Strategic Management of Tesla Motors

This report provides a review on the Tesla Motors. It is an US based energy and automotive company with headquarters in Palo Alto, California. The report commenced by mentioning the corporate level strategy through articulation on how the strategy is achieved. The report also puts across the strategic position, strategic choices and the strategies in action for Tesla. The report also outlines the reaction the market on the strategy of Tesla.

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

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

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Introduction:
The report aims at providing a review on the Tesla Motors. It is an US based energy and
automotive company with headquarters in Palo Alto, California. Tesla Motors have been not
only viewed as an independent automaker and technology company aimed at offering the electric
cars at affordable prices to average customers1. The company also shortened its name to Tesla in
the year February 2017. The report commenced by mentioning the corporate level strategy
through articulation on how the strategy is achieved. The report also puts across the strategic
position, strategic choices and the strategies in action for Tesla. The report also outlines the
reaction the market on the strategy of Tesla.
Question 1: Briefly Outlining Doings of Tesla and Mentioning its Corporate Level Strategy
Statement
Tesla Inc initially known as the Tesla Motors and incorporated in the year 2003 develops,
manufacture, design and sell electric vehicles and storage system. The company also install,
maintain and operate solar and energy storage products and sell vehicles via its own service and
sales network..
The corporate level strategy is based on the three approaches that relates to servicing,
selling and charging of the electric vehicles2. Unlike the other manufacturers who undertake
selling through the franchised dealership, it uses the approach of the direct sales.
This strategic statement has been derived from Tesla’s strategy of entering the higher
end market where the customers are ever ready in paying a premium and then driving down the
1 tesla.com, in https://www.tesla.com/, , 2019.
2 A Karamitsios, "Open innovation in EVs: A case study of Tesla Motors", in

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market as soon as possible. The company also aimed towards providing zero emission to ensure
a move towards a solar electric economy.
Question 2: Strategic Position, Strategic Choice and Strategic Action of Tesla
Strategic Position
Strategic Position Source Result
Macro environmental
opportunities and threats
External Strategic factors Opportunities:
i. Global expansion in sales
ii. Global expansion in supply
chain
iii. Diversification of business
Threats:
i. Aggressive level of
competition
ii. Fluctuations in the prices of
material
iii. Regulations of dealership
How organization manage
industry forces
Through undertaking Porter’s
Five Forces analysis.
The five force analysis helps
the organization in
understanding the factors that
affects the profitability within
the specific industry and
thereby develops competitive

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advantage.
How stakeholders remains
aligned to the purpose
By working with the project
sponsors.
Alignment does not imply
telling the people what is
thought of and ask them to
come to an agreement3. It
refers to getting the
stakeholders to participate in a
project such that they not only
feel committed but also
invested. However, some
stakeholders requires to have
more involvement compared
to the others although
everyone needed to be aware
of the project objectives and
remain updated on the
progress of the project.
Purpose of the Organization1. The mission of Tesla lies in
accelerating the transition of
the world towards the
sustainable energy4.
Accelerated advent of the
sustainable transport through
ensuring mass marketing of
electric cars
3 D Mazutis & N Slawinski, "Reconnecting business and society: Perceptions of authenticity in corporate social
responsibility", in Journal of Business Ethics, vol. 131, 2015, 137-150.
4 tesla.com, in https://www.tesla.com/about, , 2019.

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Does the culture fit the
strategy
The organizational culture of
Tesla empowers the workforce
in searching for the ideal
solutions that segregates the
business stand out from the
crowd in automotive industry.
The culture of the company is
vital since it acts has a positive
impact on the employees
thereby making them happier
and enhancing the
productivity5. Culture also
determines whether an
employee enjoys his or her
time in the workplace.
Strategic Choices:
Strategic Choices Source Result
Competition of Business
Units
By adopting either of the
competitive strategy which is
either low cost or
differentiation
By adopting cost leadership
the firm becomes one of the
lower cost producers of the
industry.
By adopting differentiation
strategy the business units
5 D Nicholson, "Inside Tesla - A Rare Glimpse Of Electric Carmaker's Cultu",
in https://www.forbes.com/sites/davidnicholson/2014/11/09/inside-tesla-a-rare-glimpse-of-electric-carmakers-
culture/#4ff8674247ff, , 2014.

