Tesla Inc. Strategic Analysis: Mission, Vision, and Strategy Report

This report provides a comprehensive strategic analysis of Tesla Inc., a leading electric vehicle manufacturer. It begins with an introduction to strategic management and its application to Tesla. The report then reviews the external environment using PESTLE analysis, examining political, econom...Read More

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Review the external environment:...............................................................................................1
Industry scenarios within existing market domains:....................................................................3
TASK 2............................................................................................................................................5
Effectiveness of mission and vision statement alignment according to the demand:.................5
Strategic competencies and capabilities:.....................................................................................6
The rationale and core logic to creates, delivers and captures value within its industry:............8
TASK 3............................................................................................................................................9
Strategies to be followed to defend core business:......................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The term strategic management can be defined as a list of decisions and description of
various strategies which are adapted by administration in order to attain efficient execution and
alternative benefits for the overall development of the business enterprise. Strategic management
can also be described as an acts which management undertakes to decides the result of the
performance of the entire establishment (Strategic Management, 2019). Strategic management is
nothing but planning for both small as well as large organizations as by formulating and applying
appropriate strategies, they can attain sustainable competitive advantage.
For the better understanding, strategic planning and decision making, the board of
directors of Tesla Inc., which is a public limited firm that deals in electronic vehicles whose
headquarters are in California, US. This report contains a review of the external environment and
probable business scenarios within active marketplace, objective and vision statements, strategic
competencies and capabilities, the principle and core logic and strategies that the organization
could follow.
TASK 1
Review the external environment:
External Environment: These are the factors which can affect and are affected by the
external environment factors which include an analysis of macro-environmental factors i.e.
PESTLE. It extends as political, economical, social, technological, legal and environmental
attributes. These elements can help the firm in analysing the external factors used in planning,
organising, implementing etc. various plan of actions in order to achieve organisational success.
(Adegbile, Sarpong and Meissner, 2017). There are various tools and methods available to
analyse the impacts of these factors. One of them is:
PESTLE Analysis: This technique includes almost all the macro environmental factors
that may affect the strategic planning and decisions of an organization. The administrators of
Tesla Inc. are capable to understand the influence of these elements on their business
performance and objectives (Balaman, 2016). It has divided external factors into most relevant
categories which can be defined as under:
P-Political Aspects: Political factors of this analysis identifies governmental influence on
businesses of Tesla Inc. and their macro-environment. Governing bodies are the main forces that
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affect any organization and industry. In the case analysis of Tesla Inc., it can utilise the benefits
for strengthening its financial performance through various inducement offered by the
government. According to the Governmental authorities, consumers may apply for tax credit
upon purchasing of an electric car. New international trade treaty and consent, incentives offered
by local authorities for electric auto mobiles, political stableness needed among various markets,
etc. These elements of the political environment are considered to be important for Tesla and the
services offered by the company.
E-Economical Aspects: E-Economical Aspects: Economical elements include inflation,
tax, foreign exchange currency rates, demand-supply, market development, trade & tariff levels
and other variables that influence the automotive business (Chang and et.al, 2014). In order to
analyse the better analysis better possibilities for development PESTLE evaluation is carried out.
disregard of the threat of system instability in the external environment of the automotive
industry can be highlighted. Tesla needs to analyse the economic external factors opportunities
such as decreasing renewable energy costs and battery costs and threats like economic stability
problems that may influence the automotive market.
S-Social Aspects: Social factors and trends influence macro environment of the business
through customers, employees and investors. It includes lifestyles, purchasing habits & power,
education level, beliefs and religion, importance of safety, sex distribution, health consciousness
social classes, average disposable income level, minorities, family structure, attitude, etc. of the
existing and potential customers in the economy. For analysing social factors of Tesla Inc., it is
considerable how the establishment line up with the social direction in its target markets. The
management of the company must ensure that strategies that are applied have maximized the
business benefits of such external factors. The idea of an electric car is fascinating for most
people, more nature friendly, less expensive than those of traditional cars in terms of
maintenance and running cost which makes Tesla auto mobiles sustainable.
T-Technological Aspects: The technical elements that may affect a business include
existence of 3D technology, the efficiency of computers, wireless charging, engine efficiency,
automation, internet connectivity, security in cryptography, etc. Being a technological
automotive company, Tesla Inc. have to go through positive and negative impact of technology.
