Business Analysis Report: Strategic Financial Management of Tesla Inc.

This report provides a comprehensive analysis of Tesla Inc.'s strategic financial management. It begins with an introduction to strategic financial management and its importance, followed by a PESTEL analysis examining the political, economic, socio-cultural, technological, environmental, and legal factors affecting Tesla. Porter's 5 Forces analysis assesses the competitive environment, including the threat of entry, substitutes, supplier power, and competitive rivalry. The report then delves into market analysis, critical success factors, opportunities, and threats. Strategic positioning is evaluated using Bowman's strategic clock and the Ansoff matrix. Corporate roles and proposed future strategies are discussed, followed by the selection of a winning strategy and risk assessment. The report concludes with a summary of findings and references.

STRATEGIC FINANCIAL
MANAEMNT

Table of Contents
INTRODUCTION...........................................................................................................................1
PESTEL ANALYSIS......................................................................................................................1
Political.......................................................................................................................................1
Economical..................................................................................................................................1
Socio cultural..............................................................................................................................1
Technological..............................................................................................................................2
Environment................................................................................................................................2
Legal............................................................................................................................................2
Porter's 5 FORCES ANALYSIS .....................................................................................................3
Threat of entry.............................................................................................................................3
Threat of substitutes....................................................................................................................3
Supplier power............................................................................................................................3
Competitive rivalry.....................................................................................................................4
MARKET ANALYSIS ..................................................................................................................4
Critical successful factor (CFS)..................................................................................................5
OPPORTUNITIES ADN THREATS..............................................................................................5
STRATEGIC POSITION................................................................................................................6
Bowman's strategic clock............................................................................................................6
Ansoff matrix..............................................................................................................................6
Corporate roles............................................................................................................................7
PROPOSED FUTURE STRATEGIES...........................................................................................7
SELECTION OF WINNING STRATEGY.....................................................................................8
DESCRIPTION OF WINNING STRATEGY................................................................................8
RISK ASSEMENT (ERM) AND MANAGEMENT .....................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic financial management is one of the key aspect which contains in depth
knowledge about finance and long term view. Financial management is becoming one of the
essential element subject to managing financial resources in effective manner. This report is brief
analysis subject to business report for TESLA INC. overall analysis of organisation done in this
context in categorised form1.
PESTEL ANALYSIS
Political
 Tesla has complete support of government subject to promoting business at next level.
 Government take initiative subject to enhance electric auto mobiles.
 Positive perspective and stable political environment is helpful to boost the business level
at next level.
 Government facilities and permission are made around low consumption of fuel vehicles
and promoting environment friendly vehicles. This indicates protective and booming
factors of organisation2.
Economical
Economically organisation is giving tuff competition to other automotive industries. of
Economical aspects can be bifurcated in further such as
 Economical price rate and nil consumption of petroleum and fuel elements.
 Providing economical atmosphere subject to use of electronic vehicle and products
 Renewable better and use of energy, economical stability issues are main aspect which
reflect positive image of organisation.
 Affordable price and best performance vehicles are essential aspect subject to booming
economical structure of country
1 . Moutinho, Luiz, and Alfonso Vargas-Sanchez, eds. Strategic Management in Tourism,
CABI Tourism Texts. Cabi, 2018.
2 . Brigham, Eugene F., and Joel F. Houston. Fundamentals of financial management.
Cengage Learning, 2012.
1

Socio cultural
Tesla is one of the largest electric manufacturing automotive industry in U.S. Social
cultural in U.S. is based upon subject to environment friendly which is related to promoting
social culture of organisation3.
 It promotes low carbon lifestyle and promote social culture in the U.S.
 Social trends and situations are in favourable condition in the U.S.
 Enhancing healthy lifestyle and atmosphere is main motive of organisation which is
effective and beneficial for organisation subject to developing markets.
Technological
In technical field there are some essential aspects are considered in Tesla which are as
below
 Tesla is the topmost automotive industry which is using advanced technology in terms of
electronic products.
 Automation and electric battery based cars and vehicle manufacturing is one of the main
motive of organisation
 Mobile operating system and controlling system, use of artificial intelligence is one of the
speciality of organisation.
Environment
As per environmental aspect image of organisation has become vast and fair in terms of
Zero heat emission form vehicle4. This is also considered as external factors in terms of social
culture of Tesla's businesses
 Enhancing popularity subject to low carbon lifestyle is environmental aspect covered by
organisation
 Building safe and improved structure of business is considered environment influencing
factors.
Legal
Tesla is concerned with its corporate social responsibilities and ethics in order to
providing services with in the country and outside the country. Tesla's legal structure is fouced
around major three areas such as
3 . Rothaermel, Frank T. Strategic management. McGraw-Hill Education, 2015.
4 . Ward, Keith. Strategic management accounting. Routledge, 2012.
2

