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Porters Five Force Report

Focus of Porters Five Force Report is to understand various aspects


related to business strategy and to apply these the cortical concepts with
respect to a specific business organisation. Business strategy should
always be prepared in a way that it considers external as well as internal
environment to the company.
Introduction
For a business organisation, it strategy to execute its plan in order to achieve its
business objectives defines its success (or failure). Business organisation which are
successful have one common factor among them, this common factor is their capability
to successfully plan and execute their plan or in other word implement their business
strategy to achieve their objectives.Focus of Porters Five Force Assignment Help is
to understand various aspects related to business strategy and to apply these
theoretical concepts with respect to a specific business organisation. In order to have
better understand organisation selected for this task is Tesla Motors. As part of this
report, focus will be on understanding the overall strategic planning process, the way it
formulates its strategy, its approach towards evaluation and selection of a strategy and
finally the way a selected strategy is implemented. Hence, by the end of this report,
learner/reader should be able to analyse various elements of a business strategy and
how it can be applied in an organisation like Tesla Motors.

Task 1

Select a business organisation and research its business activities before


writing a preliminary report based on following:
Company Profile: Unlike other automobile manufacturers, Tesla Motors is relatively
young company in the ever competitive automobile sector. However after its
establishment in 2003, Tesla Motors has rapidly scaled the heights of the market and
established itself has a unique manufacturer of the cars. Main reason behind unique
positioning of the Tesla Motors is its focus on design and manufacturing of electric
sports car-cars which run on electricity power rather than carbon fuel. However, Tesla
Motors also plays critical role of other companies such as GM (General Motors) &
Toyota Motors as it is one of the major suppliers of auto parts to these companies.

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Mission and Vision statement: For any organisation its mission and vision statement
provides a direction to the organizations plan. Vision statement is a broad overview of
what actually a company wants to achieve throughout its existence, on other hand
mission is more like a well-defined short term and long term goals which company
continuously wants to achieve.

Vision statement of Tesla Motors is very objective and clear, it has targeted towards
becoming one of the primary innovator and manufacturer in the field of electric car
manufacturer in 21st Century. Company wants to create a sustainable transport system
which is enabled by automobiles based on electric power. On other hand mission
statement of Tesla Motors is focused on creating a healthy, green and sustainable
environment through by reducing use of carbon fuels like petrol, coal and other source
of hydrocarbons, by promoting electric power based automobiles in the market. Based
on market analysis of Tesla Motors it can be said that as of now, it primary goal is to
become primary leader in the market of electric car. In alignment to its goal and overall
business strategy, its objective is to position itself as niche manufacturer in the
automobile sector and to sustain its position by achieving stable growth and profitability.
In order to achieve its business objective,Tesla Motors has focused on ensuring that it
does a small scale production of 400 electric cars every week, and to further ensure that
pricing strategy of such cars in long term is such that it becomes affordable for all the
classes of society in United Kingdom. Important aspect of business strategy is to
analyse the core competencies of an organisation. For Tesla Motors its core
competency lies in its expertise in the electric car market. The level of technical
expertise it has in this sector is unmatched, no other company is even near to create
mass production model of electric cars. This is one major reason, due to which Tesla
Motors has been able to uniquely position itself in the automobile market of UK and
other countries. However, two main factors which give Tesla Motors an edge over other
competitors are its superiority in development of the battery technology which powers its
automobiles, and secondly its capability to innovate new features in saturated market of
automobiles. It has been able to achieve this innovative edge through various ways like
filing patents on relevant technologies, and then scaling up the product to a level of
mass production.

Analyse the factors that have to be considered to formulate strategic plans.


How does the Ansoffs matrix help your chosen firm to manage the strategic
decision to consider strategic plan.
While preparation of a strategic plan there are several factors which needs to be
considered. In case of Tesla Motors, following are the factors which have been
considered:

Timeframe for strategy implementation: The time frame within which the
strategy has to be formulated and implemented should be well-defined. Well-
defined time line for strategy implementation will enable the business
organisation to properly utilise its available resources in order to achieve its
business objectives.

