Strategic Management of Tesla: Position, Choice and Action

This report provides an overview of Tesla Motors and its strategic position, strategic choice and strategic action. It also outlines the market reaction towards Tesla's strategy. The report commences with a mention of corporate level strategy and then goes on to discuss strategic position, choice and action for Telstra along with outlining the market reaction towards Tesla strategy.

Running head: MANAGEMENT
Strategic Management
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Introduction:....................................................................................................................................2
Question 1: Brief Outlining of the Doings of Tesla and its Corporate Level Strategy Statement. .2
Question 2: Strategic Position, Strategic Choice and Strategic Action of Tesla.............................3
Strategic Position of Tesla:..........................................................................................................3
Strategic Choices of Tesla:..........................................................................................................5
Strategic Actions of Tesla:...........................................................................................................7
Question 3: Market Reaction to Tesla’s Strategy............................................................................8
Justification of the Response Based on Following:.........................................................................9
Growth Market Share...................................................................................................................9
Share Price Increase:....................................................................................................................9
Market Commentary:...................................................................................................................9
Conclusion:....................................................................................................................................10
References:....................................................................................................................................11

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Introduction:
The report provides an overview of Tesla Motors. The company is headquartered in
California and headed by Elon Musk, a charismatic chairman who is also the co founder of
PayPal and the CEO of Space X. The company has been adored for its gigantic capitalization of
the market of close to about $33bn (tesla.com 2019). More recently, the company has been
looking forward to alternative fuel sources for reducing global warming. The report commences
with a mention of corporate level strategy and then goes on to discuss strategic position, choice
and action for Telstra along with outlining the market reaction towards Tesla strategy.
Question 1: Brief Outlining of the Doings of Tesla and its Corporate Level Strategy
Statement
Tesla specialized in the manufacture of the electric car and believed in accelerating its
transition towards sustainable energy (Bohnsack, Pinkse and Kolk 2014). The company which
was the brainchild of Silicon Valley Engineers tried to prove that people did not require
comprising in driving electric cars since such cars could be quicker, better and fun for driving
compared to the gasoline cars.
The corporate level strategy of Tesla depended on the three pronged approach that
involved servicing, selling and charging of the electric vehicles. The company also undertook
direct sales instead of franchised dealerships (Rothaermel 2013). The company also tried to
create an international network of company owned galleries and showrooms in the urban centre
across the world. By owning sales channel, Tesla believed in gaining advantage in the product
development. It also created unique buying experience of the customer. Tesla showroom did not

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experience any conflict of interest. Besides, Tesla also undertook unique approach in getting the
first vehicles to the market. Instead of building an affordable car it undertook the opposite
approach and focused more on the creation of a compelling car. This approach was undertaken
since it was impossible to mass market the first products for a company that never produced car,
followed one technology and did not experience any economies of scale. The first product of the
company had thus been expensive irrespective of the looks and hence the company decided in
building sports car as it proved to be the ideal chance of becoming competitive made of the
gasoline alternatives.
The strategic statement is arrived from the Tesla’s strategy in entering higher end markets
where customers are ready to pay premium thereby driving the market down as fast as possible.
The company also possessed the aim of ensuring zero level emission that ensured a step towards
an economy inclined towards solar electricity.
Question 2: Strategic Position, Strategic Choice and Strategic Action of Tesla
Strategic Position of Tesla:
Strategic Position Source Result
1. Macro environmental
opportunities and threats
External strategic forces Opportunities:
i. Diversification of the
business
ii. Global expansion in the
supply chain
iii. Global expansion in the

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sales
Threats :
i. Fluctuation in material
prices
ii. Dealership regulation
iii. Fluctuation in material
prices
2. Ways in which
organization can manage the
industry forces
Analysis using Porter’s Five
Forces
The five forces analysis helps
an organization in
understanding factors that
influences profitability within
specific industry thereby
developing a competitive
advantage.
3. Ways in which
Stakeholders remain aligned
to organizational purpose
Working with project sponsors Alignment refers to the
participation of the
stakeholders in a project so
that they feel invested as well
as committed. There are some
stakeholders who have
increased level of involvement
in comparison to others
although everyone needed to

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have awareness regarding
project objectives and the
project progress.
4. Purpose of the
organization
Accelerating advent of the
sustainable transport by
bringing introducing mass
market electric car as soon as
possible.
Introduction of better, quicker,
fun to drive gasoline
supported electric cars.
5. Alignment of Culture to
Strategy
The culture of Tesla
empowers workforce towards
an ideal solution that aided the
business in standing out from
crowd.
Culture of the company cast a
positive impact on employees
making them happier and
enhancing productivity. It
also helps in determining
whether the employee their
time at the workplace.
Strategic Choices of Tesla:
Strategic Choices Source Result

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1. Competition of business
units
Adopting either
differentiation or low cost
strategy
Differentiation strategy allows
the business units in setting it
apart through acquiring one or
more attributes which the
buyers consider as
important(Grant 2016).
Cost strategy on the other
hand allows the firm to adopt
cost leadership and become
lower cost producer of
industry.
2. Businesses that are
included in Portfolio
Includes business planning for
strategic planning effort.
This enables in categorizing
products depending on the
sales growth and competitive
strategy
3. The level where the
organization should
internationally compete
Electric car market Electric car has been
introduced by startup firm in
Sanghai and it acts as the
rival to Tesla
4. Appropriateness in the
innovation of the
organization
Electric car has been a
remarkable innovation of
Tesla
The company brings about a
change to the world through
innovation in addition to

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making money.
5. Whether organization
should buy companies, ally
or go alone
Tesla considers itself as self
sufficient and hence believes
in doing the things alone.
The company serves as micro
monopoly thereby
manufacturing electric cars
which it has plans of doubling
by close to 2 percent.
Strategic Actions of Tesla:
1. Whether Strategies are
suitable, feasible and
acceptable?
Strategies of Tesla are
suitable, feasible acceptable
The strategies of Tesla have
turned into one of the
household names in the
automotive industry
2. The kind of strategy
making process required
Intensive and Generic
Strategies
Intensive Strategy:
It aids organizational growth
in regard to enhancing sales
revenue from present
market(Thomas and Maine
2019)
Generic Strategy:
i. Attracts the early adopters in
the global automobile industry
ii. Aids in maintaining the
competitive advantage.

