Strategic Management Essay: Analyzing Tesla's Corporate Strategy, 2019

This essay provides a comprehensive strategic management analysis of Tesla Motors, now Tesla, Inc., focusing on its corporate strategy and market reactions. The essay begins by outlining Tesla's business operations and formulates a corporate-level strategy statement. It then delves into the company's strategic position, choices, and actions using the sixteen fundamental questions of strategy, examining macro-environmental opportunities, industry forces, stakeholder alignment, and the company's mission and culture. The analysis further explores Tesla's business units, market penetration strategies, innovation, and international competition. Finally, the essay assesses the market's reaction to Tesla's strategy, evaluating its success based on factors such as market share growth and innovation, and concludes with an overview of Tesla's impact on the automotive industry and its future sustainability.

Running Head: TESLA 0
STRATEGIC MANAGEMENT

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Table of Contents
Introduction................................................................................................................................2
Question 1..................................................................................................................................2
Question 2..................................................................................................................................3
Question 3..................................................................................................................................5
Conclusion..................................................................................................................................5
References..................................................................................................................................6

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Introduction
Tesla Motors designs and manufacturers electric vehicles and bringing new ways of
transportation. Tesla facility is located at California focusing its assembly and manufacturing
operations. Currently, Tesla has 45,000 plus employees and their income for the last quarter
in 2019 was $4.541B, a 33.23% rise annually (macrotrends.net, 2019).
Tesla operates 200 stores plus stores all over the world and one of its finest electric four-
wheeler i.e. Model S was founded by the company in 2012. This report outlines the
company’s strategic position and action including the market reaction to Tesla strategy. It
will help the management to develop relevant strategic management for the purpose of future
direction.
Question 1
Tesla mission is to speed up the world transition to sustainable energy. The company also
targeting luxury market segmentation by producing electric vehicle and endeavour in creating
innovation in relation to continuous innovation. In 2008, the enterprise come up with its first
car, the completely electric Roadster. It was formed no tailpipe emissions as it did not use an
internal combustion engine (Armand and Tarascon, 2008). However, the company, later on,
stopped manufacturing of Roadster in 2012 and emphasis on its new Model S sedan. At the
beginning of 2012, the company also built several stations termed Superchargers in the
Europe and United States and later on those stations was known as Tesla Stations. The
enterprise company also produce solar energy products that can be used in both home and
businesses.
Tesla corporate strategy statement is related to creation of most compelling car enterprise of
the 21st century by pushing the world transition to electric vehicles. In order to achieve this,
Tesla is making various substantial incremental improvements and tweaks to the traditional
way and developing broad ways to their business model. In relation with growth strategy,
Tesla Motors has a concentric diversification and market penetration strategy and they are
adopting this strategy for recently purchased Solar City. The company also formulate
strategies to integrate energy generation and storage. Tesla Motors already manufacturers

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batteries to create energy to power a home and battery on a commercial scale (Wesseling et
al, 2014). In relation with market penetration, the company is using Model S and it is leading
US luxury sedans grabbing 32% of the market share. This strategy statement can be said to
well-developed representing Tesla long term strategic direction and indicates what is critical
or important for the organisation strategy.
Question 2
The plan of Tesla is to enter at the high end of the market where consumers are arranged to
pay a superior price and drive down market with each successive model (Wesseling et al,
2014). Various fundamental questions set out in the strategy can be divided into three
categories i.e. strategic position, strategic choices and strategic actions.
In relation with strategic positions, Tesla macro environmental opportunities include
increased attention towards reducing fossil fuel consumption and moves towards more
renewable sources so that to eliminate risk in the opportunities (Chan et al, 2009). The threat
for the company includes limited supplier’s network base (that makes bargaining power of
supplier high) and huge competition in automobile market. With rise of electric vehicle
segment and consumer preferences, various big technology and automobile companies are
also investing such as BMW, Audi, Google and Amazon. This requires Tesla to attain a
competitive edge in the market with any one factor.
Tesla also manages industry forces by understanding underlying levers of profitability in
automobile industry. For instance, by innovating new products, Tesla can tackle the threat of
new entrants. They can also bring sustainable differentiation to control rivalry among the
existing competitors. In addition, the industry forces can be managed effectively by Tesla
through identification of game changing trends at an early stage and can promptly respond to
exploit the evolving opportunity (Sortomme and El-Sharkawi, 2010).
Tesla corporate culture aligns stakeholders with company strategic objective and leverages
them to create a sustainable transportation network. One of the main interest of the
communities as an important stakeholder is environment protection. When making CSR
policies, the company consider all stakeholders as a crucial headway factor for the business.

