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Global Strategy and Sustainability Assignment Help sample

1. Introduction 

The Tesla case concerns the massive automobile industry, the energy-generating sector and the power storage business’s which are related to the dimensions of global or macro-environment factors (Kim, 2020). Additional variables of the company like clients and local authorities are influenced by external elements of these sectors. For instance, both the target customer and the sales growth of Tesla Inc. depend on variables such as the economic efficiency of transportation systems. EVs have a comparatively flat proportion in worldwide sales of about 3% in 2020 but will continue to rise and reach around 7% in 2023 with sales of around 5,4 million (Flehantova and Redka, 2021).  From the reports published by the market, experts anticipate that the industry will thrive to obtain the optimum position in the upcoming years which will initiate company interest to invest in advanced developmental approaches. 

Tesla has been growing at an incredible pace since 2014. Without the latest revelation from its CEO Elon Musk, there’s been absolutely no week (Baffour-Awuah, 2020). There have been several facts that suggest that Tesla intends the mobility sector to transform and aspires to be more than a car manufacturer. Its vision and objectives are extremely ambitious and the performance intensity is severe. The present report will analyze the external and internal environmental aspects associated with the company and how the CSR initiatives are embedded into the corporate fabric of the company. 

HD wallpaper: logo, Tesla Motors | Wallpaper Flare

Figure 1: Tesla Inc. Logo 

2. External Environmental Analysis

2.1 PESTLE Analysis 

Political

Many countries and governments offer tax credit incentives. This is because electric vehicles are promoted. Tax lending incentives of up to $7500 are provided by the US Federal Government. A reduced interest loan of $465 was given by the US Department of Justice (Baffour-Awuah, 2020). Colorado state gave incentives to grant tax credit of $5000. As a result of the worldwide scale of the industry, the final figures for the builder of alternative fuel cars are dependent on international trade agreements. China’s 25% tax is another factor that can be considered a significant aspect of political constraint. 

Economical

One of the most notable economic variables for Tesla is fluctuations in currency values (Matthews et al., 2020). This is because the producer of alternative energy cars has an international option of commercial activities. While the domestic market of the United States remains the largest electric vehicle manufacturing industry, the proportion of worldwide sales continues to increase. More specifically, it generated sales of USD 6.66 billion in China in 2020 and represents 21% of the $31.54 billion (GS and LS, 2020). Tesla’s foreign-currency transactions earned USD 334 million in 2020 due to fluctuations in exchange rates.

Social

The entire electric car market is increasing. These include improving security and car emission laws, technical advancement and evolving consumer expectations (Wang and Peng, 2020). The causes are diverse. However, Tesla Motors Inc. (TSLA) and its distinctive business model are able to bear most of the societal approval and enthusiasm for automobiles.

Technological

Tesla involves a growing rate of automation in the enterprise and development in the level of innovation development in its technological elements (Bhardwaj et al., 2020). Tesla can have a tremendous impact on the velocity of technological progress. This is due to the strong support of the firm. Tesla has also been using its patent pool to transforms its technological advancements into an industry-standard (Lu, 2020). For promoting the global transition to sustainable energy and meet the rising need for scientific, technical, engineering and mathematical (STEM) employment, Tesla collaborates with local high schools, colleges and charities.

Legal

When it comes to international market operation, compliance with the international labour laws is a prominent aspect that can lead to the company’s progress or downfall (SMES’PERFORMANCE and HEI, 2020). For instance, recently the Tesla threatened the labourers when they tried to form and union. All the obligations must be followed by the company otherwise legal consequences can be severe. 

Ecological

Global Warming Solutions Act of 2006 is one such ecological regulation which the company will have to abide by to continue its operations in the international market (SMES’PERFORMANCE and HEI, 2020). 

 

2.2 Porter's Five Analysis 

  1. Barriers to Entry 

Capital investment in assembly plants, equipment and technologies are required for the development of electric cars. In order to invest efficiently, knowledge is also necessary for the automobile industry (Liu, 2021). Because technical costs are still rather high. 

  1. Bargaining Power of Buyers

The advantage is with purchasers, which is due to robust competitiveness and industrial substitution (Corbett, 2020). The reduced switching costs are another element that strengthens the influence of the purchasers. Switching between models costs the consumer little or nothing.

  1. Bargaining Power of Suppliers

Suppliers have limited influence comparably. The conventional and electrical car industries are supplied by a huge number of firms (Maamoun, 2021). Innovation occurs on the manufacturer’s side more often than on the suppliers’ side.

  1. Industry Competitors 

Key car manufacturers are increasingly competitive and continue to stay extremely competitive (Zhang, 2020). There are several car firms that are fighting for prospective electric vehicle consumers. Robust competitiveness and a high buying power led to significant competition in the electric car sector.

