Strategic Management - CC01

CASE ANALYSIS

TESLA
MOTORS
GROUP 2
TABLE OF
CONTENTS
Overview 01
Internal Stength & Weakness 02
External Environment 03
SWOT Analysis 04
Corporate-level Strategy 05
Business Level 06
Structure & Control system 07
Recomendation 08
 GROUP MEMBERS
01. Nguyen Thanh Nhan 2153649

02. Ly Hoang Anh 2152403

03. Ngo Minh Trang 2053510

04. Phan Nguyen Song Ngan 2053258

05. Nguyen Ngoc Phuong Mai 2211983

I. TESLA MOTORS
OVERVIEW
Mission - Vision - Objectives
History - Development - Growth
HISTORY
Tesla Motors was founded in 2003
by two Silicon Valley engineers,
Martin Eberhard and Marc
Tarpenning.

“The company designs,

manufacturers, and markets high
performance, technologically
advanced electric cars and
powertrain components”
HISTORY
Tesla was named after an electrical engineer and scientist, Nikola
Tesla, who was known for impressive inventions. The name suits the
company well because they were able to use technology as their
driving force and create a vehicle that was suitable for the industry
as well as their consumers.
DEVELOPMENT

Tesla Motors experienced some financial

issues between 2008 and 2012, with losses
totaling “$943.5 million on combined revenues
of just $861 million”. 2013 was the year the
company had to make strategic decisions and
revise their strategies.
GROWTH
Developing a new product was
amongst their new strategies;
therefore, producing Model S vehicles
to customers. Their two new models
as well as new management have
proven to increase their revenues
and turn the company around in
becoming profitable again.
MISSION

“To accelerate the world’s transition to

sustainable energy”

In brief, Tesla Motors is focused on

conserving energy and revolutionizing
transportation through their electric
vehicles, enabling them to lead the way in
terms of speed and sustainability.
 VISION
“Utilize the company’s proprietary
batteries and powertrain technology to put
millions more electric cars on the road and
dramatically curtail global dependence on
petroleum-based transportation”
(Thompson, 2014)
Elon Musk is confident in his ability to elevate
the company to unprecedented heights
and deliver a unique consumer experience
unmatched elsewhere.
OBJECTIVE
“To drive the world’s transition to electric
mobility by bringing a full range of
increasingly affordable electric cars to
market”
(Thompson, 2014)
By achieving success in these overall
strategies, Tesla Motors can enhance their
competitive edge among other automobile
manufacturers and establish a prominent
reputation as leaders in the field of electric car
manufacturing.
II. INTERNAL
Strengths - Weaknesses
 STRENGTHS

STRONG LEADERSHIP THE STRATEGIES

MANUFACTURING ABILITY CONDITIONS FOR CUSTOMERS

 STRENGTHS

STRONG LEADERSHIP

Visionary Commitment to Strategic

Thinking Innovation Risk-Taking

Hands-On Strategic
Effective Communication Resilience and
Management Partnerships and
and Brand Building Perseverance
Style Expansion
 STRENGTHS

THE STRATEGIES

Product Line Technology and Product Manufacturing

Strategy Development Strategy Strategy

Supply Chain Strategic

Distribution Strategy Marketing Strategy
Strategy partnerships
 STRENGTHS

MANUFACTURING ABILITY CONDITIONS FOR CUSTOMERS

Tesla integrates design, manufacturing,
Tesla Motors operates its distribution channel
and sales, with in-house production of key
through its own stores in 18 countries,
machinery and sourcing basic
strategically located in high-visibility areas to
components externally. The Gigafactory
engage clients and build brand awareness.
boosts scale advantages and vertical
Celebrities like Morgan Freeman and George
integration. Fixed car prices support
Clooney contribute to its fashionable image.
vertical integration in sales. Manufacturing
Tesla employs a multi-channel model,
in Fremont is highly automated, producing
incorporating online stores for convenient
multiple models with up to 83 vehicles per
vehicle purchases.
day using multifunctional robots.
 WEAKNESSES

