Strategic Analysis Report: Tesla Electric Car Company's Position

This report provides a comprehensive strategic analysis of Tesla Electric Car, examining both internal and external factors that influence its performance. The introduction highlights the significance of strategic management in formulating and implementing organizational goals, with a focus on Tesla's position in the automotive industry. The main body includes an external analysis using PESTLE and Porter's Five Forces models to assess political, economic, social, technological, environmental, and legal factors, along with competitive forces affecting Tesla. The internal analysis delves into Tesla's core competencies, resources, and VRIO analysis to evaluate its competitive advantages. The report concludes by synthesizing these analyses to provide insights into Tesla's strategic position, challenges, and opportunities for long-term growth and development in the electric vehicle market.

Strategic Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
External Analysis.........................................................................................................................3
Internal Analysis..........................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic management is useful in formulation and implementation of the organizational
goals and objectives in a systematic and efficient manner. It helps organization in developing
long term goals by effectively allocating resources and identifying internal and external
environmental factors. Strategic management is very useful in strengthening the core
competencies of business. This study will focus on critically examine the current strategic
position of the business by effectively evaluating the challenges and issues faced by the
entrepreneurs, strategic managers and directors. This study highlights internal and external
strategic analysis of the company.
Tesla Electric car is an automotive energy storage company which was founded in the
year 2003 by Martin Eberhard, Marc Tarpenning, Elon Musk, J.B. Straubel and Ian Wright. This
company mainly deals in Tesla Electric vehicles and Tesla energy.
Automotive industry is one of the leading industry according to the current market
scenario. It is referred to be as one of the largest economic sector in term of revenue across the
world. It mainly deals in designing, development, manufacturing, production, merchandising and
selling of motor vehicles.
MAIN BODY
Strategic management is one of the most effective tool which is useful in establishing the
future goals and objectives for the business. Strategic management is very useful in
strengthening the core competencies of business by critically examining the internal and external
strategic analysis of the business. Strategic management consists of setting goals and objectives,
effectively analysing, formulation of strategy, implementation of strategy and monitoring of
strategy (Ansoff and et.al., 2018). It is also very useful in demonstrating the current challenges
and issues of the entrepreneurs, managers and directors. This in turn helps in ling term growth
and development of the Tesla Electric car company, UK.
External Analysis
External analysis is a strategic tool which is useful in determining the factors which can
affect the operational efficiency of the business (Moutinho and Vargas-Sanchez, 2018). External
analysis can be done with the use of strategic tool such as PESTLE analysis and Porter's five
force model in order to critically evaluate the operational efficiency and performance of the
company.

A. Trends and key drivers
Political factor: This is a strategic approach which can influence the functioning of the
business by developing strategic goals and objectives. There are various political factors which
could affect the functioning of the business which mainly includes corruption, bureaucracy in
the local market, activities related with trade union, Tesla Inc. have a political stability which in
turn is useful in qualifying for tax credit purchase of an electric car. Government has been taking
initiative to manufacture and sale electric vehicles (Hitt and Duane Ireland, 2017). Free trade
agreement among various international boundaries helps Tesla in reaching various large
geographical area and attain higher market share. Tesla electric car company will focus on
targeting markets which are politically stable in order to boost up the business.
Economic factor: High economic growth of the country results in higher operational
productivity sales and profitability for the Tesla electric cars company. There are various
economic factors such as interest rate, economic development, currency exchange rate,
employment and unemployment rate, inflation rate, cost of labour, etc. in turn largely influence
the sustainable growth and development of the company. Sales of the electric car has been raised
by 3.5 percent which in turn has a positive impact on the sustainable growth of the business.
Lower cost of material, decline in battery cost helps Tesla in producing affordable electric
vehicles (Lasserre, 2017). Tesla is going to be affordable and accessible to the public which in
turn increases the sales and profitability for Tesla. Zero emission vehicle also provides financial
benefit to the business.
Social factor: Tesla electric car focuses on being environmentally sustainable by
effectively eliminating the use of fuel. There are various social factors such as career attitude,
cultural barriers, safety emphasis, lifestyle attitude, age distribution, etc. influences the
functioning of the business (PESTLE Analysis of Tesla Inc.: The growth of the eco-friendly
electric car, 2018). This in turn has a positive impact on the society in order to eliminate carbon
emission into the environment by effectively using renewable energy. Equal distribution of
wealth helps in improving the financial health of the business.
Technological factor: Technology has been increasing at a faster pace which in turn
results in higher operational growth and efficiency. Tesla focuses on time to time innovation
with improved aerodynamics, battery, etc. helps in improved operational performance and
productivity for the Tesla Electric car. Tesla has an effective source for implementing

