Strategic Management Analysis of Tesla Inc. - Semester 2, 2019

This essay analyzes Tesla Inc.'s strategic management, addressing the company's operations, and formulating a corporate-level strategy statement. It employs the sixteen fundamental questions of strategy to outline Tesla's strategic position, choices, and actions. The essay further examines the market's response to Tesla's strategies, evaluating its success through market share, share price, and market commentary. The analysis covers the company's early focus on electric sports cars, its direct sales model, service infrastructure, and supercharger network, as well as its intensive growth strategies including product development and market penetration. It also considers Tesla's differentiation strategies and international business strategies. The essay references various sources, including the textbook, Tesla's corporate website, and academic articles to support its analysis of the company's performance and strategic decisions.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the student:
Name of the university:
Author Note:

1STRATEGIC MANAGMENT
The aim of the assignment deals with the Tesla Inc which is formerly known as the
Tesla Motors (2003-17), an American electric auto mobile manufacturer. The objective of the
Tesla Motors previously was to develop the electronic sports cars. The first car which is
produced by the company is the completely electric roadster. After going through the lots of
test, the roadster can accelerate from 0 to 60 miles (96 km) per hour in less than 4 seconds.
The light weight body of the car is further made of the carbon fiber. Further the electronic
motor of the company is further powered by the lithium ion cell which is utilized in the
gadgets such as the laptop, computer batteries (Trigeorgis and Reuer 2017).
The generic strategies of Tesla further reflect the focus of the company by using the
advanced technologies in the in the electric vehicle and the other products in order to
compete with the Toyota Motor Corporation and General Motor company. Tesla also
performs the intensive analysis for the growth of the business which is further based on the
SWOT analysis of Tesla Inc (Ansoff et al. 2018).
The key corporate promotional strategies which are involved in the business of the
Tesla business models and these strategies are the only reason behind the enhancement in the
business growth of Tesla motors which are given bellow:
 Direct Sale – After manufacturing the cars, Tesla generally uses the direct sales
method which means that the sales are done through the franchised dealership.
Owning the sales channels give the access to sell the products of Tesla all over the
world. But better experience only takes place when the customer is buying and
using the products. There are also access to the various service facilities of Tesla all
around the world.
 Service – There are many sales center combined to that of the service centers
where the customers can service their vehicles at a service plus location. In case of

2STRATEGIC MANAGMENT
most of the services the technician can view the disputes and further fix the
problem online with the help of the wireless internet connection.
 Supercharger Network – Tesla also created the supercharger station where the
drivers can charge the electric cars which is quite similar to the process of getting
the gasoline for the other normal cars. The network of the supercharger is located
all over the world which is United States, Asia and Europe (Bryce 2017).
The fundamental strategies of Tesla comprise the key strategies strategic position, strategic
choice and strategy in action which is depicted bellow:
 Strategic Position – The positioning deals with the customer segment and choice of
products which creates value proposition to the customers. In case of the value
proposition Tesla position its products in such a manner that is highly technological,
reliable, environmentally friendly and deliver high end cars to the customers. The
main advantages of the electric cars are that they are much technology driven and
attractive designs of the cars automatically attracts the potential customers in the
market. In terms of the corporate strategies, Tesla is further focused on the intensive
growth strategies which are the product development and market penetration. As the
revenue of the sales constantly increase it further gives access to the highly
technological advancement and the ecofriendly products of the company (Arcand,
Berkes and Panizza 2015).
 Strategic Action – The corporate action which is taken by the Tesla for the intensive
growth strategies which are the following elements such as the market penetration,
product development, market development and diversification (Shoup 2017). By
applying the strategy of market penetration, it will further help the company to
enhancing the revenue of the business based on the current market strategy. The
growth strategy is further related to the generic strategy of Tesla by developing the

