Stakeholder Analysis and Strategy Development Report

This report provides an analysis of stakeholder management and strategy development in the context of Tesla. It identifies four stakeholder groups and evaluates their impact on the business. The report also offers recommendations for effective stakeholder management.

STAKEHOLDER ANALYSIS AND STRATEGY
DEVELOPMENT REPORT

Executive Summary
Stakeholder management is one of the KPIs for business and the instant report deals
with the analysis of stakeholder management and related aspects from the context of
Tesla, an automotive giant across the globe. The report identifies four distinct
stakeholder groups and evaluates the same in the business context. Finally, the report
provides a recommendation for the management as the analysis shows some flaws
within the operational manual and corporate objective framework.
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Table of Contents
1.0 Introduction..................................................................................................................4
2.0 Company Overview.....................................................................................................5
2.1 Operations................................................................................................................5
2.2 Vision and Mission...................................................................................................5
2.3 Industry Trends........................................................................................................6
2.4 Strategic Challenges................................................................................................7
3.0 Stakeholder View of the Organisation.........................................................................8
3.2 Stakeholder Groups in Tesla....................................................................................8
4.0 Stakeholder Analysis.................................................................................................10
5.0 Stakeholder Category Identification and Generic Strategic Programs.....................12
6.0 Recommendation.......................................................................................................14
7.0 Conclusion.................................................................................................................15
References.......................................................................................................................16
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1.0 Introduction
Stakeholder management may be considered to be one of the key success parameters
for business as the stakeholders are primary resources for the company and hence, it
becomes utmost responsibility for the management to create a stable and efficient
stakeholder management policy for them (Andriof and Waddock, 2017, p.21). The
instant report delves into the analysis of stakeholder management plan of Tesla in the
context of an established and relevant theoretical framework in this regard.
At the very beginning of the study, the paper introduces the topic followed by the brief
discussion on the organisational overview with reference to its operations, mission and
vision, performance and also the strategic challenges in the context of market trends in
the industry. In the subsequent parts of the paper, the researcher provides a concise
analysis of the stakeholders of the company. In addition, the paper identifies four
stakeholder groups that are critical to the success of the business and evaluates the
respective strategies that could have been applied for managing the groups. In the last,
the researcher sumps up the discussion by way of recommendation for the
management of Tesla regarding the stakeholder management policies and then wraps
up the discussion by way of concluding note.
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2.0 Company Overview
2.1 Operations
Tesla is an American automotive and energy company based in California. The
company specialises in manufacturing of electric car and solar panel. In the year 2019,
the company sells a number of products including Model S, Model X, and Model 3 etc
which have been able to create its own niche market across the world. The company
was founded in the year 2003 and within few years, the company has been gradually
acquiring lions’; share in the automotive market throughout the globe due to its
customised and innovative offering and service delivery.
2.2 Vision and Mission
The company has been leading the automotive market by its path-breaking and
disruptive innovation in the electric car segment. The mission of the firm is to
accelerate the world’s transition to sustainable energy.
All the vehicles manufactured at Tesla are the products from own factory shop and
hence, the firm depends on its suppliers of raw materials heavily. However, the factory
set up has been kept a safe place to work so that the quality parameters are being met
and also the workers’ satisfaction may be attained which may further add value to the
operational excellence of the firm. The objective of the firm may be conceived to be
continuing its innovative focus and creating vehicles that add value to transportation.
Also, the firm intends to reach out to more people by making its offering easily
accessible
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2.3 Industry Trends
The automotive industry has been increasing at a decent pace worldwide and the US is
also no exception to the same, except for the fact that the industry segment presently
has reached a saturation where innovation plays a success-critical role. The figure
below shows the brand value of the top companies in the year 2018.
Figure 1: Brand Value of Automotive Companies in the US for 2018
(Source: Statista, 2019)
Tesla ranks much lower than Toyota or BMW or Ford. However, the market for Tesla
has been niche and specific.
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2.4 Strategic Challenges
Some of the strategic challenges that Tesla's faces are listed herein:
 Dependence on suppliers
 Continued net loss position
 Delay in production
 Inadequate insurance strategy
 Disproportionate cost structure with revenue
 Risk of fire from lithium-ion battery cells
 Risk of materialising product liability claims
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3.0 Stakeholder View of the Organisation
3.1 Stakeholder Map of Tesla
The theory of stakeholders shows that company or business organisation is surrounded
by a number of stakeholders and the business is responsible for each one of the
stakeholder's groups as a whole. The map for Tesla may be pictorially presented
through a figure as shown herein.