automation and artificial intelligence into the electric vehicles (Noe and et.al., 2017). Improved
and effective technology helps Tesla in managing the competitive place into the market.
Environmental factor: Tesla focuses on producing environmental friendly cars by
effectively reducing carbon emission into the environment. It focuses on electricity than fuel
which in turn helps in producing environmental friendly products by effectively complying with
environmentally friendly products. Tesla focuses on various climatic change and waste disposal
programs, which in turn is useful in creating higher brand image for the company.
Legal factor: Tesla electric car focuses on complying with various legal norms and
standards which in turn results in strategic decision making. There are various legal factors such
as employment law, health and safety policies, patent law, copyright law, antitrust law, etc. Tesla
focuses on expanding patent protection right and energy consumption regulation is a major
opportunity for the business to work smoothly in a legal and sustainable manner (Morden, 2016).
Tesla electric car must abide with various government laws within which it operates.
B. Power
Tesla company effectively maintains its profitability with the help of various strategic
measures in order to address the competitive challenges and threats to the business (Ruff, 2015).
The key strategy of the Tesla company is to bring in various range of affordable electric vehicles
into the marketplace.
Porters five force model
This is a strategic model which is useful in analysing the opportunity and threat to the
company. It is useful for company in determining the profitability and operational functioning of
the business in a systematic and efficient manner.
Bargaining power of buyers (Moderate force)
The bargaining power of the customers can influence the automotive industry. Customers
have a low switching cost, as Tesla produces electric vehicles which is highly affordable by the
individual (Jacobides, MacDuffie and Tae, 2016). Price sensitivity is one of the most common
factor which affects the bargaining power of the customers. Another factor which influence the
bargaining power is the availability of substitute products and the product differentiation
available to customers in other electric vehicles.
Bargaining power of suppliers (Moderate force)

The operational efficiency of the Tesla company is dependent on the reliability of the
suppliers. Suppliers helps in shaping the environment and functioning of the industry by making
raw material and other goods available on a timely manner. Suppliers tends to have higher
control over the manipulation of the prices. Suppliers who are in dominant position can reduce
the profit margins for the company. Tesla has a very strong supply chain which helps in making
goods available to the customers.
Competitive rivalry (Strong force)
Tesla company operates in an extremely competitive marketplace which a major threat to
the business. Strong rivalry competition leads to lower profitability and productivity for the
business (Engert and Baumgartner, 2016). Tesla motors is considered to be one of the top
automotive company. Tesla tends to function in a highly competitive environment. It has various
rivalry competitors such as Mercedes Benz, BMW, GM, Porsche, Jaguar, Nissan, etc. which are
into development of various electric vehicles. This in turn hampers the operational performance
and productivity of the business. The extent in solar energy and energy storage products also act
as a competition for business.
Threat of substitutes (Moderate force)
Tesla is experiencing threat of new substitute products which in turn results in lowering
the performance of the business (Tesla Inc. Five Forces Analysis (Porter’s Model) &
Recommendations, 2019). There are various competitors who aids to manufacture the electric car
with effective feature. This in turn results in shift of customer base and lower profitability for the
Tesla company.
Threat of new entrant (Weak force)
Tesla company is one of the established company. It has a recognised brand reputation
which in maintaining its customer base and market share. Tesla focuses on maintaining
economies of scale. It is very difficult for the new entrant to match the brand image of the
company. Tesla offers wide range of facilities to the customers at comparatively affordable price
than its competitors (Tafti, Mahmoudsalehi and Amiri, 2017). Tesla needs to focus on
continuous improvement and innovation in order to maintain its competitive position and brand
image.
Attractiveness

