MBA Global Business: Strategic Management Report on Tesla Motors

This report provides a strategic analysis of Tesla Motors, a leading electric vehicle manufacturer. It includes a PESTLE analysis, examining the political, economic, social, technological, environmental, and legal factors impacting Tesla's operations. Porter's Five Forces model assesses the competitive intensity within the automotive industry, focusing on the bargaining power of suppliers and buyers, the threat of new entrants and substitute products, and the intensity of rivalry. A VRIO analysis identifies Tesla's resources and capabilities that provide a competitive advantage. The report also includes a SWOT analysis, outlining Tesla's strengths, weaknesses, opportunities, and threats. Furthermore, it discusses Tesla's business strategy, financial position, and concludes with key findings regarding the company's strategic outlook. Desklib offers a variety of solved assignments and past papers for students.

Degree Title: MBA GLOBAL BUSINESS
Level: 7
Module Title: STRATEGIC MANAGEMENT
Assignment Title: STRATEGY REPORT OF TESLA MOTORS
Word Count: 3790
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Contents
1. Executive Summary………………………………………………..………….3
2. Introduction…………………………………………………………….……… 4
3. Pestel Analysis……………………………………………………..…………..5
4. Porter’s Focus Model ………………………………………………..………..8
5. VRIO Analysis …………………………………………………….…………..11
6. SWOT Analysis ………………………………………………….……………13
7. Business Strategy……………………………………………………………..14
8. Financial Positions ……………………………………………………………15
9. Conclusion …………………………………………………………………….15
10. Reference………………………………………………………………………16
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1. Executive Summary
This Report will highlight some significant an analysis of Tesla. This report will also
include porters five forces model, SWOT Analysis and Pestel Analysis.
We will also outline the primary as well as the support activities by Tesla motors.
Tesla Motors is a car manufacturer that develops electric vehicles. The company
became the first to produce a zero-carbon vehicle car has become an iconic vehicle
in the car industry. They have different boards of directors and committees that help
in the company's continuous operation.
Tesla is a company that has a social responsibility policy. It produces cars that are
zero-emission. Its batteries are also easily recyclable.
Tesla has a strong management style, which enables it to perform its duties
effectively. It also has a great organizational structure. Its employees also like it
because of its positive atmosphere.
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1. Introduction
Tesla is a multinational organisation that was established in the year 2003 by Martin
Eberhard and Marc Tarpenning who are serving as CEO and CFO of the company.
Later Lan Wright also joined this organisation and becomes the third employee of the
company. Elon musk in the year 2004 has joined this organisation. It is an
organisation that was built by a group of engineers who aims to become of care
manufacturer and also wants to be in a technology company (Tesla, 2022). This
group wanted to prove to people that they do not need to make a compromise to
drive electricity (Abbasi and et. al., 2021). Tesla launched the Roadster unveiled in
2008 with cutting-edge battery technology as well as an electric powertrain. After
that, this organisation is focusing on designing the first-ever premium all-electric
sedan in the world from the ground up the Model S. It is a model that later on ranked
as the best car in its class in every category. It is a car which is combining safety,
efficiency and performance. Model S has set new expectations of the world in the
context of cars with the longest range in an electric vehicle in the 21st century. It
consists the over-the-air software updates which make it better over time. It has a
record of 0-60 mph acceleration time within 2.28 seconds. It measure can be taken
by the Motor Trend.
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2. Macro environment analysis
A PESTLE analysis will look at the various factors that affect Tesla's international
operations and strategy (Aithal and Aithal, 2019.). An explanation of this tools in the
context of Tesla is mentioned below:
Political
Tesla has developed a production facility in China to enable it to reduce its costs and
sell profitably. This facility helped the company reach profitability. But there are
different types of regulations imposed by the Chinese government on international
business like their strict policies. The business also needs to follow government
guidelines strictly to carry out its business in China. Any avoidance of business can
result in a negative impact on the operation of Tesla.
The only reason why Tesla has been able to establish itself in China is due to its
sustainable brand. There are some other foreign automakers who have also
developed local alliances in this country to gain an advantage. The Chinese
government also provides support to foreign companies by inviting them to their
country in order to create employment opportunities for people living in that country
(Bell and et. al., 2018).
