Strategic Management Case Study: Tesla

This assignment involves conducting a strategic analysis of Tesla, Inc., focusing on its strategic management, business model renewal, and stakeholder approach. Using Porter's Five Forces model, you will examine the competitive landscape of the electric vehicle industry. Additionally, draw insights from other provided articles to evaluate Tesla's strategic management practices, tangible and intangible assets, and dynamic capabilities.

Strategic
Management

EXECUTIVE SUMMARY
Tesla can be referred as the American MNC which is expertise in energy, storage, electric
vehicle and manufacturing of solar panel which is based in California. The company produce
various high technology automate, powerpack batteries, solar roof tiles along with various Tesla
Powerwall. The company aims over the offering of electric cars and manufacturing of more
electric cars at cost affordable to more average customer. The enterprise was named for their
physicist Nikola and electric engineer through founder of organisation i.e. Marc Tarpenning and
Martin Eberhard. This report is analysing external and internal environment along with strategic
management of company in order to produce and manage more effective outcome. For this, it is
understanding SWOT analysis, Porter's five forces, PESTLE analysis etc.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Internal and external analysis.................................................................................................1
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic management can be referred as the formulation and execution of the major
activities and targets along with initiatives undertaken through the organisation's higher
administrative authorities or owner based strategic management as well AS internal and external
environment in which the company competes (CHUANG and Liao, 2010). This focuses over the
long-term planning and leading companies toward a certain direction. The report will study the
strategic aspects of Tesla which is an American firm that possess expertise in the energy storage,
electric vehicles and solar panel production. The report will analyse strategic management and
evaluation of company through analysing various environmental elements including intrinsic and
external environment of enterprise.
MAIN BODY
Company Background
Tesla Inc. is one of the largest and best American automobile company which
manufactures, designs, sells, provides the electrical car, solar panel and electrical energy. The
company was founded in 2003 which is based in California. This organisation has expertise in
the lithium-ion battery, electric cars storage of battery, photovoltaic panels for residential usages
etc. The additional services and products that Tesla sells involve Tesla Powerpack and
Powerwall along with solar panels, batteries and solar roof tiles (Doz and Kosonen, 2010). CEO
of organisation Elon Musks claims the company as an independent automaker and high
technology provider companies which focus over the offering of electric cars at an affordable
cost to middle and upper middle class people. This organisation was named after the famous
physicist and electrical engineer Nikola Tesla through organisation founders Marc Tarpenning
and Martin Eberhard. The firm function various types of productions as well as assembly of
plants, Gigafactory 1 proximate Reno which produce the battery packs and batteries of their
services and vehicles. This report will analyse the strategic aspects of Tesla considering the
different environment analysis.
Internal and external analysis
Environmental analysis is the procedure in which company evaluates various external
and internal factors situated in the working environment that affects the business growth. In
addition to this, internal evaluation consists of capabilities, resources and core competencies
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whereas the external environmental elements consist of political, social, technological, legal,
environmental and economic components that can assist the company in achieving their business
objectives. In order to lead the automobile market, this is required for Tesla to perform proper
environmental analysis (Eden and Ackermann, 2013). Here is mentioned the internal and
external environmental analysis of Tesla.
EXTERNAL ANALYSIS
This consists of external environmental elements and renders more insight into the threat
and opportunities according to which the SWOT factors of company are being shaped. In order
to consider Tesla's external evaluation, the company will conduct proper PESTLE analysis which
is mentioned as below:
Tesla PESTLE Analysis
The company must overcome from their issues and challenges associated with the
technologies and market struggles. In order to analyse this, it is required for the company to
conduct proper PESTLE analysis which is mentioned as follows:
Political Factor: Tesla Motors has strengthen the opportunities and their financial
performance by the assistance of government incentives. However, the external elements are
directly related with their inconsiderable emission of carbon of organisation's product. In regard
of this, free trade expansion agreements free chances for company to expand their internationally
operations., On the other side, the stability of political factors in major company's markets create
more macro environment along with the strategies of market penetration. In this context, the
external elements present the growth opportunities in the automotive business. This factor
indirectly influences the performance of company along with expanding the business operations
globally.
