Strategic Management of Tesla Motors

This report discusses the strategic management of Tesla Motors, including SWOT analysis, environmental constraints, stakeholders, organization structure, and employee motivation. Recommendations and controls are also provided.

Running Head: MANAGEMENT 0
STRATEGIC MANAGEMENT

MANAGEMENT 1
Table of Contents
Introduction................................................................................................................................2
S.W.O.T. – Formulating Strategies............................................................................................2
Environmental Constraints.........................................................................................................3
Stakeholders...............................................................................................................................4
Organisation Structure and Design............................................................................................5
Motivating Employees...............................................................................................................6
Recommendations......................................................................................................................6
Controls and Recommendations................................................................................................7
References..................................................................................................................................8

MANAGEMENT 2
Introduction
The invention of internal combustion engine in the 20th century changed the world and
Tesla motor is one of the companies that has transformed internal combustion engine far
superior to others. Tesla Motors develops, designs and sell various sorts of electric vehicles
as well as advanced electric vehicle components. The company was founded in 2003 by Elon
Musk and Martin Eberhard. Tesla Motors launched its 1st car in 2006, the Roadster which has
been sold in more than 28 countries till now (Mangram, 2012). The company differentiate
itself from the competitors by using of public relation strategy. The company is focusing on
those customer segment who seeks for luxurious and high-performance cars rather than just
being price conscious.
The number of employees in Tesla Corporation is more than 45,000 as per the report
of 2018 (Matousekjan, 2019). The company revenue for the quarter ending December was
$7.266B. This report is a blend of various different aspects includes internal analysis,
constraints in environment, perspective of stakeholders, organisation structure, and employee
motivation. Considering relevant insight of both part 1 and 2, various recommendations are
also being suggested.
S.W.O.T. – Formulating Strategies
 Strategy for Strength – As it was identified that Tesla is doing great in technology with
constant innovation and creativity. The company can use this strategy for first mover
advantage in the electric car industry by embedding something new into it. The company
model X and 3 are doing well in the market. The brand can introduce more new models with
further enhancement as goodwill and demand for old products will automatically lead to
increase the sales of their new product. With this, Tesla can ensure its growth and
sustainability in the automotive industry.
 Protection against weakness –Some of the identified weakness includes narrow market
nearness, restricted production network and high costs. To prevent this weakness, the
company is required to expand its operations to emerging nations as Tesla can avail cheap

MANAGEMENT 3
labours there which will directly reduce costs of manufacturing (Bahn, Barratt-Pugh & Yap,
2012).
 Strategies for opportunities – the company can sign up deal with various technologies and
Battery Company such as Panasonic and CATL so as to demonstrate more benefits and
outgrow high benefits. With further improvement in power vehicles, the company can attain
competitive advantage in the market.
 Protection against threats – It is true that manufacturing of 5, 00,000 vehicles in 2018
requires huge investment. One of the possible solutions is to make the company private
which can potentially reduce the future cash obligation of the company.
Environmental Constraints
 Political Factors – There are various initiatives taken out by both national and state
government that will help Tesla to manufacture and sale of electric vehicles. For instance,
Department of Atomic Energy in US has granted $465 million subsidised loans (Robertson,
2013). However, if the company want to set up their manufacturing unit in other nation, it is
must for them to comply with all necessary rules and regulations related to environment and
labour.
 Economic Factors –The economic aspect also brings various opportunities for Tesla as
there is been seen improvement in the global economy with increase in sales of electric
vehicles. US economy is expected to increase with 2.25% and so better wealth distribution
will lead to inclusion of people towards affordability of green technologies (Bagliano &
Morana, 2012). However, economic stability issue can be possessed as threat for the
company especially in Europe and Asia.
 Social Factors –The social trend is more towards improving preference of low carbon
footprints and use of renewable technology and this show growth opportunities for the
company. However, there are some price-conscious buyers also available in the market and to
expand whole of country, the company may require to introduce cheap electrical vehicles.
 Technological Factors –This can be a threat for Tesla as there is a growing use of
embedded technologies in automobiles and in business analysis, high rate of technological
change is both opportunity and challenge. Tesla business can be threatened by Driverless car

MANAGEMENT 4
that may be potentially introduced in future by other big companies such as Google, Uber,
BMW and so on.
 Environmental Factors – Automobile sector is also leading to increasing concern towards
greenhouse gases and with expansion of various environmental programmes, it may be
difficult and challenging for Tesla to adapt all practices in their company.
 Legal Factors – Due to increased regulations addressing automobile standards by various
governments such as dealership sales regulation in the US may threaten the business of Tesla.
Technological factors bring out the biggest challenge for the company as many
organisation are already lined up in the cue to bring out technological innovation in the
market and it may be quite challenging for the Tesla to compete them effectively.
The economics aspect of the analysis can be valued as opportunity for Tesla as with
rising in economy, people income level standard will also be increased and this will directly
impact the sales of Tesla.
Stakeholders
Stakeholders are those groups of clusters who directly or indirectly influence the
business decisions of an enterprise (Elias, 2012). In case of Tesla, the main stakeholder group
includes customers, investors, communities and employees. Customers are seen as external
stakeholders who provide necessary feedback to the company related to its electric vehicles.
With changing customer preference and trends, the company need to modify or bring up new
product line including latest market demand. Employee is the next stakeholder group in Tesla
that helps the company in achieving its strategic goal effectively. As Tesla has more than
45,000 employees in their company, these employees also seek growth opportunity as well as
career development. Next, stakeholder group includes investors. Tesla has a long list of
investor that also put the company in some sort of financial obligation. However, Tesla need
to consider these investors while taking out any big decisions for the market.
The last stakeholder group include society. Tesla relies on this stakeholder as it
provides them various necessary resources and services to carry out their operations.
Considering all, it is important for Tesla to rank employees as its top stakeholder as they duly

