Business Strategies of Tesla Motors

This document discusses the business strategies of Tesla Motors, including the impact of macro environment, assessment of internal environment and capabilities, and evaluation using Porter's 5 Force Model.

BUSINESS STRATEGIES
OF TESLA MOTORS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
LO 1 – ANALYSE THE IMPACT AND INFLUENCE WHICH THE MACRO
ENVIRONMENT HAS ON AN ORGANIZATION AND ITS BUSINESS STRATEGIES....4
LO 2 – ASSESS THE ORGANIZATION'S INTERNAL ENVIRONMENT AND
CAPABILITIES..........................................................................................................................7
LO 3 – EVALUATE AND APPLY THE OUTCOMES OF AN ANALYSIS USING
PORTER'S 5 FORCE MODEL................................................................................................10
LO 4 – APPLY MODELS, THEORIES AND CONCEPT TO ASSETS WITH THE
UNDERSTANDING AND INTERPRETATION OF STRATEGIC DIRECTIONS
AVAILABLE TO AN ORGANIZATION...............................................................................11
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
The business strategies are those strategies which are required to build a strong business
for the company. These business strategies includes many strategies such as marketing strategies,
financial strategies, HR policies and procedures, Workplace Conditions etc. These business
strategies are made to attract the consumers towards the product and services the organization is
producing. Every organization wants to achieve their goals and targets in the minimum time
periods. To achieve these goals and targets, many business strategies are needed in the business.
The business strategies are made by the employees of the organization working in different
sectors. While making the strategies for the successful running of the business, many
organization takes the opinion of their share holders and stakeholder also.
The Tesla motors is an automotive company which was founded on 1 July 2003. The
company was founded by 5 young engineers Martin Eberhard, Marc Tarpening, Elon Musk, J.B.
Straubel, Lan Wright. The company have its headquarter in the Palo Alto, California, US. The
companies objective is to make electric cars which will run by electricity. This will reduces the
use of petrol in the world by which the environmental pollution will be decreased. These cars
will run by the solar energy produced by the sun.

MAIN BODY
LO 1 – ANALYSE THE IMPACT AND INFLUENCE WHICH THE
MACRO ENVIRONMENT HAS ON AN ORGANIZATION AND ITS
BUSINESS STRATEGIES
P 1
The Tesla Motors was introduced in the year 2003 by five young engineering graduates.
The Tesla Motors was the car manufacturing company which was having an objective to reduce
the pollution in the environment and provide fast and more fun to drive cars to the customers.
The vision, mission and core values of the company were as follows:
 Vision
The vision of the Tesla Motors was to see how the electric vehicles can helps in reduction
of the pollution in the environment(van Bommel, K., 2018.). The company wants to create the
most compelling cars which can bring the world's transition into the electric vehicles.
 Mission
The mission of the company was to accelerate the world's transition to sustainable
energy. The company wants to use the green energies such as energies generate from sunlight,
wind, rain, tides, planets and geothermal heat. The company's mission was to accelerate the
global transition in the world(Miklian, J. and Rettberg, A., 2017.). The communities of the world
should be improved and the company will come beyond the expectations of their consumers.
 Core values
The core values of the company was to do the best by taking the risk, environmental
consciousness, respect and constant learning. The company wants to use the latest technologies
and innovations by taking the risk and responsibilities to work hard an produce the best product
the customers.
The PESTLE ANALYSIS AND SWOT ANALYSIS of the Tesla are as follows:
PASTEL ANALYSIS OF TESLA
 Political