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Tesla purpose also clearly states with its mission to speed up the world transition to
sustainable energy. The company culture also fits with the strategy with empowering its
workforce to discover ideal solutions that make the business stand out in the automotive
industry.
Considering strategic choices, Tesla has different business units such as electric vehicles,
batteries, products for offices and charging stations (Yilmaz and Krein, 2012). Most of the
resources are same and shares from one business unit to another for attaining competitive
advantage. The business portfolio of Tesla also includes various other products other than
electric cars such as lifestyle products such as wireless phone charger, surfboards, branded
clothing, batteries and so forth. This also the company to cater to different market segments
needs and the strategy pointed out to achieve economy of scale and gain brand awareness.
Tesla can also compete internationally by creating its footprint to developing countries where
there is an abundance of resources and include different income class people. The best
countries can be recommended as India and China due to their rising economy and GDP. It is
also true that Tesla is innovating as the business is keeping its technology secretly protected
from competitors as the purpose of company is to change the world, not to make money. The
Boston Consulting Group’s 13th annual report also classified Tesla as 9th in its ranking while
defining the global most innovative company (teslarati.com, 2019). However, for further
expansion, Tesla can do joint venture or acquisition rather than going alone as it helps the
company to attain new technology and market insights about customer trends and choices.
In relation with strategic actions, The Tesla strategy can be called as suitable, acceptable and
feasible. For instance, Elon Musk, CEO of Tesla has made a bold bet that the automotive
sector can move faster than anybody supposed promising (Lovins, 2013). Tesla strategy is
aggressive and but has run. The diversification strategy of Tesla is highly favourable showing
standard car market in decline and demand for eco-friendly vehicles. As Tesla using its own
core competencies in new areas, their strategy also appears to be consistent. The strategy-
making process includes some series of steps starting from clarifying the vision, collecting
and analysing information, formulation of strategy implementation and evaluation and
control. To start with the formulation Tesla Motors Inc specified its vision and mission along
with the objectives and goals. Their strategy is also implemented by building a sports car. In
last, the strategy is evaluated and reviewed periodically. The company also have a functional

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organisation structure and has a structural group of employees for engineering and another
for sales and service. Tesla manages change by diversifying into different product line such
as Tesla also initiate Space X program which is now worth more than his electric cars. The
main role in strategic process is of CEO Elon Musk who take all responsible and significant
decisions related to company’s innovation and diversification. However, employees ideas are
also welcomed due to the company culture and organisation structure of decentralisation.
Question 3
Tesla broke into the market based on defensive strategy. Their strategy is unique from the
other automobile manufacturers. As a result, the market in kind reacted to Tesla success
instead of acting. This reaction gave birth to an opportunity for Tesla to bring further
innovation and diversification.
It is true that Tesla strategy has been successful that make the company stand out in the
automobile market. Tesla’s release has been a success with not only car purchasers but also
projected the organisation into the attention as one of the few successful autonomous car
makers with regards to being a innovator considering electric car market. Elon Musk is
considered as the engine behind that strategy who fuelled the success of Tesla for a long time.
Technology, timing, monopoly, efficient team, distribution and secrets are some of the key
reasons and points for the success of Tesla and by with the company, success can be
measured.
Conclusion
Tesla Motors is a great company consists of incredible actions with changing the vehicle
market. The company mission towards green awareness helps them in achieving its mission
and core purpose. With Tesla innovative designs and diversification, the corporate strategy
established are achieving sooner than expected and also allow the company to bring
monopoly in the market.
To ensure future sustainability, the company needs to adopt strategy for catering different
market segments and paving the way for the future of automobiles. This helps the brand to
attain competitive edge in the industry or automobile sector.

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References
Armand, M. and Tarascon, J.M. (2008) Building better batteries. nature, 451(7179), p.652.
Chan, C.C., Wong, Y.S., Bouscayrol, A. and Chen, K. (2009) Powering sustainable mobility:
roadmaps of electric, hybrid, and fuel cell vehicles [point of view]. Proceedings of the
IEEE, 97(4), pp.603-607.
Lovins, A. (2013) Reinventing fire: Bold business solutions for the new energy era. United
States: Chelsea Green Publishing.
macrotrends.net. (2019) Tesla Revenue 2009-2019 | TSLA [ONLINE] Available from:
https://www.macrotrends.net/stocks/charts/TSLA/tesla/revenue [Accessed 02/08/2019].
Sortomme, E. and El-Sharkawi, M.A. (2010) Optimal charging strategies for unidirectional
vehicle-to-grid. IEEE Transactions on Smart Grid, 2(1), pp.131-138.
teslarati.com. (2019) Tesla is one of the world’s Most Innovative Companies, says noted
consulting firm [ONLINE] Available from: https://www.teslarati.com/tesla-most-innovative-
companies-in-2019-ranking/ [Accessed 02/08/2019].
Wesseling, J.H., Faber, J. and Hekkert, M.P. (2014) How competitive forces sustain electric
vehicle development. Technological Forecasting and Social Change, 81(1), pp.154-164.
Yilmaz, M. and Krein, P.T. (2012) Review of battery charger topologies, charging power
levels, and infrastructure for plug-in electric and hybrid vehicles. IEEE transactions on
Power Electronics, 28(5), pp.2151-2169.