Managing the Multinational Corporation: Tesla Project Report

This project analyzes the challenges Tesla faces from increasing competition, particularly from newcomer multinational corporations (MNCs) in the electric vehicle and related sectors. The research identifies 'competition on innovation and technology' as a key issue impacting Tesla's operations and stakeholders, including managers, shareholders, employees, suppliers, and consumers. The report explores how these stakeholders react to the competitive pressures, particularly from companies leveraging technological advancements. It examines the role of newcomer MNCs and their impact on Tesla's market share, profitability, and employee base. Furthermore, the project offers recommendations for Tesla to manage these challenges, focusing on innovation, cost reduction, and stakeholder engagement to maintain a competitive edge in the evolving automotive and energy industries. The project also considers the reactions of different stakeholders and proposes strategies to mitigate negative impacts and capitalize on opportunities for growth and sustainability.

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Managing the Multinational Corporation
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Contents
Introduction................................................................................................................................2
Research question.......................................................................................................................2
Analysis of the issue...................................................................................................................3
Role of newcomer MNCs...........................................................................................................4
Impacts of the issue on various stakeholders.............................................................................5
Possible reactions from stakeholders.........................................................................................7
Recommendations......................................................................................................................8
Conclusion................................................................................................................................11
References................................................................................................................................13

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Introduction
In today’s competitive business world, organisations are facing cut-throat competition in their
respective industries and they are struggling to generate and retain a competitive advantage in
the market. Companies have to assess and evaluate the key issues or trends in the market
which could have the potential to negatively affect their operations and the interest of their
stakeholders (Nykamp, et al., 2013). The objective of this research report is to analyse the
key issue that is affecting the operations of Tesla. Tesla is an American electric vehicle
manufacturer that was founded in 2003; the headquarters of the company is situated in Palo
Alto, California, US. Tesla operates in the industry of automotive, energy storage and energy
production. The company has built a positive brand reputation and a loyal customer base by
offering electric vehicles that are highly efficient, cost-effective and sustainable allowing its
customers to reduce their carbon emissions and contribute to the protection of the
environment (Wade, 2016). However, the number of companies that offers elective vehicles
increasing rapidly as existing as well as new comer MNCs (multinational companies) enter
the market. The key issue selected for this report is “competition on innovation and
technology”. This research report will identify how this issue will affect the stakeholders of
the company along with the evaluation of their potential reactions to this challenge. This
research report will evaluate how the company could manage this issue and the reaction of its
stakeholders by providing various recommendations.
Research question
How do the company’s stakeholders react to the issue of competition on innovation and
technology and what should the company do to manage these?

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Analysis of the issue
As the competition in the automobile sector become intense, it becomes crucial for Tesla to
ensure that it relies on innovation and technological advancement to continuously improve its
products that provides it a competitive advantage in the market. The issue of growing
competition on innovation and technology in the automobile sector resulted in affecting
various stakeholders of Tesla and it becomes necessary for the company to assess these
challenges to reduce their negative impact. Different stakeholders of Tesla react differently to
the issue of competition on innovation and technology. Other leading companies in the
automobile industry such as Volkswagen, BMW, Mercedes and Audi relies on new
technologies to offer electric cars that provides better value to their customers than compared
to Tesla that resulted in reducing the number of its customers. It also affects the shareholders
of the company since the profitability and market share of the company shrinks (Mikulskiene
and Pitrenaite-Zileniene, 2013). The employees of the company also face challenges since it
becomes difficult for Tesla to offer them adequate salary packages and it also led to
increasing job-cuts in the company.
Furthermore, there are many new comers MNCs that are creating challenges for Tesla by
disrupting its market share that affects its shareholders in a negative manner. A good example
is the launch of Jaguar I-Pace, Audi e-tron and Lucid Air in the market that created high
amount customers resulted in adversely affecting sales of Tesla’s new models (Beresford,
2019). Although, major automakers such as Jaguar and Audi has created a large market share;
however, these companies are considered as new comers in the electric automobile sector
making them major competitors of Tesla. These are a part of new emerging economies since
they target customers in leading market such as the US and the UK where the customers
already prefer new models introduced by Tesla. When it comes to small developing
economy, companies such as Lucid Air poses potential threats for Tesla since they heavily

