution trend, the number of possible consumers of the company's fairly expensive autos

expands. In this section of the PESTEL/PESTLE analysis, Tesla Inc. can extend its business

abroad.

● Technological Factors

This element of the PESTEL/PESTLE Analysis investigates how technologies impact the

organization's regional or macro-environment. To grow, Tesla's automotive and energy

product businesses rely on current technologies. Materials engineering technique, for

example, determines the efficiency and cost-effectiveness of the company's batteries. The

following technological external elements are essential in Tesla, Inc.'s vehicle business:

1. Rapid technological progress (opportunity & threat)

2. The use of business automation is increasing (opportunity)

3. Online mobile systems are gaining popularity (opportunity)

The fast rate of technological advancement is both an advantage and a threat in this business

study. The high rate provides an opportunity for Tesla to improve the technology of its

products. The same external factor, on the other hand, offers a risk to the corporation in terms

of the prospect of rapid obsolescence of technology used in its items. Nonetheless, increased

corporate automation is a trend that gives opportunities in this PESTEL/PESTLE study

example. Tesla, for example, has space to grow by further automating its business
procedures. Furthermore, the rising popularity of internet mobile devices should encourage

the company to incorporate these technologies into its cars on a more regular basis.

● Environmental Factors

This part of Tesla, Inc.'s PESTEL/PESTLE Analysis discusses the effects of environmental

factors. The global company's remote or macro-environment is vulnerable to the effects of

ecological circumstances mentioned in this section of Tesla, Inc.'s PESTEL/PESTLE

Analysis. Changes in the environment, for example, have an impact on the availability of

materials used in a company's production activities. In this situation, the following ecological

external variables have an influence on Tesla's market:

1. Climate Variations (opportunity)

2. Environmental initiatives are being increased (opportunity)

3. The laws governing waste disposal are growing increasingly rigorous (opportunity)

Environmental variables are considered important pressures on Tesla, Inc.'s industrial

environment in this PESTEL/PESTLE study. Concerns about climate change, growing

environmental initiatives, and rising waste disposal regulations provide chances for the firm

to market its electric cars.

● Legal Factors

Laws and legal systems have an impact on managerial decisions and corporate development.

Tesla's marketing mix, or 4P, for example, operates within regulatory constraints. Human

resource management and commercial connections are also subject to legal constraints. In the

context of Tesla, Inc.'s business plan, the following legal external variables must be

addressed.
 1. Extending the reach of international patent protection (opportunity)

2. Energy consumption regulations (opportunity)

3. There is a sales regulation for dealerships in the United States (opportunity &

threat)

By considering expanding international patent protection, Tesla has the possibility to build its

firm safely outside of the United States. This PESTEL/PESTLE research, in particular,

suggests the viability of marketing the company's electric cars and energy solutions goods

based on energy consumption constraints that client enterprises must adhere to. Furthermore,

the firm has the potential to grow through direct sales, which is permitted in a number of

states throughout the United States. Tesla, according to Musk, would "not launch patent

lawsuits against anyone who, in good faith, wishes to use our technology." The major aim,

according to Tesla, is to accelerate the adoption of sustainable transportation through an

open-source approach to Tesla's patents. This approach results in exploitation of Tesla’s

innovative benchmarks and invites more competition in the market, hence a legal lens is

required to ensure patent protection.

The industry is competitive and works in a tough industrial climate, according to Porter's five

forces analysis. However, due to the long-term trend of EV adoption and the current low

level of competition, particularly for market leader Tesla, there is significant future

profitability potential.

1.3 Noteworthy emerging factors

According to Tesla's internal and external environmental studies, the most crucial developing

elements are:
 1. The electric vehicle (EV) is a new and growing technology. The overall trends imply

that the future will be entirely electric. However, EVs are not widely used in the

United States at the moment. Before Tesla can flourish, the EV market must expand

so that the market may grow even larger.

2. Scale and government assistance are critical for any firm in the EV market to succeed.

3. All present gasoline-energy-based enterprises are transitioning to electric. As a result,

the market is becoming increasingly cutthroat as more competitors enter. However, a

substantial portion of EV technology and infrastructure remains to be developed, and

there are huge development prospects for businesses.

Task 2 – Tesla - Strategy in the Global Environment

2.1 The rationale and strategic advantages for Tesla's international expansion

The following are the grounds why Tesla will have to establish globally and internationalise,

according to Yip's competitive strategy. The following are the various reasons:

1. International clients: Expansion abroad will let Tesla reach new markets outside of

its home market. This will enable a larger customer base to have access to Tesla

products, helping the company to increase its sales volume and revenues (Emerald,

2012).

