Tesla Strategic Analysis Report - Business Development Module

This report offers a comprehensive strategic analysis of Tesla, examining its position in the global automotive market. It begins with an introduction to Tesla's business model and objectives. The core of the report uses frameworks like PESTLE analysis to assess the external environment, Porter's 5 forces to evaluate market competition, and a TOWS matrix to identify strategic opportunities. A value chain analysis is also conducted to assess primary and secondary activities. The report delves into challenges faced by Tesla, concluding with a summary of key findings and strategic recommendations. The analysis covers various aspects of Tesla's operations, from political and economic factors to sociocultural, technological, legal, and environmental considerations, providing a holistic view of the company's strategic landscape.

Running head: TESLA STRATEGIC ANALYSIS
Tesla Strategic Analysis
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1TESLA STRATEGIC ANALYSIS
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
PESTLE Analysis........................................................................................................................2
Porter’s 5 forces analysis.............................................................................................................5
TOWS matrix...............................................................................................................................6
Value chain analysis....................................................................................................................6
Challenges........................................................................................................................................8
Conclusion.......................................................................................................................................8
REFERENCES................................................................................................................................9

2TESLA STRATEGIC ANALYSIS
Introduction
The global automotive market is dynamic in nature. Companies are constantly adopting
strategies with the help of which they aim to gain a competitive advantage while they are
operating in the market. Tesla Motors Inc. is a company that has been operating in the global
automotive market since 2003 and they launched the first car the Tesla Roadster in the year 2008
(Tesla.com 2019). The headquarters of the company is in Palo Alto, USA. Elon Musk, the main
brain behind the company has been able to operate manage the affairs of the company with
transformational leadership (Tesla.com 2019). The main repertoire of the company is built
around the development of electric vehicles and an energy unit. The purpose of this assignment
is to identify the factors that the company must identify and comply with in order to remain
sustainable while they operate in the industry. The current challenges and opportunities
presented before the company will be discussed using frameworks such as PESTLE analysis,
Porter’s 5 forces, BCG and TOWS matrix, value chain analysis.
Discussion
There are various aspects that can be adjudged in order to determine the strategic and
competitive advantage in the market. A PESTLE analysis will help in evaluation of the external
environment that the company operates in. Porter diamond of competitive advantage can be used
to evaluate the scope of competition that exists in the market. TOWs matrix helps in
identification of methods through which the weaknesses and threats can be turned into
opportunities and strengths.
PESTLE Analysis
Following is the review of the external scenario;

3TESLA STRATEGIC ANALYSIS
Political
 The government supports electric vehicle manufacturers and thus, production of the same is
incentivised.
 Global trade agreements that have been formulated, favour imports and exports of vehicles
and automotive components.
 Tesla operates in various markets throughout the globe and most of the markets that the
company operates in are politically stable.
Economic Factors
 Battery costs have been some of the most expensive cost allocations that companies
producing electric cars have to cater to. The prices of batteries have been found to be
decreasing with is an opportunity that the company can capitalise on (Naumann et al. 2015).
 Renewable energy is highly appreciated an encouraged by the government and since Tesla
produces the same, they are likely to be subject to advantages (Ahlborg and Hammar 2014).
 The economic stability of a country is a major issues that needs be considered while carrying
out market research. The economic stability of the market of the United States can be deemed
to be challenging for the operations of the company.
Sociocultural factors
 Lifestyle that are characterised by low carbon emission is gaining popularity and hence, the
business model of Tesla that is characterised by the same is likely to be appreciated in the
market.

4TESLA STRATEGIC ANALYSIS
 With sustainable initiatives, people are gaining affiliation towards the renewable energy.
Tesla uses renewable energy and hence, the demand for Tesla vehicles are likely to increase
at a gradual rate in the future.
 The products that are offered by Tesla help in bringing equal opportunity to the
underdeveloped market offering the products. Thus, Tesla can bring in the economic develop
that can help in equal division of labour across countries.
Technological factor
 Regardless of the place in the country, there is a high degree of innovation and technological
change that is taking place.
 Automatic processes and automation is highly influencing the industry.
 Online mobile systems are gaining popularity and hence, Tesla is likely to experiences an
operational edge.
Legal factors
 International patent protection laws are present in the USA and all the markets that the
company is present in.
 There are various regulation for the consumption of energy.
 In the United States there are regulations for dealership and sales.
Environmental factors
 Rapid climatic change is taking place and hence, the nature of operations of their production
units are changing.
 Environmental sustainability initiatives have highly influenced the market of the United
States.