The company received many financial helps from the government. There was an political
stability in the market for automobile industry. The government of US has supported the Tesla
because the company was producing the environmental friendly products and the development of
hybrid and electric vehicles were always encouraged by the government.
 Economic
The global economic growth has been developed because of the innovation done bu
Tesla. The economic growth was expected to remain at the rate of 3% in the year 2019. The
economic factor which effected the Tesla market was the decrease in cost of battery used in the
vehicle. Te materials cost was also declining at high rate which was a good news for Tesla. The
lower material cost will be given the customers large benefits at low cost.
 Social
The social factors which affected the Tesla were the social status of the customers which
is judged by the car they own. The social status of the customers can be increased by the use of
electric cars.
 Technological
Technology helped the company in managing the competitive advantage in the market. It
was expected that in the future, the Tesla will provide driver less technology to their customers.
 Environmental
The company build a very strong brand image by introducing the environmental friendly
car for the world. The sustainability is maintained and the supply chain of the company became
more energy efficient(Gangotra, A. and Shankar., 2016).
 Legal
The Tesla is facing many law suits, investigation and regulatory issues. The patent rights and
energy consumption issue were the major legal problems faced the company.
SWOT ANALYSIS OF TESLA
 Strength
The strength of the Tesla is that the it is an top employer company. In automotive market,
the company leads on the first position. The company produces the best electronic cars and it
dominates the electric sale of vehicle in US. The company is an cross-sell diversified company
which produces the innovative products(Alva, and et.al., 2018).
 Weakness

The top weakness of the company is that it has the manufacturing complications. The
demand of the products of Tesla are very high and the company is not able to meet the customer
demand. The production of the company is also not high in volume and the company is facing
the shortage of battery in the manufacturing department of the company.
 Opportunities
The opportunities of the Tesla are that the in the market, their sales expansion is
untapped. The cars produced by the company is very cheap and the maintenance cost of the car is
also not very high. The batteries used in the manufacturing of the product are in house made
batteries. The battery used in the cars are made by the employees of the production
department(Ambler,and et.al., 2016).
 Threats
The threats of the company are that the liabilities of the product of the company claims
the failure of technologies. The company have an extensive competition and many times their
products are defective.
Critical factors impacts such as economic factor lessening within the cost of battery
used in the vehicle. It will provide large benefits to the customers at low cost. Technological
factors also impact as Tesla provides drive less cars that reduces the accidents and hence
people will more attract such kinds of vehicles also they also give less pollution cars which is
beneficial to the environment and people attract towards this type of cars as young generation
are targeted here .
LO 2 – ASSESS THE ORGANIZATION'S INTERNAL ENVIRONMENT AND
CAPABILITIES
P 2
MCKINNEY 7S MODEL IN CONTEXT OF TESLA
 Strategies
The strategies adopted by the Tesla were to focus on the production of electronic cars
which will help in the reduction of the pollution in the environment and will meet the
sustainability of environment. The company used low cost production startegy to attract the
customers towards their product.
 Structure

It is not easy to describe the organizational structure of Tesla. The company is structured
into a unique company which do not have large competitors in the market. As such the Tesla
don't have any organizational structure but it works for the operations of electronic automakers
which is further divided into energy, engineering, production, legal, HR, Finance and marketing.
 System
The employee's recruitment and selection process, team development, training an
development sessions, business intelligence system, customer management relationship,
transaction processing system etc. are the done in a systematic manner in the company.
 Skills
As the company is all about making innovative products in the automobile the company
was recruiting only engineering graduates and those candidates who are highly skilled and have
all the technical knowledge. The skills required in the company will be based on the experience
in the saving of environment from harmful factors.
 Staff
The staff of the organization was unsatisfied because of the less amount of profit earned
by them. As the company was selling their product at low cost, the staff was also not getting a
good amount of salaries and incentives. Due to this many employees of the Tesla were lay ed
offed and only those employees who were having high skills and knowledge about the technical
things were recruited in the organization.
 Style
The style of the Tesla cars is much different from the other cars and automobiles in the
market. The shape of the Tesla cars is different in all the models. The Tesla is having the low
designed lines which are also made on the front side of jaguar.
 Shared Values
The company was having the literature of CSR and it was highly extensive and largly
inconclusive in the nature. The companies shared values are constituted on the one possible
answer to a series of societies concern out of many theories available in the literature.
The strength of the Tesla is to make the electronic cars and hence organization structure
of Tesla works on the works for the operations of electronic automakers divided into energy
production and engineering. The internal capabilities of the Tesla are highly innovates so that
considers its strength while making innovates products Tesla for not having skilled labors who

