Tesla Motors International Strategy Analysis

This assignment analyzes Tesla Motors' international strategy, focusing on its approach to serving new market segments globally. It delves into the company's challenges, including battery production capacity limitations and increasing competition from traditional automakers entering the electric vehicle market. The analysis also examines Tesla's potential for growth and highlights key strategic issues such as achieving mass-market affordability and maintaining its competitive edge.

Running Head: STRATEGIC MANAGEMENT
Strategic Management
Name of the student
Name of the University
Author Note

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Table of Contents
Part B...............................................................................................................................................2
Introduction......................................................................................................................................2
Summary SWOT.............................................................................................................................2
Strategy Evaluation..........................................................................................................................3
Identify three main strategic issues..................................................................................................6
Conclusion.......................................................................................................................................7
Reference.........................................................................................................................................8

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Part B
Introduction
Strategic management is a vital part of the organization to gain competitive advantages in
the business. In the context of energy storage organization battery backup is beneficial to store
the energy. This allowing the organization in improving the sturdiness regarding the electrical
grid, doing the reduction of the expenses relating to energy regarding businesses as well as
residencies, and providing a backup regarding power supply. This study aims to discuss the
strategic management process in context of Tesla. However, the SWOT analysis of Tesla has
been addressed in this section. On the other hand, different strategies will be discussed in this
section that have been taken by Tesla.
Summary SWOT
S-Strength
 Physical assets
 Technological asset
 Confidentiality of low expenditure
W-Weakness
 Difficulty in retaining profit
 Low volume of manufacturing
 Existence of limited fund
O-Opportunity
 Business expansion in the global
market
 Collaborative operation with other
organization
Threats
 Entry of new organization in the
automobile industry
 Strong market competition
 Changing market trend

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 Maintenance of the environmental
sustainability
 Government regulation
It can be stated that the company’s strength will be including the physical as well as
technological assets like intellectual property as well as its factories. The organizational strength
will also be including its increased confidentiality level, the organization’s low expenditure
related to marketing as well as being considered as a distinctive manufacturer of electronic
vehicle (Wheelen, 2017).
The company’s weaknesses will be associated with the difficulty in retaining the profit
due to the expenses related with research and development that are reason for the losses to occur.
Another weakness associated with the organization is its low volume of manufacturing.
Moreover, the negative occurrences will be adversely impacting the organization’s business
operations and another significant weakness associated with the organization is the existence of
limited funds for introducing as well as launching new products within the market.
The opportunities relating to the organization is to do its business expansion in the global
market since, the marketing of electric vehicles is in the stage of development. Moreover, there is
the opportunity for the organization towards having a collaborative operation with the other
organizations like Daimler as well as Toyota. Moreover, there also exists the scope for the
organization in having the ability for fulfilling the policies of the environment since, the product
electric vehicles are considered being friendly towards the environment.

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The threats associated with Tesla Motors is stating that there is occurring the entry of
new organizations in the automobile industry and these organizations are the reason for the rise
in strong market competition. Another threat cited in this regard is that with the market getting
developed, the new market research will be changing the present industrial trend. Moreover, the
imposing of the rules as well as regulations by the government might be having an adverse
impact upon the organization’s business operations (Wheelen, 2017).
TOWS Matrix
Internal and external
environment
Strength
 Low threat of the
substitutes
 Physical and
technological assets
 Industry is in the
developmental stage
Weakness
 Less economic sell due
to low volume of
production
 Limited funding
Opportunity
 Business expansion in
the international
market
 Collaborative work
with other organization
 Environment friendly
business
SO strategies
 Recruitment of the
skilled employees
 Innovation of new
products
WO opportunities
 Increasing the
production by adding
new features in the
manufacturing process
 Partnership working to
enhance the funding
Threat ST strategy WT strategy

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 Entry of new threat
 Competitive rivalry is
high
 Development of the
competitive strategy to
mitigate the threat of
new rivalry
 Managing the financial
resources to compete
in the global market
and resist the new
rivalry
Strategy Evaluation
In this regard, it could be stated that there should occur the evaluation of four current
strategies regarding Tesla Motors. This will be including the business level strategy,
diversification, international strategy as well as acquisition strategies.
Diversification strategy
In respect of the diversification strategy, it can stated that from the historical perspective
of the organization, it has been focusing almost entirely upon the process of offering electric
vehicles to the customers throughout the world. In recent years, however, there has occurred the
organizational diversification of its offerings into somewhat adjacent sectors of business
associated with the commitment of the organization to the use of electric energy by acquiring
Solar City Corporation in late 2016 (Stead, 2013). With the help of the diversification strategy,
Tesla Motors will be having a potential shift from a single-business organization to a dominant-
business organization, till the time its storage of energy as well as solar roof components will be
gaining acceptance within the market. There can be a noticeable observation of the motivation
regarding Tesla motors to do the implementation of this specific strategy regarding