Technology helps the company to come through its competitive edge in the marketplace. The
company effectively used technology to enhance its product portfolio. Even in near future the
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company will launch totally driverless technology, which will be an important technological
benefit.
L-Legal Aspects: Legal elements are the factors that are concerned with rules,
regulations, laws and legislations of specific economy. These factors include consumer laws,
copyright laws, discrimination laws, health and safety laws, pyramid scheme legality,
import/export laws, employment laws, etc. Tesla Inc. have to abide by legislations and
regulations to run the business activities without any legal conflict. The organization is facing
several regulatory issues, law suit and investigations. In the year 2019, two clangs happened and
the National Highway Traffic Safety Administration and Transportation safety Board are
investigating the main reasons of these two incidents.
E- Environmental Aspects: Environmental factors are that which are related to
ecological surroundings and natural resources of a particular marketplace. It includes climate and
Ocean acidification, climate, emissions, accessibility of sustainable and semi-renewable
products, etc. Factors are Tesla's primary possibilities as vehicles are eco friendly and use energy
(Cucchiella, D'Adamo and Gastaldi, 2014). Vehicles from Tesla Inc. also comply with several
environmental regulations and have little effect on carbon release compared to traditional
vehicles. The selected company has retained its concentration from electronic vehicles to other
energy-saving products on saving energy as well as sustainability.
Industry scenarios within existing market domains:
The best case scenario of Tesla Inc. is much more than an automotive firm. The company
also have expectancies of being a battery company, an energy company, a logistics company and
a transportation company. There is still a lot of arguments whether any of those will actually
become gainful but there are huge possible income courses for Tesla that simply don't exist for
other auto-makers like Toyota. The industry scenarios of the firm within existing market domain
can be understand with Porter's five forces analysis.
Porter's Five Forces Analysis: This model was introduced by M. Porter in the year 1979
that helps to know impacts of such forces within an organization. This is an investing tool that
helps in investigate and examine the strength of organization by evaluating competition (De
Harlez and Malagueno, 2016). The five forces which are studied within the analysis are:
Competitive Rivalry: It is consider as determining factor that measures competitiveness
and profitability of an establishment in the industry. In current market, firms need to compete
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sharply which results as reduction of profits. Tesla Inc. runs the business within great
competition market. This feature of the Five Forces Analysis highlights the impact of
competition on the energy solutions and automotive industry environment. There are many
competitors of Tesla who are trying to beat the competition by providing better quality of
vehicle. There are numerous number of firms in the market but other manufacturers are
providing the products at low prices than Tesla. It helps to attracts customers to buy cars is
strengthening the force of competition. This force analysis of Tesla Inc. points to competitive
rivalry as a high-priority strategic management consideration in the industry.
Bargaining power of buyers: This means when the number of customer are less then
suppliers then buyers have power to get products at less prices as they wants which means high
switching cost of buyers. In case of Tesla, the switching cost of buyers is low because it
manufacture better quality of products which attracts customers. So it is beneficial for Tesla to
manufacture such kind of products and sell at high prices in order to make profits.
Bargaining power of suppliers: If there are only few suppliers or substitute raw material
exist in the market, then supplier has power to bargain the prices from manufactures. It helps to
set the prices of products and services. The suppliers of Tesla Inc. have a low switching cost due
to more suppliers and less number of buyers. This external factor describes limited control of
suppliers in sale and distribution of their products. This analysis of force indicates the bargaining
power of suppliers as a secondary strategic management priority.
Threat of substitutes: The replacement power is endangered when clients with greater
quality or prisoner rates can readily obtain alternative items and when buyers can readily move
from one product or service to another. This internal factor imposes a powerful force on the
surroundings of Tesla's sector In this assessment, the small switching costs make it easy to attract
clients from replacements such as public transport.. However, this impact of providers is limited
by the moderate accessibility of replacements. Only a restricted and moderate amount of
alternative alternatives is available to customers on the market.
Threat of new entrants: This force determines whether an sector is lucrative and there
are few obstacles to enter, competition for fresh institutions will quickly intensify. Due to the
current high price of product growth, Tesla's company is difficult to compete with (Förster and
et.al, 2014). It's hard for fresh participants to fit the powerful brand of the company, which is one
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of the enumerated strengths. The risk of fresh entry in the company's business setting is only a
minor problem for strategic management.
