Strategic Management Plan: A Business Analysis of Tesla Motors

This report provides a comprehensive strategic analysis of Tesla Motors, examining its position within the competitive electric vehicle market. The report begins with an introduction to Tesla, followed by an evaluation of its strategic environment using frameworks such as PESTLE, SWOT, and Porter's Five Forces. The PESTLE analysis assesses the macro-environmental factors impacting Tesla, including political, economic, social, technological, environmental, and legal influences. The SWOT analysis evaluates Tesla's internal strengths, weaknesses, opportunities, and threats. Furthermore, the report applies Porter's Five Forces model to assess the competitive intensity within the electric vehicle market. Finally, the report discusses theories related to strategic planning, concluding with an overview of Tesla's strategic position and recommendations for future growth. This report provides a detailed understanding of Tesla's strategic challenges and opportunities within the automotive industry.

Business Strategy
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TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Macro environmental factors...................................................................................................3
Pestle analysis —.........................................................................................................................3
2. Internal environmental significance on the firms' growth.......................................................6
Swot analysis —..........................................................................................................................6
3. Porter Five Forces of Tesla....................................................................................................10
4. Theory related to strategic planning......................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES .............................................................................................................................15
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INTRODUCTION
Strategic planning is termed as a process of an organization that aids in strategy making,
decision-making, allocation of several resources, setting direction. It assists entity in bring the
needed changes within an entity, analysis their overall process. The auto manufacturing within
market is very competitive.
Present Report focuses on the electric vehicle manufacturing firm, Tesla motors and how
it will manage extreme competition from premium and large firms. Report begins from
introduction of Tesla Motors firm (Cha, Hwang and Kim, 2019). After that firm’s strategic
position will be evaluated by frameworks such as Pestle, Porter’s five forces, Swot and Value
chain analysis. Report focuses on Tesla Motors that was established through Marc Tarpennning
and Martin Ebehard in 2003. It is one of the world’s premium brand that becomes third best-
selling car within the United States. The firm’s success is contributed to the Elon Musk who is
the CEO as well as Architect of Tesla, whose vision is very strong regarding the firm’s future.
MAIN BODY
1. Macro environmental factors
Pestle analysis -
PESTLE Analysis is considered as strategic analysis that mainly highlights used to
impact of the various external that impacts the entity’s business. Mainly these factors impact the
firm within both positive and negative way. It also evaluates will aid in evaluating all the
external factors that impacts Tesla business.
Political factors — It mainly focuses on the policies and actions of the government that impact
the economic development and remote environment of the firm. Factors such as tax policies,
trade control, government stability impacts an entity within a more drastic way. Brexit will affect
negatively on Tesla operations as UK trade laws will change. Tesla has an opportunity where it
can expand their business globally and increases their supply internationally. Tesla motors have
also deals within several political patterns impacting the business operations. One of the major
political factors impacting the industry regarding the environmental protection laws in order to
induce production more environmental cars to meet the strict emission level. Laws which impact
Tesla are mentioned as —
Health and Safety Act, 1974, this act defines the health and safety measures which are to
be provided to the employers, employees and other staff members who work in the company.
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The Companies Act, 2006 (Strategic Report and Directors Report) Regulations 2013 has brought
in to notice a report on the greenhouse gas emissions as part of the Annual Director's Report.
Tesla reported on the Global Energy use. This was done under the act of Companies Limited
Liability Partnerships Regulations 2018 (Noblecilla, 2018).
Economic — These are the factors that involve the growth within alternative energy industries
as well as enhances within the cost of using cars because of the risen prizes in short duration.
Thus, the demand regarding more efficient cars is higher than earlier. The pandemic Covid 19,
will impact negatively on Tesla operations. It is because of decline in GDP of UK and other
naions (Zhu and Chertow, 2017). The UK constitutes 3.3% of world's GDP. The service sector of
UK dominates which is contributing to 80% of the GDP. The Largest economy is constituted by
London which makes it higher in evaluation of GDP per capita income in Europe.
Social- These are associated to enhance the environmental concerns, emphasis and attitude
regarding products. That is considering as Eco friendly. It will impact in a positive way on Tesla
operations as now people needs are changed. They are buying more fuel efficient cars.