Economic
Economic factors are also important for Tesla as they can create an impact on the
cost and profitability of the firm. China has several factors that create positive and
negative situations for Tesla. There is a lower wages rate in China which is creating
a favourable situation for businesses as it allows them to reduce the total cost of the
firm and allow them to increase the profitability of the business. The pandemic has
not affected passenger car sales in the lower-end markets. In India, for instance, the
sales of cars in June declined by almost 60% compared to the same month last year.
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Tesla's sales grew significantly in the third quarter of 2009 in comparison to the
previous year. It is expected to continue its growth momentum in the fourth quarter
as the US economy begins to recover from the pandemic.
Social
Tesla is providing an electric vehicle to its customers which creates an opportunity
for the firm. It does not create a negative impact on the environment and is also in
demand among customers. It allows the firm to successfully operate in the
marketplace and also increase the demand for its products and service. Consumers
tend to buy from companies that have a low environmental impact. This is evidenced
by the fact that Tesla is a company that is performing well and also able to compete
with different competitors in the marketplace.
Technological
Tesla, which is an innovative brand that makes electric cars and energy storage
products. Aside from the usual driving features, Tesla cars also have an impressive
touchscreen monitor that shows the car's position on the road and the surrounding
traffic. The company's latest model called Autopilot is also capable of self-driving.
From the standard features, Tesla also offers a dedicated app that lets users control
their cars remotely (Drobyazko and et. al., 2019). Tesla has been very active in
developing new technologies such as self-driving cars. One of these is the
company's smart summon, which can be utilized by all vehicles that have full
autonomy.
Environmental
Due to the increasing number of customers who are aware of the environmental
impact of their automobile purchases, car brands have to step up their efforts in
addressing these issues. Tesla is one of the few companies that have a sustainable
business model. The company has been able to sustain itself through the ups and
downs of the economy. The most recent example of this is the increase in Tesla's
sales during the 3rd quarter of 2020 which was attributed to the increasing
awareness about the environment.
Legal
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Tesla has been able to continuously focus on innovation and sustainability, it has
been able to avoid many of the legal hassles. Tesla has made significant inroads in
the market and is planning on further penetrating other countries. To achieve this,
the company needs to stay updated with all the necessary patents and copyrights in
the country where it is planning to operate. Tesla also needs to establish a network
of dealers in other countries.
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3. Five Forces Analysis of Tesla Motors Using Porter’s Focus Model
Several forces affect the profitability of automobile businesses. One of the simplest
tools that can be used to analyze the competitive position of firms is Porter's five
forces model.
Bargaining Power of Suppliers
Tesla’s drivetrain has only 17 moving parts, which is significantly less than the 200
moving parts found in a typical internal combustion engine. This makes it easier to
assemble than traditional cars. Another key factor that has helped tesla avoid
dependence on its suppliers is its ability to integrate its components.
Bargaining Power of Buyers
The bargaining power of Tesla buyers is moderate due to the number of suppliers
and the scarcity of substitutes. Another reason why the power of buyers is moderate
is that Tesla is very competitive and its products are highly differentiated.
Threat to New Entrants
The threat of new entrants into the automobile industry is low. Most of the barriers to
entry are due to the large capital required for entering the industry, which includes
the necessary infrastructure and human resources. Even if a new player can gain
entry into the market, it will not be able to immediately gain market share.
Intensity of Rivalry
The intense competition in the automobile industry has become very prevalent. This
is because of the existence of a large number of players in the industry (Hoghová,
2020).
The threat of substitute product
The threat of substitute products is minimal for Tesla since there are only a few
electric vehicle manufacturers in the world. Their sole goal is to provide superior
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electrical vehicles with better performance and range (Kandybko, Ryazanov and
Khachaturian, 2019).
Primary Activities :
Inbound Logistics
Tesla's warehouses are primarily used for storing and transporting goods. These
warehouses are usually leased and are located in the US.
This facility, which is located in Taiwan, has a total area of about 5.6 million square
feet. Its size makes it slightly bigger than the other warehouses the company uses.
Aside from this, Tesla also uses these facilities for manufacturing (Keding, 2021)).
These are the locations of the warehouses:
 Livermore California.
 Lathrop, California
 Sparks Nevada
 Taipei City, Taiwan.