Economic Factor: The economic factor has a very fundamental part in the world of
commercial industry which influences the businesses fortune in numerous ways. This can be
observed that these businesses are rising more rapidly from past few year. However, hike can be
observed in economic practices since the incurring of recession which was fundamental
happening that has influence on the growth of United Kingdom (Freeman, 2010). With the rise in
economic status, people are spending more in the high cost. With increasing economic practices,
the employment level has also risen internationally and that has directed to the country toward
higher spending on the commodities. Now, more people are making the purchase decision in
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regard of luxury cars. Hence, Tesla is getting benefits of the economic factors of country. On the
other hand, performance of business benefits from less cost of battery. Decreasing cost of
batteries facilitates enterprise in less expense while manufacturing electrical car. Though, the
United Kingdom's economic situation has been developed, therefore, their economic condition is
still unstable which can create internal and external loss for company in various ways.
Social Factor: The interest, culture, manner and other social factors can influence the
organisational culture in the working environment. Shared attitudes and beliefs of the entire
population will play major role in the growth and development of enterprise. Tesla has various
opportunities of development and growth as this has developed the low-carbon lifestyle services
as well as increasing the renewable preferences for energy. Tesla has the opportunities to hike
their financial performance associated with the increasing distribution of health in developing
trade. On the other hand, as people are more oriented towards the environment and performing
various practices in sake of avoiding environment pollution. Tesla is working over the services
and products according to this. New car of Tesla, Tesla Roadster is made eco-friendly. Also,
company is manufacturing various other electrical cars and vehicles.
Technological Factor: Technology is rapidly disrupting in various industries all over the
world. Car industry is now dominating the entire market as people tend to like luxuries. Tesla has
been disrupted more innovation in the sector of car industry (Gooner, Morgan and Perreault Jr,
2011). It also has more growth development opportunities utilised in their products. Tesla has
recently render and manufactured hybrid cars which include smart phones system that can assist
in achieving business objectives. Emphasising on the growth opportunities can lead the
enterprise towards growth as people of UK are preferring advanced technologies. Tesla profits
and sales too risen very rapidly in the last few years. Hence, the technology can be very essential
for determining the benefits and sales for business which is in favour of growth and benefit of
enterprise. So, Tesla is getting more technological benefits from the support of supply chain and
their services that can help in gaining energy in an efficient manner.
Environment Factor: In the business context, environment components are growing and
developing within the working environment. Internationally, the brands which have invested in
the betterment of environment have developed rapidly in popularity. In the context of
environment, Tesla has good influence in the recognition in the marketplace. It is producing
more energy saving vehicles and electrical cars focusing over the saving energy and
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sustainability. This is rising their sales of products and services in the marketplace in comparison
of their competitors. Also, the enterprise has been conducting various CSR activities in the
external environment of company which is leading to extension of environmental program in
more efficient manner. Through developing better technology, Tesla can access better sales
growth and more revenues in the working environment in more effective manner than their
competitors.
Legal Factor: Legal aspects of an enterprise influence their working environment and
activities in more significant manner (Greco, Cricelli and Grimaldi, 2013). Tesla has chance to
sagely deploy their business across the broader, overseas through undertaking the international
patent safeguarding. In addition, organisation has the growth opportunities to promote their
electrical vehicles, cassocked with the consumption of energy regulation which consumer
organisation should comply. Also, the company has the growth opportunities by which state
allow them to trade more freely and independently in the foreign marketplace. Hence, the legal
aspects are more essential to follow and examine for Tesla. As per the new regulation of
international judiciary, Tesla would not be affected much as firm as already been working over
the electrical and ecological services and products.
Through the assistance of proper investigation of Porter's Five Forces, Tesla can evaluate,
undertake and manage proper growth which is mentioned as below:
Porter's Five Forces
Organisation in the global automotive industrial environment experiences wide range of
external factors consisting the technology availability and raw material which shapes the
competitiveness of enterprise. The organisation evaluation presents that business in order to
develop beside of facing more competitive challenges. Here are mentioned the major Porter's
five forces of enterprise which are discussed as follows: Competitive competitors or rivalry: Tesla functions their business in the market with high
competitors. This factor of market can influence the automotive market as well as the
solution of energy in the industry environment. As per this analysis, external components
of company limit the competition impact on the organisation such as Tesla. However the
organisation are often more aggressive in the case of promotion and innovation of their
service. Large companies in automotive industry can render more aggressive marketing
campaigns. Hence, as per the report, there is high competition in the automate industry
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which Tesla has to face and deal with. Therefore, it can state that the competitor’s rivalry
is strong in the competitive industry. Bargaining power of service user or customers: There are mass numbers of competitors
which hike the consumer's bargaining power. The consumer impact on organisation is
accountable in battery, solar panel and battery industry (Grewal, Janakiraman and
Tolerico, 2010). Low switching price can reduce various barriers for the company's
consumer to make purchase decision from other providers. In this regard, buyers impose
strong force in regard of enterprise along with other elements in the industry of
automobile. Hence, the external factor intensities in this aspect reflect the power of
consumer’s bargaining as moderate force as well as the secondary priority of
management. Bargaining power of suppliers: A business organisation relies over the availability of
supplier which can enhance and decrease the business activities’ expenses. This shapes
their operation and activities along with their amount of profitability in various ways.