TASK 2
Effectiveness of mission and vision statement alignment according to the demand:
Mission Statement: The statement that represents the Tesla’s mission and vision is “To
accelerate the world’s transition to sustainable transport”. Though, the firm altered its
managerial objective to "accelerate the shift to sustainable energy in the world" in mid-2016
(Tesla Motors, 2016). This mission declaration demonstrates a slim but significant shift
throughout the business of the firm, indicating renewable energy market possibilities. In a
manner, the corporate mission recognizes the importance of the company's batteries and
associated energies.
1. To increase the efficiency
2. The world’s changeover
3. To viable energy
The first aspect of the stated mission sets out the role of Tesla in shifting the sector
towards sophisticated techniques for profitable business and clean energy goods. The task also
describes "the transformation of the globe," indicating the company's expectation of effective
progressiveness for electric cars on the worldwide market. This element is related to the focus on
the worldwide market of the corporate strategy statement (Gustafsson, Ivner and Palm, 2015). In
addition, the shift from "sustainable transportation" to "renewable electricity" demonstrates that
the financial core mission developed by Tesla, Inc. matches the company's present strategic
goals. Moreover, this instance of business assessment demonstrates that the increasing demand
for renewable energy is now reflected in the enhanced enterprise range of the organization to
address new products such as batteries and other possibly lucrative alternatives for renewable
energy.
Vision Statement: Vision statement of Tesla is “To create the most compelling car
company of the 21st century by driving the world’s transition to electric vehicles.” This
business vision builds the focus of the organization on renewable energy. Particularly, the
administration targets the market of electric vehicle as a important approach for alleviate growth
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of the renewable energy market worldwide. The following components are significant in Tesla
Inc.’s vision statement:
1. Most compelling
2. Car company
3. 21st Century
4. The world’s transition to electric vehicles
In future vision statement of the company, Tesla Inc.'s object to be the most persuasive in
automotive industry. On the other hand, the “car company” component of the corporate vision
focuses Tesla Inc.’s efforts on designing and manufacturing cars. This section indicates
excellence and leadership in the establishment. The company formulates this aim by integrating
advanced technology in its electric auto-mobiles and related products. This section explains the
utilization of innovative technology of the establishment to denote real time problems like
environmental protection. The company’s leadership in electric vehicle design and production
satisfies the “21st century” component. The fourth ingredient points to the company’s global
goals (Kaiser, El Arbi and Ahlemann, 2015).
Strategic competencies and capabilities:
SWOT Analysis: A SWOT assessment is and framework intended to facilitate a reality-
based, genuine, information-driven look at an organisation's advantages and disadvantages,
goals, or business. The organisation needs to maintain the assessment accurate by avoiding
predetermined views or grey areas and concentrating instead on actual-life situations. It should
be used by businesses as a reference not as a prescribed (Kalkhouran and et.al, 2015). It is an
expression for Forces, Vulnerabilities, Chances and Provocations. Tesla Inc.'s strategic skills
and skills. can be understand and analyse with the help of SWOT analysis which is described
below:
Strengths:
Innovative procedures: Tesla, Inc. is renowned for its elevated innovation pace,
particularly with the advent of both the world's first completely powered sports vehicle.
Strong brand: Tesla is a symbol of innovation and renewable energy solutions, consistent
with the company objectives of Chief executive Elon Musk.
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Strong command of manufacturing procedures: the inner factor of powerful control of
manufacturing procedures is focused on economies of scale and the centralization and hierarchy
of the organisational structure of Tesla (Wang and et.al, 2016).
Weaknesses:
Restricted presence on the industry: Tesla struggles from restricted involvement on the
sector. In the United States, the firm produces much of its income and also has a tiny existence in
China and the developing countries.
Limited supply chain: the restricted manufacturing process of the business is a associated
deficiency that prohibits the business from growing quickly in these industries.
High prices: Tesla's vehicles, particularly those with combustion engines, are relatively more
costly than competitive vehicles.
Opportunities:
Global sales expansion: Tesla should recognize the chance for worldwide sales episode
based on substantial financial development in nations in which the business has a negligible
retail presence.