 Enhancing international patent rights and protection
 Adhering rules and regulations related to ecological aspects and energy consumption
regulations
 Rules and legislations related to employee relations and ethical behaviour with in the
organisation.
Porter's 5 FORCES ANALYSIS
This is one of the method which is implemented with in organisation to determine
competitive environment subject to maximise profitability of organisation5.
Threat of entry
There are some essential element subject to analysing the competitive analysis. Nissan
Alliance is one of the largest and top most global pure electric car manufacturing in the world.
Nissan is nearest competitor of Tesla in the world. Threat of entry is divided in major factors
 lack of number of units and firms
 Aggressive and strong marketing tactics
 High process and marketing tactics
 high competitive advantage and brand value
Threat of substitutes
Global competition level has become increased form past decades. Tesla is one of the
successful automotive segment subject developing electric cars and vehicles. It provides energy
solutions to the world6. Threat of substitutes is divided in following aspects which are as follows:
 less alternatives and variations in pricing strategies
 availability of intermediate substitute
 Average performance of substitute products
5 Cooremans, Catherine. "Make it strategic! Financial investment logic is not
enough." Energy Efficiency 4, no. 4 (2011): 473-492.
6 . Stead, Jean Garner, and W. Edward Stead. Sustainable strategic management.
Routledge, 2014.
3

These are some essential aspects which are given above in respect of substitute products.
Tesla now taking steps ahead in the direction of switching prices such as public transportation
which would be able to get more customer attraction and attention7.
Supplier power
Tesla is managing and operation world's largest supply chain and potential suppliers
across the globe. This analysis is done in order to determine the structure of supply chain and
potential interest of suppliers8. This is also considered one of the external factor which enhance
the level of outcomes. Moderate supply level and channels are also some essential aspects which
are need to be categorised in following parts such as;
 Expand the size of supplier
 Manage the supply chain and enhancing the scope of supply chain.
 Intermediate regardant integration
Competitive rivalry
Tesla is working in high competitive environment. This analysis helps to understand the
behaviour of Tesla in respect of competitors and other organisations. How competitive strategies
are adopted by organisation subject to deal with industry environment. Tesla's rivalry or
competitive strategy is bifurcated as follows
 Low switching low cost products and high aggressive nature of firms.
 High price of electric cars are also one of the competitive factor which bifurcate the
nature of Tesla.
MARKET ANALYSIS
Market analysis provides overall analysis and effectiveness subject to future growth and
development opportunities. Tesla introduced first electric automotive segment in the world
subject to lead global market in electric car segments. Organisation is operating large electric car
manufacturing organisation in terms of managing global market9.
7 . Kunc, Martin, and Rahul Bhandari. "Strategic development processes during economic
and financial crisis." Management Decision 49, no. 8 (2011): 1343-1353.
8 . Wheelen, Thomas L., J. David Hunger, Alan N. Hoffman, and Charles E.
Bamford. Strategic management and business policy. Pearson, 2017.
9 . Laudon, K.C. and Traver, C.G., 2013. E-commerce. Pearson.
4

