Strategic Management at Tesla Inc.: A Stakeholder Analysis Report

This report provides a comprehensive analysis of Tesla Inc.'s strategic management strategies. It begins with an overview of the company's history, growth, mission, and vision statements, highlighting its transition to sustainable energy. The report then delves into a stakeholder analysis, examining the interests and influence of various groups, including environmental organizations, employees, shareholders, governments, and customers. It assesses how Tesla addresses the concerns of each stakeholder category, particularly in relation to environmental impact and corporate social responsibility. The report concludes by offering recommendations for Tesla to improve its future outlook, based on the analysis of its current strategies and stakeholder relationships.

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Executive Summary:
This report analyses the strategic management strategies that are in place at Tesla Inc.
The first part of the report is giving an overview of the company and the growth that it has
experienced since its inception, and the growth in awareness and popularity of their products.
Then the company’s mission and vision statement are analysed to show how they are lining
these statements with their organizational structure and procedures. The sections after the
introduction focus on the different stakeholder groups of the Tesla and how they are being
treated by the company. Finally, the last section is an attempt at making recommendations for
company in order to better their outlook in the future.

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Table of Contents
1. Introduction to Tesla Motors:.............................................................................................3
1.1. Tesla’s Mission and Vision Statement:.......................................................................4
2. Tesla Stakeholder View of the Organization:.....................................................................5
3. Analysis of Stakeholders:...................................................................................................5
4. Stakeholder Category Identification:..................................................................................7
5. Recommendation:.............................................................................................................10
References:...............................................................................................................................13

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1. Introduction to Tesla Motors:
Tesla Inc., which was formerly Tesla Motors, is an America-based electric automobile
manufacturer (Chen and Perez 2018). The company was found in 1993 by a pair of American
entrepreneurs called Martin Eberhard and Marc Tarpenning. The name is inspired by the
Serbian-American engineer, inventor and a futurist Nikola Tesla. The company was formed
with the goal to develop and eventually manufacture electrically operated sports cars.
Funding for the company came from various sources and most significant of which came
from Elon Musk - $30 million for the new venture (Tesla 2019). He was then appointed as
the chairman of the company in the beginning of 2004. Martin Eberhard resigned as the CEO
and president of technology in 2007, he then joined the advisory board of the company. In
2008, however, news had spread that Eberhard had left the company but was still a major
shareholder of the company. It was then that Elon Musk took over the empty position as CEO
of Tesla Inc.
Tesla released their first car in the year 2008 which was the completely electric car called
the Roadster. Before being released for the public, the company had tested the car and it
proved to be able to run at a stretch of 245 miles (394 km) in just one charge. This range was
unprecedented in all the existing electric cars in the market, giving Tesla Inc. the edge over
everyone in the market competition (Tesla 2019). Tesla stopped the production of the
Roadster and Elon Musk had started working on the Model X which was meant to be a
“crossover” vehicle that successfully encompasses the qualities of a sports car while being
built on a car chassis. A unique feature of these cars are the usage of gull-wing doors instead
of the traditional doors, giving it an edge of being a luxury car. Tesla had already anticipated
the excitement for their cars and that is why they started taking reservations for the purchase
of this car without announcing the prices.

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1.1. Tesla’s Mission and Vision Statement:
Tesla Inc.’s mission and vision statements truly and accurately reflect the company’s
nature of manufacturing cars that run solely on electric power. The company has been
experiencing continued growth along with a positive rise in brand image. The mission
statement of the company is able to guide the executives working there on how they should
make their strategic business decisions that will ensure that the company is able to achieve
effectiveness in the way that their business is run. Tesla’s mission statement initially was “to
accelerate the world’s transition to sustainable transport,” but this was slightly modified in
mid-2016, when the company was under Elon Musk, to “to accelerate the world’s transition
to sustainable energy,” (Tesla 2019). This change in the mission statement may be a slight
edit of words but it represented a significant shift in the business, so that Tesla was able to
create newer market opportunities to venture into the market of renewable energy, not just the
market relevant to electric vehicles.
The vision statement of Tesla shapes the organizational direction in which the company
wants to grow in. Tesla’s vision statement is “to create the most compelling car company of
the 21st century by driving the world’s transition to electric vehicles,” (Tesla 2019). Through
this statement, it becomes easier for everyone to see which avenues of growth that the
company wants to venture into – most compelling, car company, 21st century and the world’s
transition to electric vehicles are the most noteworthy elements in the statement. This tells the
consumers in the market and also other business executives that Tesla is aiming for superior
leadership in the market for multinational automotive business with a focus on electric
vehicles. With Tesla’s strong brand image along with its increasing popularity, they are
predicted skyrocket their success in the global market for automobiles.