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relies on innovation and technological advancement to offer better products to their
customers. These factors are necessary to be considered by Tesla in both emerging and small
developing economies in which it operates since they directly affect its stakeholders in a
negative manner (Hawke and Edmonds, 2014).
Role of newcomer MNCs
Tesla operates in energy generation and storage, and automotive and the company is affected
by growing competition in these sectors which affect its stakeholders as well. Tesla itself is a
newcomer in these sectors; however, the company has created a unique brand reputation and
strong market share by using innovation and technology in its operations. Similarly, new
comer MNCs in these sectors also rely on innovation and technology in order to find creative
solutions to current problem that led to improving the overall products and services which
allows them to disrupt the market of incumbents and expand their market share (Lie,
Kauffman and Ma, 2015). In the case of Tesla, the share prices of the company reduced
drastically after the information regarding the new comer MNCs entering the automobile
sector spread. For example, many people pre-booked for Lucid Air even when it was
displayed as a prototype by the company. Many strong claims were made by this Tesla
competitor that was new in the market based on the innovation and technology that was used
in manufacturing of this product. The company was able to make huge claims regarding the
capacity of this product which attracted the attention of a large number of customers.
Similarly, many other already established MNCs that are a new comer in electric vehicle
sector introduced prototypes of new products that were termed as “Tesla killers” (Ombello,
2020).
Companies such as Honda are new comer in the market and rely on technological innovation
such as hydrogen energy technology to improve their products. The company is developing

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fuel cell vehicles (FCV) that are powered by hydrogen energy which allow its users to refill
within 3 minutes. Another new comer is the launch of 2017 Bolt by General Motors that is a
cost-effective electric vehicle that allows its users to travel 200 miles in just a single charge
(Bumblebee Batteries, 2020). Products offered by these companies have the potential to
negatively affect various stakeholders of Tesla since it disrupts the market share of the
company and create potential threats relating to its profitability. If the company wants to
protect the interest of their shareholders and employees, it has to make sure that it
continuously improves the use of technology in its products and relies on innovation to
deliver better services to its customers. For example, the company has reduced the time it
took for its customers to recharge their vehicles and the number of charging stations
throughout the US have increased as well. The company has also improved the
manufacturing process of its engines and other components by selecting more cost-effective
ways that reduces overall wastage and cuts the overall production time (Weiller, et al., 2015).
Still the company is facing threats from new comer MNCs in relation to innovation and
technology that increases competition for the firm and creates challenges for its various
stakeholders.
Impacts of the issue on various stakeholders
The stakeholders of Tesla are categorised in both internal and external groups; internal
stakeholders include managers, shareholders, employees, and the Board of Directors whereas
the external stakeholders include suppliers, consumers, governments and others (Nowinski, et
al., 2013). These stakeholders are situated in different developed countries, developing
countries, and emerging markets; however, the majority of Tesla customers are situated in
developed markets such as the US and the UK since the company has created a strong
network of charging stations which is not available in developing countries and emerging

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markets. The interest of these stakeholders is affected by the operations of Tesla and the
growing competition in the industry directly affects them as well (Lampel, Jha and Bhalla,
2012). The company is struggling as a result of growing competition from both new comer
MNCs and already established brands since these organisations relies on innovation and
technology to offer products and services that are better than Tesla’s products and services.
This threat affects the different stakeholders of the company in a different manner. For
example, the managers of the company are under pressure to ensure that they sustain the
profitability and growth of the company by continuously offering new products based on
customers’ demands while reducing the overall costs of production (Ritala and Sainio, 2014).
When it comes to shareholders of the company, they want the company to generate higher
revenue that provides them better results; however, there returns are reduced as new comer
MNCs enter the market to disrupt the sales of Tesla’s vehicles. Employees of the company
are also affected since they face challenges due to job-cuts. For example, in the recent news,
the company announce that it will lay off around 3,000 employees to cut costs of its
production and the company already reduced 9 per cent of its total workforce in June 2018
(Stewart, 2019). It shows the negative impact of growing competition on the employees of
Tesla.
External stakeholders of the company are also affected by the growing issue of competition in
the automobile sector which is a result of increasing use of innovation and technology by
automobile company. The company has strong relationship with its suppliers which allow it
to maintain the quality of its products and reducing the time it took in the procurement of raw
materials. However, this relationship is negatively affected as the competitors of Tesla use
some of its team suppliers to improve their production quality that led to creating challenges
for the company (Lopez and McKevitt, 2017). Consumers are key stakeholders of Tesla that
are also affected by the entry of new MNCs in this sector. Tesla has a loyal customer base