Suppliers Regulators Customers Government Society
Employees Owners Management
ORGANISATION
Figure 2: Stakeholder Map Model of Tesla
(Source: Created by author)
As per the figure, it may be conceived that the stakeholders of Tesla may be broadly
categorised in two ways namely –
 Internal stakeholders: Employees, Owners and Management
 External stakeholders: Suppliers, Regulators, Customers, Government and
Society
3.2 Stakeholder Groups in Tesla
In the instant paper, the researcher has identified elements of the above-mentioned
shareholder groups and these elements are briefly narrated as below:
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Stakeholders Elements
Employees 37,543 employees in the year 2017 (Annualreports.com, 2019)
Owners 1,156 holders as per common stock register in the year 2017
(Annualreports.com, 2019)
Management Elon Musk, CEO; Deepak Ahuja, CFO; Eric Branderiz, CAO
Suppliers The business uses thousands of purchased parts from hundreds of
suppliers across the globe
Regulators California’s Zero-Emission Vehicle Regulations, U.S. Environmental
Protection Agency, United States Federal Motor Vehicle Safety
Standards etc.
Customers In 2018, total electric cars sold was 245,240 approximately
(insideEvs.com, 2019)
Government The US and other Governments
Society In the year 2017, the company had a number of manuals for the
Code of Business Conduct and Ethics (teslamotors.com, 2019).
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4.0 Stakeholder Analysis
Employees
The management of the company has been able to maintain a strong corporate
governance policy sets and ethical framework in which the operational manuals and
charters are being prepared, implemented and strictly monitored. The Code of Business
Conduct and Ethics shows that the company has prioritised its employees with utmost
importance. The workplace has been maintained in such a way that the staffs feel a
sense of safety. The workplace is designed with the aim of close to zero injuries
possibilities and therefore, it may be stated that the company has been maintaining the
policy in order to create unique value to the staffs.
Owners
The revenue of the business has consistently been increasing over the last few years
though there has been an increasing loss position for the firm. In other words, the
operating expenses of the firm have been disproportionately higher than the revenue so
generated. The management may need to consider the same as the net loss may
primarily be borne and attributable to the owner's groups. Though the management
believes that the long-term fundamental of the business is strong as a considerable
investment has been made in R&D, the shareholders may need to be provided with
dividend and positive bottom line.
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Figure 3: Snapshot of Key Financial Parameters for Tesla from 2013 to 2017
(Source: Annualreports.com, 2019)
Customers
Since the company’s vision lies on the fact that transportation system should be
redefined with its mass scale reach and innovative value creation, the management
always puts emphasis on optimising its cost structure as well on a continuous basis. As
a result, the batteries have been priced in a house in order to reduce the cost in supply
chain and external sourcing. In addition, it may also be observed that the company has
been aiming to widen its charging stations network across the globe and hence, a
substantial amount has been invested for the same.
Society
Since Tesla has introduced disruptive innovation in the automotive market with its
unique offering, environmental sustainability has also been one of the key value
proposition for the management. It has been identified that all the making of Tesla are
almost free from environmental pollution. The vehicles are ecologically clean and these
near zero-emission offerings have contributed towards the society as a whole by way of
focussing on ecological balance.
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5.0 Stakeholder Category Identification and Generic Strategic Programs
Employees
It has been observed that employees specifically conduct the successful operation of a
business. In the opinion of Miles (2017, p.45), internal stakeholders, in general, show
financial interest in a business. This set includes employees, directors and investors.
For Tesla, employees are key resources and the management has strategized HR
policies and also its policy manual relating to the Code of Conduct in line with the
stakeholder's expectations (Wicks and Freeman, 2017).
Owners
The stockholders usually vest interest in the successful operation of a business and
they also tend to contribute or invest financial figure in the business. Therefore, the
owners tend to have more influence and control over the business profits that the
external stakeholders. According to Jones, Wicks and Freeman (2017, p.20), one of the
primary functions of the owner groups is to have definite voting rights depending on the
numbers of shares owned by the company. The members specifically vote for aspects
like partnership alliance, acquisition, key position hiring, liquidations, oversight, setting
budget and profit distribution. The ones having greater numbers of shares in the
business tend to participate in the activities like employee development, training
facilities, brainstorming, product designing ideas and market penetration discussions
(Mok, Shen and Yang, 2015, p.450).
Customers
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Harrison, Freeman and Abreu (2015, p.60) asserted that sometimes, customers are
only considered under the category of external stakeholders. They maintain an indirect
influence over the business strategies. Sometimes, the market gets disrupted with one
of the trends, which triggers customers to buy to prefer purchasing disruptive products.
This simultaneously also enforce every business to change their line of operation,
product, services and pricing strategies. Hence, it can be stated that external
stakeholders can also create a direct influence on the business operation (Tantalo and
Priem, 2016, p.320).