Industry market predictions
As per financial times report published in 2017 there are some key aspects were
discussed in terms of growth and development of Tesla Inc. it was predicted that the growth,
advancement will be increased in near future. It is one of the key aspect which reduce the level
of capacity. Britain's electricity system has some essential aspects which are considered subject
to analyse the future prediction.
As per national Grid is assuming that sale of electric vehicle sales could helps to analyse
potential aspects subject to enhancing cares in the UK. Organisation is stressed that 18GW of
additional demand at peak times.
SBU market predictions
Strategic business unit is expressive concept which indicates towards potential aspects
subject to growth and development of organisation10. These are considered one of the essential
aspect in respect of offering and market segments. These are type of business units which
indicates towards discrete marketing plans and analysis.
Tesla has its own strategic units which remain associated with analysing future plans and
growth opportunities. It recently took effective step in terms of accelerate the structure of
commercialisation of electric drives globally.
Critical successful factor (CFS)
Organisation analyse the performance of organisation in terms of manufacturing electric
cars and automatic. Organisation is focused around customer choice and interest. Tesla is good in
manufacturing and implementation of high technical vehicles and cars for better advancement.
This is one of the essential aspect which was analyse the critical issues and factors.
Advanced technology and upgraded gadgets and cars are first choice of customers. Tesla
analysed this factors and invested the strategies for enhancing the consumer perspective subject
to gain consumer interest.
OPPORTUNITIES ADN THREATS
Tesla is one of the emerging organisation which introduced the electric car segment
within in the U.S. And then across the globe. Tesla has huge opportunity to expand and grow the
10 . Ivashkovskaya, Irina, and Anastasia Stepanova. "Does strategic corporate performance
depend on corporate financial architecture? Empirical study of European, Russian and other
emerging market’s firms." Journal of Management & Governance 15, no. 4 (2011): 603-616.
5

size of business and organisation in the world11. As per the strategy national grid, future strategy
of Tesla is centralised towards “ future energy scenarios”. Introducing future gadgets and zero
fuel consumption based gadgets and vehicles are main motive of organisation.
There was a sales reports presented in the year 2016, which contains the details subject to
global battery and plug in hybrid electric car sales for forth quarter. Total sales of cars was
recorded as 250575 and average change and variations in demand was recorded as 22%.
China was the high selling company in respect of best selling vehicle in 2016. approx
329000 units of plug n electric passenger vehicles according to CPCA. EV sales 86% to CPCA
was recorded in the year of 2016.
Daimler is planning to invest $11 billion in electric vehicle or help and support the
compete to Tesla. Technological aspects are some essential aspects which are improvised in near
future. It is considered that organisation in respect of operating range in electric cars. Tesla has
future vision of 2025 we want to develop 10 electric cars based on the same architectures. For
basket ball. As per the report 10 electrics cars are based up to 10 billion users.
Threats
Tesla's SBU strategies are based upon activities and behaviours of rivalry organisation
such as Mercedes Benz and Volkswagen12. There are also key issues are associated with the
growth and development of organisation. Organisation is trying to be global leader in order to
electric car manufacturing.
Organisation is able to enhance the sales records but even after having a brand value and
image across the worlds Tesla has a thereat of Competitive countries. Volkswagen, Mercedes
Benz, Toyota and Nissan are nearest competitor of Tesla.
STRATEGIC POSITION
Bowman's strategic clock
This strategy is based upon model which explore the option for strategic positioning. This
is based around eight categories. Tesla's bowman's strategic clock is categorised as under:
11 Harrison, J.S. and John, C.H.S., 2013. Foundations in strategic management. Cengage
Learning.
12 . Wiggers, Peter, Maritha De Boer-de Wit, and Henk Kok. IT performance management.
Routledge, 2012.
6

 Differentiation: there is diversity found in nature and products of Tesla. It deals in Model
1 to Model 3 products. Roadster was the first electric car which was produced by the
Tesla at initial level and segment Focused Differentiation: Tesla is focused around future growth and development
strategies in order to provide more advanced and hybrid cars and automotive13. Tesla is
utilising knowledge and technical resources subject to enhance the capacity and balance
of electric cars world wide. Risky high margins: there is high uncertainty and risk involved in respect of
manufacturing and developing automatic cars. Toyota, Volkswagen, Volvo are also
growing ahead towards manufacturing and making electric cars. Monopoly pricing:Pricing strategy of Tesla is found in various forms subject to
bifurcating the price of products in vast terms. Electric vehicles and manufacturing
products also need to be categorised subject to analyse the aspects of pricing for further
analysis. Loss of market share: Due to high price of products customers need to analyse the
essential aspects subject to analyse future trends. Low price and low added values:Tesla also thinking about investing in Low cost
products and managing the financial resources for better growth.
 Low price and hybrid: Tesla has a clear vision in terms of investing in hybrid and electric
cars.
Ansoff matrix
Tesla's strategic analysis as follow in the form of ansoff matrix
Market development
Tesla wants to explore its product chain by introducing more advanced and latest
products. Tesla wants to expand Model 3 and Model 1 products.
Diversification
Tesla introduced new chain in terms of using electric battery and stationary energy
storage.
Market penetration
13 . De Waal, André. Strategic Performance Management: A managerial and behavioral
approach. Palgrave Macmillan, 2013.
7