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Identification of stakeholders: Tesla Motors needs to ensure, that it clearly
identifies the stakeholders who will be impacted by the implementation of the
strategy.
Identification of resource required to fulfill the strategy: For Tesla Motors, in
order to ensure that its business strategy is implemented properly, it will be
important to identify the resources which will be required to achieve the strategy.

It is important to understand that for a business organisation to succeed, it is not


necessary to deploy only one specific strategy to succeed and sustain in the market.
These strategies can be development of market, differentiation of the product line, or
the way organisation positions itself. In order to analyse, the kind of strategy might be
required in any given specific situation, tool known as The Ansoffs Matrix can be used.
Below displayed diagram displays the Ansoffs Matrix for Tesla Motors.

Figure 1: Ansoff's Matrix for Tesla Motors

Above displayed Ansoffs matrix clearly identifies the suitable strategy w.r.t a specific
market environment. On the basis of this matrix, it can be said that currently Tesla
Motors has started its operations in UK and is rapidly spreading its presence in various
cities of UK. For example, currently business strategy of Tesla Motors can be based on
market penetration, as it is yet to gain major share of UK automobile market. However,
in future Tesla Motors should focus more towards market development and
diversification, especially since Tesla Motors offers on X and S class of automobiles
currently. Hence, based on market environment Tesla Motors can accordingly plan its
strategy and implement through analysis of Ansoffs matrix.

BCG Matrix is a framework which is used to evaluate the strategic position of the
business organisation, its brand portfolio and overall business potential. BCG matrix can
be used to identify the business of Tesla based on the industry attractiveness and
competitive position.
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Hence, for Tesla Motors, four segments as per BCG matrix will be Stars (High market
growth rate, high market share), Questions marks (low market share, high market
growth rate), Dogs (Low market share, low market growth rate) and cash cows (low
market growth rate, high market share). Hence based on analysis, below diagram
represents the BCG Matrix for Tesla Motors:

Figure 2: BCG Matrix Tesla Motors. Source

Hence, based on the analysis, it can be said that Tesla Motors falls in the category
of questions marks,where despite of earnings and profits growing, cash flows remains
negative and overall strategy of Tesla Motors should be focused on investing in market
development.

Evaluate the effectiveness of strategic planning techniques to be used when developing


strategic business plan.
In order to develop a strategic business plan, an organisation can use various strategy
planning techniques. Some of the widely used techniques include SWOT (Strength,
Weakness, Opportunity and Threat) analysis, Porters Five Force Model, BCG Matrix,
Balance Scorecard and PESTEL Analysis. Some of these methods are described briefly
below:

SWOT Analysis: As the name suggests itself that SWOT analysis if focused on
identification of strength, weakness, opportunity and threat for any particular business
organisation. It can be said that SWOT analysis enables an organisation to analyse all
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the aspects mentioned above and accordingly prepare its business strategy. Strength
and weaknesses are internal to the organisation whereas opportunity and threats are
from the external environment which might not be directly associated with organisation
(Alstete, 2013).
Hence SWOT analysis of Tesla Motors is as follows:

Strength

Innovation capability for new Weakness


concept and technology
Superior design and engineering High production cost
Strong partnerships Scale of operations
Poor market growth

Opportunities
Threats
Growing market
Increasing oil and gas prices Gradually increasing competition
Support from government Concentrated industry
Limited range of products

SWOT Analysis for Tesla Motors

PESTEL Analysis: PESTLE analysis helps an organisation, by presenting a


comprehensive analysis of the external factors which might have impact on
organizations business strategy. These factors are mainly categorized as Political,
Economic, Social, Technological, Legal and Environmental in nature.

Political factors: Following are the political factors which will have impact on the
business strategy of the Tesla Motors:

Gradually United States has reduced its dependency on oil imports from middle
east countries
Government has been giving tax exemptions to the companies like Tesla which
are focusing on use of green technologies.
There has been increase in demand for the green transportation from public as
well.

Economic factors:

Low interest rate and easily available funds from venture capitalist

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Increase in fuel prices have pushed consumers to look for other cheaper energy
alternatives.
Steady growth has increased the job creation has as well, impacting purchase
power of the consumers.

