Tesla Motors: An Examination of Organizational Strategy & Growth

This report provides a comprehensive overview of Tesla Motors' organizational strategy, examining its past, present, and future approaches. It delves into the company's generic and intensive strategies, including differentiation, market penetration, and diversification. The analysis highlights how Tesla leverages advanced technologies in electric vehicles and related products to gain a competitive edge. Furthermore, the report explores Tesla's future strategy, emphasizing innovation and the development of sustainable energy solutions. The document also includes brief analysis of Tesla Motors PESTLE and Micro Environment, SWOT and Internal Organisation/Environment.

Running head: MANAGEMENT
Tesla Motors- Organizational Strategy
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Executive Summary:
The report aims at providing an overview of management by throwing a light on the
organizational strategy of Tesla Motors, known for the manufacture of the electronic car and the
solar panels. The report throws a light on the past, present and the future strategy of Tesla
motors. As far as the past strategies are concerned the report throws a light on the generic and
intensive strategy of the Tesla Motors. The report even throws a light on the differentiation,
market penetration and the diversification strategy of Tesla Motors. Through the report one can
also get an overview as to how the company adopts its future strategy to concentrate on the
aspect of innovation.

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Table of Contents
Introduction:....................................................................................................................................3
Organizational Strategy of Tesla Motors:........................................................................................3
Past Strategy:................................................................................................................................4
Present Strategy............................................................................................................................5
Future Strategy:............................................................................................................................7
Conclusion:......................................................................................................................................8

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Introduction:
The report aims at providing an insight into the past, present and the future of the
organizational strategy of Tesla Motors (tesla.com 2019). The company was found by engineers
Marc Tapenning and Martin Eberhard in the year 2003 and is located in California. The company
has expertise in the manufacture of the electric car and solar panel. The company is known for its
multiple assembly and production plants. According to the reports of the year June 2018, Tesla
sold Model S, Model 3, Model X, Powerpack and Powerwall batteries, solar roof tiles and solar
panels. The company ranked as the worlds’ best in selling the plug in passenger car in terms of
both the automotive group and the brand. The company had a market share of close to 12 percent
in the segment of plug in sales. The vehicle sales of Tesla rose from 48,000 in the year 2017 to
close to 182,400 in the year 2018 in the United States. This represented a hike of close to 138
percent from the year 2017.
Organizational Strategy of Tesla Motors:
An organizational strategy represents sum total of actions that a company intend in taking
for achieving the long term goals (Benn, Edwards and Williams 2014). Altogether, such actions
define the strategic plan of the company. A strategic plan takes a year to get completed and
ensures the involvement at all the company levels. The key purpose of the organizational
strategies remains in connecting the key areas that defines the purpose of the business.
Organizational strategy is vital for the organization since it puts across sense of direction thereby
outlining the measurable goals. Thus, strategic planning acts as a useful tool for guiding the day
to day decisions while evaluating the progress and changing the approaches while moving
forward (Grant 2016).

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Past Strategy:
Tesla puts across generic strategy for achieving the competitive advantage in comparison
to the other firms within globalized automotive industry. According to the Porter’s model the
generic competitive strategy represented the approach of the company in competing into the
market (Tanwar 2013). In this regard, the generic strategy of Tesla reflected the focus of the
company in using the advanced technologies in the electric vehicles and the other related
products as the mean of competing with the Toyota Motor Corporation, General Motors
Company, Volkswagen and Bavarian Motor Works (BMW). Apart from generic competitive
strategy a company uses the intensive strategies for the growth of the business. Tesla believes in
gradual evolution of the growth strategies. This evolution reflects the increased popularity and
the improved profitability of the company. The strategic adjustment of the company ensured the
resilience of the corporation in face of the technological advancement and the changing
preferences of the customers.
The generic strategy of Tesla Motors enabled the company in maintaining the
competitive advantage and in attracting the initial adopters in international automotive market.
On the other hand, the matching intensive strategies supported the organizational growth based
on rising sales revenue from the present market where the company operated. The generic
competitive strategy of Tesla lay in it’s the broad differentiation. This strategy helped in
building the competitive advantage depending on the product development that helps in
differentiating the company from the other firms within the industry (David and David 2013).
For instance, the products of Tesla Inc is competitive since they are able to integrate the
advanced environment friendly technology while considering the fact that majority of the
automobiles made use of the internal combustion engines. The strategy helped the company was

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able to attract the potential customers who express increased interest in the environmental
friendly product. Tesla made use of differentiation focus as the generic strategy in gaining an
advantage over its competitors. In applying the differentiation focus strategy of the company that
not only stressed on uniqueness of the products but at the same time emphasized on the early
adopters of the electric vehicle. The early adopters have been affluent customers who possess a
higher tendency of purchasing the new products. With the popularity and the declining
production cost, the generic strategy of Tesla presently shifted to broader differentiation. The
decline in the production cost and the increasing popularity of the brand enabled a company in
broadly targeting customers in automobile market.
Thus, the generic strategy of Tesla Motors put across strategic objectives for ensuring
that the competitive advantage. For instance, the strategic objective of the company lies in
increasing the investment in the research and the development for the development of the newer
products that helps in satisfying the market demand for the improved renewable solutions of
energy such as batteries for the varied purposes. The other strategic objective of Tesla lies in
strengthening the competitiveness through broadening of the market reach for generating
increased sales and in supporting the popularity of the brand.
Present Strategy
The present strategy of Tesla has been the intensive growth strategy known as the
market penetration (Hardman, Shiu, and Steinberger-Wilckens 2015). This strategy helps the
company in business growth through the increase in the sales revenue in the current market
(Nykvist and Nilsson 2015). For, instance, through the aggressive marketing the company
focuses on rolling out and selling of increased number of electric cars in United States (US). In
this manner, the corporation is able to maximize the revenue from the market where it operates