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that prefers its customers as they are sustainable and high quality; however, competitors are
using technological advancement and innovative approach to offer better products than Tesla
which creates challenges for its loyal customers since it becomes difficult for them to
continuously use its products. Therefore, the issue of competition on innovation and
technology for Tesla created a clear impact on its stakeholders and the company has to
evaluate these effects in order to ensure that it stays relevant in the ever changing business
environment (Hall, O’Brien and Woudsma, 2013).
Possible reactions from stakeholders
The impact of growing competition as a result of the use of innovation and technology by
competitors of Tesla affect its various stakeholders and they could have different reactions to
the impacts of this issue (Hardman, Shiu and Steinberger-Wilckens, 2015). When it comes to
managers, the possible reaction to this threat is implementation of new business strategies
which are targeted towards finding creative solutions for current problems through innovative
approach and using technological advancements in order to improve supply chain operations
of the company (Wayne Gould, 2012). The managers are focused on reducing the overall cost
of production while also increasing the efficiency and effectiveness of Tesla’s products
making them more appealing to their customers. In the case of employees, they can
contribute to the success of Tesla by discharging their duties in an effective manner.
Due to the fact of job-cut, many employees could face challenges and they might switch their
jobs before they receive a termination letter from the top level management (Mangram,
2012). This could result in increasing the attrition rate of Tesla making it difficult for its
managers to foster a culture that supports innovative thinking that is crucial for the company
to provide stiff competition to new comer MNCs. The possible reactions of shareholders
could be to sell the shares of the company in order to secure their results since the market

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value of the company could reduce drastically if its sales or profitability suffers (Lu, et al.,
2014). The shareholders can also have an alternative approach towards this issue and they can
support investment in research and development practices of the company that lead to
development of better products which ultimately benefits them by increasing the customer
base of Tesla.
The suppliers of the company could also decide to go with the competitors of Tesla since they
could offer them better deals from a financial perspective; however, most of the suppliers
have a contractual relationship with Tesla making it difficult for them to engage in business
practices with its competitors (Liu and Meng, 2017). The potential reaction of customers of
Tesla can be both positive and negative. Since there is no high switching costs, it becomes
easier for the customers to select competitors of Tesla that offers better products or services.
Customers also make aware decisions by comparing the details of Tesla’s products and the
products of its competitors which gives them an advantage to select the most suitable product
that caters their needs (Herrera, 2015). However, they could also select Tesla’s products due
to their loyalty towards the brand despite the fact that other companies might offer slightly
better products and services to them. These potential reactions of stakeholders of Tesla could
differ based on the location of these stakeholders such as developed countries, developing
countries and emerging markets or based on their preferences. Nevertheless, the organisation
should take into consideration also these potential reactions before taking into consideration
any strategy to address the issue of competition on innovation and technology
(Mathivathanan, Kannan and Haq, 2018).
Recommendations
Due to the growing challenge of competition that is brought up as a result of growing
innovation and technological advancement in the automobile sector, various stakeholders of