Nowadays people are losing faith within gasoline fuel as well as associated cost within
production, trying to aid within environment. Furthermore, undoubtedly the current society
judges individuals associated on the car type their buy for themselves. The ideas regarding the
electric vehicles enhance the social status of people. Fuel efficient cars are becoming popular
which has increased the sales of the company due to its effective and efficient products and
services offered to its consumers along with rising popularity of low — carbon lifestyles
preferences in renewable energy is increased. Here social changes is enhanced within aging
population alongside most savings and wealth that likely to spend more money on the cars
(considered as premium electrical cars).
Technological — Tesla's EV charging stations is a major technological change which the
company has initiated for the future use of electric cars. Over 20,000 units will be installed in
US. Superchargers for those electric cars will be accounted for the usage. Furthermore, a US
electric carmaker would debut in 2021. The rapid globalization as well as internet influence that
have huge impacts regarding the industry known as automotive industry. The Globalization and
internet influence will affect positively on Tesla operations as advancement in technology will
provide platform for Tesla to expand in new markets. It focuses on several improvements within
safety as well as convenience of cars within the future perspectives. Thus, B2B platforms as well
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as market places that have also provided enhanced opportunities to the car industry in turn
enhanced efficiencies as well as decreased costs. After Covid 19, Strategy of Tesla is to provide
the effective supply chain management for the firm that has invested large amount of money as
well as gives products and services timely to their consumers. Firm also invested with the RFID
technology that aids in completing tasks very smoothly in order to enhance the experience of the
consumer. Thus, Technological changes enhances the cost as well as labor for work that reduces
the financial capacity of the entity in order to meet the future demands or challenges. By the help
of the training and development of workers enhances the financial burden on the entity.
Environment- Over the few years various cars manufacturers have faced pressure in order to
produce fuel efficient vehicles or Eco –friendly. The Eco friendly environment will impact
positively on Tesla operations as cars produce by company is environment friendly.
Environmental factors are one that deals with the enhancing awareness regarding climate
changes that leads to change within operations as well as firm’s products and services, due to
that buyers are getting more awareness regarding environmental impacts of production
(Matthews, Hirve, Pan and et.al., 2020).
Legal- Legal regulations which Tesla constitutes customer privacy notice which makes sure that
how the information is being used. Government Clean Air Regulation is initiated by Tesla which
ensure that no harm is done to the environment. Governments Clean Air Regulation will
positively impact the Tesla operations as company car is highly secured. In legal and regulatory
compliance Tesla ensures products and services supply comply with all national and other rules
and regulations (Dana, C., 2018). from green movements focuses on energy loan programs as
well as putting pressure on Eco friendly’s car production. For examples enhance within taxation
to incorporate green business’s new methods, carbon tax and various other green polices. One of
major concerns within the franchise laws in United States of America protects car dealers as well
as creates several challenges in order to sell its cars directly to their buyers. Various other factors
that impacts the manufacturing of battery car involves subsidies and tax incentives in order to
enhance the demand among buyers.
In the above analysis of Pestle analysis the issues covered shaped several opportunities
for Tesla Motors for success of electrical cars in automotive marketplace and also for further
expansion of cars within industry. Thus, together with opportunities also creates threats as the
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form concerned regarding rapid technology advancements as well as political regulations within
marketplace where the Tesla can operate (Oldman and Tomkins, 2018).
The people of the United Kingdom welcomes new products within marketplace in order
to gives the opportunities so that business can be expanded. Thus, it impacted on the firm’s
existing growth that are working within country for long duration of time as well as reduces their
profit share.
2. Internal environmental significance on the firms growth
Swot analysis -
Swot analysis is aids in understanding the strength, weakness, threats as well as
opportunities. It aids the Tesla in understanding through which they operate as well as uses
competitive advantage so that dominate the electric car manufacturing industries.
Strength
Tesla is one of the leading firm that has left behind the other brands in race of the electric
cars. When compared to their range the electric car manufactured by Tesla is covering maximum
distance. Firm has also proven itself an innovative one as because of its recent development such
as new sports cars and electric semi trucks. Tesla has 18% market share in Global EV sales as
Electric car is one of the most innovative product that has been made by Tesla.
