Tesla's Strategic Management: Growth, Development & Market Analysis

This report provides a comprehensive strategic management analysis of Tesla, an American automotive and energy company known for its electric vehicles and battery technology. It utilizes the PESTLE framework to evaluate the political, economic, social, technological, environmental, and legal factors influencing Tesla's business. The analysis highlights governmental incentives, economic stability, social trends towards low-carbon emissions, technological advancements, environmental concerns, and legal constraints impacting the company. Furthermore, the report employs Porter's Five Forces to assess the competitive landscape, including the threat of new entrants, bargaining power of buyers and suppliers, rivalry among existing companies, and the threat of substitute products or services. The report concludes that Tesla's strategic initiatives, such as the development of the Cybertruck and a direct-to-customer business model, are crucial for maintaining a competitive edge against established automotive brands.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

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Company Overview
Tesla is an American Automotive and energy based company that is kwon for manufacturing
various types of fully driven electric vehicles as well as batteries that is also used in different types of
objects. The company is also known for manufacturing various types of solar panels and lighting systems
in its manufacturing units. The company is known to have its headquarters in Palo, Alto, Califiornia. The
company is known to perform all its manufacturing facilities at the Tesla Factory which is in Fremont.
The company is known for selling various types of models like the Model S, Model Y, Model 3 as well as
the Roadster which is the fastest and quickest car in the world. Recently the company has also diversified
its manufacturing business with electric cars in the development of the Cybertrucks.
Regarding the strategic management practices it can be said that the company is known to make
use of the Operations management best practices in order to maximize the productivity of the company as
well as increase the production of the company, which helps it to stay in a competitive position over the
competitors of the company in the automotive market. Taking care of the environment analysis of the
company it can be said that the PESTLE analysis will be much better in understanding the needs of the
company. According to the author Bughin, Pissarides & Hazan (2019) the PESTLE analysis is the most
used tool to determine the strategic management of the company in the area of its operations.
Political factors affecting the company business
The government entities are the most important or the main societal factors which are known for affecting
the business organization, and hamper the business revenue earned by the company in the particular
manufacturing place. The following are the external factors which are significant to Tesla as well as the
automotive industry in which they are working.
 Governmental incentives for the launch of the electric vehicles in the countries is the opportunity
faced by the company.

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 The new governmental trade agreements are the opportunities for the company
 But however the political stability of the company in various regions is the only thing affecting
the company. Most of the people in the present date are not used to in purchasing the electric
vehicles, therefore they are not preferring to buy them. Thus the government of the country might
not approve the entry of the company.
Economic factors affecting the company business
The effects of the economic factors of the company in the geographical area of manufacturing of the
vehicles is the most important factor to carry out the operation of the company in the present era.
These include the expansion in the market, trade levels, currency, are known to influence the
automotive industry.
 The decrease in the cost of the battery is one of the best opportunity for the company.
 Decrease of the renewable waste is one of the best opportunity that is faced by the company.
The business in the future will improve more only if the company is taking care of the renewable sources
of energy, however the economic stability issues will be threatening the company’s operation especially
in the market of Europe, and Asia, which is known for hampering the financial performance of the
company.
Social factors affecting the company business
The social analysis of the company will be analyzing the social trends of the company as well as it will
determine how the company is aligning to the social trends of the company. Therefore in order to target
the company aligned with the trends in the market, the managing directors of the company should be able
to ensure the strategies which will be applied in the business to maximize the business and increase the
revenues earned by the company. Few of the social factors of the company includes

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 .There is an increase in the drive of the low carbon emission vehicles in the market which will be
an opportunity for the company in the market.
 There will also be an increase in the preference in the renewable wastes of the company.
 There is an improvement in the wealth distribution in the market of the company in the
developing markets of the company.
Technological factors affecting the company business
The technological factors of the company includes how the company is thriving through its competitors in
the market with the evolution of the innovative measures as well as technological inventions. Taking for
the example of materials used in the engineering process as well as the cost effectiveness tools used in the
company manufacturing process. Therefore few of the technological factors of the company includes:
 There is an high rate of technological changes in the environment in the present date which is an
opportunity for the company.
 There is an increase in the use of electric as well as hybrid vehicles.
 Online mobility system is also much in trends.
Therefore it can be said that the company faces huge amount of opportunities in the automotive industry.
The company can therefore make use of these potential factors and rapidly align itself to the strategies
used and excel in the industry as soon as possible. The technological condition of the remote or the macro
environment clearly shows that the company has huge amount of opportunities regarding its growth in the
technological enhancement of the company.
Environmental factors affecting the company business
 The ecological trends or the environmental trends of the company includes the availability of the
materials used in the production and manufacturing of the cars in the company.
 There is a change in the climate in many countries therefore the company should target the
Asiatic countries to launch their cars.

