Republic of the Philippines

Mindanao State University – Main Campus

Marawi City

Case
Analysis
In Partial Fulfillment in the course
MGT108-Strategic Management, Section Yy

Submitted to:
Prof. Analee C. Mala

Submitted by:
Amaikurot, Nur Janinah
Amin, Aliah H.
Anino, Janine T.
Camar, Rahma H.
 CHAPTER I: Background Of the Firm
TESLA MOTORS, INC., 2015
Background of the Firm
Founded in 2003 by a group of engineers, Jeffrey Straubel, Elon Musk, and Marc
Tarpenning, Tesla manufactured its first electric vehicle, the Tesla Roadster, in 2008. The vehicle
offered instant torque, incredible power, and zero emissions. The Roadster featured a sports car
powertrain built around an AC induction motor, patented in 1888 by Nikola Tesla, the inventor
who inspired the company’s name. The Roadster accelerates from 0 to 60 mph in 3.7 seconds
and has a range of 245 miles per charge of its lithium-ion battery. To date, Tesla has sold more
than 2,400 Roadsters, now on the road in more than 30 countries. In 2012, Tesla launched a fully
electric sedan named the Model S, with room for seven passengers and more than 64 cubic feet
of storage. The Model S provides the comfort and utility of a family sedan while achieving the
acceleration of a sports car: 0 to 60 mph in about 5 seconds. With a range of 265 miles per
charge, the Model S was named Motor Trend’s 2013 Car of the Year and achieved a 5-star safety
rating from the U.S. National Highway Traffic Safety Administration.

Headquartered in Palo Alto, California, Tesla Motors designs, develops, manufactures,

and sells fully electric vehicles and advanced powertrain components. Well-known for its one-of-
a kind Roadster sports car vehicle, Tesla operates 80 dealerships and galleries in North America,
Europe, and Asia, and sells vehicles directly from the corporate website. During Q4 of 2014,
Tesla introduced an all-wheel drive Model S, produced a record 11,627 vehicles, delivered 9,834
vehicles, and announced that its new Model X would ship in 6 months. However, the company’s
Q4 performance fell far short of expectations because Tesla’s net income for Q4 decreased 561.8
percent, compared to the same quarter a year earlier, falling from –$16.26 million to –$107.63
million. Tesla’s net operating cash flow decreased to –$86.40 million or 166.58 percent,
compared to the same quarter the prior year. Furthermore, the company reported a steep decline
in earnings per share to $2.36, versus –$0.71 the prior year. Tesla attributed the poor performance
to bad weather, shipping problems, currency headwinds, and customer vacations that prevented
planned deliveries.

CHAPTER II: EXISTING VISION AND MISSION

STATEMENT
MISSION
“To accelerate the advent of sustainable transport by bringing compelling mass-market
electric cars to market as soon as possible.”
VISION
“Create the most compelling car company of the 21st century by driving the world’s transition to
electric vehicles.”
 CHAPTER III: Improved Vision and Mission Statement
Tesla Motors Inc. Current Mission Statement
"Tesla's mission is to accelerate the world's transition to sustainable energy."

Analysis:
Tesla's mission statement focuses on the company's commitment to renewable energy and
sustainability. By phrasing their mission as "accelerating the world's transition to sustainable
energy," Tesla is positioning itself as a leader in the shift towards a more environmentally
friendly future. The mission statement reflects the company's goal of reducing reliance on fossil
fuels and promoting the use of clean energy sources. Tesla mission is to accelerate the advent of
sustainable transportation by compelling mass market electric cars to market as soon as possible.

Tesla Motors Inc. Current vision statement

"To create the most compelling car company of the 21st century by driving the world’s transition
to electric vehicles."

Analysis:
Tesla's vision statement emphasizes the company's goal of becoming a dominant force in
the automotive industry through the production of electric vehicles. By stating their intention to
be the most compelling car company of the 21st century, Tesla is setting a high standard for itself
and indicating its ambition to surpass traditional car manufacturers. The vision statement also
reinforces the company's commitment to sustainable energy and highlights its role in driving the
transition to electric vehicles globally.

Recommendations for Tesla’s Mission & Vision

Tesla’s corporate mission statement is satisfactory in terms of presenting the company’s
goals. It adequately covers the kinds of products that the company sells, the market scope, and
the market position of the automobile and energy solutions business. However, the corporate
mission does not provide adequate information about the general direction of Tesla’s
organizational development. Thus, a recommendation for improving the corporate mission
statement is to describe the electric car company’s operations in moving toward the fulfillment of
its corporate vision. The mission statement can specify that Tesla aims to provide advanced
automation and autonomous technologies to accelerate the world’s transition to sustainable
energy.
 Tesla’s corporate vision statement effectively describes general strategic objectives.
However, it does not cover current business endeavors, instead focusing on transportation. The
corporate vision does not accurately reflect operations in providing sustainable energy solutions
for cars and homes. The corporate mission statement already encompasses sustainable energy
solutions, but the vision statement remains focused on electric vehicles. A recommendation is to
make Tesla’s corporate vision statement reflect the business organization’s increasing interests in
products other than electric vehicles, such as solar energy products and batteries.