perform such electronic operations so its affects on operations of the firm and hence the results in
the Complications in the manufacturing process.
VRIO / VRIN ANALYSIS OF TESLA
 Value
The company is having the co – efficient production process. The customers of the Tesla
are experienced and have encouraged leanings about the Tesla brand. The external environment
of the organization neutralize the threats. It creates an database to improve the autopilot feature.
 Rarity
The company is producing extremely rare products and it does not even utilize the
dealerships from outside of the organization. It is an only manufacturing company which solely
focuses on the production of E V's.
 Imitability
The factory took time to build and the process of building the factory was very costly.
This was done to avoid the duplicate factory. This element can be imitated but it may take large
amount of time and money. The network can be made only at the high cost to competition.
 Organization
The data is currently being collected and used to advance the autopilot feature for all the
cars produced in the organization. The Tesla vehicles were the only company which were using
the charging networks. The company Tesla is having an low pressured environment which is
currently used to educate consumers and provided an opportunity for the public to know more
about Tesla. The resources of the company were exploited in the current integration production
process(Kanieski da Silva, and et.al., 2016).
PORTER'S VALUE CHAIN ANALYSIS
 Inbound Logistics
It includes the storage of raw materials to for the manufacturing of the electric vehicles,
solar panels and energy storage system for the organization. The raw materials such as
aluminum, cobalt copper, steel, lithium and nickel have scarcity in the availability of these
resources.
 Operations
The Tesla operated in the two major sectors and they are automotive sector and energy
generation and storage sector. The automotive operations were made for the development of

design, manufacturing, electric vehicles sales. The comapnyb produced many models of the
electric cars in the year 2017.
 Outbound Logistics
The outbound logistics of the Tesla includes the warehousing activities and distribution
of the electric vehicles, solar panels and storage system produced by the organization. The
organization was making a direct sales of the electronic vehicles to their customers. There were
two reasons for the outbound logistics of the Tesla. First was the taking the high demand into
account for the electric vehicles and the initiate of doing direct sales decreased the delivery time
of the vehicles to their customers. Second was the direct sales of the cars kept the costs low for
future also(Parrilli, M.D. and Fitjar, R.D., 2016).
 Marketing and Sales
The company has adopted the “word of mouth” strategy for the expansion of their
business. The company believed that the word of mouth can bring more customers to the them
rather than doing digital marketing of the companies products. The company found this strategy
beneficial to attract the media towards their products. The company was also engaged in the sales
of used cars of the their company and other companies cars. The company was making changes
in the used cars and then they were selling them under their brand name.
 Services
The company has a separate section for the customer service. This sector provides the customers
with solution of all of their problems. In Tesla, It was found that the customer service of the
company was very poor. The customers have to wait for many days to get repairing of the
services about which they had complained.
LO 3 – EVALUATE AND APPLY THE OUTCOMES OF AN ANALYSIS USING
PORTER'S 5 FORCE MODEL
P 3
PORTER'S 5 FORCE MODEL IN TESLA
 Competitive Rivalry or competition with Tesla (Strong Force)
This influence the competition on the energy solutions and automotive of the industry
environment. The factors which are responsible for the strong force of competitive rivalry were
small number of firms which was an weak force, High aggressiveness of firms which was an
strong force and low switching costs which was also a strong force.

