Strategic Analysis of Tesla - Desklib

This report provides a strategic analysis of Tesla, including PESTEL analysis, Porters Five Forces Analysis, market prospects and competition, opportunities and threats, strategic position of the organization, success/failure of current strategies, and more.

Running head: STRATEGIC ANALYSIS OF TESLA
Strategic Analysis of Tesla
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STRATEGIC ANALYSIS OF TESLA 2
Table of Contents
1. Introduction....................................................................................................................3
2. PESTEL analysis of Tesla.............................................................................................3
3. Porters Five Forces Analysis...........................................................................................5
4. Overall Market Prospects and Competition.....................................................................7
5. Opportunities and Threats................................................................................................7
6. Strategic Position of Organization.................................................................................10
7. Success/Failure of EV industry’s Current Strategies.....................................................11
8. SBU and Corporate Strategies.......................................................................................12
9. Feasibility of Recommended Strategies........................................................................14
10. Key Issues in Implementing Recommended Strategies...............................................15
11. Conclusion...................................................................................................................16
References..........................................................................................................................17

STRATEGIC ANALYSIS OF TESLA 3
1. Introduction
Tesla Inc. is an American multinational corporation, which specializes in manufacturing
electric vehicles, energy storage and solar panel manufacturing. The organization
is headquartered in Palo Alto, California(Grant2016). The organization was founded in the year
2003 and the progression since its inception was dependent on the innovation that the
organization brought about in the automobile industry. The specialization of the organization is
based on commercializing high quality electric cars, which are powered by high performance
battery packs. The development of the organization is dependent on the steady innovations that
are planned by the business while operating in the markets (Rothaermel2015). On the other hand,
the identification of the needs of the customers has helped in maintaining the different levels of
changes in the processes of the business.
The purpose of the report is to identify the different prospects of expansion of the
organization while operating in the international markets. The report enumerates the different
key roles of the strategies that are undertaken by the organization and the manner in which it
supports the expansion of the business in the international markets.
2. PESTEL analysis of Tesla
Political The environmental issues that are faced by the
world have led different governments to promote
non- emitting cars to reduce the levels of CO2
emissions. It will be helping in the growth of the
organization in the different markets with their
product offering of electronic cars (Moritzet

STRATEGIC ANALYSIS OF TESLA 4
al.2015).
Economic The fluctuations in the world economy have
constrained the limit of the common people to
change to the environmental friendly processes.
The fluctuations in the economy have greatly
affected the sales of the organization as they
promote the green approach through the
innovations (Moehrle2017).
Social The conservative approach among the people has
helped the organization to promote their product
offerings on the basis of the identification of the
needs of the people to resort to environment
friendly automobile technologies. The wide
acceptance of the innovative idea of the
organization to revolutionize the concept of
conservation has helped in maintaining the
different changes in the systems and the
performance of the business while operating in the
international markets (Linxweiler2017).
Technological The general cost of the lithium ion cells have
decreased which will be allowing the organization
to maintain a high profit margin at a comparatively
lower cost. The rise in the demand of the solar
panels for charging the cells has made it mandatory
for the organization to form charging stations

STRATEGIC ANALYSIS OF TESLA 5
proportionate to the sales.
Environmental The agreements that are undertaken by some 183
countries have helped in promoting the eco-
friendly approach that is promoted by the
organization while bringing forth modifications in
the automobile industry. The objective of the
nations to reduce the pollution level by 20% is
supported through the innovations that is
undertaken by the industry (Smith2017).
Legal The different lawsuits that are engaged with the
patent rights of the organization have created
barriers for the functioning of the business. On the
other hand, the lack of legislation in the artificial
intelligence’s decision making has created an
impact on the auto- pilot provision that is created
by the industry.
3. Porters Five Forces Analysis
Porters’ five forces analysis is carried out for EV (electronic Vehicle) industry in
analyzing the business environment within which the company operates (Walton2017). This
analysis will lo facilitate the industry with the development of different innovative strategies that
can bring competitive advantages to all business units.
 Competitive Rivalry: The industry operates in highly competitive markets of the
automobile sectors. High power of competitive rivalry is because of certain forces such as
small number of companies, increased aggressiveness of companies and lowswitching