Tesla's suppliers have low forward integration level. The external components can be
defined as the supplier etc. that opt the third parties to trade their services and products of
Tesla. In contrast to this, other companies directly transact with organisation. These
elements portray a moderate force on working organisation. In this addition, the company
has limited impact on the industry. Henceforth, the company has moderate supply level
that can empower Tesla's supplier but only to the limited range. Threat of substitution or substitutes: The substitute impact on automobile industry can
affect the business of an enterprise. Switching the services and product cost can influence
the competition for company (Porter's Five Forces, 2014). In the case of Tesla, low
switching price of substitutes like public transportation can help in attracting the service
user; this can help in imposing a powerful force against the environment of cited
company. For example consumers have more moderate and limited substitute number in
the marketplace. In regard, various substitution's performance level is moderate only in
satiating their initial requirements of consumer. For instance, the facility of public
transportation is not as convenient and comfortable as car. Hence, this factor can be
considered as the secondary priority for Tesla's management and is mandatory element.
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 Threat of new entrants: Tesla has strong market positioning and has great recognition in
the automotive industry. This is complex and difficult for any enterprise to compete with
Tesla. Entering to the automobile market is more complex procedure as this requires
large financial amount and more innovation to establish which is one major benefit that
company has (Hill, Jones and Schilling, 2014). Linked with the external components in
this concept, the new entrance threat is very minor for the strategic management concern
in context of Tesla’s industry environment.
Hence, the above mentioned elements of Porter's five forces can assist in the
management, evaluation and development of new strategies and plan to the company.
INTERNAL ANALYSIS
Internal evaluation refers to the exploration of organisation's major competencies,
strengths, competitive viability etc. Tesla needs to implement this in order to understand the
major impact of internal factors over their business. This can easily be analysed through the
assistance of Porter's five forces and PESTLE analysis which is mentioned as follows:
Tesla SWOT Analysis Strength: Tesla is having a higher goods differentiation of an technology of electric
power train as it has position their brand as a unique within a marketplace with core
concentrating on developing auto mobiles. As it includes of control software, gearbox,
motor, battery pack and power electronics. Organisation is controlled its ability in the
systems of electric power (Hitt, Ireland and Hoskisson, 2012). These are used for load
shifting, power back up, electric market services etc. it owns their services as well as
sales centres, hence, getting rapid feedback along with that actual time from the market, it
improve control on operations of services, customised warranty packages and better
control of inventory. Tesla has construct a new facility of Gigafactory which will
combine the process of battery producing. Weakness: Tesla is having a supply source of battery cell of powerpacks. As they are
having a experience of developing a new goods as well as handling various models are
limited. Tesla weakness face difficulty of raised debt as well as assets liability. They are
earning less profitability. Organisation is having a higher load of debt. They are having a
limited infrastructure as electronic cars need stations for charging. It is less compared
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with gas cars. As for charging, they require one hour to charge their cars in a Tesla
supercharger. Opportunity: Organisation is having an opportunity of raised attention towards declining
of consuming a fossil fuel. They are having an opportunity for expanding a explore of
ecosystem as well linked with opportunities of market. They are having an opportunity of
expanding their markets within United Kingdom as it can expand their share of market to
Ireland, India and South Korea. Organisation is having an opportunity of higher
incentives of government (Hodgkinson and Healey, 2011). As they are offering financial
incentives for buyers to buy electronic cars. It is a new automotive technology like as
improvements in car battery as well as autopilot would provide a competitive edge from
other brands along with public convenience for future. They are also scheduled to make
available new roof of solar within homes. Threats: Tesla operates their enterprise in European from Tilburg, Amsterdam and
Netherlands. Consumer’s services and sales, logistics network, producing operations for
all nations etc. are controlled by Netherlands. They are having threats of limited
supplier’s base of network for sourcing its elements. This is because company is facing
high challenges while developing option of suppliers for them. By this, it declines the
power of bargaining with suppliers and vulnerability is raised by operational failure for
producing elements. They are producing locations focus mainly in US but purpose is to
capture a whole market such as japan, Canada, Norway and china. It will lead to demand
uncertainty and estimating finance for Tesla. As they have to face a high competitors of
auto mobile sector (Swayne, Duncan and Ginter, 2012). Tesla is a young organisation as
it has to face various competitors within a market such as Volkswagen, Toyota etc. they
are having base of stable suppliers, higher loyalty of consumers and higher credit sources
of finance for developing new technologies.