 Elkridge, Maryland and
 Bethlehem, Pennsylvania
Operations
Tesla was founded in 2003. By 2007, the company launched its first product, the
Roadster. In 2008, it launched its second product, the Model S. Tesla has expanded
its operations by establishing manufacturing centers in Europe and the US.
Tesla's other factories are known as the Gigafactory 1 in Buffalo, New York and the
3rd one in Shanghai, China. These facilities are used to produce the batteries and
other components for the company's vehicles.
Outbound Logistics
The Gigafactory in Nevada is Tesla’s largest manufacturing facility. It is located
outside Reno and is used for the assembly of Model 3 vehicles. Other facilities in the
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company’s manufacturing network include its facilities in California and China ( Liu
and Yang, 2021).
Marketing and Sales
Due to the intense competition in the automobile industry, many companies rely on
various marketing channels to promote their brands and products. Tesla, on the
other hand, uses its website and other digital platforms to promote its products and
services. Its social media channels are also used to reach out to its fans and
followers around the world.
Many of Tesla's stores have integrated retail sales with after-sales service. This
strategy has helped the company maintain its strong image in the global market.
Tesla has a strong focus on building a customer-oriented brand that delivers high-
quality products. The company has a wide range of stores and galleries in China
(Makadok, Burton and Barney, 2018).
Product and Services
The company's first product, the Roadster, was introduced in 2008. In the following
years, the company launched various products such as the Model S, Model X, and
Model 3. They also offer a variety of energy products such as batteries and solar
panels.
Support Activities:
Infrastructure
Tesla has two main divisions: the automobile and the energy product. Its CEO Elon
Musk is the leading decision-maker. The company has a different administrative
structure.
Technology
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Due to the intense competition in the automobile industry, many companies have
started developing fully electric cars. Tesla, for instance, has introduced the Model S,
a fully electric vehicle.
Tesla is known for its continuous investment in R&D. In 2018, the company spent
almost $1.46 billion on R&D which increased by almost $102 million from the
previous year.
Human Resources Management
Tesla employs over 50,000 people full-time in 2019. The company depends on its
talented employees to maintain its high operational efficiency and grow its business.
HR management is becoming an area of focus for most technology companies to
attract and retain top talent (Maksimenko, Vashko and Zdrestova-Zakharenkova,
2021).
Procurement
Tesla's vehicles rely on thousands of parts that come from thousands of suppliers
globally. The company has built strong relationships with its key suppliers, which
include many key system components.
Strategic position:
A strategic position can be described as the decision of a firm about ways in which it
can serve its customers and also compete against its competitors.
Key performance indicators can be described as metrics used by businesses to track
and evaluate the performance of businesses for the attainment of goals (Mariina and
Tjahjadi, 2020).
Tesla is one of the organisations which is operating in the automotive industry. It is
earning sufficient profit in the marketplace. To develop the strategic positioning of a
firm, a business needs to compare its performance. There are different steps to be
taken by businesses to develop key performance indicators. These steps included to
be taken by the firm are mentioned below:
 The development of a goal is the first step for KPI on basis of which the firm
needs to measure performance.
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 In the next step, the business needs to develop different success factors that
consist of activities on which the organisation needs to focus for the
attainment of success.
 KPI is also focusing on quantifying different success factors in business which
enables firms for purpose of measuring performance.
 It is also collecting different measures for businesses which helps them to
determine changes in the business.
 In this stage, the business needs to calculate ratios, rates, and percentages of
business.
There are mainly four performance indicators that are considered by the business of
Tesla and explanations of these are mentioned below:
Customer satisfaction: Tesla is providing quality products to its customers which
are convenient for them (Met, and et. al., 2020).
Internal process quality: Tesla is one of the big organisations which is providing
products with good quality that are sufficient to meet the expectations of its
customers (The 4 KPIs Every Manager Has To Use, 2021).
Employee satisfaction: Tesla has highly skilled and talented employees in their
organisation.
Financial performance index: Tesla is one of the successful organisations which
has good financial performance in the market and also focuses on increasing its
profitability and growth in the market.
4. VRIO Analysis
The capabilities and resources of a company are the driving factors of competitive
advantage. Understanding these factors can help a business improve its overall
performance. The VRIO framework helps managers identify the various
characteristics of a resource or capability and determine which ones are valuable
and rare (Potyshniak and et. al., 2019).
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