Strategic Management Report: Tesla's Business and Corporate Strategies

This report provides a detailed analysis of Tesla's strategic management, focusing on its business and corporate level strategies. It begins with an introduction that highlights the importance of strategic management in the competitive business landscape and then delves into Tesla's current strategies, identifying them as differentiation and market focus at the business level, and diversification at the corporate level. The report then conducts an environmental analysis, examining political, economic, social, and environmental factors impacting Tesla. It proceeds to assess Tesla's resources and competencies using the VRIO framework, identifying key strengths like intellectual properties, technologies, and leadership. Based on these analyses, the report argues for a business expansion strategy, develops a strategic plan including vision and mission statements, information gathering methods, and strategy formulation, and outlines key performance indicators and a strategic implementation plan, including communication and monitoring processes. The report concludes by summarizing the findings and providing recommendations for Tesla's strategic direction.

Running head: STRATEGIC MANAGEMENT
Strategic management
Name of the student
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Table of Contents
Introduction......................................................................................................................................2
Determination of the business strategies.........................................................................................2
Environmental analysis....................................................................................................................3
Resource and competence analysis..................................................................................................4
Argument for the strategic direction................................................................................................6
Development of the strategy plan....................................................................................................6
Vision and mission statement......................................................................................................6
Gathering information.................................................................................................................7
Formulation of the strategy..........................................................................................................8
Key performance indicators.........................................................................................................9
Strategic implementation plan.......................................................................................................10
Communication method.............................................................................................................11
Monitoring and evaluation process............................................................................................12
Conclusion.....................................................................................................................................13
Reference.......................................................................................................................................15

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Introduction
Effective process of strategic management is important for the business entities in order
to have the understanding about the strengths and the areas of improvement. In the current
competitive business scenario, it is important for the organizations to initiate their strategies on
the basis of the identified factors. This includes the determination of the business strategies and
environmental factors (David and David 2013). Effectiveness of the strategic intent of the
organization will determine the extent to which they will survive in the competition. This should
also be noted that strategic management process will not be effective only by initiating but also
by effectively implementing. Hence the implementation plan should also be designed in the most
suitable manner.
Tesla is the leading and the most emerging automobile brands in the world in the current.
They have changed the entire business scenario of the global automobile sector by introducing
the electric mobility solution. In the last few years of their operations, Tesla gained enough
market presence and brand identity for their innovation. However, still there are areas where they
are trailing behind their competitors, which should be identified (Stringham, Miller and Clark
2015). This report will discuss about the business level and corporate level strategies of Tesla.
Environmental analysis will also be initiated and on the basis of the identified factors, strategic
plan will be developed. This report will also develop the implementation plan for the strategic
plan including the KPIs.
Determination of the business strategies
In terms of the business level strategy, it is identified that Tesla is following
differentiation and market focus strategy. According to the differentiation strategy, the products

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of Tesla are distinctive and unique in nature in terms of looks, performance and range. Thus,
even with the higher price, Tesla cars are attracting fair segments of customers. On the other
hand, as per the market focus strategy, they are catering to the customers seeking for emission
free cars with the higher performance and acceleration. The cars of Tesla are being designed in
view to the expectations and preference pattern of the target market customers (Mithas, Tafti and
Mitchell 2013). It is also identified that in terms of the corporate level strategies, Tesla is
following diversification strategy. This is evident in their product portfolio where Tesla is
offering batteries, superchargers and electric cars. Among the electric cars, they are having
different products ranging from super premium Model X to more affordable Model S. This is
also helping them in catering to different customer segments. However, due to the lack of cost
leadership approach, Tesla is losing out to the mass market customers and sales volume
(Robinson and Verdier 2013).
Environmental analysis
Political factors  Tesla is currently operating only in USA, Canada and China.
These countries are having different political scenario with China
is having completely different with the other two.
 Positive political factor is evident for Tesla as different countries
are embracing electric mobility (Bettig 2018).
 However, the emerging global instability can be challenging for
Tesla because huge investment is associated with their foreign
operations. Hence, political instability will be detrimental for
Tesla in managing their positive return on investments.
Economical factors  With the average increase in the global economic rate, the

