Tesla Case Strategic Management

This document provides an analysis of Tesla's strengths, weaknesses, opportunities, and threats in the electric car industry. It includes a discussion of Porter's Five Forces and strategy implications for Tesla's future success.

Tesla Case Strategic
Management
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Table of Contents
Porter five force...........................................................................................................................3
Strategy implications...................................................................................................................4
Will tesla be able to not survive but thrive in coming few years................................................5
REFERENCES................................................................................................................................6
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MAIN BODY
Swot analysis of Tesla
Strength- Tesla is considered as one of the leading firm within the electric cars industry.
First and foremost, Tesla's strength is to instead of selling cars by dealership, Firms sell all of
their cars directly to the consumers. Due to this Tesla sells of their cars at very low prices as their
vehicles are not marked up through dealership. In addition to this firm also a leading competitor
within self-driving Technology that provides a competitive advantage over the other electric
vehicles (Akakpo and Akpabot, 2019).
Weaknesses- Firms has several weaknesses as it requires to be overcome. As due to the large
debt firm has a large debt because of the heavy capital expenditure. It will also hinder the future
investments within firm. Another weakness is that all of their vehicles are produced within one
facility within California. It creates an additional cost when vehicles are sold within China and
Europe as costumers have to pay for import and shipping taxes.
Opportunities- In order to make electric cars more affordable the electric car market is
consistently growing as costumers more conscious about environment as well as technology.
Tesla is well-established firm within the markets of United States as well as having a growing
presence both in china and Europe.
Threats- The electric vehicles of Tesla are expensive in order to produce and outcomes comes at
the high price tag. As several established firms starts to sell electric cars at the lowest price as
compare to Tesla. Another Threat for the firm is American Car Manufacture that could cause
several problems when trying in to grow within the foreign markets as costumers prefer vehicles
that are made within their native country (Bilbeisi and Kesse, 2017).
Porter five force
Threat of new entrant- Getting started with electric vehicles industry is not considered as a
easy task as Tesla took it over 15 years as well as billions of dollars to get the firm where it is
now. The Biggest threats of Tesla of new entrants such as Fiat-Chrysler, GM, Ford, Audi as well
as other car manufacturing firms deciding to take entry to the market as nowadays electric cars
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becomes feasible and more popular. Within the Germany alone it will invest over $46 billion
within electric car Technologies over the next four years. As these are the threats consider as to
be medium (Tesla strategic management, 2019).
Bargaining power of consumers- Due to various factors the power of electric buyers is really
high. For starters, there can be more options available for the electric car for the costumers in
order to purchase creating competition within the relevant field (Fisher. and McCabe, 2019). Due
to the high process of the car the buyers purchase car and use only at a time because of this
someone who are just buy a car from a firm is not going to buy another car at very soon. As new
car firms have started producing the electric cars at very low cost as compare to Tesla as a
pressure from consumers has been placed to Tesla in order to produce cars at very low prize so
that easily compete with new entrants.
Threat of Substitution- Nowadays there are several modes of transportation as the closest
alternative of electric vehicle can be gas powered and hybrid vehicles. The vehicles from which
based on the energy sources has little or no differences from an electric vehicle compare to the
gas one. Due to various substitutions the threats of the substitution is also very high.
Bargaining power of Supplier- Tesla works with several suppliers in order to produce its
vehicles. Within the electric car firms Tesla control quality and quantity of the parts that are
buyers from suppliers (Teece, 2018). Within the year 2018, firm also put pressures on suppliers
in order to ask them to refund Tesla for pasty paymentsS that are made on parts as well as to
negotiate lower prices for the Future reference. Suppliers are also well-established within supply
chain as well as parts are consumer produced for the manufacture.
Industry Rivalry- There is not so high competition within the car industry as overall electric
car industry is considered as medium one. In addition to this, major car firms such as GM, the
sales of the car are small as compare to gas power vehicles. Firms like GM are also just breaking
into the vehicles industry but at the same time not as wholly such as Tesla Currently is.
Strategy implications
Tesla requires continuing refine as well as adapt its strategy if the firm needs to be
successful within the long run of the electric vehicle industry. In order to become more
profitable, first one is Tesla must focus on achieving economies of scale. For this, the firm
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requires to opening factories and quicken their pace to building within both European and
Chinese markets. The second alternative is to reach more consumers Tesla should focus more on
Hybrid vehicle that can uses the combination of the power sources in order to run vehicles.
These hybrid vehicles also becoming more popular with costumers. Tesla has competitive
advantage such as autopilot features, advanced battery technology. Third alternative is to that
Tesla should replace Musk as CEO as Musk's consistently working strategy for firm has created
several issues within the past (Välikangas, 2018). As Tesla needs steadier leader. As according to
this alternative Musk also works within Tesla but focuses on production and Business
development while at the same time new CEO focuses on strategy as well as administration of
firm.
Will tesla be able to not survive but thrive in coming few years
Within the auto sector, there are several trades off that consumers are likely to be
compromise. For purchasers of cars who are opting for low price will sacrifice their performance
as within the case of Toyota Camry. Consumers of electric vehicles have pretty much eliminated
these trade off as within the case of Porsche Taycan. The electric vehicles of Tesla have pretty
much reduced these trades off over the years.
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REFERENCES
Books and journals
Akakpo, A. and Akpabot, S., 2019. Foresight, organization policies and management strategies
in electric vehicle technology advances at Tesla. In Futures Thinking and
Organizational Policy (pp. 57-69). Palgrave Macmillan, Cham.
Bilbeisi, K.M. and Kesse, M., 2017. Tesla: A successful entrepreneurship strategy. Morrow, GA:
Clayton State University.
Fisher, M. and McCabe, M.B., 2019. Tesla: Accelerating to Market. Journal of Strategic
Management Education, 15.
Teece, D.J., 2018. Tesla and the reshaping of the auto industry. Management and Organization
Review, 14(3), pp.501-512.
Välikangas, L., 2018. Forum on Tesla and the global automotive industry. Management and
Organization Review, 14(3), pp.467-470.
Online
Tesla strategic management, 2019. [online] Available through :<
https://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1165&context=honorstheses>
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