Expansion of the worldwide value chain: A further chance is to extend Tesla's value chain to
promote worldwide manufacturing and distribution extension.
Business diversification: this internal economic factor includes setting up or acquire new
companies to decrease risk on both the automobile industry.
Threats:
Violent rivalry: Competitiveness between automotive firms is strong. Tesla is threatened
by this internal economic variable, given certain companies ' present attempts to produce electric
vehicles.
Content cost changes in demand: oscillations in material rates underline the holding steady
and generally, increased cost of lithium, a stuff used in the power storage brands of the company.
Car dealer regulations: Tesla sells its products directly to clients without participation in
the dealership, which raises prices for sales.
The rationale and core logic to creates, delivers and captures value within its industry:
Value Chain Analysis (VCA): Evaluation of the supply chain helps a business to
identify its very own limitations and strength along with the operations and features that
contribute value to commodity creation, design and development (King, 2015). It comprises of
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main operations that are directly concerned with operations of manufacturing and support that
assist to improve the efficiency of main operations.
Primary Activities:
Inbound Logistics: Tesla produces the most significant parts in-house. Many providers
generate and offer other parts in a timely way. It decreases to a minimal level its grace period
and increases the effectiveness of manufacturing.
Operations: All vehicles are produced with all required production activities in Northern
California, Claremont factory. Highly innovative and organized manufacturing method, with
cross-function robots capable of producing up to 83 cars per day and readily reconfigured to
create distinct vehicle models.
Outbound Logistics: The delivery platform of Tesla Motors comprises on its own shops
in 18 nations, which play a part in teaching clients about the advantages of electric vehicles. On
the other side during the internet appointment and dealership purchase of a item, choosing the
desired shipping address.
Marketing and Sales: Tesla does not expend any cash on traditional advertising and does
not use an advertising agency. Alternatively, they created the system their shops to communicate
with brand recognition, situated in high-foot traffic and capital areas. The firm also uses Internet-
based short movies and YouTube ad promotions "Visualising the Car purchase Knowledge."
Service: Tesla also has its own distribution centers in North America, Europe and Asia
along with its shops (Tesla Motors, 2014). They constructed and expanded the extremely-fast
electric car charging terminal system for cars for the clients, improving brand importance. In
addition, to boost the trust and decrease operating costs, they provide their clients with a 50,000
mile service contract policy.
Support Activities:
Infrastructure: Tesla motors has accepted a flat or horizontal administrative structure
with the top management at making the hypersensitive decisions and then handover authorization
to lower level personnels. The establishment achieves profit from having this organization
structure as it provides better communication process and quick decision-making and avoiding
lag time and delays.
Procurement: They have created excellent relationships with commercial providers, like
partnerships with Panasonic, enabling important advantages of each company and data exchange
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and brief-term contracts with other providers. In situation of inability to provide all the needed
parts and performance, substitute them with alternate sources (Koseoglu and et.al, 2015). With
copyright, all their concepts are shielded to reduce the risk of employing and copying their
creation.
Human Resources: Growing rapidly on the worldwide market, Tesla utilizes High Street
Clients to hire processes to hire and preserve the skilled workers. Next, Tesla offers business
stocks to staff, encouraging executives to implement policies that boost the organisation's share
price.
R&D: R&D is Tesla Motors' main component enabling them to have been thus
competitive in respective sector that no other rivals can defeat them at this moment (Olanipekun
and et.al, 2015). In order to decrease costs, stay revolutionary and maintain their picture, the
business focuses on transferring all free cash back in R&D. This also contributes dignity to
design of product, which generates a greater value feeling.
TASK 3
Strategies to be followed to defend core business:
Corporate structure, management and individuals as well as other administrative systems
and processes are the main aspects that will influence the execution of the approach. This implies
that even at the operational level, Tesla Motor needs to identify the organisational goals that
should always be described in the goals. It is clear with the help of above analysis that Tesla Inc.