CHAPTER IV: External Forces That Affect the Firms

POLITICAL FACTOR
Governmental entities are among the main societal forces that affect businesses
and industries. For example, policies on trade can limit industry performance and the
company’s revenues.

1. Governmental incentives for electric automobiles (opportunity)

2. New global trade agreements (opportunity)
3. Political stability in the majority of major markets (opportunity)

ECONOMIC FACTOR

For example, the solar energy market’s growth rate determines the growth
opportunities of the company’s solar panel business. Tesla needs to address the following
economic factors that influence its markets:

1. Decreasing battery costs (opportunity)

2. Decreasing renewable energy costs (opportunity)
3. Economic stability issues (threat)

Tesla’s business performance benefits from lower battery costs. This external
factor translates to price reduction opportunities for the company’s electric automobile
products. The company improves as renewable energy solutions become more popular.
However, economic stability issues threaten the company’s financial performance,
especially in Europe and Asia.

Social/Sociocultural Factor
The company’s managers must ensure that strategies are applied to maximize the
business benefits of such external factors. The sociocultural factors important to Tesla’s
business are as follows:

1. Increasing popularity of low-carbon lifestyles (opportunity)

2. Increasing preference for renewable energy (opportunity)
 3. Improving wealth distribution in developing markets (opportunity)

This company analysis shows opportunities to grow the multinational automotive

business. For example, Tesla has growth opportunities based on the rising popularity of
low-carbon lifestyles and increasing preference for renewable energy.

Technological Factors
The advancement of Tesla’s automotive and energy solutions business depends on
available technologies. For example, materials engineering technology determines the
efficiency and cost-effectiveness of the company’s batteries. The following technological
factors are significant to Tesla’s automotive and energy business:

1. High rate of technological change (opportunity & threat)

2. Increasing automation in business (opportunity)
3. Increasing popularity of online mobile systems (opportunity)

The high rate of technological change is an opportunity and threat in this business
analysis. The high rate presents an opportunity for Tesla to enhance its products’
technologies.

Environmental Factors
For example, ecological trends determine the availability of materials used in the
company’s production processes. In this case, the following ecological factors affect
Tesla’s market:

1. Climate change (opportunity)

2. Expanding environmental programs (opportunity)
3. Rising standards on waste disposal (opportunity)

For example, the company has opportunities to promote its electric vehicles based
on concerns on climate change, expanding environmental programs, and rising standards
on waste disposal. The company’s electric vehicles, batteries, and solar panels are
considered suitable in directly addressing these external factors linked to business
sustainability and environmentally friendly products.
Legal Factors
The effects of regulatory factors on the remote or macro-environment are
determined. Laws and legal systems shape managerial decisions and business
development. For example, Tesla’s marketing mix or 4P is implemented within legal
constraints. The company’s human resource management and business partnerships are
also within legal constraints.

1. Expanding international patent protection (opportunity)

 2. Energy consumption regulations (opportunity)
3. Dealership sales regulation in the United States (opportunity & threat)

Tesla has opportunities to safely expand its business overseas, considering

expanding international patent protection.

CHAPTER V: Industry Analysis Using Porter’s Five

Forces Model
Tesla’s resilience reflects strategic effectiveness. This company analysis shows that the business
manages to grow in spite of competitive challenges. However, Tesla must ensure that it
addresses external factors according to the intensity of the forces impacting the business, as
shown in this Five Forces analysis:

1. Competitive rivalry or competition: Strong Force

2. Bargaining power of buyers or customers: Moderate Force
3. Bargaining power of suppliers: Moderate Force
4. Threat of substitutes or substitution: Moderate Force
5. Threat of new entrants or new entry: Weak Force

CHAPTER VI: Input Stage

THE EXTERNAL FACTOR EVALUATION MATRIX
THE COMPETITIVE PROFILE MATRIX
THE INTERNAL FACTOR EVALUATION MATRIX
CHAPTER VII: Matching Stage
SWOT MATRIX
OPPORTUNITIES
1. Production and Manufacturing
Tesla produces up to 1,000 vehicles per week at its factory in Fremont,
California, but the company is building additional manufacturing facilities in
Tilburg, the Netherlands, where it has an assembly facility, and Lathrop,
California, where it has a specialized production plant. The Gigafactory will also
produce battery packs intended for use in stationary storage, helping to improve
robustness of the electrical grid, reduce energy costs for businesses and
residences, and provide a backup supply of power. The Gigafactory reveals that
 Tesla is not just an automaker but a technology and design company with a focus
on energy innovation.
2. Strategy and Demand
In 2014, Tesla increased its number of dealerships and service centers by
over 40 percent, expanded its Supercharger network by 400 percent, started
construction of the Gigafactory, and introduced numerous advances on Model S.
Tesla has started selling vehicles in Australia, and four other countries/regions,
doubling its number of sales and service locations internationally. Tesla remains
convinced that China is a key country for the company, and thus is simplifying the
buying process in China by having Tesla personnel install charging points at
customer homes or businesses well before vehicle delivery. The world has
growing demand for Electrical Vehicles (EV) due to environmental concerns and
Government incentives
3. By-segment Data
Tesla is reorganizing its revenue and cost of revenue sections of its income
statement, so that automotive revenue and gross margin reflect only new car sales
activities. Revenues and gross margin for all the company’s other businesses, such
as powertrain sales, services, trade-in sales, and stationary storage will be reported
in the “Services and Other” section of the income statement. Tesla says this
change will “provide clearer disclosure of our core business of new car production
and deliveries.

