Strategic Management Report: Tesla's Corporate and Business Strategies

This report provides a comprehensive analysis of Tesla's strategic management, focusing on its corporate and business strategies. It begins with an executive summary outlining the key areas of focus, including market development and the adoption of new technologies. The report then delves into various corporate strategies such as market penetration, market development, new product development, and consolidation strategies, evaluating their relevance to Tesla. The core of the report examines Tesla's business strategy, particularly its approach to direct sales, servicing, and charger networks. It evaluates the chosen strategy using strategic models like suitability, acceptability, and feasibility, considering internal and external factors. The report also discusses the importance of cost leadership and differentiation within Tesla's strategy. The analysis includes recommendations for the company, emphasizing the implications of the chosen strategic options and providing insights into how Tesla can maintain its competitive advantage in the electric vehicle market. The report concludes by highlighting the importance of innovation and stakeholder expectations in achieving the company's goals.

Reading Head: STRATEGIC MANAGEMENT 0
Management
March 6
2020

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Executive Summary
This report aims at analysing all the possible strategies that a company can adopt. These
strategies will help the company in achieving its goals and objectives. Market development
United Arab is at a pea level as people there are attracted to innovations and technology.
Companies are also adopting new and advance technologies in developing their products.
There are high chances of a company to earn maximum amount of profit but the company
should involve itself in innovations. Strategies are also adopted by companies that can
provide the components of growth and innovation. Every organization before implementing
strategies evaluates those strategies by using the appropriate strategic model. These models
enhance the advantages and problems that a company may face in the future after
implementing business strategies. The decision of implementing strategy in an organization is
also based on two major factors such as internal and external factors. These two factors affect
the organization at a higher rate. Recommendations of strategy are also mentioned in this
report.

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Contents
Executive Summary...................................................................................................................1
1.0 Introduction.....................................................................................................................3
2.0 Corporate Strategies.............................................................................................................3
2.1 Market Penetration...........................................................................................................4
2.2 Market Development Strategy..........................................................................................5
2.3 New Product Development...............................................................................................5
2.4 Consolidation Strategy.....................................................................................................6
3.0 Choice of Corporate Strategy...............................................................................................6
4.0 Business Strategy.................................................................................................................7
5.0 Evaluation of Strategy..........................................................................................................9
5.1 Acceptability.....................................................................................................................9
5.2 Suitability.......................................................................................................................10
5.3 Feasibility.......................................................................................................................10
6.0 Recommendations..............................................................................................................11
References................................................................................................................................14

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1.0 Introduction
TESLA is the best electric vehicle selling company. Electric cars are also been manufactured
and sold in 2019 by the company (TESLA, n.d.).
In this report Motors is an American electric vehicle and clean energy company. This
company is based in Palo Alto, California. This company was founded in 2003 by Martin
Eberhard and Marc Tarpenning. The main specialization of the company is electric vehicle
manufacturing. These electric vehicles consist of battery energy storage and vehicles are
charging from the solar city, collar panel, and solar roof tile. Tesla also operates in multiple
production and assembly plants but its main manufacturing facility is at the TESLA factory.
TESLA is also ranked as the world’s identification of possible strategic plans that can be
implemented by the company will be discussed. The evaluation of these plans will also be
presented by using appropriate strategic models. Recommendations and suggestion are also
been provided to the company so that they can implement plans effectively. Critical analysis
of those implications will also be done to know different aspects of the chosen strategy.
2.0 Corporate Strategies
There are many corporate strategies that a business can adopt to work effectively and achieve
goals. These strategies also provide a framework by which a company can also develop their
strategy. The main purpose of these strategies is to expand the organization and gain control
in the competitive market. There are four types of corporate strategy that can be used by
businesses such as Market penetration, Market Development Strategy, New Product
Development Strategy and Consolidation Strategy (LYNCH, 2018).

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(CFI Education Inc., 2020)
2.1 Market Penetration
Market Penetration is the strategy that occurs when a company is trying to get access to those
markets that already exist in the market. It is a product strategy where organizations try to
gain competitive advantage and control over the existing market. The main focus of this
strategy is to capture a large volume of the market. This strategy requires a high level of
competitive strength and a strong bond between customers and the company. It is a risk
approach (Davydov, 0928).
Tesla can also penetrate the market so that the company can also have a maximum amount of
market share. This can be done if the company will supply a unique product in the market.
Tesla can achieve this strategy effectively as the company is developing vehicles that are
having advanced technology For example company is developing vehicles that will charge
through solar energy.