  1. The Threat of Substitute Products 

The threat of replacements is extremely serious because of intense rivalry and the developing paradigm of mobility. The e-mobility sector has a competitive structure similar to that of the traditional car industry (Sangra, 2020). Although the model mix is not as large as conventional automobiles, the possibility of replacements remains enormous.

2.3 Analysis of The Competitiveness 

Although Tesla has obtained a significant worldwide revenue collection in 2012 with 5000 sales of vehicles which also increased over 75000 in 2016, the threat of competition remains high as the competitors of conventional cars are increasing (Sangra, 2020). Along with that the global political and economic volatility poses a great threat to the company, especially after the pandemic. Innovation is the key for the company which has allowed it to remain at the centre of the global energy and EV market, for instance, Tesla’s Powerwall batteries were launched for hoe energy storage and EV charging. 

3. Internal environmental analysis 

3.1 VRIO analysis 

ResourcesValueRareImitationOrganizationCompetitive Advantage

Arrangement of actions with Tesla Corporate Strategy

Yes

No

Each of the firms has its own strategy

Yes

Still, there are scopes for improvement 

Strategic ties with retailers and wholesalers

The company maintains a strong relation with all its retailers 

Yes, 

Difficult to imitate 

Yes

Sustainable Competitive Edge 

Track Record of Projects 

Yes

Yes

No

Yes

Robust Competitive Edge 

Global and Local Presence

Yes

Yes

Can be imitated by competitors

Yes

Sustainable Competitive Advantage

Product Portfolio and Collaboration among Numerous Products

Yes, it is valuable in the industry

Most of the entrants are willing and trying to enter the profitable sections

Can be imitated 

The company has utilised it in a proper manner

Gives short term competitive edge  

Prospects for Brand Extensions

Yes

No

Yes

Brand extensions will necessitate an advanced marketing budget

Temporary Competitive Advantage

Competence to obtain Talent in Several national and Global Markets

Yes

Yes

Difficult to imitate

To a great level yes

Strong Competitive Advantage

Client Network and Allegiance

Yes

Yes

Has been tried by rivals but none of them is as successful

The company is leveraging customer loyalty to good effect

Provide medium-term competitive advantage

Sales Power and Network Administration

Yes

No

Can be imitated 

Still, there is a lot of possibilities to apply the outstanding sales power

Can offer a sustainable competitive edge 

Brand consciousness

Yes

Yes

No

Tesla has applied its leading brand image in numerous segments

Sustainable Competitive Advantage

(Source: Sangra, 2020)

3.2 Value Chain Analysis 

Tesla Inbound logistics: Tesla Inbound Logistics covers resources processing and storing for the construction of electric vehicles, energy storage devices and solar panels (Morrison, 2020). Tesla employs a variety of rare resources including aluminium, steel, cobalt, lithium, nickel, and copper, together with a conventional set of raw resources.

Tesla Operations: Tesla functions in Fremont, California, Lathrop, California, Tilburg, The Netherland and China, here the company executes its production and assembly operations. 

Tesla Outbound Logistics: Tesla’s outbound logistics comprises the warehouse and shipment of the company’s electric automobiles, energy storage devices and solar panels (Morrison, 2020). In the United States and 35 other nations and territories, Tesla distributes electric automobiles to its own showrooms and galleries globally. The firm also provides clients with direct supplies of electric automobiles.

Tesla Marketing and Sales: Tesla marketing and sales tactics are innovative and are comparable to other business approaches of the company (Le and Ho, 2021). Tesla technique for advertising is also known as “Zero Dollar marketing.” It acts as an important source of value in growing brand recognition on a worldwide scale, attracting widespread media attention.

Tesla Service: In recent years, customer service methods in Tesla have developed. The firm of electric cars strives to provide the highest consumer experience and thus does everything by itself, from manufacturing to distribution.

3.3 Analysis 

Musk always attempts to anchor the Tesla brand to reach and maintain leading recognition by doing business in an unconventional way than the traditional premise. Building a large vibe enables Tesla to follow a $0 marketing budget approach — no publicity, agency or dealership investment (Le and Ho, 2021). It shows that the company relies on the value of its brand name and enables the customers to see the advancements of its technology offerings to create the market buzz.  As a consequence, revenues have constantly risen up to 7 billion dollars, from just 200 million dollars five years prior. In 2017, this performance appears to have persisted. During the first quarter, Tesla recorded revenues of $2.7 billion - more than twice as much as the firm posted $1.15 billion in the same time of the preceding year. The capital market recognized this accomplishment. Batteries are a dangerous undertaking (Maamoun, 2021). In 2016, prices internationally declined by 22%. As per Bloomberg New Energy Finance’s estimations, a further price decrease of up to 20% was predicted for 2017. 