The key opportunity with Tesla is that it has higher operational productivity by directly
selling electric cars to the targeted customers. Tesla has a great lead of approximately $2 million
as one of the major market opportunity for the business. Tesla tends to increase in various
national and inter national boundaries. This in turn results in higher profitability and productivity
for the business. Tesla is considered to be three year ahead from its competitors in terms of
production of electric vehicles (Kauerhof, A., 2017). Tesla focuses on continuous innovation and
make all the resources available in order to sustain ahead of its competitors for the long term in
the market. On the contrary, the major threat to the business is the large number of competitor in
the market who are offering similar range of electric cars. This is a major threat to the business
and leads to shift in customer base and in turn results in lower profitability. Tesla was able to
effectively capture a unique position in the automotive industry.
Internal Analysis
This helps organization in exploring the internal factors of the company in order to take
strategic decision. Strategic internal analysis helps in providing useful information about the
particular company. It helps in determining the core competencies of the business, resources,
competitive viability and the cost position of the business. Internal analysis is useful in critically
evaluating the opportunity and threat to the business.
A. Core competencies
Resources: Tesla needs human resources, financial resources, charging station, service
centres and production plant in order to attain high operational performance and efficiency. The
intangible resources which are superior for the firm's performance includes brand equity,
reputation of the company and culture.
Competences: Tesla focuses on designing battery powered motors and designing high
performance electronic vehicles. It has strong brand image, public relations and effective market
share in order to sustain for the long term in a market (Xia, Govindan and Zhu, 2015). The core
competence of the Tesla is to improve the battery and motor inverter. Tesla also has a unique
design for the electric vehicle models with each aims to attain sustainable competitive advantage
for the company.
Skills advantage: Tesla has experienced experts and research and development team
which helps in long term sustainable growth and development of the business. It has highly

integrated solar roof and ecosystem which h in turn results in higher competitive advantage to
the company.
Value chain: Tesla focuses on inbound logistics of the business and focuses on making
goods available on time by effectively improving the efficiency of the productivity. The
operations of the Tesla are highly automated with the use of multi- functioning robots who are
effectively designed to produce different models of car (Miller and et.al., 2016). It has a strong
outbound logistics in order to distribute the goods through its own stores in around 18 countries.
Marketing and sales through proper advertisement, web based films, word of mouth etc. is very
useful in gaining higher operational growth and efficiency for Tesla.
B. VRIO analysis
This helps in determining the internal capabilities of the business. It results in strategic
planning which in turn is useful in providing competitive advantage. It is useful in protecting and
uncovering the capabilities and resources of the business.
Value: Battery is considered to be one of the valuable aspect of the Tesla. It also focuses
on creating a large database in order to effectively improve the feature of autopilot in Tesla
electric vehicles. Tesla has a cost efficient manufacturing procedure with vertical distribution
channel. It is very useful in controlling the customer experience which adds value to the
business. Offering goods at relatively affordable price than its competitors results in increasing
the value of the product.
Rareness: Tesla does not take into consideration outside dealership. It solely focuses on
producing electronic vehicles (Sanchez and NITL9019, 2017). The resources used by the Tesla
company is rare which make s it difficult for the other company to get access to such resources.
Imitation: It is very costly to imitate the Tesla motors which in turns aids to higher
operational performance and profitability of the business. The resources or the material used by
the Tesla is difficult to be possessed by other company at a reasonable price.
Organisation: Charging networks can be effectively used by the Tesla vehicles. It
focuses on effectively using the resources in order to attain higher operational growth. Tesla has
a systematic organizational structure which in turn helps in coordinating all the activities of the
business in an appropriate and efficient manner (Moutinho and Vargas-Sanchez, 2018).
C. Competitive