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2.2 Market Development Strategy
Market development strategy is the growth strategy and it is used to expand the market and
attract new customers through the development of new products. This strategy is effectively
implemented when the needs of the individuals can be identified. Market research is also the
most important and critical part of this strategy. This strategy targets customers that are not
involved in the market. New customers can be identified through geographic, demographic
and psychographic segments of the market (Czarniewski, 2014).
Tesla believes in applying a strategy that will help the company in gaining a competitive
advantage. In Michel Porter’s model, a competitive strategy is that which helps the company
in competing in the market. Tesla's strategy is that the company is focusing on developing
vehicles with advance technology. Tesla is competing against General Motors Company,
Toyota, Honda, Nissan and many more. Tesla is also looking for an intensive business
growth strategy.
2.3 New Product Development
Product is the main component of every business. Therefore the development of products
according to the needs of the customers is also considered important. New product
development is the process of developing, researching and creating a new product. It is also
the process of bringing new products in the market with proper marketing and effective
strategy is also the major task for the business (Kuka, 2018).
Tesla Inc. is focusing on those strategies that will help their business achieving competitive
advantage and growth. The main focus of the company is on two strategies i.e. Market
development and New Product Development strategy. This strategy is helping the company
in initiating new technology in electric vehicles.

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2.4 Consolidation Strategy
It is the strategy that refers to the mergers and acquisition of small companies into large
companies for economic benefits. This strategy is helpful for both organizations that are
merging because it will create new opportunities for the business. The main goal of this
merger or acquisition is to reduce the cost of the business. It also helps the business in
improving efficiency and processes (Deans, 2003). By applying this strategy effectively in
the market company can earn high profits and they can also develop a customer base. There
are several ways for companies by which they can adopt this strategy (Weedmark, 2019).
Tesla has also adopted this strategy as Tesla has acquired Maxwell Technologies. The main
aim of this acquisition is to improve electric automaker. It also helped the company in
reducing the cost of the company and it helped the company in gaining competitive
advantage and reducing competition in the market (Korosec, 2019).
3.0 Choice of Corporate Strategy
Four corporate strategies can be used by any business and these strategies are mentioned
above. All this strategy has different aims and motives. The organization will choose strategy
according to its needs. These strategies will help the organization in achieving a competitive
advantage in the market.
If Tesla will use Market Penetration strategy it will be helpful for the company as it will help
the company in gaining competitive advantage and creating more customer base. The
company believes in applying those strategies that can help a company in innovations and
attracting more customers. Michael Porter’s model refers that a competitive strategy
represents the approach towards a competitive market. Tesla focuses on using new and
advanced technologies in its vehicles and other products (ROWLAND, 2018). Market
penetration strategy consists of four components such as

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Cost Leadership Differentiation
Cost focus Differentiation focus
Cost is the main factor for every business. Cost also affects many factors of the organization.
Cost Leadership is applied in the business to gain a competitive advantage in the market. But
cost leadership is the different concept from price leadership as this will help the company in
reducing the cost of producer. This feature will not reduce the cost of products. And if the
company can successfully implement this component in its company they can earn the
maximum amount of profit in the market. This factor also helps the company in reducing the
cost of the company. This factor is generally dependent on efficiency, size, scale, scope, and
experience of the company. Since the company is having several competitive advantages in
the market in terms of market and technology company can easily adopt this component in
their business strategy. Since Tesla has mastered its value chain and the company also has
experience in the market and supply chain of the company is also strong in comparison to
other competitive companies all these factors will help the company in controlling its value
system.
4.0 Business Strategy
This Strategy will focus on business growth. By applying effective business Strategy
Company can gain a competitive advantage. There are different models of business strategies

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that are used by every company according to their requirements. Tesla also has its business
strategy and that is mentioned below
(Business Strategy HUb, 2020)
When Tesla entered the market through the launching of expensive cars and the main target
of the company at that time are high-income group people. Tesla establishes that once the
company will be settled in the competitive market they will launch lower price model cars as
well. The main focus of the company was to build a brand name. There are three models of
the Business strategy of Tesla, namely:
1. Direct Sales
Tesla prefers to sell its products directly to customers. The company believes that adopting
this type of business strategy will help the company in product development at an increasing
rate. The experience of customers while buying a vehicle can also be improved by this
approach.
2. Servicing