 Bargaining Power of Tesla's Customers/Buyers (Moderate Force)
The bargaining power of the customers of the Tesla was directly determining the companies
sales revenue. The external factors which effected the bargaining power of the customers were
low switching costs which had an strong force, moderate substitute availability which had an
moderate force and the lat is low volume of purchases which had an weak force(Doh, and et.al.,
2015.).
 Bargaining Power Of Tesla's Suppliers (Moderate Force)
The bargaining power of the suppliers of Tesla showed that how the suppliers were shaping the
environment of the industry by influencing the availability of the materials needed by the firm.
The bargaining power of the suppliers were effected by the three factors and they were moderate
forward integration which had an moderate force in the environment, moderate size of suppliers
which also has an moderate force on the environment and the last one was moderate supply level
which also had moderate force on the environment(Ambler,and et.al., 2016.).
 Threat of substitutes or Substitution (Moderate Force)
The company experienced many impacts of the automotive and energy solution substitutes. The
factors that effected the threats of substitutes or substitution were the low switching cost which
had an strong force, the moderate substitute availability which had an moderate force and the
moderate performance of substitute which also had an moderate force in the market.
 Threat of New Entrant or New Entry (Weak Force)
The company gets effected by the new entrant and the competitor firms a lot. The factors by
which the company gets effected are the high cost of brand development which had an weak
force , The high cost of doing the business which also had an weak force and high economies of
scale which also had weak force in the market(Verma, P. and Sharma., 2019).
STAKEHOLDER'S MATRIX TO ANALYSIS MACRO ENVIRONMENTAL FACTOR
AND THEIR INFLUENCE OB TESLA
 Communities
The community influence is there because the actual designed corporate image of the
company. The stakeholder of the company are protecting the environment. It was announced by
owners of the that the other parties and organizations can use the patents of the company which
will effect in the production of more and more innovative products.
 Customers

The customers are influenced by the Tesla's income and they were concerned about the
product quality and prices of the products. To receive complete satisfaction from the customers
of Tesla, the company is working hard by reducing the cost of batteries. The company started
making their own batteries rather than purchasing it from Panasonic.
 Employees
The performance of the employees of Tesla were directly effecting the companies
profit . So the company provided a good competitive salaries and trainning sessions for the
growth and development of the employees.
 Investors/Shareholders
The investors and shareholders were always concerned about the companies growth and
profitability. The growth of Tesla's business was going very high and with that correspondence,
the investment done by the investor's were safe in the business.
 Government
The company was dependent on the actions taken by the government. The economic
growth of the state was getting a great contribution from the stake holder's group because the
government of US was concerned about the legal actions taken against the company and
companies compliance(Longoni, A. and Cagliano, R., 2015).
Ansoff matrix is used to determine the growth of the Tesla. It determines by focusing
new or current products. Tesla works on the product development as they offered their new
vehicles to the existing market, also here products can be modified that enhances performance
quality.
LO 4 – APPLY MODELS, THEORIES AND CONCEPT TO ASSETS WITH THE
UNDERSTANDING AND INTERPRETATION OF STRATEGIC DIRECTIONS
AVAILABLE TO AN ORGANIZATION
P 4
VISION The vision of the Tesla Motors was to see how
the electric vehicles can helps in reduction of
the pollution in the environment. The company
wants to create the most compelling cars which
can bring the world's transition into the electric
vehicles(Latiff, and et.al., 2015.).

MISSION The mission of the company was to accelerate
the world's transition to sustainable energy.
The company wants to use the green energies
such as energies generate from sunlight, wind,
rain, tides, planets and geothermal heat. The
company's mission was to accelerate the global
transition in the world. The communities of the
world should be improved and the company
will come beyond the expectations of their
consumers(Harrigan, K.R., 2017).
OBJECTIVES There are 3 major objectives of the Tesla and
they are as follows:
 Primary Objectives
The primary objectives of the company
includes the generation of demand and driving
the sales of electric cars up in the market. The
building of long term awareness about the
brand “Tesla” and managing the corporate
reputations of the company. The customer
loyalty and their referrals has managed the
customer base and managed the existing
customers of the company(Ross, and et.al.,
2016).
 Secondary Objectives
The secondary objective of the Tesla is to
increase its market share from 3% to 5%. The
spreading of education among the customers of
the Tesla so that they can easily understand the
goals and objectives of the company which
will help them in their future. The increase in
the waiting list of the companies model S and