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Tesla are being affected. The management of the company has to assess their potential
reaction to this issue and implement policies that are targeted towards managing these issues.
The corporation should implement corrective measures in order to successfully execute its
global strategy and it should also formulate policies that effectively implement change in the
workplace. The success of the globe strategy heavily rely on the fact whether the
management of the company is able to eliminate resistance among its employees while
implementing policies that foster innovation and use of modern technologies (Stringham, et
al., 2015). It becomes crucial for Tesla to manage the reactions of its stakeholders that will
contribute to ensuring that it is able to face its competitors in the market while maintaining its
competitive advantage. In order to address the threat of growing competition on innovation
and technology, Tesla should focus on changing its global strategy that will enable the
organisation to reach out a new customer base in developing nation and emerging markets to
make sure that its stakeholders did not face negative impact. One of the key selling points of
Tesla’s products is the ability of the company to find innovative solutions for existing
problems that contributes to the development of society. The company should use
technological advancements in order to improve its existing products to make sure that its
customers remain loyal to the organisation. Since the competition of Tesla is also using
innovation and technology, the company should also use these techniques to provide stiff
competition to its competitors (Nykamp, et al., 2013).
The company should improve the safety of its cars by using advanced LIDER technology to
monitor the roads in order to eliminate the threat of accidents. The company has already
established a large number of charging stations throughout the US, making it difficult for new
comer MNCs to disrupt its market. However, the company has also allowed its competitors to
charge their vehicles in its charging stations that give them an edge over Tesla. This issue can
be addressed by the company based on its ability to create a virtual map that leads to

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increasing the safety of its cars than compare to its competitors. For example, Tesla has
created an in-depth map of the US that allows its customers to visit different places while
relying on the function of self-driving mode. In order to activate this function, new comer
MNCs will have to incur substantial investment in R&D process and they will have to
conduct years of research before reaching to the same capabilities of Tesla. Based on these
technological advancements, shareholders of the company can relax since they know that
their investment will remain secure in the future and they will receive a high rate of return on
their investment as the market of Tesla expand . It shows that focus and execution of the
global strategy will enable Tesla to positively influence its stakeholders by meeting their
interests (Ritala and Sainio, 2014). Through the global strategy, the company should use its
innovation and technological advancements to enter in developing nations and emerging
markets that will allow the company to give a strong competition to its competitors while
relying on its key resources and capabilities. As the issue of competition on innovation and
technology increases, the turnover of employees in the company might increase as well;
however, through an effective global strategy, Tesla will be able to retain talented employees
that will allow the organisation to ensure that it stays ahead from its competitors.
The company should cater to the needs of its employees allowing them to ensure that they
find and develop new ways of manufacturing that will lead to reducing the overall operating
and production costs of Tesla giving it an edge over its competitors. It is recommended that
the managers of the company should focus on creating culture in which employees become a
part of the decision-making process and they are able to contribute to the process of strategy
formulation. The managers should promote a culture in which employees that demonstrate
creative thinking and innovative approach are recognized and appreciated by the top level
management. These strategies will result in reducing resistance among employees towards
change policies that introduce new ways of conducting business operations while also

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allowing them to rely on creative problem solving mechanisms to achieve corporate goals.
Along with the focus on internal stakeholders, Tesla should also focus on interest of its
external stakeholders. Based on the execution of a global strategy, the number of suppliers of
Tesla will increase as well on a global scale allowing company to exercise its power in order
to restrict its suppliers from engaging in business practices with its competitors (Hardman,
Shiu and Steinberger-Wilckens, 2015). The global strategy of the company will also benefit
its customers since they will be able to use its product in developing nations and emerging
markets. As the threat of competition on innovation and technology grows, it becomes
important for Tesla to find new customers that are willing to purchase its products based on
its market value and reliance on technologies. These recommendations shows that Tesla
should focus on executing global strategy and managing the change in order to address the
issue of competition on innovation and technology which will make sure that its stakeholders
are not affected in a negative manner.
Conclusion
Based on the above observations, it can be concluded that Telsa is facing the issue of growing
competition from existing as well as new comer MNCs that relies on innovation and
technological advancements to manufacture products that are cheaper and offer better
solutions to customers. These companies belong from both emerging economy and small
developing economies and they have the potential to impact various stakeholders of Tesla.
Stakeholders such as managers, employees, customers, suppliers, shareholders and others are
directly affected by this issue and they could have different reactions to the impact of this
issue. These reactions could have both positive as well as negative affect on the operations of
Tesla based on which it should be assessed by the management to make sure that the
company is able to retain its position in the market. There are various recommendations