Dynamic Strategy and Disruptive Innovation

This report explores the concept of dynamic strategy and disruptive innovation, focusing on Tesla Motors' stakeholder view, stakeholder analysis, and recommended strategic programs for different stakeholder groups. It provides an overview of Tesla Motors, its vision and mission statements, and recent developments in the automotive industry. The report categorizes stakeholders into internal and external groups and analyzes their behaviors and motives. It also identifies generic strategic programs for each stakeholder group and provides specific recommendations for managing communities, employees, customers, and shareholders. Overall, the report highlights the importance of considering stakeholder interests and expectations in achieving competitive advantage.

Running Head: DYNAMIC STRATEGY AND DISRUPTIVE INNOVATION
Dynamic Strategy and Disruptive Innovation

DYNAMIC STRATEGY AND DISRUPTIVE INNOVATION 1
Executive Summary
Tesla Inc.is an automotive and energy company from America based in Palo Alto, California.
The company addresses the interests and expectations of the stakeholders in order to attain
competitive advantage in the market. Tesla Motors is also considering the recent developments
for the purpose for achieving its long term objectives. The focus of this report is on the
stakeholder view of Tesla Motors along with stakeholder analysis, identification of stakeholder
category and generic strategic programs for the selected groups. At the end of this report, certain
recommendations relating to strategic programs have been made for the selected stakeholder
groups.

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Contents
Introduction to Tesla Motors...........................................................................................................3
Tesla Stakeholder View of the Organization...................................................................................3
Stakeholder Analysis for the Selected Stakeholder Groups............................................................6
Identification of Stakeholder Category and Generic Strategic Programs for Selected Stakeholders
.........................................................................................................................................................7
Recommended Strategic Programs for the Selected Stakeholder Groups.......................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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Introduction to Tesla Motors
Tesla Inc.is an automotive and energy company from America based in Palo Alto, California.
The specialization of the company is in manufacturing of electric cars and solar panel
manufacturing through its SolarCity subsidiary. Multiple production and assembly plants are
operated by the company, however, the main vehicle production facility is available in Fremont,
California at Tesla Factory (Tesla, 2019).
The vision statement of Tesla Motors clarifies its long term goals and the reason for all its
efforts. Its vision statement provides that Tesla Motors aims at becoming the most fascinating car
company of the 21st century by way of driving the transition of the world to electric vehicles.
Moreover, for the purpose of achieving the long term goals, it has formulated the short term
goals. The short term goals of the organization are highlighted in its mission statement. The
mission statement of Tesla Motors provides aiming at hastening the transition of the world to
sustainable transport. The vision and mission statement of the company are in conformity with
the recent developments and trends (Tesla, 2019).
The recent developments have provided by the facility of electric cars to the world in order to
eliminate the impact of automotive on the environment. The company is also taking steps for
leading the world towards a sustainable transport. Tesla is working on bringing self- driving cars
to the market but it still appears to be a challenge whether the industry and the company will be
able to adapt the changes which is likely to be brought by this technology. Automated driving
and electric mobility are the automotive industry trends that are required to be taken into
consideration by Tesla Motors.
The focus of this report is on the stakeholder view of Tesla Motors along with stakeholder
analysis, identification of stakeholder category and generic strategic programs for the selected
groups. At the end of this report, certain recommendations relating to strategic programs have
been made for the selected stakeholder groups.

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Tesla Stakeholder View of the Organization
The stakeholder theory provides the view of capitalism which emphasizes on the interconnected
relationships between the organization and its suppliers, customers, investors, employees,
communities and others having stake in the business. The theory argues for the creation of value
by the firm for all the stakeholders and not just the shareholders (Andriof, Waddock, Husted and
Rahman, 2017). In other words, the stakeholder theory is the theory related to business ethics and
organizational management which addresses the values and morals in the management of the
organization. The traditional view of the company, the shareholder view, provided that only the
shareholders or the owners of the company are important and there is a binding fiduciary
relationship on the part of the company to put their needs first along with increasing value for
them. On the other hand, the focus of the stakeholder theory is on the other parties involved such
as financiers, political groups, trade unions, governmental bodies, communities, employees,
customers and trade associations.
Tesla Motors
Investors
Suppliers
Government
Employee
Consumers
Shareholders
Owners
Board of Directors
Environmentalists Consumer Advocates

