Strategic Management (MGT 401): Comprehensive Analysis of Tesla

This report provides a strategic analysis of Tesla Motors, a prominent player in the automotive and energy industries. It includes a SWOT analysis identifying opportunities like the shift towards eco-friendly products and government support, threats such as trade wars and increasing competition, strengths like product differentiation and weaknesses including a weak financial position. The report also discusses Tesla's social responsibility initiatives and their impact on competitive advantage, highlighting the company's focus on sustainability and reducing environmental impact. Furthermore, it assesses the power of buyers, suppliers, and substitutes using Porter's Five Forces framework, concluding with an analysis of Tesla's competitive strategy, which is based on product development and market penetration through R&D and innovation. This detailed analysis offers a comprehensive understanding of Tesla's strategic positioning and competitive landscape. Desklib provides access to similar solved assignments and resources for students.

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Assignment Answers
1. Briefly present your selected company (name, industry, nationality, location, size,
activities, and products)
Tesla Motors is a leading player in the automotive industry for its electric
vehicle designs and quality and also operates in energy production and storage. The
company operates in different segments such as solar energy, electric vehicles, and
cyber truck (Valentin,2019). Tesla has two main plants in America one is located in
Nevada and another one is in California and both plants have the capacity of
producing 800,000 cars in a year (Galpin,2019). In the US, the company covers 77%
of market share because of its electric vehicles such as Model X, Model 3 and Model
S. In 2019, the revenues of the company were US$.86 billion as sales of the company
increased by 50% from 2018 (Tesla, 2019). Tesla sold 367,849 units in 2019 (Kumar,
Sujit & Abdul,2019). Furthermore, “Tesla is the world’s first vertically integrated
sustainable company as it offers end to end clean energy products, including
generation, consumption, and storage”.
2. Determine the opportunities, threats, strengths, and weaknesses of your selected
company by completing the SWOT matrix in the answer sheet. (1 mark) 200
Opportunities Threats
- The shift of people towards eco-
friendly products due to that
demand for electric cars, energy
storage, etc. will increase in the
near future.
- Government support for reducing
the use of fossil fuel and the
reduction of taxes will help the
company to expand
- A trade war between the US and
China
- Limited suppliers of high
bargaining power of suppliers
(Tesla,2019).
- Fluctuation in the exchange rate
- Increasing competition from
Ford, General Motors and
Toyota.

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Strengths Weaknesses
- Advantage of product
differentiation such as electric
power train technology
- Huge investment in Gigafactories
- Diversification in product portfolio
such as power pack applications
- Low-cost batteries manufacturing
plant (Tesla,2019)
- Strong marketing policies and
improving customer base
- Elon Musk leadership style
- Single source of suppliers
- Weak financial position
- Increasing debts and little
profitability
3. Does your selected company have a social responsibility? If yes, discuss its impact on
the competitive advantage of the corporation
Tesla is a sustainable organization that focuses on corporate social
responsibility with the motive of addressing some of the major stakeholder’s interests
in the energy business and automotive business (Musonera & Cagle,2019). Tesla's
highest priority is communities and then customers. The sustainable practices and
integration of this with organization gaols are a great imitative taken by the company.
Further, Tesla sold 550K electric vehicles in 2019 due to that $7 M metric ton of CO2
saved (Tesla,2019). Tesla's supercharging network is the fastest and delivered over
595 GWH of energy that resultant in saving over 75M gallons of gasoline
(Tesla,2019). The aim of reducing the use of fossil fuels for electricity generation and
transportation decreases the risk of respiratory disease and stroke. The use of solar

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batteries in its electric cars saves millions of resources and reduces the environmental
impact of its operations.
With these practices and policies, the company gain a competitive advantage
as the use of solar energy for the production of batteries help the company to decrease
its cost of production and this help Tesla to compete with others in term of quality and
prices. On the other side, its charging network across the globe five an advantage to
the company and also impact customers living in a positive manner.
4. Based on figure 4.3 (Ch4-slide no 18) and the textbook text relative to Porter’s Five
forces of competition framework, assess the power of the buyers, suppliers, and
substitutes of your chosen company. How formidable are the barriers to entry and
how intense is the rivalry among existing firms?
The threat of New Entry (Low): There are high barriers in this industry due to
the threat of entry for firms operating in this industry are low (Dyer, Godfrey, Jensen
& Bryce,2020). Further, there is the huge investment required in technological
perspective, expertise, and workforce and production layout. Hence, the threat of new
entrants in the automotive industry is low.
The threat of Substitution (Low): For Tesla, there is no such direct substitute
for its products and due to that threat of any substitute is low. Moreover, the substitute
for the automotive industry can be trains, buses and another mode of transportation.
Bargaining Power of Suppliers (Higher): In this industry, the raw material
procurement and quality is an important factor due to that role of supplier play a
significant part in the manufacturing of vehicles. This leads to a higher power in the
hand of suppliers to bargain (Musonera & Cagle, 2019).
Bargaining Power of Buyers (Medium): Tesla customers are loyal because of
services, quality and innovative products offered by the company. Due to that, no
other competitor attracts a customer base of tesla until and unless a strong competitive
advantage can be developed. Hence, the bargaining power of buyers is moderate.
Competitive Rivalry (Medium): As analyzed there is no close substitute for
Tesla products but due to the changing environment and increasing competition there
are chances that competitors develop a competitive advantage through technology and

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innovation to compete with Tesla. Hence, there is a medium force of competitive
rivalry (Dyer, Godfrey, Jensen & Bryce,2020).
5. What is the competitive strategy used by your selected company?
Tesla's competitive strategy is based on product development and market
penetration. As the company with its aggressive marketing strategy try to capture the
domestic market and with that the company focus to increase its market share in the
US. Further, product development is an intensive growth strategy that Tesla uses as
the company offers fully electronic sports cars with high technology features. A
strategic objective of the company is to attract more customers by investing in R&D
and innovation (Boger, Chesbrough, Heaton & Teece,2019).

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References
Bogers, M., Chesbrough, H., Heaton, S., & Teece, D. J. (2019). Strategic Management of
Open Innovation: A Dynamic Capabilities Perspective. California Management
Review, 62(1), 77-94.
Dyer, J. H., Godfrey, P., Jensen, R., & Bryce, D. (2020). Strategic management: Concepts
and cases. John Wiley & Sons.
Galpin, T. (2019). Strategy beyond the business unit level: corporate parenting in
focus. Journal of Business Strategy.
Kumar, B. R., Sujit, K. S., & Abdul, W. K. (2019). Brand valuation–examining the role of
marketing on firm financial performance. Measuring Business Excellence.
Musonera, E., & Cagle, C. (2019). Electric Car Brand Positioning in the Automotive
Industry: Recommendations for Sustainable and Innovative Marketing
Strategies. Journal of Strategic Innovation and Sustainability, 14(1).
Tesla,2019. Annual report Tesla 2019. Retrieved From:
http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_TSLA_20
18.pdf
Valentin, M. (2019). The Tesla Way: The disruptive strategies and models of Teslism. Kogan
Page Publishers.