5TESLA STRATEGIC ANALYSIS
 Extensive focus on the aspect of disposal of wastes.
Porter’s 5 forces analysis
Internal market Competition (HIGH): There are not too many firms that are offering services
that are similar to that of Tesla. However, the market is oligopolistic. Extensive emphasis in
product development and aggressive promotional campaigns. Consumers have several options
ahead of them and thus, loyalty is vulnerable.
Bargaining power of the consumers (MODERATE): Even though complete substitutes are not
available, moderate substitutes are available. Hence, the consumers have the option of choosing
one company over the other along with the fact that the products that are offered by the company
are not purchased in bulk.
Bargaining power of suppliers (MODERATE): Suppliers are forward integrated and are not
large in size. Furthermore, the level of supply is moderate as compared to mass market products.
Thus, the company is dependent on the suppliers.
Threat of Substitution (MODERATE): Since the cost of switching is low, the chances of
substitution is high. The nature of products offered by the company are unique.
Threats of new entrants (WEAK): Companies have to incur huge costs in terms of promotional
budget and innovation to be deemed as top players in the market. Furthermore, the market is
characterised by economies of scale.

6TESLA STRATEGIC ANALYSIS
TOWS matrix
A TOWS matrix is a tool that helps in combining the four quadrants of the SWOT matrix
and using the assimilation of the same to collectively use the same in order to come up with a
competitive advantage.
Internal strengths
External factors
Strengths:
 High brand
recognition
 Sustainable notion
 High turnover rates
 Emphasis on
Innovation, research
and Development
Weaknesses:
 Present in limited
markets
 High degree of
Competition
 High operational
and production
costs.
Opportunities:
 Rise in demand for
products that are
sustainable.
 Emerging Asian
market.
 Capitalisation of the
mass market by
cutting down costs.
 AI in driving
SO:
The company can deviate
their turnover to Asia. The
company can set up R&D
centres in Asian countries
and develop products that are
less costly. This will help in
generation of mass appeal.
WO:
By expanding to Asian
countries the company can
solve its problem of limited
presence. The high
production and operational
costs can be mitigated by
developing products for the
mass market.
Threats:
 Intense competition
in every market
 Problems associated
to regulations and
laws.
ST:
Tesla can use their
innovation quotient and come
up solutions to succeed in the
competitive market. The
company should also analyse
the market identification of
laws and regulations.
WT:
High degree of competition
exists in the market that the
company can extend to. The
company has to be more
careful in terms of
identification of laws and
regulations.
Value chain analysis
Primary activities

7TESLA STRATEGIC ANALYSIS
Inbound Logistics: The main issues can be experienced in the developmental phases of relations
with the suppliers. The current practices shows high degree of affiliation to all the elements of
from the transfer phase to the realisation of actual finished product.
Operations: Tesla has paid due importance to transformation of the raw materials into finished
products. The analysis of every phase of operation is vital for the development and maintenance
of the processes.
Outbound Logistics: In order to maintain the quality quotient associated to the products of the
company, the company limits their outbound logistics.
Marketing and Sales: Tesla model S and X have been heavily marketed. Furthermore,
initiatives such as the Tesla Space X have been responsible for the high exposure that the
company has received, hence, hence it reflects in the high turnover (Viessmann, Benjamin and
Jezzard, 2017).
Services: The after sales services have been highly acclaimed and thus, being able to mitigate the
negative word of mouth.
Secondary Activities
Firm infrastructure: The company has extensively focussed on the development of all the
functional departments across the company thus, have been successful in budget allocation.
Human Resources Management: The Company has included activities such as performance
appraisal and a favourable rewarding systems in the policy frameworks to manage the work
force.

8TESLA STRATEGIC ANALYSIS
Technology development: Innovation and technological developments is on the top priority of
the company and hence it has been effectively optimised.
Procurement: Procurement activities are optimised and as a result of availability on activities of
the company. Hence, the procurement activities are effectively carried out even if they are
expensive.
Challenges
Following are the challenges that can be faced by the company while in operation;
 High degree of competition
 Development of disruptive innovation and staying at par with the competition.
 Challenging marketing initiatives carried out by competitors.
 Laws and regulations of different states that the company operates in.
Conclusion
On a concluding note, it can be said that the nature of competition that exists in the
market is likely to pose threats to the sustainability of the company in the long run. The
competitive analysis that has been carried out by the company along with the external analysis
imply that the company is likely to face challenges in operations. With the help of the value
chain analysis and the TOWS matrix it can be implied that the company is likely to perform
effectively while in operations.

9TESLA STRATEGIC ANALYSIS
REFERENCES
Ahlborg, H. and Hammar, L., 2014. Drivers and barriers to rural electrification in Tanzania and
Mozambique–Grid-extension, off-grid, and renewable energy technologies. Renewable
Energy, 61, pp.117-124.
Naumann, M., Karl, R.C., Truong, C.N., Jossen, A. and Hesse, H.C., 2015. Lithium-ion battery
cost analysis in PV-household application. Energy Procedia, 73, pp.37-47.
Tesla.com, 2019. Electric Cars, Solar Panels & Clean Energy Storage | Tesla. [online]
Tesla.com. Available at: https://www.tesla.com/?redirect=no [Accessed 23 Dec. 2019].
Viessmann, O., Li, L., Benjamin, P. and Jezzard, P., 2017. T2‐Weighted intracranial vessel wall
imaging at 7 Tesla using a DANTE‐prepared variable flip angle turbo spin echo readout
(DANTE‐SPACE). Magnetic resonance in medicine, 77(2), pp.655-663.