MANAGEMENT 5
contribute the firm in achieving the strategic objectives and also they cannot be imitated by
anyone on the market in terms of their competency and skills.
Organisation Structure and Design
Tesla organisation structure helps the company in its continued business growth. It
develops capabilities that enable strong managerial control of the business instead of its rising
business operations. Tesla has a functional organisational structure where they have a
structural group of employees for engineering and others for service and sales. Other
characteristics of their organisation structure include centralisation in their corporate
structure. Here, the managerial control is in the hand of head of the offices of the global
hierarchy. This shows that the company minimally supports autonomy as the headquarter of
Elon Musk (CEO)
CFO (Deepak Ahuja)
CTO (JB Straubel)
Chief Designer (Franz
Holzhausen)
Energy: 1SVP and Vps
Engineering and
Production: 9 Vps
HR &
Communications; Chief
People Office and
3PVs
Legal and Finance:
General Counsel and
4Ps
Sales: 2VPs
Software: Director of
Artificial Intelligence
and 1 VP

MANAGEMENT 6
Tesla take out most of the decisions for overseas business. The company has more of
mechanistic structure and the decision making kept as high as possible and communication is
vertical.
Motivating Employees
The productivity level will be increased and enhanced if the employees are motivated
and directed (Lazaroiu, 2015). In relation to Herzberg two factors theory, motivators and
hygiene aspects are the two bases of categorization. Various motivators aspects provide
employee a sense of job satisfaction whereas there can be dissatisfaction with hygiene factors
of the theory in relation with the working environment. Employee of Tesla can feel greater
satisfaction with the motivator aspects of Herzberg theory. In addition, Tesla needs to
encourage employees with their operations as a substitute for hygiene factors including
earnings.
Recommendations
 Tesla needs to establish their manufacturing plant in developing countries so as to
reduce manufacturing costs. The company are currently under various financial
obligations and debt and thus they need to pursue innovative strategies to reduce high
costs as well increase their shares outside the native company.
 Tesla needs focus on other segment of the market also which include price-conscious
buyers. It is possible to fulfil the demand of that product by introduction of cheap
electric cars in the near future.
 The company need to consider all environment standards clearly so as to avoid legal
accusations and fines. Before, the company was already fined up with $31, 000
concerning environment pollution from Bay Area lines.

MANAGEMENT 7
Controls and Recommendations
Tesla may deploy control before the commencement of the action as it may allow the
management to prevent the issue to occur rather than finding cure later on. This will help
Tesla to discover relevant gap and so develop new plans in relation to strategic goals.
Moreover, by using feedback control, employee may also get motivated and thus individual
goal will be aligned with the strategic goals (Khalil & Praly, 2014).
In last, to analyse whether goals are addressed or not, the survey tool can be used on
various sites on social media that may help Tesla to undertake different perspective and
thoughts of customers.

MANAGEMENT 8
References
Bagliano, F. C., & Morana, C. (2012). The Great Recession: US dynamics and spillovers to
the world economy. Journal of Banking & Finance, 36(1), 1-13.
Bahn, S., Barratt-Pugh, L., & Yap, G. (2012). The employment of skilled migrants on
temporary 457 visas in Australia: Emerging issues. Labour & Industry: a journal of
the social and economic relations of work, 22(4), 379-398.
Elias, A. A. (2012). A system dynamics model for stakeholder analysis in environmental
conflicts. Journal of Environmental Planning and Management, 55(3), 387-406.
Khalil, H. K., & Praly, L. (2014). High‐gain observers in nonlinear feedback
control. International Journal of Robust and Nonlinear Control, 24(6), 993-1015.
Lazaroiu, G., 2015. Employee motivation and job performance. Linguistic and Philosophical
Investigations, (14), pp.97-102.
Mangram, M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan
analysis. Journal of Strategic Marketing, 20(4), 289-312.
Matousekjan, M. (2019). Tesla is laying off 7% of its employees. Retrieved from
https://www.businessinsider.in/Tesla-is-laying-off-7-of-its-employees/articleshow/
67588309.cms
Robertson, A. (2013). Tesla repays $465 million government green energy loan ahead of
schedule. Retrieved from https://www.theverge.com/2013/5/22/4356860/tesla-repays-
465-million-government-green-energy-loan.