STRATEGIC ANALYSIS OF TESLA 6
costs. Large automobile companies have aggressive marketing campaigns that can
increase competition for the business (Birk2015). Considering such intense competition
the EV industry is implementing aggressive innovation and marketing campaigns for all
its product promotions.
 Bargaining Power of Buyers:Low switching costs decreases barriers for the industry’s
consumers for purchasing vehicles from various providers. This external factor imposes a
strong force against EV industry and other players within automotive industry.
Conversely, availability of substitutes is moderate that decreases consumer bargaining
power against EV industry. For instance, several consumers in suburban regions have less
access to public transportation that as it highly practical to drive their own vehicle. In
addition, low purchase volume decreases impact of consumers on EV industry (Flamand
2016).
 Bargaining Power of Suppliers:This force indicates that the suppliers have low forward
level integration. The external factor indicates limited control of suppliers within the
distribution along with sale of products. For instance, few suppliers use third party to sell
their goods, while on the other hand, others directly go into transaction with the
organization. This force is observed to have moderate impact on the company.
 Threat of New Entrants: Businesses of EV industry is difficult to compete with,
particularly because of increased cost of brand development as well as popularity for the
industry leaders. For instance, it is difficult for new entrants to match strong brand of the
company. Additionally, automobile manufacturing has increased expenses that impose
barriers to new automobile companies (Liuand Meng2017). Established companies in EV

STRATEGIC ANALYSIS OF TESLA 7
industry attain advantages from increasing economies of scale that can only be attained
by new entrants through exceeding a production threshold.
 Threat of Substitutes: EV industry experiences substitute’s impact on the automotive
and energy solutions industry surrounding. For instance, low switching costs for EV
industry enables substitutes like public transportation that easily attract consumers. Such
external factor is deemed to have a strong force against environment in EV industry
(Cheong, Songand Hu2016).
4. Overall Market Prospects and Competition
From business environment analysis of EV industry it has been gathered that there are
several competitors of the automobile company. High power of competitive rivalry is because of
certain forces such as small number of companies, increased aggressiveness of companies and
low switching costs. Large automobile companies have aggressive marketing campaigns that can
increase competition for the business (Millard2016). Considering such intense competition EV
industry is implementing aggressive innovation and marketing campaigns for all its product
promotions. EV industry Roadster has certain major competitors are Porchse and Ferrari and
once they alunched the Model S Sedan, the company will require to compete against the future
and the current competitors in the industry. These competitors include major automobile
manufacturers of the world such as BMW, Audi, Mercedes, Ford, Toyota and Honda. In order to
attain a competitive edge over them, EV industry is recently collaborating with Toyota to
manufacture an electronic version of RAV4 (Moehrle2017).
5. Opportunities and Threats
SWOT Analysis

STRATEGIC ANALYSIS OF TESLA 8
Strengths
 Mobility service- EV industry has
launched ride sharing service that can
offer its consumer with cheaper
transportation mode.
 Autonomous driving technology that
is offered by EV industry having self
driving capability
Weaknesses
 Expensive cars-The currently released
model S is overprized. However, the
price might seem reasonable based on
its quality, it remains unattainable for
most of the middle class Americans. At
the time the middle class people are not
considered the company might face
threat for business for a long time
(O'Neillet al.2015).
 Competition-EV industry is facing
threat of increased competition from
luxury and environment friendly
brands. Other than luxury brands such
as Porsche and Audi, the brands
developing environment friendly goods
pose a competitive threat.
Opportunities
 Increasing demand of sustainable
products-EV industry is a major factor
of increasing demand of environment
friendly product options for
transportation that can make consumers
Threats
 Strong opposition-Well capitalized
renowned companies such as Toyota,
Volkswagen and Ford present threat to
EV industry. This is for the reason that
these companies have high capabilities

STRATEGIC ANALYSIS OF TESLA 9
use less polluting automobiles
(Sharma2016).
 Sales, supply chain and maintenance
network all over its business units
 Increased low priced models for
attaining attention of increasing middle
class
to be competent in manufacturing field
as well as distribution.
 Less attractive for younger
generation-Considering the image of
EV industry, fuel driven sports cars are
observed to be highly demanded cars
internationally because of its
exceptional features. Electrics cars are
observed to be less attractive for young
generation.
 Legal and regulatory issues-Such
threat can be costly for the organization
and this can result in an increase in
expense. EV industry has its business
operations in numerous nations for
which its business is subject to political
and legal regulation in such markets.
TOWS Matrix
SO Strategies
 Tesla can shift its operations to other
WO Strategies