MISSED PRODUCTION GOALS LOSS OF PROFIT

BATTERY ISSUES GAS VS. ELECTRIC

 WEAKNESSES
STRENGTHS

MISSED PRODUCTION GOALS

Tesla’s costs of goods sold have grown In 2015, technical difficulties with the
quicker than sales leaving room for design of futuristic falcon-wing doors
improvements to manufacturing delayed the launch of the Model X, a
efficiency. The strong demand for Tesla crossover vehicle produced with hopes of
vehicles has led to situations where attaining an even broader customer
manufacturing their vehicles has slowed to appeal to follow the momentum achieved
near-standstill because of the limited with the production of the successful and
supply of specialize components like popular Model S.
batteries.
 WEAKNESSES
STRENGTHS

LOSS OF PROFIT
Limited benefits from
Tesla needs the market to expand fast
economies of scale because at Because Tesla fully
in order to balance the books or keep
its core, Tesla is a startup develops their
digging into current investors
heavy manufacturing vehicles in-house, to
pocketbooks. Tesla currently lacks the
company, meaning that the include all
scale and financial wherewithal to
company is not yet receiving sub-assemblies, this
create the electric car market on its
many benefits from economies leads to higher costs
own and must take appropriate
of scale because its operations of production since
measures necessary to effectively
function like small-scale economies of scale
position itself in preparation of
boutique operations with low are not yet achieved.
loosening its grip on the market.
sales volumes.
 WEAKNESSES
STRENGTHS

GAS VS. ELECTRIC

With the continued
Tesla is competing
decline in gasoline Until charging stations
against a very Industry competitors
prices, there is are more widely
well-established like GM, Nissan, and
significant risk that available across large
and with heavily Toyota, currently
offers providing geographic regions,
ingrained offer electric vehicles
incentives to purchase electric vehicles will
technology that for lower costs and
electric vehicles remain unable to
has been in use for at higher production
through federal tax complete
over one hundred volumes.
credit program may cross-country drives.
years.
end.
Internal Factors Analysis Summary
(IFAS)
III. EXTERNAL
ENVIRONMENT
PESTEL Analysis
EXTERNAL ENVIRONMENT
1 Policital

2 Economic

3 Social

4 Technological

5 Environmental

6 Legal
 Government Environmental
Support Regulations
Tesla benefited from The emphasis on
government incentives and environmental
support for renewable energy sustainability and
and electric vehicles. reducing carbon
emissions led to
favorable policies and
regulations for electric
vehicles.
 Economic Factors

Economic Recovery Fuel Prices

The period of 2013-2014 Tesla's electric vehicles offered

marked a gradual an alternative to traditional

recovery from the gasoline-powered cars, which

appealed to customers looking
global financial crisis of
to reduce their fuel costs.
2008
 Social Factors
Environmental Technological
Awareness Advancements

Tesla's focus on The rapid advancements in

technology and the
producing electric
increasing acceptance of
vehicles aligned with the
electric vehicles as a viable
increasing demand for alternative to combustion
environmentally friendly engine cars contributed to
transportation options. the social acceptance of
Tesla's products
Technological Factors

Battery Supercharger
Technology Network
Tesla's investment in
The company's focus
building a network of
on battery innovation
Supercharger stations
allowed it to helped address the issue
differentiate itself of range anxiety for
and attract electric vehicle owners

customers.
Environmental Factors

• Tesla's electric vehicles were

well-aligned with the goals of
reducing carbon emissions.
• By prioritizing sustainability and
clean energy, Tesla positioned
itself favorably in the market,
appealing to environmentally
conscious consumers and
capitalizing on the growing
demand for eco-friendly
transportation options.
 Legal Factors
• Tesla encountered a myriad of
regulatory challenges concerning
safety, emissions, and
manufacturing standards across
different jurisdictions.
• Compliance with these regulations
was paramount for Tesla to
uphold the safety and reliability of
its vehicles, as well as to foster
consumer trust.
VI. SWOT ANALYSIS
Strengths - Weaknesses - Opportunities - Threats
SWOT
Helpful Harmful

1. Innovation and 1. Production

Scalability and
Technological

Internal
Cost

ANALYSIS
Leadership
2. Service and
2. Brand Equity
Maintenance
3. Integrated Network
Business Model 3. Reliance on Elon
Conducting a SWOT analysis at 4. Direct Sales and Musk
the business level, the focus Service Network 4. Limited revenues
and profitability
shifts to how the company 1. Global Market
competes in its particular Expansion 1. Increasing