2. Scale economies to reduce expenses: EVs are in their formative stages. According to

Elon Musk, EVs are not yet mass marketable, and hence the market size must be

expanded. Furthermore, globalisation will push Tesla to form alliances with global

suppliers in order to develop a global supply chain and cut total manufacturing costs

(Ristovska & Ristovska, 2014).

 3. Global Competitors: Emerging global competitors are appearing all over the world,

particularly in China. As a result, Tesla must build a global strategy to resist the

development and growth of Daimler, Faraday, Lucid, and others. He et al. (2019)

4. Economic liberalisation: As a result of globalisation, many nations increasingly

adhere to free market ideals in terms of international commerce and finance.

According to Ristovska (2014), as a result of following a global strategy, Tesla is able

to penetrate new markets and boost its prospects of boosting profits.

2.2 Internationalisation Strategy in the Global Environment for Tesla

2.2.1 Global Alliances

In order to expand into other regions Tesla should consider PESTEL analysis of the following

states where it tends to operate and it can be referred to in the above index which categorises

the outlying potential the global market contains. Tesla has lately entered into new alliances

with global companies such as Tencent from China, Asia's second most valued tech business,

which paid $1.8 billion for a 5% stake in Tesla. While Tencent's intentions are unclear, the

partnership might greatly increase Tesla's influence in China. Another company that has

surfaced in alliance with Tesla is Panasonic, the japanese giant has shown evident interest in

expanding beyond batteries and shift to self driving technology which is becoming a major

breakthrough in modern technology. Through this agreement, the firm will be able to

penetrate the Japanese market and bring additional sensor technology in-house, allowing it to

construct more integrated systems with reduced component prices over time. Tesla purchased

the German engineering firm Grohmann in late 2016. This subdivision though centered

around automation facilitation for advancements in speed and output could also result in

Tesla innovative initiatives in Germany to compete with its major competition like
Volkswagen, Audi, BMW and Mercedes. In order to integrate to these target areas, Tesla

could imply the following means:

2.2.2 Exporting and increasing supply chain

Exporting, according to Cavusgil (2004), is the cross-border sale of domestically generated or

manufactured goods. The three types of exporting are indirect exporting, direct exporting,

and cooperative exporting. Because there is no direct exposure to the international market and

its hazards, indirect exporting is the safest approach to enter the market (Kotler & Armstrong,

2012). Revenues might be raised by diversifying into the Asian car and renewable energy

industries. Another possibility is for Tesla to expand its supply chain in order to support the

company's global expansion of production and sales operations. Compared to bigger

corporations such as General Motors, this external feature of direct exports highlights the

company's comparably limited area of activity.

2.2.3 Licensing

Tesla aspires to shape the environment and asserts that its primary goal is to accelerate the

adoption of sustainable transportation through an open-source strategy. Intangible property

includes things like trademarks, patents, and manufacturing procedures. The licensee is

required to pay a fee in return for the rights specified in the parties' contract. Licensing is

popular because it is low-risk, has little susceptibility to economic and political conditions,

and provides a decent return on investment. It is also preferred by municipal governments,

particularly those dealing with climate change.

2.2.4 Joint Venture

Tesla may pick a joint venture as their method of entering a foreign market for a variety of

reasons, including risk sharing, leveraging each other's capabilities, and so on. However, in
order for a joint venture to succeed, the two or more organizations that make up the joint

venture must/should share common goals in the following areas: the entry-level market,

reasonable risk/reward levels of the market accessed, knowledge exchange, collaborative

product development, and adherence to local government legislation. Tesla has an open room

for entry into any state since the idea of EV is not introduced to many countries yet the buzz

of the brand and technology is immense.

There is no single established entrance mode that is thought to be better to the others. If Tesla

intends to grow abroad, it must first identify the optimal levels of commitment, flexibility,

control, presence, and risk in order to select the most appropriate entry plan. When deciding

on a foreign entry strategy, the organization's internal resources and capabilities must also be

considered. Another key difficulty for firms looking to expand internationally is the market of

entry. A PESTLE analysis of the worldwide market might help the organisation understand

the industry better.

Task 3 – Corporate Strategy

3.1 Vertical and Horizontal Integrations

3.1.1 Vertical Integration

When a corporation buys a client supplier, such as a shop, it is referred to as forward vertical

integration. When a company buys a raw material provider, it is referred to as backward

vertical integration.
Because it prompted Tesla to spend with efficiency, the Vertical Integration method has put

Tesla in a better position. Gives you better control over product quality and production

scheduling. Shipping is less expensive, and delivery is quicker. The dependency on suppliers

has decreased. Competitive advantages. Ensured that necessary components supply is not

disturbed. Better product alignment with the needs of its in-house end product, when other

suppliers serve the expectations of several manufacturers. Tesla recognised the complexities

of the automotive supply chain and employed vertical integration to modernise the industry.