Competitive market strategy and analysis subject to enhance customer interest and
involvement for better growth.
Product development
Tesla has decided to invest technology and knowledge to develop its segment three
products which are considered model 3 products.
Corporate roles
Tesla also plays vital role in terms of providing corporate strategies and plans for further
process and plans14. At present organisation is presenting and leading global environment
friendly organisation to develop growth and developing strategies.
PROPOSED FUTURE STRATEGIES
Tesla is electric car manufacturing organisation. There main aim is to build environment
friendly cars which helps in reduction of pollution. To attain success in there is need to develop
future strategies which directs the employees to provides their activities in this directions. It
provides the opportunity to attract large number of customers and influence their behaviour
regarding purchase of electric cars. The different future plans of Tesla is mentioned below:
 Increase in Tesla car range to 1000 Km: Cars which are manufactured by organisation
runs on battery which are drained after some period of usage. At present, the batteries
have the capacity of 800 km only. Now to attract more customers they want to push the
limit beyond 1000 km.
 Mass production of model 3 by end of 2017: Another future strategy is to produce this
model car more due to having large demand in market. The price of car is approximate
$35000 and which runs 200 miles per charge.
SELECTION OF WINNING STRATEGY
Organisation achieved lots of achievements subject to meeting desired aims and
objective. Tesla be able to become world's largest manufacturer in the world. With these
strategies not only helped Tesla to be a leading market leader in electric car leader but also made
organisation environment friendly15.
14 . Barnett, Michael L., and Robert M. Salomon. "Does it pay to be really good?
Addressing the shape of the relationship between social and financial performance." Strategic
Management Journal 33, no. 11 (2012): 1304-1320.
8

DESCRIPTION OF WINNING STRATEGY
Tesla adopted strong and effective sales and marketing strategy subject to grow and increase the
sales figures of products. Tesla's sales and marking strategies are divided as follows:
 Owen stores and galleries: Tesla directly sell products to its customers and as internally
works for better growth and development.
 Orders and reservation: demand of products remain high in terms of enhancing growth
opportunity. Majority of customers depends upon internet marketing and sale of various
products
 Marketing: as per past records significant aspects come across various forms. Sales of
organisation is based upon media coverage word mount and primary drivers16.
 Energy saving: this is one of the essential aspect on the basis Tesla is string storage and
products subject to various channels. Power wall 2 appears in many of stores in terms of
managing effective strategy and plans.
RISK ASSEMENT (ERM) AND MANAGEMENT
Risk assessment is the process which includes identification of the risks which associated
with the activities of Tesla. The major risks which are faced by organisation is mentioned below:
 Experienced risks regarding delays in delivering of their cars, complications in design,
launch, manufacture etc.
 Another risk associated with their business activities are not able to meet the production
demand of their growing vehicle and delivery plans which impacts the image of business
in market.
Such risks can be mitigated with the helps of application of effective management
theories. In this regard, management of Tesla is need to identifies the preferences of customers
and application of the new technologies which helps to improve their overall production process.
15 . Bryson, John M. "Strategic Planning and." The SAGE Handbook of Public
Administration (2012): 50.
16 . Cumming, Douglas, Lars Helge Haß, and Denis Schweizer. "Strategic asset allocation
and the role of alternative investments." European Financial Management 20, no. 3 (2014): 521-
547.
9

It provides the opportunity regarding improving the life of their batteries and timely delivers of
their cars to end customers. It helps to improve their sales and profitability17.
CONCLUSION
This report is based upon strategic financial management in respect of TESAL INC.
overall business analysis is done in order to determine financial position and strength of
organisation. PESTEL analysis and Porter's five forces model also define in this context.
Organisation's strategic decisions, downfalls, achievements, key functional strategies, effective
management are defined in this context.
17 . Cumming, D., Helge Haß, L. and Schweizer, D., 2014. Strategic asset allocation and the
role of alternative investments. European Financial Management, 20(3), pp.521-547.
10