Tesla Motors: Strategic Analysis

This assignment provides a comprehensive analysis of Tesla Motors, focusing on its strategic positioning within the electric vehicle market. It delves into Tesla's competitive advantages, such as their exclusive charging infrastructure and technological innovation. The document also examines the company's weaknesses, including high research and development costs and challenges in managing rapid technological advancements. Furthermore, it utilizes frameworks like SWOT analysis and Porter's Five Forces to evaluate Tesla's overall performance and future prospects.

Running Head: Strategic Management
Strategic Management
Tesla Motors

Strategic Management 1
Contents
Introduction.................................................................................................................................................1
External Analysis..........................................................................................................................................1
Internal Analysis..........................................................................................................................................3
Conclusion...................................................................................................................................................5
References...................................................................................................................................................6

Strategic Management 2
Introduction
The report provides a brief overview of the Tesla Motors Company and its external analysis and
internal analysis. The external analysis of the company includes industry competitors, general
environment and opportunities and threats of Tesla whereas internal analysis includes resources
and capabilities information. Further details about the task discussed below:
External Analysis
Porter’s 5 forces
 The company has moderate threat of new entrants in the market as there is high capital
investment in the automobile industry and no or very few economies of scale due to low
production in volume. Apart from that, in order to excel in this business, the
organization’s expert needs to have optimum knowledge and experience about the
products which all companies are incapable to have (Tansel 2015). Thus to which the
company enjoys the power due to low threat of new entry.
 Moderate buyer’s power in the industry shows that the level of competition in the
industry creates a moderate choice for the consumers in terms of price, design and
functionality. Further this power is likely to increase with the increase in sale of
electronic vehicles.
 Supplier’s power in the industry is high as companies producing electronic vehicles are
highly dependent on Tesla (Tansel 2015).
 Threat of substitutes is moderate as there are both hybrid and alternative fuel cars present
in the industry. As the customers present in the industry are highly price sensitive and

Strategic Management 3
will immediately switch if they do not find the product different according to their
expectations.
Present opportunities and threats of Tesla Motors
Opportunities
 As short term government supports the company in consumer incentives and research and
development because of electronic vehicles industry growth stage.
 Also increase is oil and gas prices will also increase the demand of the products of Tesla
in the industry. As the company produces electronic vehicles which runs without oil and
gas due to which with increase in petroleum prices people will buy more EV (Liu, et. al.,
2014).
Threats
 The biggest threat to the company is regarding the doubt in the mind of customers
regarding the price, design and its reliability on the electronic vehicles. as people
normally rely on cars which run on petroleum so the company faces a threat in supplying
the EV due to less demand and confusion in the mind of customers.
 Also the industry is connected with technological implementation in the product so the
company faces difficulty in matching to the advancement present in the industry. Also
many times the innovation impacts negatively on the satisfaction of customers.
 Lastly, lack of global charging infrastructure acts as a drawback for the EV of the
company (Birk 2015). Thus, it is a threat which can reduce the growth of the company
present in the target market.

Strategic Management 4
Competitive environment
Competitors present in the industry are high, as there are many other famous firms are engaged
in producing electronic vehicles in the country. Future it shall be noted that future rivalry is
likely to increase with the implementation of innovative technology driven process in companies.
Ford, Honda etc. are the main competitors of the company present in the market.
Internal Analysis
Talking about internal analysis it shall be noted that the resources and capabilities of Tesla
motors helps the company in fulfilling the core competencies of the organization. Tesla’s core
competency is to improve the motor-inverter and batteries. Licensing the drive propulsion
technology and packaged battery system is another core competency for Tesla.
In order to fulfill the core competencies the company used the powertrain technology and
financing capabilities to achieve the target. The intangible resources of the company include its
goodwill and innovative technology whereas tangible resources include reserves of the company
invested in improving the parts of the vehicles (Linxweiler 2017).
Value Chain Analysis
 Primary activities
 The company owns and operates two manufacturing plants in California and
Nevada. Talking about supply chain, the company has 350 suppliers sourcing
their products internationally and several in-house experts who monitor and
maintain the quality standards and intellectual property.

Strategic Management 5
 Operations: the operations are conducted with high degree of reliability for the
design and quality of product present in the market.
 Distribution: the company directly distributes their product to the online stores.
Further tesla loan program led the customers’ resale their vehicles to tesla at a
reasonable value (Hill 2013).
 Marketing and sales: the key marketing objective of the company is to maximize
the demand of the company and drive the customers to buy technology driven
products. Also building long-term brand awareness is one of the objectives of the
company.
 Services: the company pays stress on the satisfaction level of customers due to
which they employed mobile technicians (Tesla Ranger) company owned service
Centre (service plus) to solve the queries of customers. Supporting activities
 The company is focusing on procurement of product since 2010. They developed
the Model X which aimed to initiate sale from Model S.
 The company heavily relied on technology and its development resulting to which
they collaborated with technicians to create an identified product.
 Currently Tesla is employing around 6000 employees in more than 100 cities.
Also the company continues to recruit new talents to support the growth plan of
Tesla (Ross 2014).
 The general administration of tesla includes personnel and facilities cost. It
includes sales and marketing activities, finance, HRM, IT etc. activities.
Strengths of Tesla

Strategic Management 6
 Exclusive electronic vehicle infrastructure is the biggest strength of tesla
which enables the growth of the company.
 Also low marketing cost helps the company to save funds to create
technological advancement in their products (Radius, 2017).
 High level of confidentiality helps Tesla to grow in the target market without
giving the competitors a hint of their future strategies.
Weakness of Tesla
 The company faces difficulty in retaining profits due to substantial increase in
research and development expenditure. This is also one of the reason due to
which the company faces loss in the market.
Conclusion
Thus, it shall be noted that Tesla motors is gaining the competitive edge by creating
technological value in their product. Also Tesla faces difficultly in managing the innovative
technology as well.

Strategic Management 7
References
Birk, D., 2015. Tesla Motors, Inc. Market Analysis and Definition.
Hill, J, 2013. electronic vehicle sale expected to grow globally to 1.8 miilion by 2023.
Viewed on November 6, 2017 from https://cleantechnica.com/2014/08/12/electric-vehicle-
sales-expected-grow-globally-1-8-million-2023/
Linxweiler, J.A., 2017. Sensitive Analysis of Tesla Motors, Inc.
Liu, R., Wang, H., Xue, J., Xu, X. and Xie, Y., 2014. Capital structure analysis of Tesla
Motors, Inc.
Radius, 2017. Tesla Motors: achieving excellence and innovation overseas. Viewed on
November 6, 2017 from < https://www.radiusworldwide.com/knowledge/case-studies/case-
study-tesla-motors>
Ross, P. 2014. Tesla research budget: spending as fast as we can. Viewed on November 6,
2017 from < https://spectrum.ieee.org/cars-that-think/transportation/advanced-cars/teslas-
research-budget-spending-as-fast-as-we-can-and-a-good-thing-too>
Tansel, A.K., 2015. Analysis of Tesla Motors’ Marketing Communications Strategy.
Tansel, A.K., 2015. Marketing Report on" Tesla Motors".