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The above diagram of the Tesla stakeholder view provides that its stakeholders can be divided
into two categories i.e. internal and external. Internal and external stakeholders are the two types
of stakeholders which includes individuals from within the business entity such as board
members or owners, employees and shareholders and the individuals from outside the business
entity such as customers, suppliers, employees, contractors, communities, etc. According to the
stakeholder theory, competitive advantage can be attained by an organization only when it
considers the interests and expectations of its stakeholders (Cooper, 2017). Tesla takes a number
of steps for the purpose of satisfying both stakeholder groups. The specific stakeholders within
each stakeholders group of Tesla has been explained below:
Internal Stakeholder Group-
Employees- Employees include the individuals which are hired by Tesla for the performance of
its tasks and who receive compensation and remuneration for the services provided by them
(Bourne, 2016).
Board of Directors- Board of Directors are the individuals or group who are in strong governance
of the organization. These are the individuals who are elected by the members of the
organization with the help of a common vote in the General meeting of Tesla (Pérez and
Rodriguez del Bosque, 2016).
Owners- Owners of Tesla comprise of the individuals or groups who own the business and can
be the shareholders or the partners.
External Stakeholder Group-
External stakeholders comprise of the entities who are affected by the performance of Tesla
Motors such as the regulators, suppliers, investors and consumers. The government requires
Tesla Motors to pay taxes on time, follow laws, employ more people, and truthfully report its
financial conditions. Customers are the stakeholders who demand high quality goods from the
company at lowest possible costs. Suppliers expect that the business which make purchases for

DYNAMIC STRATEGY AND DISRUPTIVE INNOVATION 6
its products from them. On the other hand, creditors want to receive their full dues on timely
basis. Also, the community demands that Tesla should contribute in a positive manner towards
the population and the environment (Bonnafous-Boucher and Rendtorff, 2016).
Stakeholder Analysis for the Selected Stakeholder Groups
Stakeholder analysis can be defined as the evaluation of the stakeholders of the organization
along with their potential for helping or hindering the organization in the achievement of its
objectives. Stakeholder analysis is a technique for the identification of the stakeholders and
making analysis of their needs. The main purpose of stakeholder analysis is the development of
strategic view of the institutional and human landscape along with developing the relationships
between different stakeholders (Jensen, 2017). The social responsibility strategy of Tesla Motors
has resulted in the prioritization of certain stakeholders like communities, employees, customers
and shareholders. Each stakeholder group has a specific attitude or set of values and therefore,
the behaviors and motives of the stakeholders have been analyzed below:
Communities- There is a heavy influence of the community on Tesla Motors because they are
responsible for designating the corporate image. The main motive of the community is to make
sure that the environment is protected and is not harmed as the result of the business operations
of these organizations (Davis, 2016). This type of behavior can be described as the cooperative
potential. The behavior of these communities is completely guided by their motives. Such
concerns are perfectly being considered by Tesla with the help of its electric cars. Moreover, the
communities have been satisfied by Tesla through zero- emission and ecologically clean
products (Tantalo and Priem, 2016).
Employees- Tesla Motors has clearly indicated that the employees are the most essential part of
their business. The performance and productivity of Tesla Motors is directly impacted by its
employees. This type of behavior of this stakeholder group is its actual behavior and has been
observed over a period of time. The basic motive of the employee behind working in an
organization is to receive competitive salary along with attaining the professional growth. If
they are able to achieve this then they make the best possible efforts for the achievement of the
objectives of the organization. Tesla is trying to consider these expectations of its employees by

DYNAMIC STRATEGY AND DISRUPTIVE INNOVATION 7
way of incorporating special HR programs and competitive compensation strategy for the
purpose of enriching the professional skills of its employees (Kent and Zunker, 2017).
Customers- The profits of Tesla Motors are dependent on its customers. The main motive of this
stakeholder group is to receive quality products at the most justified pricing level. This type of
stakeholder behavior can be described as cooperative potential (Garcia‐Castro and Francoeur,
2016). Their behavior is also guided by this motive and they move towards other automotive
companies if this demand is not satisfied by Tesla. Tesla is trying to meet this demand of their
customers by way of purchasing low priced batteries for the purpose of reducing the overall cost
of its cars.
Shareholders/ Investors- The shareholders and investors play an important role in the
capitalization and cash flow of Tesla Motors. The main motive of the investors and shareholders
is to receive maximum possible return on the investment made by them. For this purpose, they
elect those individuals on the board of the organization, who, they think, will act in the best
interest of the company and will take the organization to new heights. Also, if they do not
receive the desired returns they retrieve their investment from the company and this is the actual
behavior which has been observed in this stakeholder group (Eskerod and Jepsen, 2016). Tesla is
taking the interests of its shareholders and investors into consideration by formulating long term
strategies for the transformation of the automotive industry.
Identification of Stakeholder Category and Generic Strategic Programs for Selected
Stakeholders
The stakeholders can be categorized into four categories namely swing, defensive, offensive and
hold. The above mentioned stakeholders i.e. communities, employees, customers and
shareholders have been classified into the stakeholder categories below.
Communities- Communities are the swing stakeholders with high cooperative potential and high
competitive threat. Swing stakeholders have robust capability of influencing the outcomes of a
particular situation. The management of the swing stakeholders can be ensured with the help of
following generic strategic programs-