STRATEGIC ANALYSIS OF TESLA 10
nations in attaining decreased overall
business costs
 Intrducing consuer oriented products
can help the company in positioning
itself as a leader in the market
 The resours used in automobile
manufacturing can be equally
distributed that can help in divertsing
less time to work on developing
manufacturing facilities.
ST Strategies
 Offering innovation in the automobiles
can decrase the loss that is incurred in
prices against its business rivals.
 Expansion within the new economies
can be helpful in decrasing the currency
impact on the company.
WT Strategies
 The strategy that can be implemented
by Tesla is that it can associate with a
large superstore. Opening a store in the
highway can serve as a better strategy
 Developing plug-in battery and the
spare batteries must be kept in the cars
in long trip
6. Strategic Position of Organization
Strategic position of EV industry in the current year is deemed to be unique as it has
effectively played a new game strategy that generated a niche product along with a position for
itself in the global automobile market. The automobile brand is also observed to convert its lack
of knowledge in generating an advantage through launching new electric based drive train for its
automobiles along with implementing direct-to-consumer selling model (Bonelli2017).
Moreover, it has also been observed that EV industry is strategically position in the electric
vehicle industry as a high end dealer and manufacturer. This is because the automobile company

STRATEGIC ANALYSIS OF TESLA 11
attains competitive advantage over its major business rivals such as Toyota, Porsche and
Volkswagen along with attaining exceptional stores and service centres, innovative options of
consumer financing along with technological innovations. EV industry Motors is observed to be
unique internationally as it is selling cars along with new technologies(Colmorn and Hülsmann
2016). Over, the years till now, EV industry has developed and dominated the international
market for luxury and long range electric automobiles. EV industry has developed a market for
less expensive electric automobiles along with market for luxury gas powered cars. In case of
this automobile company, EV industry is focused on developing a network of superchargers,
service stations along with battery swap stations.
7. Success/Failure of EV industry’s Current Strategies
There are several strategies that are observed to be successful for EV industry in attaining
competitive advantages for all its business units internationally.
 Technology: Strategy of EV industry in implementing effective technology is deemed to
be successful in all its global strategic business units. The automobile spare parts
manufactured by EV industry are so advanced and powerful that it has made the company
to attain competitive advantage. Few renowned companies like Daimler uses its battery
packs, Mercedes Benz employs EV industrypower train and Toyota employs EV industry
Motor (Birk2015).
 Monopoly:Another strategy of attaining monopoly has turned out to be successful for EV
industry in attaining competitive advantages. EV industry stated its business with a
supermarket and has attained a monopoly business with presenting high-end electric
sports cars. Rapidly innovating on its technology has facilitated EV industry in leading

STRATEGIC ANALYSIS OF TESLA 12
the automobile market and along with attaining high revenue from all its strategic
business units.
 Team: Employee team of EV industry is deemed to be highly efficient under the
leadership of the current CEO of the company who is a summate engineer and
salesman.The employees of the company are highly motivated in delivering quality
consumer service in all its business units(Moritz et al. 2015).
 Distribution: EV industry has the strategic advantage of owning its entire distribution
chain. Despite the fact that up-front costs of the company in opening service centres and
stores in its business units of New Jersey, New York and Ohio is high, it has maintained
control over consumer experience, strengthened its brand and maintained cost control in
the long run.
Moreover, there are few strategies those failed to offer competitive benefits to the
company’s business units(Moritz et al. 2015).
 Production Issue: Model 3 of EV industry faced certain production issue because of
which it launched late. Through EV industry has been pioneer in technology and attained
huge market share in electric vehicle sector, its manufacturing strategy is observed to fail
that troubled the company.
8. SBU and Corporate Strategies
Based on the business environment in which EV industry operates, certain effective
strategic business unit and corporate strategies based strategies are implemented by EV industry
in the current years are explained under:
Strategic Business Unit Strategies of EV industry

STRATEGIC ANALYSIS OF TESLA 13
EV industry’s current business strategy is based on the automation of its vehicles
manufacturing. The processing plant of the company used increased use of numerous robots that
had multi-joint arms and performed several tasks. Such current innovated strategy was successful
in increasing its production to eighty three vehicles per day on a same assembly line (Colmorn
and Hülsmann2016). Offering innovation in the automobiles of Tesla can decrease the loss that is
incurred in prices against its business rivals. Expansion within the new economies can be helpful in
decreasing the currency impact on the company.
EV industry Company’s CEO Musk’s strategy of owning and operating all the
dealerships was an exceptional strategy that was not yet implemented by any other automobile
company. Moreover, the company’s dealerships are compared with the stores along with
upgraded shopping malls. The company’s sales professionals are capable to answer questions
that facilitate consumers in analyzing the sales pitch of EV industry. EV industry has also
implemented a strategy of offering high performance chargers along with building enough
charge stations that can form a network such as gas station. The company also offers products
with lower prices because of which sales of EV industry cars has increased over years (Martins,
Rindovaand Greenbaum2015). The strategy that can be implemented by Tesla is that it can associate
with a large superstore. Opening a store in the highway can serve as a better strategy
Developing plug-in battery and the spare batteries must be kept in the cars in long trip.
Corporate Strategies of EV industry
Mission and goal of EV industry is focused on increasing the advent of sustainable
transport through bringing huge number of electric cars to the international automobile market as
fast as possible. Corporate strategy of EV industry is not just to position itself as an automaker
but also as a design and technology organization with great focus on energy innovation. The