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affordability for the Tesla cars is increasing
 However, the premium positioning of Tesla is losing out the
major economic benefits (Sierzchula et al. 2014)
 Increase in the competition from the side of other established
players is challenging the market status of Tesla
Social factors  Social preferences and awareness towards the electric cars are
increasing, which is a positive factor for Tesla
 However, the requirements of affordable electric cars are not
getting met by Tesla (Gifford and Nilsson 2014)
 Changing of the customer preferences from the electric cars to
alternate fuel driven cars will pose further challenge for Tesla
Environmental
factors
 Environmental factors are majorly favorable as electric cars are
positioned as eco-friendly products
 Different countries are offering concessions for the electric
vehicles for their non emitting feature. This is increasing the
market potentiality of Tesla
 However, the sustainability in the electric production should be
adhered with the environmental standards
Resource and competence analysis
Resource based view model will be used in determining the internal capabilities of Tesla.
According to this model, the first step is to identify the tangible and intangible resources. In the
case of Tesla, the tangible resources are their manufacturing facilities, financial resources and

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machinery. On the other hand, their intangible resources are trademarks and other intellectual
properties, technologies, goodwill and leadership. VRIO analysis will be done to identify the
extent to which these resources are helping Tesla in gaining competitive advantages.
Valuable Rarity Inimitability Organizational
capability
Intellectual
properties
  
Technologies    
Goodwill   
Leadership    
According to the above VRIO analysis, it is identified that intellectual properties are
adding value for Tesla due to the reason that their trademarks including the logo of Tesla are
copyright protected and is well known across the world. Moreover, due to the copyright
protection, the intellectual properties of Tesla will not be imitable. In addition it is also identified
that technologies possessed by Tesla are also valuable, rare and inimitable (Hall et al 2014). This
is due to the reason that the Tesla is having technological leadership in developing electric
mobility, which is patented. Thus, the value of Tesla in the market is mainly due to their
technological advanced products and these technologies are rare as the fewer companies have
developed this. They cannot be imitated due to the patents. Leadership is also being considered
as the key resource of Tesla because their CEO Elon Musk possesses competitive leadership
skills that are unique in the industry. The level of innovation and managerial skills possessed by
Elon Muks are not comparable to any other (Schoemaker, Heaton and Teece 2018). This is

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helping Tesla in gaining the competitive advantages in terms of their business operation and
internal business management. Thus, it can be concluded that in the decision making process,
each of these factors is contributing and assisting Tesla.
Argument for the strategic direction
Based on the above analysis of the internal and external environments of Tesla, it is
suggested that they should initiate the business expansion strategy to achieve the goal of
becoming the market leader in the global electric mobility sector. This is suggested due to the
reason that as of now, Tesla is only having their presence in three countries, which should be
increased in order to compete with the established car brands (Dibrell, Craig and Neubaum
2014). In addition, the internal factors including the technologies and brand value of Tesla will
support their plan of expanding globally. On the other hand, most of countries are embracing the
electric mobility in view to the emergence of alternative fuel based transportation. Hence, there
are huge opportunities left for Tesla in expanding their business across the world.
Development of the strategy plan
Development of the strategic plan is important because it will ensure Tesla in driving
through the strategic direction and achieve the goals. There are few steps that should be
considered in developing the strategic plan, which will be discussed in the following sections.
Vision and mission statement
The first step of developing the strategic plan is stating the mission and vision statements.
The proposed vision statement of Tesla will be to become the market leader in the world in the
electric mobility sector and offering the customers different sustainable solutions. In terms of the

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mission statement, it is suggested that Tesla should aim at offering the sustainable solutions in
diverse utilities and across different price levels. Thus, the different levels of customers can be
catered (Albrechts 2013). As per the new vision statement of Tesla, their long term objective is
well stated of becoming the global leader. Hence, the following strategies to be implemented will
also be based on the market expansion plan. Furthermore, in the terms of the mission statement,
the offering of sustainable products is denoting the sustainable approach to be followed in the
organization. Also, it is also denoting that customer centricity will be followed in the business
process.
Gathering information
The next step involves gathering of information that denotes the accumulation of the data
and information regarding the trend in the global market. This is important because based on the
information collected; Tesla will be able to design their strategies for implementation. For
instance, if the Tesla is targeting to enter the Indian market based on their positive market
growth, then the related market risks and preference pattern should also be identified. In doing
business in Indian market, the products of Tesla cannot be more premium and performance
oriented rather small, affordable and city friendly electric cars will have more potentiality. Thus,
different countries across the world are having different preferences and trends, which should be
identified by Tesla in designing their global business strategy (Liu and Papageorgiou 2013). It is
also recommended that Tesla should initiate extensive market research activities in order to gain
the core market trends from across the world. In this section, SWOT analysis should also be done
in identifying the internal effectiveness of Tesla for doing business globally.
SWOT analysis