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2. Tesla Stakeholder View of the Organization:
I. Community – environmental conservation organizations and people
II. Employees – managers, subordinates, engineers and maintenance staff
III. Investors/Shareholders – board members, major shareholders
IV. Governments – legislators, environment conservation committees
V. Customers – current Tesla car owners, future car owners
3. Analysis of Stakeholders:
a. Environmental Conservation Organization:
People in this community are not necessarily the people who want to or plan to buy the
car, but are the people who care more about what effect a new company will have on the
environment (Hess and Andiola 2017). These stakeholders pay close attention to the
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emissions that companies cause, and take it upon themselves to publish any bad effect that
may be caused by the company. It is clear to see that the business Tesla Inc. provides has a
direct relationship with satisfying the concerns present in the community. It is the community
who will determine the brand image of Tesla Inc. The main concern of these stakeholders is
that whether the products released by Tesla will be able to fulfil its goal of preserving the
natural environment, and not causing adverse harm to the same. Their strongly positive
attitude is prevalent in the announcement made by Elon Musk where he had mentioned that
he allowed others to use the patents created by the company, to ensure that other companies
also adopt the same vision of the company.
b. Existing Employees:
According to Tesla Inc.’s organizational structure, they believe that their employees are
very critical to ensure that the business experiences continued success along with growth in
their automotive and energy solutions sector. Considering the existing employees as
stakeholders, they have the capability to heavily influence the productivity and performance
of the business (Moritz et al. 2015). The corporate social responsibility of these employees
comes from their compensation being high and the fact that they are being exposed to
significant career opportunities in Tesla. The company has HR programs in place which offer
sufficient resources to help the employees in developing their skills in their job and also
encouraging them to become effective leaders. Moreover, Tesla also provides the employees
with collaborative programs with other partnering firms to offer them with learning
experiences.

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c. Major Shareholder:
In the initial years of Tesla, they had depended majorly on the funding they received from
their investors. These shareholders are very integral in influencing the capitalization
capability of the company as their main interest in the company is from their profitability and
the rate at which the company is experiencing growth (Sippel 2015). Tesla is focused on
approaching the interests of major shareholders through the formulation of long-term
strategies that are aimed at transforming the automotive and energy-saving industry. The
increase in the demand of Tesla’s products is going to be reflected in the growth of the
business along with increasing the pool of opportunities available for the company. With
Tesla gaining significant profitability in the recent years, the company continues to
strengthen the interests of the investors and shareholders in this multinational business.
d. Current Owner of a Tesla Automobile:
Customers have a direct connection with Tesla because they are interesting in the quality
of the product that the company is producing along with the price that has been allocated.
Since the customers are what will drive the growth of the company, Tesla gives these
stakeholders the highest priority when constructing corporate social responsibility programs
(Lashley 2017). Tesla has also made efforts to increase their charging stations so to make
them more accessible to the owners of Tesla vehicles, which in turn will have a positive
effect on the customer’s experience and satisfaction with the company.
4. Stakeholder Category Identification:
a. Environmental Conservation Organization (Community):
Tesla’s purpose of manufacturing electric cars is aimed mainly at promoting energy
innovation, not just for Tesla, but for other companies as well. The goal of Tesla Inc. is to
show the society that it is not difficult to pursue the goal of being environmentally aware

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and that this goal is achievable, with great prospect of success (Dibble 2018). One of the
earlier car models that were produced by the company, Model S makes use of a “cleaner”
source of electricity if compared to its counterpart of traditional internal-combustion
designed cars. Even though Tesla has been putting continued focus on reducing carbon
emissions from their automobiles, but cannot say the same for their power plants since
electricity is the main source of power in the Tesla vehicles. To tackle this problem and to
ensure reduced backlash from this stakeholder group, they have started to use
Supercharger Stations that only use grid electricity power that is achieved from solar
power. Tesla has also initiated efforts to team up with SolarCity so that the Tesla car
owners are able to charge their cars using solar energy from the comfort of their home.
b. Existing Employees (Employees):
The organizational culture at Tesla motivates its employees to be in a constant search for
the most ideal solutions that will make the business stand out apart from all the other
companies in the same industry. Tesla’s organizational structure promotes the continued
growth of employees along with an improvement in the business (Voigt, Buliga and Michl
2017). The company’s organizational culture also promotes employee morale and is aimed
towards reducing issues that may arise in the workplace. There are six main features of
Tesla’s organizational culture that is meant for the employees to follow:
i. Moving fast – employees must be able to, and willing to, respond rapidly to
the trends and changes in the local along with the international market.
ii. Doing the impossible – Tesla encourages the employees to think outside the
box and formulate new ideas along with solutions, with a concentration on
ensuring that it is unconventional