Lean management system where all the staff members work collaboratively within
relatively small as cheaply decorated offices. This enables to simplify the process of decision-
making, skipping writing proposal as well as its submission, increasing trust and relations
between managers and staff members (Zhu and Chertow, 2017).
Tesla has acquired various investors from well-established firms such as Google as well
as built the successful strategic partnership with Toyota Motors, Daimler and Panasonic that
brings mutual benefits to both parties, offering the trust for the costumers of Tesla, future
investors, sharing their expertise within technologies, production process and increase the firm’s
brand recognition (Zhu and Chertow, 2017).
Weakness
Production defects — For any firm the assurance regarding the sustainability is vital in
order to maintain the firm’s morale and public image. Tesla because of its unstable
manufacturing conditions suffers disbelief among the people regarding its existence that can
becomes its deficiency in the development of its business. As because of the complex
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engineering used in making innovative vehicles. As cars of Tesla as well as other energy
products have flaws. Thus, there is weakness within the design of the defected products as well
as other features that can harm the firm’s image more permanently.
Shortage of Batteries- The CEO Elon Musk within annual shareholder meeting accepted
that the rate of the productivity is reduced because of the supply of batteries is limited. Here the
shortage impacted electric vehicle sales’ vehicles as well as energy storage systems (Guangul
and Chala, 2019).
Lack of high volume Production- Tesla has manufacturing actual energy saving cars
but at the same time firm failed to produce high volume of its models thus the firm plans in order
to manufacture mode 3 vehicles as it faces problems within the terms of management resources
and production cost as well as space expansion within their Gigafactory 1 (Teece, 2018).
Opportunities
One of the most significant opportunity for the firm is within the Asian markets where
there is saturation and markets are unsaturated due to political instability, poor relationship with
neighboring countries, inflation and recession elements which affects the market structure add up
to the saturation factor. Within the renewable energy and automotive markets. Thus, within such
situation firm needs to expand internationally in order to increase their financial stability. Firm
has also makes their own battery cells as such move can be also becomes big game changes that
aids the firm to enhance its manufacturing rate while at the same time decreasing the cost of
production.
Threats
Major threat to Tesla is debt. Although, Tesla still faces the competition with other
companies it still has threat from them as newer technologies and trends have been implemented
in their products and services as well. Tesla has threat from the companies like Toyota, Ford etc.
Threats from such big companies increases the threat of Tesla to survive in the market and
enhance its products and services regarding the same.
Lack of regulation for self Driving — Within many nations there is no proper regulations for
self driving such as US. The sale of the firm is impacted through self driving restrictions within
various areas. Thus, such type of the situation regarding the legal complexity enhances the
uncertainty regarding the Self driving project within the future perspectives.
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VRIO analysis -
CORE
COMPETEN
CIES
VALUABLE RARE IMITABLE ORGANIZED ADVANTAG
E
Brand Image Yes Yes Yes Yes Competitive
Innovation Yes Yes Yes Yes Competitive
Customer
Experience
Yes Yes Yes Yes Competitive
Product Range Yes No Yes Yes Temporary
Market Yes Yes Yes Yes Competitive
McKinsey 7s Framework Model for Tesla -
Hard Elements — Hard elements of this model comprises Strategy, Structure and Systems.
Strategy — The strategic direction and overall strategies are clearly defined and communicated
to all the employees and stakeholders of Tesla. The company also considers competitive
pressures and activities of the competitors. The company takes in account the consumers needs
and wants by flexibly adapting various strategies that the company generates or regulates for
attainment of goals and objectives effectively and efficiently.
Structure — Organizational hierarchy of Tesla is supported by other progressive organizations.
By high coordination between inter — departmental of the company Tesla's projects and work
are effectively executed and success is achieved through it. Tesla also has hybrid structure
between centralization and decentralization from which the company follows decentralization
process (Shaqrah, 2018). Also, there is an effective communication which runs between the
employees of the organization.