Tesla has vertically integrated multiple production steps, including battery manufacture,

electric motor production, self-driving technology, and a robust central control system. In the

future, the planet will become more varied. Artificial intelligence, networking, digitalization,

and cloud-based computing are just a few of the disruptive sectors that will speed up

technological growth.

3.1.2 Horizontal Integration

Horizontal integration occurs when one company buys another company, such as when a

manufacturer buys another manufacturer or a distributor buys another distributor. Horizontal

integration offers the advantage of removing a competitor from the race, but it also risks

generating company units with distinct cultures, which is not ideal.

3.2 Outsourcing

Tesla has shifted the dynamics of the supply chain and stressed more on insourcing due to

their sufficiency of more developed mechanisms in the company. Tesla isn't only outsourcing

production; it's also outsourcing its distribution networks. Tesla sells directly to the public on

its website and at mall showrooms. At this moment, the retail market versus the cost of

managing showrooms is uncertain, although it is something that others have considered.

3.3 Strategic Alliances

Tesla has initiated many disruptions along with different companies with projects like

Gigafactory, a cost advantage mass battery production company. Another Tesla ambition is

shared by the German firm Herrenknecht, which is working together to create and operate

hyperloops - a network of tunnels that will transport automobiles at high speeds on electric

sleds.Furthermore Musk has also ventured with Tencent on AI technology for driverless cars.

These efforts have resulted in making Tesla appear as a standard of innovation and without a

doubt Tesla sets the global bar for competition and other players only are left to imitate.

Tesla's track record demonstrates that they are a quick study who built ties with organisations

that possessed technology that Tesla lacked, hired some of their most talented workers, and

then pushed over the boundaries that prevented more risk-averse partners from succeeding.

As Tesla tries to produce low-cost, long-lasting batteries, significant technological

improvements will be unveiled, allowing its electric cars to compete more fairly with cheaper

gasoline vehicles. Tesla may benefit from new battery cell designs, chemistries, and

production techniques, to name a few and with these inelastic developments the profitability

ratios might turn sound.

Task 4 – Strategic Purpose – Ethics and CSR

The CRS is based on the ideas of environmental friendliness, solar energy, and long-term

profitability, according to Tesla. CSR efforts enable the firm to obtain a competitive edge

while also recruiting new customers. Tesla meets the needs of its customers by producing

products that are both trustworthy and affordable. While Tesla is an environmentally

conscientious firm that aims to decrease its carbon footprint, it also considers its customers'
performance needs. (Dibble, vol. 46, no. 1, 2018). The firm must be studied on the merits of

Carroll's Pyramid model, as required by the research.

4.1 Carroll’s Model

Carroll's CSR pyramid is a model for how and why businesses should be socially responsible.

The pyramid was created by Archie Carroll, and it stresses the four most important kinds of

organisational responsibility. The following are some of them:

1. Economic responsibility

2. Responsibility under the law

3. Ethical accountability

4. Philanthropic responsibility

4.1.1 Economical Responsibility

Tesla is forecasted to grow the demand for electric vehicles by 20214 at its highest and being

the torchbearer of EV vehicles, the prospect for profitability will be also of the subject. The

solar roof pricing proposals depict that with ease of technological conventions in regular use,

it is determined that along with welfare, the organisation projects numbers not for today but

for tomorrow. The existing market of EV’s is largely dominated by the Tesla Model S with a

total of 50935 units sold in 2016.

4.1.2 Legal Responsibility

Tesla being the torchbearer of driverless driving can sound intriguing at first but technology

is always left with a loop and there are consequences the company has faced in the recent

past but the company has complied with the authorities, fulfilled its legal obligations and
ensured the protection of rights of their stakeholders. Being an eco-friendly company, Tesla

tends to meet much more than the legal requirement.

4.1.3 Ethical Responsibility

After the release of the company's important patents were planned. It would be a fantastic

idea if every large corporation adopted or developed Tesla's approach to environmental

protection. Other rivals, according to the CEO, should help reduce greenhouse gas emissions

from gasoline-powered vehicles. The business also hopes that the method would lower the

cost of electric vehicles, making them more accessible to the general public. Although the

stockholders were first dissatisfied, they eventually realized that the reasons were justified.

Tesla's stock price climbed by nearly $30 per share, demonstrating that he made the right

move. Through compliance, Tesla ensured a leadership role too in encouraging these

measures.

4.1.4 Philanthropic Responsibility

Tesla engages in social entrepreneurship in order to address the community's environmental

and social needs. There are three different types of social entrepreneurship theories.

According to the first principle, organisations should have a clearly stated environmental and

social goal. Second, the business should generate as much money as feasible through

commerce. Finally, a significant amount of revenues must be allocated to social goals.

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Appendix