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iii. Constantly innovating – encourages employees to adopt the similar culture of
Tesla which is to have a continuous nature of innovating because this will help
the company in developing cutting-edge technologies for their vehicles.
iv. Reasoning from the “first principles” – first principles revolve around the
understanding and solving of the problems that are present in the real word.
CEO Elon Musk encourages employees to use these principles when doing
their job.
v. Thinking like the car owners – a lot of importance is put on the employees
being able to put themselves in the position of the owners so to be able to
formulate better solutions to the problems that may not be obvious on the scale
that the business functions.
vi. We have to be ALL IN – Tesla incorporates all its employees into teams that
work towards improving the business, this kind of synergy also helps better
the relationship between co-workers and in turn, reduces conflicts that occur in
the workplace.
c. Major Shareholder (Investors/Shareholders):
The top three investors of Tesla are Elon Musk (CEO), Jeffrey B. Straubel (CTO) and
Deepak Ahuja (CFO). For the past few years, the main concern for the investors at Tesla
was whether the company would be able to produce enough cars so that they are able to
be profitable. However, now after the increased profit that was shown to be achievable,
this concern was put to rest (Bouwer 2019). Elon Musk is an individual who likes to take
big risks and this can be a worrying situation for the shareholders however, it is important
to keep in mind that Musk has been very successful in whatever he’s been doing for Tesla
to get it to the position that it is at right now. He had first aimed at ensuring that Tesla
delivers at least 500,000 cars by 2020 but after seeing the immense growth that the

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company has been experiencing, he then wanted to achieve the target by 2018, two years
before schedule. To achieve this goal, it was important for the company to increase their
manufacturing level which will require additional capital, and so he had urged the
investors and shareholder to contribute as they are required to put their trust in Musk in
ensuring that the company only experiences profits with minimum setbacks.
d. Current Owner of Tesla Vehicle (Customer)
Tesla is continuously invested in thinking of newer ways to minimize the costs of
their automobiles as for example, they have stopped buying battery cells from Panasonic
but established a partnership with the same company in order to shift the manufacturing
of these to their own warehouses in order to make the electric automobiles more
affordable. Many common news outlets have labelled the owners of Tesla vehicles to be
the most loyal customer base of any other organization, and this customer base has also
been labelled as being “cult-like” (Bobanac, Pandzic and Capuder 2018). It is interesting
to see that Tesla does not have an extensive budget for marketing purposes nor does it
have any multinational marketing campaigns. This is because the company relies on their
customers do their marketing for them, the power of word-of-mouth is not lost on Elon
Musk as he puts his showrooms, not in extravagant spots, but inside shopping malls so
everyday people can come and take a look at the vehicles.
5. Recommendation:
a. Community:
Many analysts have come out publically and questioned till what extent can Tesla’s
cars be considered to be green. This is however not to say that Tesla is fooling the market
like Volkswagen (Rogerson 2017) had done, but that Tesla’s cars are creating greenhouse
gas emissions through other ways. Along with using SuperCharger stations to recharge

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the Tesla vehicles, Tesla should make efforts to venture further into solar power because
it has proven itself to be the most reliable natural renewable source. With most of their
manufactured cars nowhere close to being on their last legs in terms of usage, Tesla
should draw up some outlines for what will happen to the car after it loses its
functionality that will not harm the environment by adding to the already increasing
landfills.
b. Employees:
Addressing the previous recommendation given for the community, Tesla will need to
invest heavily in the science of being able to understand what the impacts are of the
products that are being manufactured by Tesla (Musonera and Cagle 2019). Elon Musk
should look into hiring a Chief Operating Officer because Tesla has been continuously
been criticised for not keeping up the promises that it has made. This reflects negatively
on the employees as none of this can be blamed on them since they are only following
orders, it just so happens that the orders are not coming from the right person.
c. Investors/Shareholders:
Tesla will need to be more transparent about the things that matter the most to the
shareholders and investors. It was pointed out that Tesla has failed to update the numbers
on the back order for the Model 3’s, and it has been more than a year. It was estimated
that Tesla is facing a backlog of almost 400,000 units of the Model 3. Elon Musk, for the
sake of the investors, needs to focus on long-term goals rather than making short-term
promises (Ayala 2016).
d. Customers:
Tesla needs to improve their customer service and quality after Consumer Report
pulls down their recommendation for Tesla’s Model 3. The reason behind the pulling