Tesla has a highly competitive market which in turn is useful in maintaining a strong
brand image than its competitors such as Mercedes Benz, BMW, GM, Porsche, Jaguar, Nissan,
etc. which are into development of various electric vehicles. Large number of competitors who
are offering similar range of products results in lower operational growth and efficiency for the
business. Tesla has obtained a competitive advantage by effectively obtaining the patents for the
battery which in turn results in higher economies of scale (Xia, Govindan and Zhu, 2015). Tesla
has very strong inbound and outbound logistics and effective marketing strategy to remain in the
market for the long run.
Distinctiveness
Tesla has a grater competitive advantage because it focuses on using innovative and
advanced technology for higher operational growth and sustainability. Tesla has strong value
supply chain in order to reach the customers in various countries. It effectively uses all the
resources of the company which in turn leads to long term sustainable growth and development
of the business (Tafti, Mahmoudsalehi and Amiri, 2017). Tesla is considered to be battery tech
leader. It is also considered to be one of the disruptive and innovative technology by strategically
positioning the company in the competitive environment.
CONCLUSION
This study concludes that, Strategic management is very useful in demonstrating the
current challenges and issues of the entrepreneurs, managers and directors and make strategic
decision for growth and development of the company. Internal and external analysis is very
crucial to determine the opportunities and threat of the business. It is very useful in examining
that Tesla focuses on reducing carbon emission and company with innovative advanced
technology which in turn helps in improving the performance of the business in the long run.
The major threat to the business is higher competitive advantage.

REFERENCES
Books and journals
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Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Jacobides, M.G., MacDuffie, J.P. and Tae, C.J., 2016. Agency, structure, and the dominance of
OEMs: Change and stability in the automotive sector. Strategic Management
Journal. 37(9). pp.1942-1967.
Kauerhof, A., 2017. Strategies for Autonomous, Connected and Smart Mobility in the
Automotive Industry. A Comparative Analysis of BMW Group and Tesla Motors Inc. GRIN
Publishing.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Miller, C and et.al., 2016. Internal electronic information as a competitiveness-enhancing
resource in German automotive industry suppliers. Strategic Change.25(1). pp.61-80.
Morden, T., 2016. Principles of strategic management. Routledge.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
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Noe, R.A and et.al., 2017. Human resource management: Gaining a competitive advantage.
New York, NY: McGraw-Hill Education.
Ruff, F., 2015. The advanced role of corporate foresight in innovation and strategic management
—Reflections on practical experiences from the automotive industry. Technological
Forecasting and Social Change. 101. pp.37-48.
Sanchez, R.R. and NITL9019, C., 2017. Is the Resource-Based View of the Firm Useful to
Supply Chain Managers?.
Tafti, M.M., Mahmoudsalehi, M. and Amiri, M., 2017. Critical success factors, challenges and
obstacles in talent management. Industrial and Commercial Training.49(1). pp.15-21.
Xia, X., Govindan, K. and Zhu, Q., 2015. Analyzing internal barriers for automotive parts
remanufacturers in China using grey-DEMATEL approach. Journal of Cleaner
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Online
PESTLE Analysis of Tesla Inc.: The growth of the eco-friendly electric car. 2018. [Online].
Available through: <https://pestleanalysis.com/pestle-analysis-of-tesla/>
Tesla Inc. Five Forces Analysis (Porter’s Model) & Recommendations. 2019. [Online].
Available through: <http://panmore.com/tesla-motors-inc-five-forces-analysis-
recommendations-porters-model>