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diversification. First and foremost, the technologies such as Powerwall as well as Solar Roof will
be sharing a functional economies relating to the opportunities associated with the EV operation
of the organization (Stead, 2013). In respect of the Powerwall regarding Tesla motors, this
functional economy of scope will be taking the structure of a shared activity, such as the aspect
of producing the lithium battery technology regarding Tesla, which has been used for powering
its electric vehicles. Since, the organization is already making a heavy investment regarding its
production of these batteries at its Gigafactories, the diversification of Tesla into Powerwall
technology will be standing out as a cost advantage source (Stead, 2013). Due to the fact that
there occurs the marketing of Powerwall in respect of its present customers of electric vehicles
and those who are not driving the Tesla EVs, the organization will be having the ability to do the
diversification of its customer base while sharing majority of the similar activities related to
value chain in respect of both the products, which includes various input activities as well as
activities of production associated with the manufacturing of lithium battery, warehousing, and
making distribution via its Gigafactories, as well as companion sales and strategies related with
marketing. Moreover, the corporate diversification strategy of the organization in respect of solar
roof offerings can be appropriately be characterized as sharing in respect of the core competency
regarding the organization (Slack, 2015). Because of the technical expertise of the organization
in storage of energy effectively, this move fits within one that is having an alignment in an
adjacent manner with the strategic model of business regarding Tesla without falling into an
outer-segment regarding a discrete activity (Rothaermel, 2015).
International Strategy
In respect of the international strategies of Tesla Motors, it can be stated that
organizations do the implementation of international strategies when they do the pursuing of

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opportunities relating to business that do the crossing of country borders. In similarity to every
strategies of diversification, international strategies must do the exploitation of real economies of
scope, which the external vendors are finding very expensive for exploiting on their own for
being costly (Peppard, 2016). Five economies of scope that are considered to be potentially
valuable regarding international strategies are firstly associated with the aspect of gaining
accessibility in respect of new customers or an organization’s present products or services,
secondly to gain accessibility in respect of low-cost production factors, thirdly doing the
development of core competencies that are considered to be new, fourthly leveraging present
core competencies in new processes as well as fifthly, doing the management of corporate risks
(Morschett, 2015).
Acquisitions
In respect of the acquisitions regarding Tesla Motors, in August 2016 it made the
announcement of an agreement to do the purchase of SolarCity Corp, which is the provider of
solar power systems. In May 2015, Tesla made the agreement for doing the purchasing of
Riviera Tools that is making stamping die systems. The target organization would be considered
as Tesla Tool & Die (Morden, 2016). By stating his view regarding organic growth, Elon Musk,
the CEO of Tesla, told the investors that he is open to take into consideration the process of
acquisition, provided they are serving the objective of doing the expedition regarding the
production of Model 3, the mass-market electric car of the organization that is being prepared.
Business level strategies
In respect of the business level strategies of Tesla Motors, it can be stated that the
strategy of Tesla was based primarily upon the automation of vehicle manufacturing. Each robot

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is having single multi-jointed arms that did the performing upto four varied tasks, including the
activity related to wielding, riveting, bonding as well as installing elements (Hill, 2014). The
robots were having the ability to do the production of up to eighty-three percent vehicles every
day. The decision of Musk to own as well as operate all the dealership on his own was
considered being a strategic aspect that none of the organization has ever tried earlier (Gamble,
2014).
Identify three main strategic issues
Strategic Issue 1: Lithium Price is likely to skyrocket – Tesla is having the expectation of
spending huge amount of money regarding huge factory for battery. This might be considered
being a sensible step, but it will not fully do the solving of the battery problem regarding Tesla
(Frynas, 2015). If the organization is successful in doing the production of 500,000 cars, up from
35,000, they will be having the requirement of doubling the production of lithium ion batteries,
and will be required doubling the amount of lithium mined out of the ground (Tesla.com, 2017).
Strategic Issue 2: Competitors will eventually be catching up – Tesla is still required dealing
with the reality that it will not be dominating the sales of electric car forever. Organizations such
as Honda, Toyota, Nissan, Ford all are making great efforts for entering into the business.
Strategic Issue 3: $30,000 is not “Mass-Market” – Tesla is having the thought process that it
can do the selling of a more affordable, mass-market vehicle in the range of $30,000 to $40,000.
This might be considered being a deal when compared to the Model S, but it is still a very costly
vehicle (Tesla.com, 2017).

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Conclusion
To conclude it can be stated that, while Tesla does the production of all its vehicles
within North America, it did not stop its international strategy of serving the new segments of the
market outside of the US. The international strategy of Tesla Motors is associated with the
process of serving the new segments of the market, which is considered being a great scope of
growth in respect of Tesla Motors.

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Reference
Durand, R., Grant, R. M., & Madsen, T. L. (2017). The expanding domain of strategic
management research and the quest for integration. Strategic Management
Journal, 38(1), 4-16.
Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic management.
Sage.
Frynas, J. G., & Mellahi, K. (2015). Global strategic management. Oxford University Press,
USA.
Gamble, J. E., & Thompson, A. A. (2014). Essentials of strategic management. Irwin Mcgraw-
Hill.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Morden, T. (2016). Principles of strategic management. Routledge.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management.
Springer.
Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a
digital strategy. John Wiley & Sons.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.