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sets it apart by acquiring one
or more attributes that buyers
consider important
Businesses to be included in
portfolio
Business that prefers to
undertake strategic planning
efforts
This helps in categorizing the
products based on competitive
position and sales growth.
Where should the
organization compete
internationally?
In the electric car market A start up in Sanghai
introduced new electric car
that can act as rival to Tesla.
Appropriate innovation of
the organization
2. Electric cars have been one of
the remarkable innovations of
the company which it had
been selling for long.
Changing the world through
innovation besides making
money.
Should the Organization buy
the other companies or do it
alone
Tesla believes in doing it
alone.
Tesla acts as a micro
monopoly manufacturing
hundreds of electric vehicles
and have plans of doubling it
by 2 percent.
Strategic Actions:
Strategic Actions Source Result
Suitability, Feasibility and The strategies are not only The exceptional business

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Acceptability of Strategies suitable but also acceptable
and feasible.
strategy of the company of
Tesla has turned it into
household name in automotive
industry.
Kind of strategy making
process needed
Generic and Intensive
Strategies
Generic Strategy:
i. Helps in maintaining
competitive advantage
ii. Helps in attracting the early
adopters in global automobile
market.
Intensive Strategies:
It supports the organizational
growth in relation to
enhancing the sales revenue
from the present market.
Required
Organizational Structure
and
Systems
Organizational Chart defining
the function as the key
defining factor.
Tesla has a unitary form (U-
form) or functional type of
organizational structure6. As
far as the system is concerned
the company have structural
employee group for
engineering as well as sales
6 W Scott & G Davis, Organizations and organizing: Rational, natural and open systems perspectives., in ,
Routledge., 2015.

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and service.
Ways organizations should
Adopt for managing
changes
3. i. Clearly defining change and
aligning business goals
4. ii Developing communication
strategy
5. iii. Ensure effective training
6. iv. Implementation of support
structure
7. v. Measurement of change
process.
Thorough and smooth
implementation of change
with long lasting benefits.
Who Should do What in
Strategy Process
Strategic planning is vital for
an organization as it provides
direction and helps in
outlining the measurable
goals7. It also helps in guiding
the daily decisions and
evaluates process and change
approach.
It is necessary for a workplace
strategist to understand the
requirements of the
organization.
7 J Bryson, Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining
organizational achievement., in , John Wiley & Sons., 2018.

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Question 3: Market’s Reaction to the Strategy of Tesla
According to the reaction of the market Tesla has been observed as the technology
pioneer since most of the technologies of the company have been considered well established.
Besides, Tesla has not been known for the cutting age technology but has been creative and
careful in the ways they use the technology. The efforts undertaken by Tesla are undoubtedly
helping in pushing the incumbents in moving quickly and provide encouragement to the outside
car industry.
However, the biggest threat of Tesla has been the incumbents who have played the role of
being the game changer in the car market. The incumbents are mostly the tech companies like
Apple and Google who are also planning to enter the car market with the introduction of the
electric cars. In this regard the key observation lies in the simplicity and the more reliability of
the conventional cars. It also requires lower cost of design, small manufacturing plans and lesser
need for the service network. Nevertheless, it is believed that with time, data would undoubtedly
be in support of the autonomous driving through electric cars thereby saving lives.
Justification of the Response on the Company Strategy Based on the Following:
Growth Market Share
The market share of Tesla in the United States in last couple of months in 2018 has been 2
percent8. This implied that every new vehicle sold in United States is Tesla. This portrayed a
steep rise of about 0.3 percent in January during the same year. Then again 75 percent of all the
8 E Stringham, J Miller & J Clark, "Overcoming barriers to entry in an established industry: Tesla Motors.",
in California Management Review, vol. 57, 2015, 85-103.