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3. Required organizational
systems and structure
Organizational chart acts as
the defining factor
Tesla has functional or a U-
form type of the
organizational strategy
(Galbraith 2012). The
company has structural group
of employees for service,
sales and engineering
4. Ways in which
organization should manage
changes
i. Develop communication
strategy
ii. Clearly define the change
and align the business goals
iii. Implementation of a
support structure
iv. Measurement of the change
process
Smooth and thorough
implementation of change
through lasting benefits.
5. Role undertaken by
people in strategy process
Provides direction and
outlines measurable goals. It
also guides the day to day
decisions along with
evaluation of the change and
the process approach.
Workplace strategist must
have an understanding of
organizational requirements

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Question 3: Market Reaction to Tesla’s Strategy
Tesla forged remarkable success by not only taking risk but also breaking conventions in
car making through the newer technology. The excitement over the electric vehicles, uber like
apps and the self driving technologies made it easier to forget that the 100 years old car industry
would make it nearly impossible for start up like Tesco to breakthrough (Sheetz 2019). However,
the market observed that the improbable success of Tesla is built aggressively on the trends of
the exploiting technology where it grabbed an opportunity of building appealing electric cars.
The market also witnessed that the maturity of the commodity batteries and the electric cars
provided the company with a jump start in developing the cars. This also lowered any entry
barriers and resulted in the creation of natural differentiation of product. Besides, the company
also blazed trial with manufacturing, novel design, connectivity and computerization and
automation. In other worlds Tesla has been more innovative and aggressive compared to big
beasts of auto world. In fact, the company has been aggressive in the uses of the emerging
technologies. The company also used software for controlling the car features, had an interface
of giant touch screen dash board and showed how it took increasing level of risk compared to the
incumbents.
Justification of the Response Based on Following:
Growth Market Share
In the first four months of 2018 the market share of Tesla in the US has been 2 percent. It
has also been found that close to 75 percent of the electric vehicles sold in US during the
first quarter of 2019 witnessed revenue of close to $21.461 billion in the year 2018 (Collins

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2019). The net worth of Tesla has been estimated to be close to $2.2 billion in the year 2018
based on the profits and the revenue.
Share Price Increase:
There has been a slid in the stocks of Tesla in the recent months since the company
embarked on cost cutting spree. The shares of the company fell by over 26 percent in previous
three months but bounced to about 15 percent in the month of June since optimistic traders
snapped the stock at lower price.
Market Commentary:
According to an analyst, the market failed in understanding the technological and the cost
advantage and remained on the track for the solid flow of cash in second quarter. The price target
mentioned by him at about $500 implied over 100 percent upside in next year. The analyst made
a note to his clients on Thursday mentioning, ‘We maintain our bullish view on Tesla and see no
reason to walk away from our price target of $500.’ He also added that the demand remained
over blown as there has been a volume weakness in the first quarter hugely self inflicted by the
logistic problems, uncertainty related to the store closure, changing structure of pricing which
was not indicative of demand situation(Franck 2019).
Conclusion:
On a concluding note, it can be observed that Tesla achieved a remarkable position in
electric car industry. The mission of Tesla lay in its move towards the sustainable energy. The
report also describes the strategic position, strategic action and the strategic choices undertaken
by the company. Tesla focused primarily on innovation and considered the customers as one of
the vital aspects.

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References:
Bohnsack, R., Pinkse, J. and Kolk, A., 2014. Business models for sustainable technologies:
Exploring business model evolution in the case of electric vehicles. Research Policy, 43(2),
pp.284-300.
Bučko, A., Protecting Reputation in Crisis: Case Study of Strategic Reputational Risk
Management at Tesla Inc.
Collins, J, 2019. Tesla's Model Y Introduction Left The Stock Market Wanting More. [online].
Available at https://www.forbes.com/sites/jimcollins/2019/03/15/teslas-model-y-introduction-
left-the-stock-market-wanting-more/[accessed 10Aug, 2019]
Franck, T, 2019. Monster Tesla bull is sticking by stock and sees it doubling in 12 months,
[online]. Available at https://www.cnbc.com/2019/06/14/biggest-tesla-bull-is-sticking-by-stock-
sees-a-double-in-12-months.html [accessed 10Aug, 2019]
Galbraith, J.R., 2012. The evolution of enterprise organization designs. Journal of Organization
Design, 1(2), pp.1-13.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Rothaermel, F.T., 2013. Strategic management: concepts. New York, NY: McGraw-Hill Irwin.
Sheetz, M, 2019. Here's what every major analyst had to say about Tesla's profitable earnings:
'This quarter was different'. [online]. Available at https://www.cnbc.com/2018/10/25/heres-what-
wall-street-analysts-had-to-say-about-tesla-earnings.html[accessed 10Aug, 2019]
tesla.com (2019). [online]. Available at https://www.tesla.com/about[ accessed 10Aug, 2019]

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Thomas, V.J. and Maine, E., 2019. Market entry strategies for electric vehicle start-ups in the
automotive industry–Lessons from Tesla Motors. Journal of Cleaner Production.