Strategic Management Report: Tesla's Business Strategies Analysis

This report analyzes Tesla's business strategies, addressing its short-term and long-term impacts, along with a SWOT and PEST analysis. The report examines the challenges Tesla faces in the US market, including limited presence and consumer loyalty to competitors. It further discusses Tesla's online sales strategy and the importance of consumer trust. The report evaluates Tesla's current strategies, such as closing physical stores and developing online purchasing options, to maintain its competitive advantage. It also recommends future strategies, including promotional activities and multi-channel distribution, along with implementation issues and methods to execute the recommended strategies successfully. The analysis is based on the provided case study and additional sources, offering insights into Tesla's market position and future prospects.

Running head: BUSINESS STRATEGY
BUSINESS STRATEGY
Name of the student
Name of the university
Author note

1BUSINESS STRATEGY
Answer to Question 1
 Short term impacts on Tesla: Tesla holds a limited presence in the US markets which has
affected the capability of the organization in drawing the attention of the US end users
while gaining a competitive advantage over the existing market players. The limited
market presence of Tesla in US and the higher loyalty of the US end users towards
General Motors and Ford Motor Company affected the interests of the concerned
organization while drawing the attention of the end users. On the other hand, the
enhancements in the operational costs while setting up new stores in the US markets has
restricted the capacity of the organization in providing lower cost vehicles to the US end
users with the objective of gaining a competitive edge against the existing players in the
market. The major short term issue that might be faced by the organization, Tesla, is
reliant on the uninterrupted flow of operations of the different systems in alignment with
the needs of the end users.
 Long term impacts on Tesla: The organization is planning to reduce the rate of physical
stores with the objective of cutting costs and improving the margins through selling lower
priced Model 3. In this relation, Tesla aimed at improving the rate of online sales while
addressing to the huge demand of the end users. However, there are significant issues in
selling Electronic Vehicles online due to the faltering trust of the consumers. In this
relation, Elon Musk stated in an interview that test drives would be necessary for the end
users while purchasing cars online as a seven day refund policy is made available from
the day of purchase (BBC News 2019). However, the lack of trust and confidence of the
end users might create issues for the organization while improving the rate of sales in the
long run.

2BUSINESS STRATEGY
Answer to Question 2
SWOT analysis
Strengths
 Higher product differentiation
 Brand reputation
 Diverse range of product portfolio
 Intense marketing policies
 Enhanced battery manufacturing
facility
 Maximized R&D operations
Weaknesses
 Little profitability through Model 3
 Maximized cost of operations
 Limited production lines
 Lower availability of plug- in stations
Opportunities
 Increasing the development of EVs
into the futuristic models
 Developing independent automated
models
 Expanding to the emerging economies
Threats
 Limited base of suppliers affecting the
rate of successful procedures of the
venture
 Enhancement of market competition
among the existing players
 Fluctuations in the foreign currency
exchange rates
Sourced from: Liu and Meng (2017)
PEST analysis
Political The local and state governments from the
different nations have enableed the increasing

3BUSINESS STRATEGY
rate of successful procedures of the venture
while increasing the rate of sustainable
designs of the vehicles. However, the
conflicting political situations might affect the
rate of business expansion of Tesla (Cheong,
Song and Hu 2016). The Brexit and the US-
China trade conflicts might also affect the rate
of successful procedures while making
expansions in the different economies.
Economic The increasing trend of the Electronic
Vehicles and the enhanced GDP of the
economies would enable the organization in
ensuring the rate of successful procedures.
The key changes that are initiated by the
organizations would enable the uninterrupted
functioning of the business (Lutsey, Slowik
and Jin 2016). On the other hand, the
minimization of the price of the electronic
batteries would enable the organization in
improving the propositions in alignment with
the needs of the consumers.
Social The minimization of the carbon footprints
would enable the organization in improving

4BUSINESS STRATEGY
the rate of successful procedures while
ensuring the rate of successful procedures in
alignment with the needs of the venture
Technological The usage of auto-driving software I the
different models has enableed the
organization in achieving a competitive edge
over the existing players in the markets. The
different modifications in the organizational
operations are reliant on the uninterrupted
flow of operations of the systems in alignment
with the needs of the venture.
Answer to Question 3
Tesla has considered on closing the physical stores with the objective of cutting costs for
delivering Model 3 in a more affordable price. The organization has taken steps to develop a
range of online purchasing options for the consumers with the objective of improving the market
penetration related operations in US (BBC News 2019). The concerned organization aimed at
developing lower priced Model 3 with the objective of drawing the attention of the end users
towards their offerings. On the other hand, the enhancement of the performance and quality of
Model 3 required the organization to undertake high range of R&D operations. In this relation,
the organization aimed at minimizing the operational costs with the purpose of regulating the
price of the offerings while making a market expansion. Li (2016) opined that the different
changes in the strategies are reliant on the effective understanding of the organizational situation

5BUSINESS STRATEGY
and the manner in which the same might be addressed with the objective of improving the rate of
successful procedures. In this relation, Model 3 that is being proposed by the organization will
possess a range of 220 miles, a top speed of 130 mph, which is an improved extension of the
futuristic models (BBC News 2019). On the other hand, the organization also undertook steps to
minimize the price of the batteries with the objective of adhering to the needs of the consumers.
The lean management principles and the efficiency of the operations in maintaining the quality
of the propositions would enable the organization in improving the rate of successful procedures
while expanding to the US markets.
Answer to Question 4
The recommended strategies, the issues faced while implementing the strategies and the
implementation process is being discussed in this section.
Developing suitable promotional activities: The organization is recommended to develop a
suitable promotional elements by the organization would enable the same in improving the rate
of awareness among the consumers. The maximized awareness of the consumers would enable
the organization in improving the sales volume of the same. In this relation, the concerned
organization might make use of celebrity endorsements with the objective of gaining the
attention of the target end users. However, the organization might face significant issues in
convincing a celebrity to contribute to the promotional program or deficit in identifying the
choice of the target end users relating to celebrity selection for endorsements. Therefore, the
organization initiate to conduct a market research with the objective of identifying the most
desirable celebrity for drawing the attention of the consumers before developing the promotional
campaign. Appropriate market research would enable the organization in improving the rate of
successful procedures in the US markets.

6BUSINESS STRATEGY
Multi-channeled distribution: The second recommended step that might be considered by the
organization is related to the utilization of multi-channeled distribution, through evolution of
physical and online stores. The presence of the physical stores along with the online purchase
options would enable the organization in improving the rate of sales. However, the organization
might face significant budgetary issues while constructing the physical stores. Therefore, the
concerned organization might take steps to develop agile methodology while implementing
Kaizen and JIT with the objective of reducing the wastes from the production process and
thereby cutting costs with the objective of developing the multi-channeled distribution process.

7BUSINESS STRATEGY
References
BBC News., 2019. Tesla cuts Model 3 price and closes stores. [online] BBC News. Available at:
https://www.bbc.com/news/business-47410636 [Accessed 30 Jul. 2019].
Cheong, T., Song, S.H. and Hu, C., 2016. Strategic alliance with competitors in the electric
vehicle market: tesla motor’s case. Mathematical Problems in Engineering, 2016.
Li, J., 2016. Compatibility and investment in the us electric vehicle market. Job Market Paper.
Liu, J.H. and Meng, Z., 2017. Innovation model analysis of new energy vehicles: taking Toyota,
Tesla and BYD as an example. Procedia engineering, 174, pp.965-972.
Lutsey, N., Slowik, P. and Jin, L., 2016. Sustaining electric vehicle market growth in US
cities. International Council on Clean Transportation.