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Strengths  Brand value of Tesla will help in penetrating in new markets
 Technologies of Tesla will help in creating niche in the new markets
 Sustainable business process will also be beneficial in gaining
competitive advantages
Weaknesses  Not having diversified and larger product variants
 Premium pricing is causing losing out of major customer segments
 Not having the access to improved infrastructure for electric mobility
Opportunitie
s
 Maximum of the countries are opting for the electric mobility
transformation
 Governments are providing tax benefits for promoting electric vehicles
 Lack of competition
Threats  Emergence of new competition
 Emergence of alternative fuel based vehicles
Formulation of the strategy
This step involves the identification of the required resources and application of them
according to the initiated strategy. In the case of Tesla, the major resources will be financial,
human and physical resources. This is due to the reason that access to larger funding will be
important in investing and entering in different countries and setting up the business there. The
more will be the flow of funding, the more will be the capability of Tesla in developing new
products, initiates the research and development strategies and follows the market adaptable
approaches (Hardman, Shiu and Steinberger-Wilckens 2015). Furthermore, in terms of the
human resources, new sets of employees will be required in different regions, which should be

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sourced from the respective places. This is due to the reason that geocentric approach should be
followed in having both host and home country human resources in the foreign business
operations of Tesla. In this case, it is recommended that Tesla should have their major operations
and manufacturing facilities in the developing countries such as India and China because of the
low cost and abundant supply of skilled human resources (Fleming 2013). In terms of the
physical resources, Tesla should have strategically located facilities across the world. This will
help in logistic facilities along with in introducing market adaptable products.
Based on these available resources, the final strategy should be designed and it is
recommended that Tesla should follow market and product development strategy. This is due to
the reason that with the help of the market development strategy, newer markets cam be tapped
and objective of global presence can be gained. On the other hand, with the help of the product
development strategy, new products will be developed, which will be in line to the local market
trends and requirements (Chen and Perez 2018). This is also recommended that Tesla should
follow the market adaptability approach in order to penetrate in the different markets.
Key performance indicators
The last step of the strategy plan will involve the identification of the key performance
indicators. These indicators will be beneficial in measuring and evaluating the performance of
the implemented strategy. The key performance indicators for Tesla will be discussed in the
following sections.
KPI Measurements
Market expansion rate Measuring the new market acquisition rate will
help to identify the new areas being covered

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(Parmenter 2015).
Return on investments Measuring the return on investments will help
in gaining the understanding about the
effectiveness of the implemented strategy in
the foreign markets
Employee feedback Gathering the feedback from the side of the
employees will help to identify the issues and
challenges being faced by them.
Customer feedback Measuring the customer feedback will be
beneficial in understanding the effectiveness of
the employees in providing the customer
service. In addition, the effectiveness of the
marketing strategy can also be determined on
the basis of the customer feedback.
Strategic implementation plan
In the strategic implementation process, one of the key elements is the strategic control.
This refers to the reviewing effectiveness in the market plan along with identifying the key areas
of improvement. Strategic control should involve the effective communication process with the
internal and external stakeholders, monitoring and evaluation system. These techniques will
ensure that the strategies are getting implemented in the desired process. The following sections
will discuss about each of the steps to be followed in the implementation plan including the
strategic control.

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Communication method
In terms of the strategic implementation plan, Tesla should have different communication
techniques for internal and external stakeholders. This is due to the reason that internal and
external stakeholders are having different expectations and requirements from the organization.
In terms of the internal communication methods, it is suggested that Tesla should use
newsletters, intranets and emails. This is due to the reason that in the strategic implementation
process, there are will be different new changes to be initiated, which should be communicated
across all the internal stakeholders. In this case, the newsletters in the forms of notice or circular
will be effective in communicating the same (Shih 2013). Moreover, the email will be effective
in communicating with the specific employee for certain issues. For instance, performance
related issues can be communicated through emails. With the help of intranets, each of the
internal stakeholders ranging from the upper level management to the lower level employees will
be involved and the issues and challenges can be shared. Moreover, the online portals in the
forms of intranets will be beneficial for gathering the feedback from the lower level employees.
In terms of the external stakeholders, the most effective choice of communication
methods will be advertisements, social media and press release. It can be noticed that more
extensive forms of communication methods are used for communicating with the external
stakeholders. Advertisements will be beneficial in creating the social awareness about the
products of Tesla in the new markets. The more will be the awareness, the more will be the
market opportunities for Tesla (Sharp and Brumberger 2013). However, this method will not be a
two ways approach and thus the feedback of the customers cannot be gathered. In this case, it is
recommended that social media should be used. This is due to the reason that with the help of the
social media, the feedback of the customers against a certain product can be gathered and based