This is not favourable for EV manufacturers, and it causes grave problems for battery manufacturers (Maamoun, 2021). Many people believe it’s a huge gamble to build the biggest plant in the world which almost doubles the output of lithium-ion batteries globally. With the integration of SolarCity with Tesla, Musk became the CEO of three companies and extended its already expanded attention span and capital backing, which may not be eternally flexible. Some of this uncertainty is reflected in sceptical analyst reports as well as Tesla’s stock, which in early 2016 fell from $240 to $140 before again recovering its worth.

Figure 2: Tesla’s Stock Price From 2012-2017

(Source: Maamoun, 2021)

4. CSR Activity Evaluation 

4.1 Carrol’s Pyramid 

Philanthropic responsibility: In taking part in various humanitarian initiatives, Tesla takes the needs of the local community into account (SMES’PERFORMANCE and HEI, 2020). The group sponsors community initiatives and also contributes to charitable activities. Philanthropy standards generate resources for social entrepreneurs, many of whom are inspired by the same empathy driving generosity in the first place.  In order to meet the environmental and social concerns of the community, Tesla engages in social enterprise. There are three conceptions of social entrepreneurship. The first premise was the obvious social and environmental responsibility of organizations. The Musk Foundation’s very short and minimalist website aims to promote four areas: renewable energy studies and promotion, space research and empowerment, paediatrics research and science and engineering training (Bhardwaj et al., 2020). Elon Musk, CEO of Tesla, is the Musk Foundation’s only fundraiser, donating at least $257 million. He is an objectivist who pursues safe drinking water, relief from disasters and advances in all sorts of sustainability initiatives. 

Ethical Responsibilities: The Supplier code of conduct of Tesla’s (‘code’) and its human rights and appropriate resources policy provides the basis for guaranteeing social, environmental and ethical accountability across the supply chain, from raw materials to the entrance of the facility (GS and LS, 2020). The principles described in this Code dictate Tesla’s interaction with its providers and how they intend them to run their businesses and (any firms or persons from whom Tesla receives products and services as well as their employees, agents and subcontractors).

Legal Responsibilities: Forced, bonds, unlawful or exploitative work, slavery, trafficking in humans and forced (including debts) or non-compulsory labour are not allowed. Management of aggression, gender-based victimization, sexual assault, mental or physical coercion, intimidation or verbal abuse of employees is not acceptable (Baffour-Awuah, 2020).  Disciplinary rules and procedures to support these criteria are established clearly and informed to employees. 

Economic Responsibilities: Tesla has the mission of developing goods that are both socially and commercial in nature (Baffour-Awuah, 2020). The tasks are focused on social responsibility. With the use of a bidding platform for local and international recyclers, they have simplified the recycling process for the material scrapes of their stamping plants, which make metal components for model S, Model X and Model 3 simpler to use. Decommissioned and scrapped items are repurposed using this platform, such as loading equipment, motor components, cables, metal boxes, wheels and others. This precise classification of components discarded allows Tesla to recover much economically.

Carroll CSR Pyramid Model - toolshero

Figure 3: Carrols Pyramid 

(Source: Baden, D., 2016)

5. Evaluation of the Analysis 

5.1 SWOT Analysis 

Strength

Weakness

The biggest strength of Tesla is its brand name and a global presence with a giant image. 

Tesla’s market value is one of its key advantages. 

Having a technologically sound strategic vision and innovative inspirations regarding product lines and exploration into niche markets are some of the crucial aspects that can be considered as the significant strengths of the company. 

Capital power also plays an important role when it comes to Tesla’s competitive advantage or strength in the market. 

The global issue of political uncertainty remains at the core of Tesla’s business challenges. Especially the geopolitical relations between China and the USA has created a significant disruptive probability which can be difficult for the company to cope with. 

Though the company does not need any massive advertising approach because of its already well-established market position yet there might be a risk in the upcoming time when this might impact the market image or blur the market existence of the brand. 

Opportunity

Threat

Tesla’s biggest possibility is the Asian market, which remains untapped in the car and sustainable energy sectors. Tesla plans to produce battery cells of its own. The transition can be a major game-changer since its rate of production can be increased while operating costs may be minimized. Pickup trucks are 17.6 per cent of the US car industry, which offers significant potential opportunities for electric vehicles.

Technological inadequacy in their offerings is a big threat to Tesla. If the liability claims remain, Tesla may suffer major financial difficulties. The rivalry between both alternative fuel cars and auto driving technologies is fierce. 