SKILLS AND RESOURCE
Tesla possesses fundamental patents to construct more trains and batteries of electric
power.
 Company has reward 40 patent and more than 200 are pending.
 The organisation has maintained to meet identified expertise in the heavily sector
researcher through other production companies.
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 The company is popular for the energy battery density in the entire market.
 Design, production and marketing are one of the major essential abilities of organisation.
 More than 6000 employee are working for company in which most of them are skilled
engineers.
STRATEGIC SEGMENTATION
The company has recently launched Tesla Roadster as their new production. The cost of
this product begins from $200,000- $500,000 which presents the Strategic Business Unit (SBU)
positioned on various executive segments of car in completion of Mercedes Class and series of
SME. The company has more different partnership with service provider of car such as Toyota
and Daimler that shows a revenues sources (Mudambi and Venzin, 2010). New business and car
models are coming that is based on the recent model of Tesla for gaining the attention of market
in comparison to their competitors.
Internal as well as external environmental analysis can assist or render more guidance to
the organisation's decision making and policy making procedure in regard of achieving the
effective outcomes. This evaluation can aid the enterprise in performing effective elimination
and segmentation on the demographical elements. Tesla provides their consumer more
convenience and affordable services and products for middle and upper middle class of people.
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Illustration 1: Competitor of Tesla
Source: Competitor of Tesla, 2018

The organisation require to the study the demands and need of people in regard of the trending
technologies and products in order to render more advanced and modified technologies that can
assist them in achieving business objectives.
Recommendations
The company should aim over the premium sector in order to maintain their margin and
recognition. Also, Tesla should develop their own capacities of production in order to support the
mass service production to reduce the optimise time. Also, they can aim over the international
advertising and marketing campaign in order to create more effective branding and recognition
of services (Poister, 2010).
CONCLUSION
This can be summarised from the mentioned report that through the help of strategic
management, an organisation can administrate their management sector long with the designing
and leading the plan for longer period. This assure a company that incurred and operated
activities does not incur randomly bit as per the along terms design and are pre-planned. Hence,
through the assistance of this, organisation can achieve their business objectives and determined
outcome. Moreover, it is required to analyse intrinsic and external environment in order to meet
the positive and effective outcome in effective manner.
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REFERENCES
Books and Journals:
CHUANG, C.H. and Liao, H.U.I., 2010. Strategic human resource management in service
context: Taking care of business by taking care of employees and customers. Personnel
Psychology. 63(1). pp.153-196.
Doz, Y.L. and Kosonen, M., 2010. Embedding strategic agility: A leadership agenda for
accelerating business model renewal. Long range planning. 43(2). pp.370-382.
Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management.
Sage.
Freeman, R.E., 2010. Strategic management: A stakeholder approach. Cambridge University
Press.
Gooner, R.A., Morgan, N.A. and Perreault Jr, W.D., 2011. Is retail category management worth
the effort (and does a category captain help or hinder)?. Journal of Marketing. 75(5).
pp.18-33.
Greco, M., Cricelli, L. and Grimaldi, M., 2013. A strategic management framework of tangible
and intangible assets. European Management Journal. 31(1). pp.55-66.
Grewal, D., Janakiraman, R. and Tolerico, S., 2010. Strategic online and offline retail pricing: a
review and research agenda. Journal of Interactive Marketing. 24(2) .pp.138-154.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.
Hodgkinson, G.P. and Healey, M.P., 2011. Psychological foundations of dynamic capabilities:
reflexion and reflection in strategic management. Strategic Management Journal.
32(13). pp.1500-1516.
Mudambi, R. and Venzin, M., 2010. The strategic nexus of offshoring and outsourcing decisions.
Journal of Management Studies. 47(8). pp.1510-1533.
Poister, T.H., 2010. The future of strategic planning in the public sector: Linking strategic
management and performance. Public Administration Review. 70(s1).
Swayne, L.E., Duncan, W.J. and Ginter, P.M., 2012. Strategic management of health care
organizations. John Wiley & Sons.
Online:
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Porter's Five Forces. 2014. [Online]. Available through: <http://jtorres2015.wixsite.com/tesla-
team5/porters-5-forces>.
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