Social factors:

Tesla Motors has become a hugely popular organisation which people are
following for its growth on social media.
In 2013 Tesla Motors car was awarded as Motor Safety Trend Car of the Year.
Over a period of time, increased consumer confidence has helped Tesla Motors
to increase its potential market segment.

Technology:

Teslas supercharge network solar powered technology is one major aspect


supporting Teslas innovation.
Its partnership with organisations like Daimler, Toyota and Panasonic has helped
the organisation to share critical automobile technology to support its business.

Porters Five Force Model: Porters five force model helps a business organisation to
understand the existing market scenario on the basis of five important factors. These
factors are related to threat from a new entrant in the market, existing competition
among the market players, bargaining power of the buyers, bargaining power of the
suppliers and ultimately threat perception from any potential substitute product. Hence,
based on the assessment of these factors future business strategy can be prepared.

Balance scorecard: Unlike other methods, this method is focused more towards the
monitoring and implementation of the strategic plan. It also ensures that effectiveness of
the implemented strategy is measured, so that accordingly various aspects of the
strategic plan can be modified accordingly and future goals can be achieved.

Stakeholder mapping for Tesla Motors is mentioned below. It is important to know that
stake holder mapping has to be done on the scale of impact of change and support for
change.

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Figure 3: Stakeholder mapping for Tesla Motors.
Task 2

Conduct an organizational audit of the chosen business. How the evaluation


of Porters five forces model in the perspective of your chosen organization is
useful for business environment and strategic positioning.
As discussed in above section, one of the methods of strategic analysis is Porters Five
Force model. Hence organisational audit based on the Porters five forces is mentioned
below:

Intensity of industry rivalry: Currently there is hardly any automobile company


which has expertise in manufacturing of electric cars. Due to which, there is
relatively negligible rivalry in this regard and has low to moderate impact on the
performance of Tesla Motors.Even though overall competition in automobile
sectors is extremely high, but due to its unique positioning Tesla Motors does
have a competitive advantage in the segment in which it functions.
Threat of new entrants: Due to entry barriers like initial investment and low
acceptability of the products like electric cars, these barriers are relatively high,
which further negates the threat of new entrants. Also, amount of technical
expertise Tesla Motors has acquired over a period of time will be highly difficult to
match-up with. Hence there is low threat of new entrants for Tesla Motors.
Bargaining Power of buyers: Tesla Motors has launched products such as
electric cars which are completely unique in the market. The overall designing
and product presentation is unique and never seen by market. Hence, in such
scenario there is no other company which can match the expertise of Tesla
Motors in electric car segment. Hence it becomes obvious that customer hardly
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has any choice when it comes to buy high quality electric car, due to which
bargaining power of the buyers is low as well (Johnson et al,2011).
Bargaining power of suppliers: Considering the fact that Tesla Motors has
acquired technical expertise in manufacturing electric cars, it becomes natural
that company has supplier system which is unique as well and has taken long
time duration to be developed. That is why; Tesla has high dependency on its
suppliers to ensure smooth process of manufacturing of its cars. Because of this
situation, suppliers bargaining is high for Tesla Motors.

Explain the significance of stakeholders analysis while formulating new


strategy of your chosen business.
Stakeholders can be defined as an individual, group of individuals or any external entity
which gets impacted by performance of the company with which the stakeholder is
associated. For a business organisation there are various stakeholders. These
stakeholders can be internal as well as external to the business. Stakeholders for any
organisation can be classified as investors who invest their money in the organisation,
employees of the company, customers, suppliers, government, and communities. Every
stakeholder has different set of expectations from the organisation. These expectations
and the way these expectations should be prioritize should be done through a process
named stakeholder analysis. Two stakeholders cannot have same priorities for an
organisation. For example, for Tesla Motors it will be more important to fulfil its carbon
emission regulations first rather than focusing first on donating money to local
community. Hence, it will not be wrong to say that stakeholder analysis helps in
identifying the sensitivity of the stakeholders associated with the business, and based
on the priority identified, company takes actions to fulfil those requirements/expectations
of the most important stakeholder first. Ultimately, stakeholder analysis helps in
formulation of the business strategy as it analysis of various interests helps the
organisation to identify its future tasks; activities which it needs to do in order fulfil
requirements of its stakeholder. Based on stakeholder analysis of Tesla Motors, one
aspect which clearly stands out is its investors expectation from the company to
generate profit. Hence, Tesla Motors should focus on fulfilling requirement of its
investors who have invested money and enabled the company to develop innovative
product like electric car. Further the government policies also have influence on the
business. Lastly the customers are also stakeholders in the business as the business
needs to generate profits in order to sustain in the market. In nutshell, it can be said that
following are the key stakeholders for Tesla along with their purpose:

Investors: people who have invested money in Tesla Motors. Investors main
intention is to get profit for their investments.
Employees: People working for Tesla are also major stakeholders. For these
stakeholders having a stable job with Tesla and a positive work environment is
the main expectations.
Customers: Customers who purchase product from Tesla are the most critical
stakeholders in the business. If they are not satisfied with the product, then they
will lose their faith in the company and will not buy products from Tesla.
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Government: Government as a regulatory authority is a major stakeholder in the
organisation. Rules and regulations related to automobile sector impacts the
organisation.

Present a new strategy for the chosen business based on organizational audit
and stakeholders analysis
Based on the organisational audit and stakeholder analysis of Tesla Motors there are
certain key aspects which needs to be highlighted clearly. Firstly important aspect is
that Tesla Motors currently does not have many products in its portfolio. For example in
UK, Tesla Motors has only two products named MODEL S and MODEL X, whereas
other competitors offer range of products in different categories, even though other
manufacturers do not offer electric cars but still customer wants more products from a
company. Hence in order to sustain itself and gain competitive advantage, Tesla Motors
should first focus on diversification of its product line.

Further on, one major aspect which Tesla Motors needs to focus upon is its pricing
strategy. Compared to other cars in market Tesla Motors products are nowhere cost
effective, mainly due to high cost of innovation in electric car segment. Hence, it needs
to optimize its pricing strategy so that its investors can achieve return on their
investments. Hence in order to gain further market share and strengthen its position,
Tesla Motors should focus on strategy of product differentiation, according to which it
should be designing and launching new products frequently (for example yearly).
Frequent launches of new products will maintain customer interests in the company,
and will also provide new options to customers to select from. If the product
differentiation strategy is implemented properly then Tesla Motors should definitely
increase its sales and gain more market share and customers. In fact, for Tesla
Motors, role of government is equally important since decision of government toward
promotion of clean and renewable energy might result into certain subsidies or tax
rebates for Tesla Motors. Hence Tesla Motors should work in close association with
government in order make sure that through its products government is able to achieve
the goal of promoting renewable energy.

Conclusion
Based on the analysis of business strategy of Tesla Motors it can be said, that Tesla
Motors is currently going through a transition phase, where it has to not only focus on
strengthen position in UK market, but also has to ensure that it is able to enter high
growth market like China.
Business strategy should always be prepared in a way that it considers external as well
as internal environment to the company. Also, for Tesla Motors strategy which is
recommended for sustaining future growth is related to retrenchment and market entry.
It is important to understand that no two companies can follow same strategy as factors
associated with one company might differ with another. One of the major take away
from is that if the organisation is able to create a niche position in the market then it can
insulate itself from aspects such as Porters Five Force Model etc.

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References
Abdulsater, A., Balasubramanian, A., Wang, B., Madani, F., Mansour, M., & Talla, R.
(2014). Technology Road Map for Tesla Motors Sedan EV. In Planning and
Roadmapping Technological Innovations (pp. 215-238). Springer International
Publishing.
Alstete, J. W. (2013). The dynamics of strategy: Mastering strategic landscapes of the
firm. Strategic Management Review, 7(1), 110-111.
Dinwoodie, D. L., Quinn, L., & McGuire, J. B. (2014). Bridging the Strategy/Performance
Gap How Leadership Strategy Drives Business Results
Europe, T. M. (2013). Tesla Motors Presents Supercharging at IAA and Announces
Plans for European Network Expansion.

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