3STRATEGIC MANAGMENT
competitive advantages based on the aggressive marketing strategies. Product
development is another strategy of the intensive growth strategies by developing new
products such as new cars, parts of the cars, technological enhancements are kind of
the new upgrade which the company apply in the system. The research and
development of the company plays significant role in the upgrade of the cars and the
equipment parts of the cars in that case. As per the vison and mission statement of
Tesla it is significant for the company to understand the new threats of entrance or
new competitors in the market (Lasserre 2017). This can hamper the revenue of the
business if there are new competitors in the market. In order to cope up with such
kind of market it is needed to adopt differentiation strategies regarding the products of
Tesla which the company has already implemented. Further the diversification
strategies of Tesla will enhance the research and development investment
opportunities of Tesla in that case.
 Strategic Choice – The strategic choice of Tesla includes the international business
strategy which are further considered as the global strategy of Tesla. The business
system in that case is based on the coordinated and integrated activities which takes
place within the system. The company needs to attract the potential stakeholders in
the market so that the company can give tough competition to the other competitors
which are the Nissan, Toyota and other manufacturing cars in the business. The main
motive of Tesla is to develop the 100% electric cars which the other competitors in
that range is seeking. Th strategy followed by Tesla is quite broad in differentiation
and far standardized strategy (Morden 2016).

4STRATEGIC MANAGMENT
The performance of Tesla can be visualized from the 5 years share price index which is
presented below:
The share price index of Tesla is for the 5 years starting from the year 2015 to 2019
till date. The share price movement of the company is quite volatile where for the index it can
be said that in the tear 2015 the share price was quite low in the middle of year 2017 and
2018 the share price of the company started to rise and the revenue of the company also
increased. The reason behind that is Tesla optimized the cars with the appropriate pricing
strategy which help the company to take a turnaround in terms of the share price index.
Introduction of the new or the latest models in the business helped the company to increase
the revenues in the year 2017 (Frynas and Mellahi 2015). The strategy which was

5STRATEGIC MANAGMENT
implemented in the year 2015 and 2016 reflected the results in the year 2017 and 2018. But
from the year 2019, the share price of the company started to shrink in a dangerous manner
which is quite a concern for the directors of or the upper level management of the company.
This kind of sheer fall in the share price of Tesla can be noted in the year 2016 from the share
price index. In case of the corporate level strategy it is significant for the company to further
enhance the technology in such a manner that the pricing of the products can be optimized
(Gitman, Juchau and Flanagan 2015).
The pricing of the cars is a big issue where most of the Tesla are not easily affordable
by the middle-class people in the world. The pricing of the cars must be in such a manner that
each and every people can get access to the service of the electric cars. There are also
insufficient supercharge station for charging the electric cars all over the world. This are the
point which are needed to be noted by the upper level management of the company (Hill
2017). The optimization of the technology must be implemented in such a manner that the
prices of the car can also be optimized at the same time. In case of manufacturing the electric
cars, it is significant to develop most of the technology and equipment parts on its own rather
than import from the market (Morschett, Schramm-Klein and Zentes 2015).
Overall from the performance index it can be said that the performance of Tesla is
good but further implementation attractive designs in the electric cars coming up with the
much affordable price is significant for the company to give tough competition to its
competitors. It is important for the company to increase the sales of the business and it is only
possible for the company if they can sell the unique products at an affordable price
(Moutinho and Vargas-Sanchez 2018). The product differentiation strategy of Tesla is
effective and it needs to set the monopoly of the business by providing affordable pricing
range to the products of the firm. This are the above key strategies which must be taken care
of by the Tesla Inc in order to increase the productivity of the business in the long run.

6STRATEGIC MANAGMENT
References
Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R., 2018. Implanting
strategic management. Springer.
Arcand, J.L., Berkes, E. and Panizza, U., 2015. Too much finance?. Journal of Economic
Growth, 20(2), pp.105-148.
Bryce, H.J., 2017. Financial and strategic management for nonprofit organizations. Walter de
Gruyter GmbH & Co KG.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press,
USA.
Gitman, L.J., Juchau, R. and Flanagan, J., 2015. Principles of managerial finance. Pearson
Higher Education AU.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing
function. Macmillan International Higher Education.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Morden, T., 2016. Principles of strategic management. Routledge.
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management
(pp. 978-3658078836). Springer.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Shoup, C., 2017. Public finance. Routledge.

7STRATEGIC MANAGMENT
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic
Management Journal, 38(1), pp.42-63.