Society
In the consideration of Eskerod, Huemann and Ringhofer (2015), it can be noted that
organization and communities need to work together as they require the support of each
other. Businesses offer continuous employment and economic enlargement. Societies
offer effective service lines to the effective customer base that tends to fuels sales.
Hence, it can be stated that both the internal and external stakeholders work jointly with
businesses to make sure steady sustainability and profitability, synchronizing with
communities (Cooper, 2017, p.45). Business leaders are required to look forward to the
stakeholders as precious resources and not as obstructions in leading the company
forward. It definitely supports to engage external stakeholders in any new project
development.
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6.0 Recommendation
For Employees: The workplace should be kept safe and effective HR policies
and ethical practice manual should be created and applied with strict vigilance
thereon.
For Owners: The company should put more focus on generating positive bottom
line so that the owner groups may be satisfied.
For Customers: The operations should be expedited so that the same may not
hamper the brand and profitability.
For Society: Dependence on the suppliers should be minimised by developing a
broader supply chain network. In addition, the emission should be regularly
monitored and any deviation should be taken care on of on timely manner.
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7.0 Conclusion
Based on the discussion and analysis performed in the preceding sections of the report,
it may be construed that the stakeholder analysis and stakeholder management are
crucial for the success of a business. Since the management acts in their fiduciary
capacity and as an agent group of the owners, it becomes utmost responsibility on the
part of the management to run the business operations in the most efficient and prudent
manner. In this context, it may be noted that the organisation, in the instant report, has
been observed to be complying with their own stakeholder management policies which
are in line with their corporate vision and long-term sustainability policies. However,
there are certain challenges that may need to be overcome and countered by the
management in order to satisfy the stakeholder groups and create value for the larger
society. Finally, therefore, it may be concluded that a well-designed stakeholder
management policy sets supported by the strong leadership and efficient corporate
governance by way of controlling, monitoring and following -up of the implementation
and execution plans in this regard will significantly contribute towards the achievement
of corporate goals and objectives for the company in the long-term in most time and
cost efficient manner (Bridoux and Stoelhorst, 2016, p.231).
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References
Andriof, J. and Waddock, S., (2017). Unfolding stakeholder engagement. In Unfolding
stakeholder thinking (pp. 19-42). Routledge.
Annualreports.com. (2019). 2017 - Form 10-K. [online] Available at:
http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_TSLA_2017.
pdf [Accessed 25 Apr. 2019].
Bridoux, F. and Stoelhorst, J.W., (2016). Stakeholder relationships and social welfare: A
behavioural theory of contributions to joint value creation. Academy of Management
Review, 41(2), pp.229-251.
Cooper, S., (2017). Corporate social performance: A stakeholder approach. Routledge.
Eskerod, P., Huemann, M. and Ringhofer, C., (2015). Stakeholder inclusiveness:
Enriching project management with general stakeholder theory. Project Management
Journal, 46(6), pp.42-53.
Harrison, J.S., Freeman, R.E. and Abreu, M.C.S.D., (2015). Stakeholder theory as an
ethical approach to effective management: Applying the theory to multiple
contexts. Revista brasileira de gestão de negócios, 17(55), pp.858-869.
insideEvs.com. (2019). Tesla Production And Deliveries Graphed Through Q4 2018.
[online] Available at: https://insideevs.com/news/341869/tesla-production-and-
deliveries-graphed-through-q4-2018/ [Accessed 25 Apr. 2019].
Jones, T.M., Wicks, A.C. and Freeman, R.E., (2017). Stakeholder theory: The state of
the art. The Blackwell guide to business ethics, pp.17-37.
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Miles, S., (2017). Stakeholder theory classification: A theoretical and empirical
evaluation of definitions. Journal of Business Ethics, 142(3), pp.437-459.
Mok, K.Y., Shen, G.Q. and Yang, J., (2015). Stakeholder management studies in mega
construction projects: A review and future directions. International Journal of Project
Management, 33(2), pp.446-457.
Statista. (2019). Most valuable car brands worldwide by brand value 2018 | Statistic.
[online] Available at: https://www.statista.com/statistics/267830/brand-values-of-the-top-
10-most-valuable-car-brands/ [Accessed 25 Apr. 2019].
Tantalo, C. and Priem, R.L., (2016). Value creation through stakeholder
synergy. Strategic Management Journal, 37(2), pp.314-329.
teslamotors.com. (2019). Code of Business Conduct and Ethics. [online] Available at:
https://ir.teslamotors.com/code-business-conduct-and-ethics-0 [Accessed 25 Apr.
2019].
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