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currently. The intensive strategy of growth for Tesla connects with the generic strategy of Tesla
through development of the competitive advantage depending on the enhanced market share.
Hence strategic objective surrounding the intensive strategy will help in enhancing the sales
revenue of the company through aggressive marketing.
Product Development refers to the secondary intensive growth strategy of the company
where the company grows through the development of the newer products for the generation of
the newer sales (Stringham, Miller and Clark 2015). The company applies the strategy through
the development of the newer products through advanced technology for minimizing the impact
on the environment. For instance, the company puts across solar panels along with the
development of Tesla Roadster, which was one of the first electronic sports cars. This particular
intensive strategy supported the differentiation generic strategy of Tesla through focusing on the
unique higher technology mobiles and the related products for attracting the targeted customers.
In this regard, strategic objective for intensive growth strategy lie in maintaining the far-reaching
investments in the development and research.
Market Development refers to the tertiary growth intensive strategy of Tesla Motors.
The strategy involves entering newer markets for generation of increased sales and growth of the
global business (Rothaermel 2013). For instance, the company gradually expands the market
reach worldwide through establishment of the new office and the facilities. Presently, the
company undertakes selling of only in few countries with the expectation of further international
expansion. This particular intensive strategy supported the vision and mission statements that
highlighted global leadership in automotive industry with energy solutions for transportation and
the other sectors.

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Diversification is applied by Tesla Motors as a minimum growth intensive strategy. This
particular intensive strategy enables the company in growing through new business creation
(Hill, Jones and Schilling 2014). For instance, the firm aims at the creation of variety of battery
products for non-automotive applications. This particular strategy for growth presently does not
have a significant impact on the financial performance of company. The company focuses most
of the efforts on the product development and the market penetration for growing the energy and
automotive business solutions.
Future Strategy:
The future strategy of Tesla is concentrated on the aspect of innovation (Mangram 2012).
This is because growing companies like Tesla requires ideas for ensuring a profitable growth
Tesla has repeatedly put across that income growth and healthier ideation results in an innovation
culture. This will result in reduction of the cost of the batteries for the electric cars and enhance
the sell millions of solar systems that would help in introducing an electric car company that
would create the best car in the world. The planned reincarnation will enhance the ability of
Tesla to learn, improve and test. Profitability of the Tesla represented a concoction of the
production and originality directed towards the future innovation. The loyal Tesla customer base
demanded faster, better and smarter products with enhanced capabilities. Besides, they also have
the demand for innovative products that needed constant emergence without any delay in
production.
This would ensure a shifting risk of the landscape. This would involve articulation of the
value propositions for the users, identification of the market segment for product and structure of
value chain for getting the products to customers (Karamitsios 2013). In other words, the
adoption of the innovation strategy within broader ecosystem along with formulation of a

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competitive strategy will allow Tesla Motors in gaining a foothold for the future innovation that
would act advantageous for the possible competitors.
Conclusion:
On a concluding note it can be said that Tesla Motors had a successful past and present
organizational strategy that allowed the company to not only gain competitive advantage but also
operate successfully. The operational effectiveness is determined through the matching of the
generic competitive strategy and the growth intensive strategy. The company also plans to adopt
a future strategy based on innovation that would result in outcomes required within an era of the
digital transformation.

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References:
Benn, S., Edwards, M. and Williams, T., 2014. Organizational change for corporate
sustainability. Routledge.
David, F.R. and David, F.R., 2013. Strategic management: Concepts and cases: A competitive
advantage approach. Pearson.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hardman, S., Shiu, E. and Steinberger-Wilckens, R., 2015. Changing the fate of Fuel Cell
Vehicles: Can lessons be learnt from Tesla Motors?. international journal of hydrogen
energy, 40(4), pp.1625-1638.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: Theory & cases: An
integrated approach. Cengage Learning.
Karamitsios, A., 2013. Open innovation in EVs: A case study of Tesla Motors.
Mangram, M.E., 2012. The globalization of Tesla Motors: a strategic marketing plan
analysis. Journal of Strategic Marketing, 20(4), pp.289-312.
Nykvist, B. and Nilsson, M., 2015. Rapidly falling costs of battery packs for electric
vehicles. Nature climate change, 5(4), p.329.
Rothaermel, F.T., 2013. Strategic management: concepts. New York, NY: McGraw-Hill Irwin.
Stringham, E.P., Miller, J.K. and Clark, J.R., 2015. Overcoming barriers to entry in an
established industry: Tesla Motors. California Management Review, 57(4), pp.85-103.

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Tanwar, R., 2013. Porter’s generic competitive strategies. Journal of business and
management, 15(1), pp.11-17.
tesla.com 2019. [online] Available at: https://www.tesla.com/ [Accessed 12 Mar. 2019].