Systems — Effective organization system works for Tesla. All the business operations work
effectively and efficiently ensuring smooth and proper work flow in the structure which is
followed by the organization in each department. All the control measures are monitored and
controlled within the system.
Soft Elements — Soft elements of this model include shared values, staff, skills and strategy.
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Shared Values — Shared values of Tesla constitute creativity, honesty, transparency,
accountability, trust, quality and heritage. The company ensures that high ethical and moral
standards are followed so that the company sets benchmark and refines its position in the
external environment.
Style — Tesla follows Participative Leadership Style which ensures that the employees are
involved in the collective decision-making process which helps in achieving the organizational
goals and objectives leading to growth and development of the company.
Staff — Employees for the company are hired both internally and externally by providing right
roles and positions to the employees based on their skills and abilities. Tesla has well-defined
system for identifying capacities and capabilities for the company (Shaqrah, 2018).
Skills — Tesla outsource commendable workforce with high skills and capacities. The company
hires by providing training to the employees according to their skills and abilities. Human
Resource of the company is the core advantage as the skills of the employees provide a
competitive benefit to the company.
Porter's Value Chain Analysis -
Primary Activities — They are directly involved in producing and selling the product by target
consumers (Simatupang, Piboonrungroj and Williams, 2017). The primary activities include
inbound logistics, operations, outbound logistics, marketing and sales and finally the services
which are offered by Tesla to the consumers.
Secondary Activities — Secondary activities of Tesla is defined by the coordinating and
facilitating the primary value chain activities (Bedeley, Ghoshal, Iyer and et.al., 2018). These
activities include Tesla's infrastructure, functions of Human Resource Department, advancement
in technology aspect and procurement by purchasing the inputs that may range from equipment,
machinery, raw material supplies etc.
Competitive Advantages — It is important for Tesla to base its competitive advantage by using
marketing, operations and other relevant value chain activities (Koc and Bozdag, 2017). The
depth and breadth of the company is analyzed through its competitive advantage.
Cost Advantage of Tesla — Tesla can control following drivers to add value, set differentiation
basis and enhance efficiency and effectiveness. The company's value chain should consider
customers perceived value.
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Differentiation Advantage — Company can produce such products and services which are not
easily available to the other companies. Differentiation can be done through both primary and
secondary value chain activities consisting of different aspects mentioned in it.
Stakeholder's Analysis for Tesla — Tesla has a Corporate Social Responsibility strategy in
which stakeholders prioritize their strategy. These are mentioned as -
Communities — As Tesla redefines the corporate image and being an automotive business it is
heavily influenced by communities. Therefore, it is satisfying the customers interest in new and
advanced technologies (Mehta and Bhavani, 2018).
Customers- Customers are more concerned about the product and services that are rendered by
Tesla. Customers are also more inclined towards low prices. Therefore, the company is providing
better quality products and services to maintain the customer base (Prochnow, 2019).
Employees — Employees of Tesla play a major role in the company's growth and development
aspect. The company's CSR strategy offers special training programs for the Tesla partners all
over the globe.
Investors/Shareholders — Investors and shareholders of Tesla are more concerned about
profitability and growth. Investors interest is to see and make the company reach heights (Mehta
and Bhavani, 2018).
Governments — Tesla is dependent on government actions. The legal actions and compliance of
the company contribute to the state economic growth.
3. Porter Five Forces of Tesla
Porter five forces
This framework is considered as beginning point for strategic analysis that can be utilized
for assessing the industry’s attractiveness. It also discovers a desirable strategic innovation so
that improves the firm and its profitability.
Bargaining power of suppliers — The supplier’s bargaining power is moderate due to the
Tesla’s products is currently limited as compare to the other rivalries within industry. Firm is
also dependent on its suppliers. Firm is also specified dependent on its battery supplier,
Panasonic, with whom Firm has a supply agreement by the end of the year 2017. There are
several potential suppliers within industry as well as firm is also increasing production that
would enhance the power of Tesla.
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Bargaining power of Buyers — Within the automotive industry the power of Buyers is high
due to this there are various models, makes, manufactures to choose from as well as dealers will
negotiate the sale prices. Thus, the bargaining power of firm consumers that is moderate due to
this there are all electric as well as hybrid alternatives that can offered through other rivalries.