THREATS
1. Dollars’ Negative Effect on Profitability
Tesla serves an international market and has a global supply chain, but
most of the Model S vehicles are built in North America, so a strong dollar has a
slightly negative net effect on the company’s profitability. In markets where the
local currency has declined significantly versus the U.S. dollar, Tesla recently
increased prices by only about half that decline. The price increase, however,
applies only to new orders and is not retroactive to the existing orders.
2. Limited Producer of Lithium Batteries (50 companies at present)
There are only 50 producers of lithium batteries in the United States, and
revenue growth is expected to approach 20 percent through 2020. Key players
include Nissan, with a 13 percent market share, followed by Ford, GM, and Tesla,
with market shares around 8 percent each, leaving approximately 60 percent of
the revenues outside these four firms, opening the possibly of industry
consolidation. In addition, as technology, economies of scale, and further
developments reduce production cost, more competitors may enter the market.
However, for the next 5 years, demand is expected to top supply, keeping prices
attractive for manufacturers. About 70 percent of all lithium battery revenue today
is derived from automobiles, according to IBIS, with consumer goods and
 medical products accounting for approximately 8 percent each. The switch into
battery production for automobiles has been aided of late by government
incentives to produce green hybrid and electric vehicles.
3. Oil
Long-term forecasts expect oil prices to be around $75 per barrel by 2020,
but with oil, projecting price is risky. An OPEC executive in early 2015 joked the
price of oil will finish the year between $30 and $150 per barrel, indicating even
OPEC executives really have no firm grasp on projecting oil prices. Nevertheless,
many experts in the field have indicated the days of $100 oil are over, possibly
due to better public transportation and more efficient engines, but also from the
growing electric vehicle market. It will be interesting to see how consumers view
electric vehicles from a cost standpoint if oil remains low. One of the key drivers
in electric car popularity was higher gas prices.
4. Gigafactory are slow
The Gigafactory is crucial for Tesla’s bid to make batteries cheap enough
for the mass-market Model 3. Also, a concern for analysts is that Tesla’s sales in
China are declining. For Q2 of 2015, Tesla reported revenue of $954.98 million,
versus expectations of $1.17 billion. The company produced a record 12,807
vehicles during Q2, while the company’s Services and other revenue was $77
million, up 85 percent from a year ago. This included about $32 million of
powertrain sales to Daimler, $23 million of Service revenue, and $20 million of
pre-owned Model S sales. Tesla’s Model X remains on track for start of deliveries
in September 2015. Oil prices remain low, so consumers are buying bigger
vehicles, hurting the sale of electric vehicles. Tesla faces stiff headwinds going
forward, including competition from numerous rival firms, such as GM, Ford,
Audi, BMW, Toyota, Nissan, and maybe even Apple and Google. Prepare a 3-year
strategic plan for CEO Elon Musk.

STRENGTHS
1. Innovative Technology
Tesla is known for its cutting-edge electric vehicle (EV) technology,
including high-performance batteries and autonomous driving features.
2. Brand Image
Tesla has cultivated a strong brand image associated with innovation,
sustainability, and luxury.
3. Supercharger Network
Tesla has built a vast network of Supercharger stations globally, providing
convenient and fast charging for its vehicles.
4. First Mover Advantage
 As one of the first companies to produce and market electric cars at scale,
Tesla has gained a significant head start in the EV market.
5. Vertical Integration
Tesla controls much of its supply chain, including battery production,
which helps streamline operations and reduce costs.
WEAKNESSES
1. Production Challenges
Tesla has faced challenges with meeting production targets and quality
control issues, leading to delays and recalls.
2. Dependence on Government Incentives
The company’s sales are partly reliant on government subsidies and
incentives for EV purchases, which could be subject to change.
3. Competition
Traditional automakers and new entrants are investing heavily in EV
technology, posing a threat to Tesla’s market share.
4. Financial Performance
Tesla has a history of erratic financial performance, with periods of losses
and profitability, which can create uncertainty for investors.
5. Supply Chain Vulnerabilities
Tesla’s reliance on key suppliers, especially for critical components like
batteries, exposes it to supply chain disruptions and price fluctuations.

SPACE MATRIX
BCG MATRIX
IE MATRIX
GRAND STRATEGY MATRIX
CHAPTER VIII: Decision Stage
QSPM MATRIX
CHAPTER IX: Conclusion
CHAPTER X: Recommendation
 CHAPTER XI: References
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