(Source: Flehantova and Redka, 2021)

6. Recommendation for Global Development 

Tesla being a globally recognized brand has the ability to make sure its existence remains stable and sustainable in future while adapting new approaches regarding its market operations. The company should focus on global expansion while being conscious of the market requirements and essential strategic directions. 

  1. The most important market opportunity can be derived from the expansion into the Asian market (Flehantova and Redka, 2021). Though the company has already started its operations in the Asian automotive industry yet the possibilities could be raised with further movement into the niche market. 

  2. For global expansion and sustained industry recognition, the brand needs strategic marketing approaches (Maamoun, 2021). Although they do not intend to have any conventional channel for the company advertisement yet strategic development of unique marketing tactics can carry on the legacy of being out of the box and also satisfy the strategic requirements.

  3. The company should invest more in the affordable range of cars which might benefit the middle class and lower-income capacity people from across the world. It will also ensure a more profitable turn for the company. 

7. Recommendation for Sustainability 

The company’s sustainability approach has posited the company at a leading stage yet there is a multitude of ways in which the company can approach their strategies to go beyond the limit of being humanitarian. 

  1. Firstly, the company should consider the recruitment process and focus on the hiring of indigenous talents in leadership positions in the operations of developing countries. It will enable the company to be more human-centric and retain the best talents on the basis of expertise (Wang and Peng, 2020). It will also serve the purpose of economical sustainability. 

  2. It should invest in the technological education funding for underprivileged students residing in the countries where it operates. It will increase the expertise and allow the company to recruit sufficiently capable human resources. 

8. Conclusion

The entire report has been focused on the analysis of strategic nuances associated with Tesla Inc. The globally recognized brand has established an image of a technologically advanced and sustainable brand. The brand has a comparatively unconventional approach towards strategic decisions and market practices which sets it apart from other standard automotive companies. The brand experiments and innovates its moves and products to get the optimum market advantage. In the process of such an elaborate market expansion and operational approaches, some external and internal environmental factors influence the dimension and usual practices of the company. The present report has attempted to explore these aspects in the company context allowing a concise and comprehensive understanding to be established through the reading. 

References 

Baden, D., 2016. A reconstruction of Carroll’s pyramid of corporate social responsibility for the 21st century. International Journal of Corporate Social Responsibility1(1), pp.1-15.

Baffour-Awuah, D., 2020. Essence of Corporate Social Responsibility–Case Study of Tesla Inc. Available at SSRN 3672317.

Bhardwaj, S., Pandey, R., Sharma, S., Sejal, S., Iyer, G., Sharma, S., Ranjith, P.V. and Kulkarni, S., 2020. Problems Faced by Automobile Industries: Case Study on Tesla. International journal of Tourism and hospitality in Asia Pasific (IJTHAP)3(2), pp.78-88.

Corbett, K., 2020. UNDERSTANDING HOW TESLA LEVERAGES TWITTER TO COMMUNICATE ENVIRONMENTAL CORPORATE SOCIAL RESPONSIBILITY.

Flehantova, A. and Redka, O., 2021. Innovation as the main driver for the future economic growth of the company (on Tesla, Inc. Example).

GS, D. and LS, M.R., 2020. Customer perception towards tesla electric car’s innovative features. Journal of Contemporary Issues in Business and Government26(2), pp.521-527.

Kim, H., 2020. Analysis of How Tesla Creates Core Innovation Capability. International Journal of Business and Management15(6), pp.42-61.

Le, L. and Ho, Q., 2021. Factors affecting the valuation of electric vehicle company in 2020: case Tesla Inc.

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.

Lu, F., 2020, January. Can shareholders of Tesla really benefit?. In 2019 International Conference on Education Science and Economic Development (ICESED 2019) (pp. 227-233). Atlantis Press.

Maamoun, A., 2021. Elon Musk and Tesla: An Electrifying Love Affair. SAGE Publications: SAGE Business Cases Originals.

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.

Morrison, J., 2020. The Global Business Environment: Toward Sustainability?. Red Globe Press.

Sangra, S., 2020. Technology & Innovation in Global Business-Fall 2020.

SMES’PERFORMANCE, I.M. and HEI, A.S.A., 2020. Journal of Global Business and Technology.

Wang, J. and Peng, X., 2020. A study of patent open source strategies based on open innovation: the case of Tesla. Open Journal of Social Sciences8(07), p.386.

Zhang, J., 2020, January. Is it a good choice to invest in Tesla?. In 2019 International Conference on Education Science and Economic Development (ICESED 2019) (pp. 283-287). Atlantis Press.

Appendices 

Presentation Slides 

 

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