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Tesla has combined the approach of direct sales and servicing. The company believes that
service centers have positive impacts on the demand of customers. “Service Plus” retail
centers are an additional advantage for customers of the company. Customers can service or
charge their cars at stations that are opened by the company.
3. Charger’s Network
Tesla has a wide range of stations where customers can charge their cars. The company has
also placed supercharge stations where customers can charge their vehicles in half an hour.
The company has adopted this approach because the company knows that more customers
will attract to it.
5.0 Evaluation of Strategy
Evaluation of business strategy is considered important for the organization. This helps the
company in evaluating the effectiveness of the company. Evaluation is depended on several
factors such as suitability, Acceptability, and feasibility. These factors are important for the
organization. The organization will implement only these policies that will fulfill all these
components (Wright, 2019).
5.1 Acceptability
Market penetration strategy is the chosen strategy for Tesla Inc. This strategy attracts
stakeholders as Tesla is innovating new products and it has also created a large customer
base. There are some expectations of stakeholders that need to be fulfilled by the company.
These expectations are international expansion of the company, innovations, profitability and
many more (Study.com, 2018). Marketing helps the company in fulfilling all these
expectations as there are different components of marketing penetration that helps them in
reducing the cost that will increase the profitability of the company (Sen & Rajagopal, 2015).

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The recommended ways by which Tesla can take advantage of this approach is by increasing
the market share of the company i.e. expand the business overseas. Since Tesla is an
automobile company it can expand business easily because people will get attracted to cars
that have advance technology.
5.2 Suitability
Suitability is considered most important while evaluating policy for business. Suitability
suggests the company whether this strategy is useful for the company or not. Tesla is the
company that is focusing on new trends of technology so that it can invent products with new
technology. There are many key drivers and growth perspectives for the company (Business
of accounting, 2010). The company has a large number of customer bases in the market it
helps the Company to keep motivate it. Market penetration strategy helps Tesla in identifying
new technology in advance so that Tesla can adopt those technologies earlier from other
companies. This approach will also help Tesla in gaining competitive advantage (Farooq,
2016). Tesla can also take advantage of many opportunities such as customer base,
technological advancement, and quality of products. Market Penetration also allows Tesla to
expand its customer base.
5.3 Feasibility
Tesla has many competitive advantages in terms of the supply chain, customer base,
technology, and effective management. But Tesla is now focusing on building a more
effective growth strategy by which Tesla can become a leading organization in the
automobile sector. This will also help the company in eradicating competition in the market
(Sanchez et al., 2017). Market penetration strategy provides many such advantages by which
Tesla can achieve all these objectives. This strategy will also provide feasible conditions in
the organization by which it can work more effectively and efficiently towards achieving its
goals. Tesla is already having experience and so it knows the preference of people and this

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factor can also result in a competitive advantage. Therefore, Tesla should apply this strategy
in their organization so that they can also accomplish their objectives (GUILLÉN, 2017).
6.0 Recommendations
The main objective of every company is to earn the maximum amount of profit. This can be
done when a company is in a competitive market. The company should also adopt those
plans, policies, and strategies that can help them in leading the competitive market. The
company should also work effectively towards achieving those goals and objectives. Many
strategic policies can be adopted by the organization according to the need and requirements
of the organization. Generally, four strategies are adopted by most of the organization. These
strategies are Market penetration, Market development, new product development, and
Consolidation strategy. But before implementing these strategies company should evaluate
these strategies by using the business model so that they can know about the positive and
negative impacts of the strategy.
Tesla is a company that is involved in the automobile sector. The company believes in growth
and innovation strategy. The company is also focusing on fulfilling the demands of customers
by innovating products with new and advanced technology. Currently, the company has
adopted a new product development strategy (Business Strategy HUb, 2020). This strategy is
helping the company in identifying the needs of the customers and developing products
accordingly. There are many competitive advantages for the company and they are mentioned
above. These competitive advantages are gained by the company as the company is having
experience in the market and the company also knows the expectation so customers. Tesla is
looking forward to expanding its business so that they can earn more profit (Dane, 2019).
There is also a recommendation for the company i.e. company can also adopt the Market
Penetrating strategy. This strategy will help the company in penetrating the market. There are