Tesla Motors' Strategic Plan for Electronic Bicycles

This assignment provides a strategic analysis of Tesla Motors, including a SWOT analysis, PESTEL/PESTLE analysis, five forces analysis, and recommendations for the company to consider. The report identifies potential threats such as competition among automotive companies and material price fluctuations, but also suggests opportunities like developing electronic bicycles to expand the market and increase profitability. A strategic action plan is proposed, including market research, identifying alternatives, feasibility studies, decision-making, and implementation.

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Tesla Motors Strategic Resource Allocation and Planning

STRATEGIC RESOURCE ALLOCATION AND PLANNING 1
Table of Contents
Introduction................................................................................................................................2
Tesla Motors Profile...............................................................................................................2
Environmental Analysis.........................................................................................................2
External Environment........................................................................................................2
Industry Analysis...................................................................................................................5
Tesla Motor’s Five Forces Analysis..................................................................................5
Competitor Analysis...............................................................................................................7
Internal Environment.............................................................................................................7
SWOT Analysis.................................................................................................................7
Strategy Formulation..............................................................................................................8
Strategic Action Plan..............................................................................................................9
Performing Market Research.............................................................................................9
Identifying Alternatives.....................................................................................................9
Feasibility study.................................................................................................................9
Making Decision................................................................................................................9
Implementing New Project................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction
The analysis is an important procedure performed to understand a complex topic by dividing
it into small divisions (The Economic Times, 2018). This report is being prepared in order to
analyze a case study based on Tesla Motors which is based in California. External and
Internal Environment analysis will be discussed to identify the factors that influence the
performance of the company. Along with this, a strategy will be suggested and it's action plan
that can help the company in increasing its profit in the future.
Tesla Motors Profile
Tesla Company was founded in 2013 with the specialization in the manufacturing of solar
panel, lithium-ion battery energy storage energy storage, residential photovoltaic panels, and
electric automotive (Tesla, 2018). Headquarter of the company is based in Palo Alto,
California. The additional products which are included in the product list of the company are
Power pack Batteries and Tesla Power wall, solar roof tiles and solar panels (Vynakov,
Savolova & Skrynnyk, 2016).
Environmental Analysis
External Environment
Technological Trends- Tech is in the root of the business plan of Tesla because it is counted
in the list of the inventors of an electric vehicle. It has created an integrated, comprehensive,
proprietary electric powertrain technology including Lithium-ion cells. Along with this, it
involves high-energy density and unique chemistry, a compact set of software-controlled
power electronics, an actively cooled battery pack, and a high RPM single-gear box
(Kissinger, 2017).

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Source [Tesla Motors Company Overview, summer 2011]
Demographic Trends- Automakers who acquire Tesla Electric vehicle powertrain
components and individuals buying Tesla's Electronic Vehicle are included in the list of the
company's customer list. In the automotive market, there are various options for the
individual customers. Whereas a pure high-performance electric sports car like the Roadster
has no comparable models. The innovative models like Model X or Model S possess a large
number of potential competitors which comprise traditional gasoline-powered and hybrids
vehicles (Hitt, Hoskisson & Ireland, 2013).
Characteristics of Owners by Type

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Source [Melinda, 2017]
Economic Trends- Economic factors include economic growth in the industries of alternative
energy. The cost of utilizing the cars increases because of the increase in the prices of fuel in
the short period. Therefore, the demand for more competent cars has increased. The retrieval
of inflation and GDP rate in many advanced countries has a major influence on the
purchasing power of the consumer (The Sphere Press, 2017).
Political/ Legal Trends- Public issues in the changing global climate is possible to cause-
related variations in the legal and political trends, like government mandates to considerably
reduce the emissions of greenhouse gas. Many countries have previously passed a carbon tax,
which will offer Electric Vehicles of Tesla a competitive advantage for the fossil-fuel–
powered automobiles (Tesla Motors, 2018).
Social-Cultural Trends- Tesla's focus and innovation are determined by high concern
towards the environment. In precise, the impending threat of changes in the global climate
has substantial implications for the increasing acceptance of company’s products. The

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company considers that customers who are environmentally aware and knowledgeable will
start taking more interest in the products which are environment-friendly (Pratap, 2017).
A major part of making a different type of company has been the attention on constructing a
corporate culture that highlights the vision and values adopted by the management team. The
culture Tesla attempts to make begins from kind of workforce it seeks to appoint.
Global Trends- Global changes in the customer demographics are likely to raise the demand
for the vehicles which are emission-neutral. Global growth of population, specifically in
China and India, along with the economic development has raised the worldwide automobiles
demand.
Global economic trends mostly includes changes in the free trade agreements and rates of
currency exchange, while presently it is not of major concern to the Tesla Motors, but it may
define how the company enlarges its sales and operation in Asia, Europe, and in other
countries in the future.
Physical Environment Trends- Tesla Motors always fulfill its corporate social responsibility
by creating different strategies depending on the business nature. For example, the electric
automobiles of the company are seen as the answer to all the negative effects of the cars that
make use of internal combustion engines (Greenspan, 2017).
Industry Analysis
Tesla Motor’s Five Forces Analysis
Competitive rivalry
Tesla Motors functions in an extremely competitive market. In this matter, the external
factor’s forces are accountable for the competitive rivalry’s strong force which is as follows:

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There are few firms which are functioning in the market of automotive. This factor decreases
the effect of competition in Tesla. However, these types of firms are aggressive in the
promotion and innovation of their products. This increases the effect of competition on Tesla
(Kissinger, 2017).
Bargaining Power of Customers
The customers of the company are considered as the direct factor that defines the sales
revenues of the company. The low switching cost decreases the barriers to the purchasing
tendency of the Tesla customer from other providers. On the other hand, the accessibility of
the substitutes is very limited which limits the bargaining power of the customers against
Tesla.
Bargaining Power of Suppliers
The partial business of Tesla is depending on its supplier’s reliability. Low level of forward
integration is possessed by the suppliers of Tesla. This factor reflects the supplier’s limited
control in the sales and distribution of their products.
Threats of Substitutes
Tesla Motor comes across with the impacts of substitutes on the environment of the
automotive industry. The low cost of switching allow substitutes, like public conveyance, to
effortlessly attract customers. But, the moderate obtainability of substitutes limits such
influence of suppliers.
Threats of New Entrants
A new entry of firms in the market affects the environment of automotive industry, which
defines the Tesla’s performance. The business of Tesla Motors is very difficult to compete
with, specifically due to the high cost of the development of the brand. For Instance, Tesla

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has already made its strong brand image in the market which is difficult for new entrants to
match.
Competitor Analysis
The market of the automobile industry is highly competitive, and many auto manufacturers
have a major existence in abroad and the United States. Companies like Daimler and Hyundai
have still to field an Electric vehicle but have declared their plans to work in near future.
Various manufacturers are presenting hybrid vehicles; however, these companies have
entered late in the market of EV segment. Whereas pure players in the segment of EV such as
Tesla are comparatively rare due to the significant need for the capital requirement. The
range of products offered by these conventional auto manufacturers reflects that the
competition will increase in this market segment in coming future.
Internal Environment
SWOT Analysis
Strength- Tesla is famous for its innovation, particularly for establishing the first fully
electronic sports cars in the world. This strategic factor is considered as company’s strength
which permits the company to cultivate profitable and competitive products (Kissingger,
2018).
Weaknesses- The market share of Tesla is very limited. For instance, most of the revenue that
company earns is from United State and it has a limited presence in the market of China.
Opportunity- In association with the Tesla's weaknesses, it should focus on the opportunity
of expanding global sales. This business opportunity depends on the countries substantial
economic growth where the company has limited or no presence in the market. For instance,

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the revenue of the company can be increased by the expansion of the automotive market in
Asia.
Threat- The competition among the automotive companies is high. This strategic factor gives
a threat to Tesla, considering present efforts of various companies in creating EV. The
changes in the prices of material are also a threat to the company.
Strategy Formulation
Tesla Motors possess all the qualities required for becoming successful in the market in the
years to come. But, as acknowledged in the SWOT analysis, there are numerous concerns
that the company must focus in order to enhance its profitability and maintain its
competitiveness.
Tesla Motors should go for inventing new product such as Electronic Bicycles. It has been
recommended because nowadays people are more focused towards their health and even
prefer driving bicycles.

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Strategic Action Plan
Performing Market Research- At this stage company will perform market research and will
identify the requirement of the customers.
Identifying Alternatives- At this stage, various alternatives will be recognized by the
company which can provide best results.
Feasibility study- All the alternatives will be checked and the most appropriate option will
be shortlisted which can be profitable and can be manufactured at less cost.
Making Decision- At this stage, one best alternative will be selected by the company i.e.
electronic bicycles.
Implementing New Project- Implementation and manufacturing of the Electronic Bicycle
will be done.
Performing
Market
Research
Identifying
Alternatives
Feasibility
Study
Making
Decision
Implementing
New Porject

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Conclusion
Tesla Motors is a well-known company in the automotive vehicle's market which reflects that
the above-suggested strategy of manufacturing Electronic bicycle will definitely help the
company in increasing its market share and profit. Along with this, it will help the company
in expanding its market in the various parts of the world.

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References
Greenspan, R. (2017). Tesla Motors, Inc. Corporate Social Responsibility, Stakeholders.
Retrieved from: http://panmore.com/tesla-motors-inc-stakeholders-corporate-social-
responsibility
Hitt, M.A., Hoskisson, R.E., & Ireland, R.D. (2013). Strategic Management: Competitiveness
and Globalisation. U.S: Cengage Learning.
Kissinger, D. (2017). Tesla Motors, Inc. PESTEL/PESTLE Analysis & Recommendations.
Retrieved from: http://panmore.com/tesla-motors-inc-pestel-pestle-analysis-
recommendations
Kissinger, D. (2017). Tesla Motors, Inc.’s Five Forces Analysis & Recommendations
(Porter’s Model). Retrieved from: http://panmore.com/tesla-motors-inc-five-forces-
analysis-recommendations-porters-model
Kissingger, D. (2018). Tesla Inc. SWOT Analysis & Recommendations. Retrieved from:
http://panmore.com/tesla-motors-inc-swot-analysis-recommendations
Melinda, V. (2017). Tesla S/X/3 costs & demographic study. Retrieved from:
https://model3ownersclub.com/threads/tesla-s-x-3-costs-demographic-study.2429/
Pratap, A. (2017). Tesla PESTEL/PESTLE Analysis. Retrieved from:
https://www.cheshnotes.com/2017/10/tesla-pestelpestle-analysis/
Tesla Motors. (2018). Pestel And Vrine Analysis. Retrieved from:
https://teslaresearchproject.weebly.com/internal-external-analysis.html
Tesla. (2018). About Tesla. Retrieved from: https://www.tesla.com/about

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The Economic Times. (2018). Definition of 'Analysis'. Retrieved from:
https://economictimes.indiatimes.com/definition/analysis
The Sphere Press. (2017). TESLA Motors – External Analysis Using PESTLE – The
SpherePress. Retrieved from: http://thespherepress.com/tesla-motors-external-
analysis-pestle/
Vynakov, O.F., Savolova, E.V., & Skrynnyk, A.I. (2016). Modern Electric Cars Of Tesla
Motors Company. Automation of technological and business-processes, 8(2), 9-18.