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electric vehicles sold in US during the first quarter of 2019 have been Tesla. However, in the
year 2018, Tesla saw a revenue generation of about $21.461 which portrayed a rise of 82.51
percent rise from the year 2017. There is hardly any chance for the revenue to slow down in the
year 2019. The revenue figures stood at $4.541 billion during the first quarter. This implied a
growth of 33.23 percent during the same period in the year 2018. The overall net worth of Tesla
has been estimated at about $2.2 billion in the year 2018 based on the profits and the revenue.
The total worth of Tesla’s shares has been $20 billion as per records in the year 20199.
Share Price Increase:
The share price of Tesla Motors Inc crashed to about 11 percent after the lackluster
results of the second quarter. The company however beat the estimates of the second quarter
while it updated the market in the beginning of the month. Thus, in the second quarter of the
2019 recorded the deliveries of closer to 95,356 vehicles and the production to about 87,048
vehicles that surpassed the quarterly records of the previous quarter10. This resulted in an
increase in the share prices of Tesla by about 5 percent.
Market Commentary:
The shares of the electric car market rose by about 6 percent after the epic week for stock
amidst positive commentary revolving around the demand for the Tesla vehicles, one of the key
issues that plagued stock market in the recent months. As per reports of the last week, Tesla put
across one of the highest weekly gains since the October by surging to about 10.5 percent and
9 M Eisler, "A Tesla in every garage?.", in IEEE Spectrum, vol. 53, 2016, 34-55.
10 B Cornell & A Damodaran, "Tesla: Anatomy of a Run-up", in The Journal of Portfolio Management,, vol. 41,
2014, 139-151.

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ensure outperformance in the broader market as the stocks marked the best week of a year.
Besides, Electrek, the news website carried a positive story about the investor sentiment thereby
covering Tesla in positive light.
Conclusion:
On a concluding note, it can be said that, Tesla specialized in the manufacturing of the
electric car through the Solar City subsidiary and manufacturing of solar panel. The mission of
the company lay in accelerating the transition of the world towards the sustainable energy. The
report also focuses on the strategic position, strategic action and the strategic choices undertaken
by Tesla. The report also portrays how innovation of Tesla extended to the retail and impacted
way in which it interacted with the customers. Tesla considered the customers as the most
important aspect and thus ditched its broken model on the automotive dealerships.

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References:
Bryson, J, Strategic planning for public and nonprofit organizations: A guide to strengthening
and sustaining organizational achievement.. in , John Wiley & Sons., 2018.
Cornell, B, & A Damodaran, "Tesla: Anatomy of a Run-up.". in The Journal of Portfolio
Management,, 41, 2014, 139-151.
Eisler, M, "A Tesla in every garage?..". in IEEE Spectrum, 53, 2016, 34-55.
Karamitsios, A, "Open innovation in EVs: A case study of Tesla Motors.". in , , 2013.
Mazutis, D, & N Slawinski, "Reconnecting business and society: Perceptions of authenticity in
corporate social responsibility.". in Journal of Business Ethics, 131, 2015, 137-150.
Nicholson, D, "Inside Tesla - A Rare Glimpse Of Electric Carmaker's Cultu.".
in https://www.forbes.com/sites/davidnicholson/2014/11/09/inside-tesla-a-rare-glimpse-of-
electric-carmakers-culture/#4ff8674247ff, , 2014.
Scott, W, & G Davis, Organizations and organizing: Rational, natural and open systems
perspectives.. in , Routledge., 2015.
Stringham, E, J Miller, & J Clark, "Overcoming barriers to entry in an established industry: Tesla
Motors..". in California Management Review, 57, 2015, 85-103.
tesla.com. in https://www.tesla.com/, , 2019.
tesla.com. in https://www.tesla.com/about, , 2019.