Thus firm unable to negotiate sale prices. Thus, the bargaining power of the Tesla consumers is
considered as moderate due to this all hybrid and electric alternatives offered through other
rivalries. Thus, the firm unable to negotiate sale prices (Pervan, Curak and Pavic 2018).
Threats of new entrants - The threats of the new entrants within marketplace are very low due
to the high barriers in order to take entry as well as large size of the rivalries within such
industry. Various high barriers such as development of design cars, high cost of research, high
production’s cost (labor, material), high brand development’s cost, high economies of scale and
high cost of marketing. There is an also new entrant that needs important upfront financing to
produce a vehicle as well as compete with rivalries in the marketplace. It is not an easy task to
get started within an electric vehicle especially for the startup. If Tesla has taken the firm over
the last 15 years as well as billions of dollars of debt. The large competitors as well as brands
control market share and competitors design new cars models as well as redesign existing car
models as well as offers the attractive incentives to impact the potential buyers.
Threat of substitutes- The Tesla’s threat of substitutes within such automotive industry are
considered as moderate due to the alternatives that can be offered through rivalries and public
transportation. Here the cost to switch from one manufacture to the other one or choose
somehow other alternative is low. In addition to this, rivalries offer other electric or hybrid
models with different price range also perform very well.
Threat of rivalries- The rivalries in the automotive industry is considered to be very
competitive. Thus, in the electrical vehicle industry where Tesla position itself is modest due to
the smaller number of various competitors such as Nissan Leaf, Chevrolet Volt, Ford Focus
BEV. Thus, market is expanding very fast and thus more number of firms such as BMW,
Volkswagen, Audi has entered with their plug models (Kitsios and Kamariotou, 2019). Also in
addition to this every firm tries to create niche so that developing various alternatives in terms of
environmental friendly cars also small performance turbo diesels, hybrid and many more. Thus,
rivalry within future will be considered as more intensive as these firms requires keeping
improving, motivating as well as making betters cars.
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Here the porter five forces are likely to be favorite for most of the case regarding the
future growth. Thus, the automotive market is also very competitive as well as attractive for rich
consumers. Thus, Tesla Motor’s must be able to keep up with larger firms. The market of Tesla
is attractive as it is more concerned about the customers needs and requirements and thus
produces different types of products and services which engage customers attention towards the
new products launched which is the Electric car gaining maximum popularity in the market.
4. Theory related to strategic planning
TOWS Matrix — This matrix consists of (Strength Opportunity Strategies), (Weakness
Opportunity Strategies), (Strength Threat Strategies), (Weakness Threat Strategies).
Strength Opportunity Strategies — Gain the marketing strategies of Tesla to attract customers so
that they are engaged more in buying the product and services.
Weakness Opportunity Strategies — Increase payrolls, supply incentive packages and benefit to
employees of the organization. (Maiyusril, 2018).
Strength Threat Strategies — Use strong distribution network to reach large customer base.
Weakness Threat Strategies — To Provide incentives, increase engagement, provide better work
environment for the company.
Vertical/ Horizontal Integration — Tesla used vertical integration as it recognized the
complexities in the supply chain. And so in this process the company has integrated its battery
production to electric motor production and a central control system, vertically (Singer,
Kerrissey, Friedberg and et.al., 2020). Vertical integration is the most effective and most
important part of the supply chain which focuses on the Tesla's complex products and services
formation rendered to the customers.
Mergers and Acquisitions — Tesla has done its merger and acquisitions with the SolarCity,
Tesla Grohmann Automation, Maxwell Technologies, Deep Scale, Hiber Systems, Silicon.
Bowman’s Strategic Clock- It aids within strategic positions of goods in order to gain
the competitive benefit in order to change the business (Desai, 2019). It represents the various
positions within a market where consumers that have various needs regarding value of money.
Such positions focuses on the various range of the generic strategies in order to gain competitive
benefit.
Tesla must use the differentiation strategy as they have to focus on small group of
individuals, who are environmental conscious and rich as well. Those who are attracted through
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