model X from the production from 10000 units
of cars to 20000 units of cars.
 Overarching Objectives
The overarching objectives of the Tesla was to
empower the women towards getting
employment, inspiring the employees by
giving the examples of great personality who
have achieved success by their own hard work
so that the employees of the organization
remains motivated towards their work and
spreading education among the children's who
are not having enough money to go to the
school.
STRATEGIES The strategies followed by the company was
the Ansoff's Matrix. The ansoff's matrix had 4
strategies used by the Tesla and they were as
follows:
 Market Penetration
This strategy includes the sales of existing
products into existing markets. The Tesla
focused on selling the model S, model 3 and
model X INTO the market.
 Product Development
This included the new product development
and targeting its sales in the existing markets.
The company rarely innovates the new product
but they are working in innovation of semi
trucks and pick up trucks which they are going
to launch in the market.
 Market Development
It includes the finding of new markets for the

existing products. The entry in the Indian
market will be the market development for the
company.
 Diversification
In this the company develops the new product
for the market. The Tesla is expected to deliver
alternate fuel vehicles for the upcoming time.
TACTICS The tactics of Tesla include 4 P' s of marketing
mix and they are as follows:
 Product
The products of the Tesla includes the
automobiles, electric vehicle power train
components, batteries and energy storage and
solar panels.
 Place
The places targeted by the Tesla companies
were company-owned stores and galleries,
official company website, company -owned
service centres and charging station.
 Promotion
The promotion of the Tesla's products were
done by the viral marketing, personal selling,
public relations, sales promotions and direct
marketing.
 Price
The pricing strategies followed by the
company were premium pricing strategy and
market oriented pricing.
IMPLEMENTATION / CONTROL The company implemented key performance
indicator (KPI) and balance score card. The

KPI of the Tesla included the organizational
performance management and performance
measures, communicating performance to
stakeholders, risk management, quality
management and improvement, financial
performance and the customers and client
perspectives. The balance score card of Tesla
includes the financial sector which has gown
by 133.98%. The customers were achieving
satisfaction, acquisition, retention and
profitability in the organization. The internal
business process was to produce the products
at low cost and the learning and innovations we
get from this is the empowerment of sales and
customer services(Parés, M., 2015).
EVALUATION The evaluation of Tesla includes the bench
marking. In this the new market participants
and new entries made in the market will
emerge in an industry they will dispute the
technology and the entire business landscape.
The company has started its began towards the
transformation and will disrupt the
technologies of the company. The major
production of Tesla and its R&D are conducted
in house of the organization by the employees
and suppliers recruited by them(Smink, and
et.al., 2015).
Tesla uses the produce development strategies
as it beneficial for the firm which enhances the
performance quality of the existing product and
also tesla offered their new vehicles to the

existing market that is innovative vehicles that
enhances its branding and reputation to the
international marketing
CONCLUSION
We can conclude the report by discussing about the different analysis made in the
company by doing its SWOT, PESTLE, PORTER'S 5 MODEL and PORTER'S 5 MODEL
VALUE CHAIN ANALYSIS in the report. The company is performing in the different sectors
in which they were producing the vehicles which runs by electricity. The company entered into
the market where the customers were ready to pay any price for this innovative product. The
company was also renovating the use cars of the different companies and selling them under
their companies banner. The Tesla was not having many competitors in the market which will
give them high competition and they were the only leading company in the electric vehicle
producing company. The company faced problems like the failure of some new innovative
technologies made by the owners of the company. The manufacturing cost of the product was
also very low which directly effected on the price of the product. As the selling price of the

product was low, the employees working in the organization were not provided with good
salaries and incentives.
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