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Formal rule changes strategies can be used by Tesla which involves lobbying lawmakers for
legislative reform. Secondly, the use of decision forum change strategies can be made which
include taking the debate to negotiation table from the courtroom. Thirdly, the kind of decisions
change strategies includes shifting the dispute from one issue or subject to an alternative
(Aaltonen and Kujala, 2016).
Employees- Employees of Tesla Motors can be categorized as hold stakeholders. This is due to
the fact that that they form in the category of low competitive threat and low cooperative
potential. They have the capability of helping the organization and at the same time can also
cause harm to it. However, this doesn’t imply that they are insignificant. The three generic
strategies which are available for the management of hold stakeholders are monitoring of
existing programs, reinforcement of current beliefs regarding the organization and guarding
against the changes in the transaction process (Eskerod, Huemann and Ringhofer, 2015).
Monitoring existing programs provides that there should be assessment of the programs for their
ability of maintaining current behavior. For the reinforcement of current beliefs, there should be
two- way communication in Tesla Motors. Tesla should further maintain trust and legitimacy
with the employees. Furthermore, the employee should also be guarded against the change
strategies by way of resisting any proposed alterations to the transaction process.
Shareholders- The shareholders and investors of Tesla Motors can be categorized in the category
of defensive stakeholders. Defensive stakeholders describe high competitive threat and low
cooperative potential. They bear the capability of preventing the organization in the achievement
of its objectives (Wu, 2012). The management of the defensive stakeholders can be ensured with
the help of following generic strategic programs-
Tesla can go for the reinforcement of its current belief strategies which include holding of
shareholder meetings and the production of annual reports through which it can be affirmed that
the management wants to create value for its shareholders. Secondly, existing program strategies
can be maintained for preserving the helpful stakeholder behavior and neutralizing competitive
threat. Thirdly, transaction process strategies can be used which involves the implementation of
investor relations programs through which communication can be initiated and driven by the
shareholders (Topcu and Mesmer, 2018).

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Customers- Customers are the offensive stakeholders of Tesla Motors with low competitive
threat and high cooperative potential. These stakeholders play an important role in the
achievement of the objectives and also pose a little threat for the business (van Offenbeek and
Vos, 2016). The management of the offensive stakeholders can be ensured with the help of
following generic strategic programs-
Changes can be brought to the current beliefs of the company in the form of product
repositioning programs. Secondly, Tesla can also change the stakeholder objectives strategies for
convincing the customers to have same objectives as that of the organization. This can be done
by convincing the customers to adopt environmental friendly cars for protecting the
environment. Thirdly, it can adopt stakeholder position strategy where it has to agree with
stakeholder’s criticism and commit to improvement.
Recommended Strategic Programs for the Selected Stakeholder Groups
Following are the recommended specific strategic programs for the selected stakeholder groups:
Defensive Strategic Program- Defensive strategy should be adopted when the group is non-
supportive. This can be applied in case of shareholders along with the generic strategic program
i.e. existing program strategies for preserving the helpful stakeholder behavior and neutralizing
competitive threat. It is recommended because it can be helpful in changing the perspective of
the stakeholders (Smakalova, 2012).
Offensive Strategic Program- This should be adopted in case when the stakeholder group
(customers) is supportive. This strategic program is applicable when there is low competitive
threat and high cooperative potential. It is recommended with the generic strategic program
which seeks to exploit the available opportunities for its advantage. The reason behind
recommending this strategy is that the customers already satisfied with the offerings of the
company and do not have preference of shifting towards the competitors.
Swing Strategic Program- This strategy is applicable is case of communities which have high
cooperative potential and high competitive threat. This specific strategic program is

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recommended to be combined with a generic strategic program that seeks to change the rules.
These strategies can assist Tesla in achieving the cooperation of the communities.
Hold Strategic Program- This strategy is applicable is case of employees which have low
competitive threat and low cooperative potential. This specific strategic program is
recommended to be combined with a generic strategic program which monitors the existing
strategic programs. The reason behind recommending this strategy for the employees of Tesla
Motors is that they are already satisfied with the existing strategy of the organization relating to
the provision of healthy work environment and higher compensation along with several other
benefits (Papke-Shields and Boyer-Wright, 2017).
Conclusion
Therefore, it can be concluded that Tesla Motors is required to consider the interests and
expectations in order to attain competitive advantage in the market. This report focused on the
stakeholder view of Tesla Motors along with stakeholder analysis, identification of stakeholder
category and generic strategic programs for the selected groups. Furthermore, certain
recommendations relating to strategic programs have been made for the selected stakeholder
groups. . Internal and external stakeholders are the two types of stakeholders which includes
individuals from within the business entity such as board members or owners, employees and
shareholders and the individuals from outside the business entity such as customers, suppliers,
employees, contractors, communities, etc. The stakeholders can be categorized into four
categories namely swing, defensive, offensive and hold stakeholders.

DYNAMIC STRATEGY AND DISRUPTIVE INNOVATION 11
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