External
2. Energy Products Competition
industry - the electric vehicle 2. Regulatory and
and Services
(EV) and sustainable energy 3. Autonomous
Legal Challenges
3. Supply Chain
industry. Driving
Volatility
Technology
 TOWS MATRIX
Strengths (S) Weaknesses (W)

• S1-O1 • W1-O1
• S2-O2 • W2-O2
Opportunities • S3-O3 • W3-O3
(O) • S4-O4 Supply Chain Optimization
Market Penetration Strategic Partnerships for
Product Development Market Development

• W4-T1
• S5-T1
• W5-T3
• S3-T2
• W6-T5
Threats (T) • S4-T4
Operational Efficiency
Diversification
Leadership Development and
Brand Differentiation
Succession Planning
V. CORPORATE-LEVEL
STRATEGY
Both corporate level and business level
strategies pursued by Tesla Motors
 Innovation and Expansion into Global Tesla’s
Technological Leadership Markets

Corporate
• Leading in electric • Penetration into
vehicle technology and European, Asian, and
battery efficiency other global markets
• Focus on sustainable • Establishment of

Level
energy solutions manufacturing, assembly,
sales, and service centers

Diversification of Product Tesla's growth and

Vertical Integration
Line
innovation-driven
• Evolution from high-end • Manufacturing key
corporate strategy
electric sports cars to components in-house
luxury sedans, SUVs, and • Direct sales model for
mass-market vehicles controlling quality and
• Strategy to cater to a offering unique buying
broader market segment experience
VI. BUSINESS LEVEL
Differentiation-focused business strategy
 Tesla’s Business Level

Innovative Product Sustainability and Superior

Features Environmental Performance
Responsibility
• Advanced technology
• Exceptional metrics:
and design
• Zero-emission vehicles acceleration, top speed,
• Autopilot features,
• Mission towards safety ratings
battery range,
sustainable energy • Outperforming
performance, unique
competitors in the market
design elements
 Tesla’s Business Level
Direct Sales and Customer Charging Infrastructure
Experience • Comprehensive network of
• Selling directly to consumers Supercharger stations
• Unique and consistent • Addressing range anxiety,
customer experience facilitating long-distance
travel
Continuous Software Brand Reputation
Updates
• Over-the-air software • Association with innovation,
updates luxury, sustainability
• Enhancing features and • Attracting customers seeking
performance post-purchase prestige and environmental
consciousness
VII. STRUCTURE &
CONTROL SYSTEM
Both corporate level and business level
strategies pursued by Tesla Motors
STRUCTURE
• Human Resources
• Business Development
• Engineering
• Design
• Manufacturing, Programs
(Process)
• Autopilot
• Global Sales and Services

This structure allows for strict

managerial control over the
company's operations.
STRUCTURE
Centralization
Tesla employs a centralized approach in its
organizational structure.

Centralization emphasizes managerial control

through decision-making conducted by a
central group or team.
STRUCTURE
Divisions
Tesla's organizational structure also incorporates
divisions based on products and geographical
locations.

The primary divisions within Tesla's corporate

structure are Automotive and Energy Generation and
Storage.

Additionally, Tesla has geographical divisions for

financial reporting purposes, including the United
States, China, and Other regions.
STRUCTURE
Vertical Integration
Tesla stands out by vertically integrating various
aspects of its business.

Tesla manufactures many critical parts in-house.

This vertical integration allows them to maintain

quality control, accelerate innovation, and respond
swiftly to market demands.
STRUCTURE
Global Presence
Tesla operates globally, with manufacturing facilities in different regions (such as the
Texas Gigafactory) and a strong presence in key markets.
 CONTROL SYSTEM
Decentralized Decision-Making
Tesla’s control system
empowers decentralized
decision-making.

Teams have autonomy to

experiment, iterate, and drive
progress.

This agility allows Tesla to

adapt swiftly to changing
market dynamics.
 CONTROL SYSTEM
Data-Driven Approach
Tesla relies heavily on data
analytics.