STRATEGIC ANALYSIS OF TESLA 14
company has drastically implemented strategy in increasing car production that has expanding
the company’s charging infrastructure for accommodating increase in number of cars and self
driving vehicles in the future years (Escoda2018).
9. Feasibility of Recommended Strategies
There are a number of strategies that the EV industry Company will be followed for
future sustainability. The possible recommendations are, firstly, the strategy is going to focus on
the supply chain management strategy. It can be argued the business model of EV industry is
unique in compare to the other automobile manufacturing companies. The focus of this strategy
is to reduce the cost of the manufacturing as well as the cost of goods sold. The previous models
of EV industry were very good and user friendly. However, high pricing caused a major setback
for the EV industry Automobile Company in the intense competitive market. As a result of that
the company wants to develop such a product that will moderate in price but resembles the
features of a future car. In this regards, the electric vehicles are very effective and also eco
friendly that will help the company to maintain its environmental sustainability.
Secondly, the EV industry Automobile company is going to introduce a change in bits
production mechanism. The Company has an ambition to have close to 80,000 cars on road by
the end of the 2020. In this context, the company is willing to launch the new electric filling
stations that are capable of charging a EV industry vehicle up to 200 miles of range in just 30
minutes. Moreover, the EV industry Company wants to develop low cost lithium batteries that
will easy to charge and giving long time back up. As a matter of fact, the company wants to
develop more effective batteries for future purposes.

STRATEGIC ANALYSIS OF TESLA 15
Thirdly, there is a corporate strategy that the EV industry Automobile Company can
follow for its future sustainability in form of making the organizational function more effective
and transparent. The simple problem solving rules are supposed to be important in this regards. It
can be argued that to manufacture new product it is imperative for the company to establish a
strong communicative framework (Beiker2015). The company management must use tools for
root cause analysis and scientific thinking. It also incorporates the interest of the individuals and
the departments throughout the organization by encouraging employees to work efficiently and
helping to learn more profoundly.
10. Key Issues in Implementing Recommended Strategies
It can be argued that there are some problems regarding the recommended strategies for
EV industry Automobiles. The issues are as follows:
 The possible expenses are very important in this regard. It can be identified that
introducing new products in the form of e-vehicles and battery may be costly for the
company (Redding and Turner 2015). In fact, these products require a separate
establishment from technological innovation to maintenance. As a result of that it will
increase the initial expenses for the company.
 Moreover, the introduction of the new e-vehicle and the batteries require a proper
marketing analysis. Therefore, bulk of money has to be invested in the marketing.
Furthermore, it is associated with customer behavior and responses. In this manner, it can
be stated that apparently the strategies look so simple but at the time of implementing it
creates complexities to perceive an idea of the whole mechanism (Van Aken and Berends
2018).

STRATEGIC ANALYSIS OF TESLA 16
 Communication is considered to be an important aspect for the organizational activities
of a company. It can be ascribe that imperfect or improper strategy can create obstacles in
the organizational activities (Duffield and Whitty 2015). Therefore, it requires the
managerial intervention in order to make the communication successful. As a matter of
fact, incorporating the employees in managerial decisions will discredit the entire effort
(Karfopoulos and Hatziargyriou 2016).
11. Conclusion
The purpose of the report was to identify the different prospects of expansion of the
organization while operating in the international markets. Business of EV industry is difficult to
compete with, particularly because of increased cost of brand development as well as popularity
for Elon Musk. For instance, it is difficult for new entrants to match strong brand of the
company. Additionally, automobile manufacturing has increased expenses that impose barriers to
new automobile companies. The paper also revealed that mission and goal of EV industry is
focused on increasing the advent of sustainable transport through bringing huge number of
electric cars to the international automobile market as fast as possible. Corporate strategy of EV
industry is not just to position itself as an automaker but also as a design and technology
organization with great focus on energy innovation.

STRATEGIC ANALYSIS OF TESLA 17
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