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 There is also a expand in the environmental programs of the company which they should take
care of environmental programs to increase their sales process.
 The company should also take care of the rising standards of the waste disposal systems which
can be an opportunity taken by the company to increase its market.
Legal factors affecting the company business
The company’s marketing mix or the 4P of the company is something which is integrated with the legal
constraints of the company. According to the author Carlson, (2015) the regulatory factors of the
company as well as the laws are known for shaping the managerial decisions of the company. The
following legal factors are taken care of for the company.
 Expanding into the international patent protection is a big opportunity for the company.
 The company should take care of the energy consumptions regulatory factors which is a great
opportunity to the company.
 The company should take care of the sales dealership law in the US which is both an opportunity
as well as a threat to the company.
Regarding the Growth and Development of Tesla it can be said that the company has had an incredible
growth in the revenue over the last 10 years, the company had a growth of $15 million in annual revenue
in the year 2008, but eventually in the year 2018, the company had an growth of about $21 billion. The
107% of the intended growth of the company in not of much common in the startup companies present all
around the world.

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Fig 1. Represents the Growth and Development of Tesla.
Source: (Endsley ,2017).
But however according to the author huge amount of faster growth for any company is very tough when it
comes to expansion of the business organization more furthers. The company has been able to sustain a
very fast rate of growth in the market, which is very clear from the above provided PESTLE Analysis.
The company has been able to sustain 74% of growth rates from last year.
Porters 5 Forces of Tesla
Threats of the New Entrant into the market
However the threat of the new entrants in the market of Tesla is moderate in the industry of alternative
manufacturing industry is relatively low. But however the major challenges which will be faced by the

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company in regard to the other new entrant in the market is with the cost to performance. Few of the new
automakers in the market like BMW, Toyota, BMW, General Motors, Ford, Mercedes and many more
have entered in to the market of manufacturing pure electric vehicles. The cars are not much in the
performance but are very much cost effective than the competitors in the market. Over all the company is
known face a huge amount of competition from the competitors like the GM or the HMC when it comes
to the manufacturing of the batteries as well as the objects for the production of the cars by Tesla.
Bargaining power of the buyers
The bargaining power of the electric vehicles manufacturers in the market is very much significant. The
cost of the electric vehicles of Jaguar, Porsche E-Cross and many more are very much high as compared
with the cost to the customers using the Tesla Model 3 or the Model X. The additional range of the factors
that affect the bargaining power of the customers is the buyer’s ability to go for the substitute products
and other services with the extent to product differentiation between electric vehicles manufacturers.
Bargaining power of the suppliers
Regarding the bargaining power of the suppliers its can be said that the company is trying very hard to get
the raw materials as well as the initial components required by the company to get at a very low price in
the market from the competitors in the industry. But however it can be said that there is a very moderate
force regarding the power of the suppliers in the market. This is the only reason why the company mainly
relies on the manufacturing of the products and services in their own manufacturing units of the company
to reduce down the prices paid to the competitors.
Rivalry among the existing companies
According to the author Mazaheri et.al, (2019)the rivalry among the existing electric vehicles are highly
intensive. But however the company Tesla is the most preferred and recognizable brand in the area.
Rivalry among the companies exists like GM, BMW, Volkswagen, Porsche, Jaguar and Nissan.

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Threats of the substitute products or services
The threat of the substitution products or the services of the company is pretty much low as because the
purchasers can undoubtedly discover the substitute items without making an appeal to the market. The
customers of the company will not get a better product other than the Tesla itself. Therefore according to
the author Schwaiger, Rischpler & Nekolla (2017) the customers of Tesla has very low opportunities to
switch over to the other competitors in the market as because they are very much higher in cost, as
compared with the competitors like Jaguar, Porsche, which are more costly and therefore this is less
dangerous to the firm Tesla.
Fig 2. Represents the Porters Five factors of the company Tesla
Source : Zaiss, Windschuh & Lad 2017)
Therefore in order to conclude the above research paper it can be said that the company is trying to
achieve new strategies which is very clearly evident with the implementation and integration of the

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manufacturing process of the company. The company has in the present date successfully developed the
Tesla Cybertruck which is giving a very good competition to the Pick-up truck brands who were for long
in the market: Ford, Toyota, Mercedes, BMW and many more in the list to come. The new business
model of the company is trying to directly control the quality of products and services which are received
by the customers as promised by the company. The new business model of the company is giving huge
amount of competition to the brands like Daimlers, Mercedes Benz, Toyota and many more. The
inclusion of the latest technologies and innovative factors used by the company includes the
manufacturing of the latest Pick up truck which is the Cybertruck. The company here has combined both
power with technology to be competitive in market.

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