They collect real-time data from

their vehicles, charging stations,
and other sources.

This data informs product

improvements, service
enhancements, and strategic
decisions.
 CONTROL SYSTEM
Agile Supply Chain
Tesla’s control system emphasizes
an agile supply chain.

They maintain close relationships

with suppliers, ensuring timely
deliveries and quality standards.

Their just-in-time inventory

approach minimizes excess stock
and reduces costs.
 CONTROL SYSTEM
Customer-Centric Focus

Tesla’s control system prioritizes

customer satisfaction.

They actively engage with

customers, address issues
promptly, and incorporate
feedback into product
development.
Alignment with Strategy
Tesla’s structure and control system reinforce their strategy of disrupting
Innovation and Disruption the automotive industry. By vertically integrating, embracing data, and
fostering innovation, they stay ahead of competitors.

Tesla’s commitment to electric vehicles aligns with

Sustainable Mobility their strategy of promoting sustainable mobility. Their
control system ensures efficient production, minimal
waste, and continuous improvement.

Tesla’s structure enables rapid decision-making, critical for maintaining

Market Leadership market leadership. Their control system emphasizes agility, responsiveness,
and customer satisfaction—key elements of their strategy.
Alignment with Strategy
Product Line Expansion and Innovation

The Tesla Roadster and Model S exemplify this strategy, providing customers with
more options and enhancing the company's competitive edge.
Alignment with Strategy
Technology and Product Development Strategies

Significant investments in technology and product

innovation

Tesla's focus on battery technology, power electronics,

induction motors, and
control software.

Tesla wanted to that innovative products were safe for

using.
Alignment with Strategy
Manufacturing and Supply Chain

Combining in-house production with outsourcing of non-core components to protect

intellectual property and minimize costs.

Their manufacturing control systems prioritize continuous improvement, cost

reduction, and efficiency enhancement.

The strategy is positioned Tesla's distribution factories in areas with access to skilled
engineers, such as Southern California and Tilburg, Netherlands to reduce the cost.
Alignment with Strategy
Distribution and Marketing

“to educate their consumers directly, sell them cars directly and service their vehicles
directly”

The important missions for Tesla to build distribution networks on company-owned

retail stores and service centers.
Alignment with Strategy
Distribution and Marketing

Increasing brand awareness, managing existing customers, and attracting new ones,
leveraging their status as the first company to commercially produce a
federally-compliant, fully electric vehicle with market-leading range.

Media coverage generated significant interest, leading to a natural increase in Tesla's

sales force without additional costs.

This allowed Tesla to maintain low marketing expenses and minimize traditional
advertising costs.
Alignment with Strategy
Strategic Partnerships

Panasonic, Daimler, and Toyota

These alliances provide access to valuable resources, expertise, and technologies that
complement Tesla's strengths and support its strategic objectives.

Prioritizing innovation, cost optimization, customer satisfaction, risk management, and

strategic partnerships, Tesla continues to lead the way in sustainable transportation and
energy solutions.
VIII. RECOMMENDATION
Future Strategies
Recommend
Strategic
Alternative
Tesla's financial stability allows for
investments in research, development,
production process improvements, and
component outsourcing, potentially
enabling quicker production scaling.
Recommend Strategic
Alternative
Outsourcing provides cost savings,
efficiency, and focus on core
competencies but entails risks such as
quality control issues and impact on
brand image.

Strategic decision-making is essential

to balance control over production
and outsourcing benefits.
 In the end, Tesla’s goal is to produce high-quality
electric vehicles
at a scale that can compete with traditional automakers.
How they achieve this will be a key factor in their
long-term success.
Recommend
Strategic
Alternative
Implementation plan
Tesla needs to address production issues
to stay competitive amid new entrants like
Ford and General Motors in the electric
vehicle market.
Implementation
plan
Tesla's financial stability, innovative
technology, and strong brand have been
crucial for its success.

To maintain competitiveness, Tesla needs to

innovate further and enhance production
processes to meet growing demand.
Implementation plan
Tesla's impact on the automotive industry is significant due to its electric vehicles. To
ensure future success, Tesla must address production challenges, innovate, and compete
in the electric vehicle market, shaping the industry's future.
Q&A
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