is very fast forward according to the time but competitors have already announced their intention
to come into business with the revolutionary technology hence it is necessary for the company to
implement some offensive as well as defensive strategies to defend its core business. The board
of directors of the form are advised to follow the below mentioned strategies to improve and
develop their business:
Marketing Strategies: A marketing strategy is indeed a enterprise plan of attack to
approach individuals and make them clients of the firm's service or product. A company's
marketing approach considers important marketing messages, pricing structure, potential buyer
data, and other aspects of the company. Marketing strategy defines the business plan which sets
out the timeliness and kinds of marketing efforts (Posch and et.al, 2015). Marketing strategy of a
corporation should last longer than that of any single marketing campaign. Marketing strategies
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have been usually confounded since they finish one another with marketing strategies. While the
shift between such two are indistinct where a marketing campaign contains the vast image of
company products, value proposal, and associated brand communication, the business strategy is
just how the company gets across important messages like creative, channels, timing, etc. It is
also possible to integrate marketing strategy upward into commercial value assessments as well
as other strategy papers.
Advertising Strategy: Advertising is the process of paying to communicate to the public
through media or physical locations. Advertisement may pay significant fees to reach a large
audience for seconds at a time.
Customer Services: Customer service principles are fundamental statements that an
establishment adopts to guide service strategy, procedures, policies, culture and measurements.
They are unique to an organization and are guided by factors such as organizational goals and
identity.
Innovation Strategies:It can be defined as a framework which is used by most of the
companies for the purpose of enhancing profits and market share by adding innovative features
to goods or services. When studying about invention scheme with the help of a jobs to be done
lens, it may be seen that an impressive plan of action must accurately communicate which
business fiduciary, segment and job to aim to attain the utmost growth and which needs to target
to help customers get the job done better (Rasmussen, 2015). Various plan of action which are
related to innovation gets failed which results in decreased success rate of them. An invention
scheme is necessary for organisations which are planning to attain high level of competitive
benefits. In order to from an effective strategy of innovation business entities are required to add
some unique features to the products which can attract large number of clients. Tesla is one of
the largest organisations which are executing operations all around the world. Mangers within
the company are highly focused with innovation as it helps the company to attract large number
of consumers. It guides business entities to reduce barriers and boundaries which are affecting
the company to achieve long term business goals. The processes that are adopted in this strategic
model are:
Design Thinking: This is a exercise of creating things, making decisions, solving
problems, learning human talent designing and devising strategies. It draws on the culture,
principles and techniques that have evolved around design disciplines.
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Fail Well: It is a framework to make plan of trial to let down rapidly, safely and cheaply.
In various situations, new and innovative goods, processes and services are required to be tested
and pass some of the specific tests in order to analyse that all of them will be able to meet
expectations of clients (Ronda-Pupo, 2015). Fail well is an criteria for designing such tests to
minimise the impacts of failure.
Management Strategies: Management strategies are related to directing and controlling
the organization in such a way that all business activities and operations can be headed toward
business objectives and goals. Different types of options are available within it such as business
administration, business executional activities and goal setting strategies. All of them are existing
in current era as organizations can only achieve top performance in the long-run if companies are
having a well structured strategy which is going to be implemented at workplace (Santoro and
et.al, 2018). It also concerns about risk management which neither seeks to maximise rewards
nor minimize risk but the goal of risk management is to optimize the risk and rewards ratio
within the bounds of an organization's risk tolerance. The strategic process that can be followed
by the Tesla Inc. are:
Benchmarking: It is a strategic management technique which is used by most of the
companies to compare own policies with other organisations in order to make effective
modifications. This process assists the management to set some standards and
measurements in order to achieve the business objectives.
Target Operating Model: A target operating model is a document that represents the
future state of an organization after the achievement of set of goals. It is a vision for the fututre
operating model of business which represents capabilities and processes.
Business Process Re-engineering: It is a re-thinking process of existing organizational
processes and workflows. The goal is to streamline the processes to make them cheaper and
faster (Tanc and Gokoglan, 2015).
CONCLUSION
From the above mentioned facts and informations, it can be concluded that strategic
management is an essential process or framework for every industry and organization as it
provides guidance for operating and planning for sustainable success. The board of directors of
Tesla Inc. are capable to understand and examine all the internal and external factors that can
affect the organizational performance and progress. Porter's five forces model is very helpful to
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examine the existing market domains and competitive abilities of the firm. It can also be
concluded that company's mission and vision statements are aligned according to today's market
needs and the establishment only needs to follow some effective strategies such as marketing
strategies, innovation strategies, management strategies, technological strategies and others to
defend its core business.
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REFERENCES
Books and Journals:
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