Tesla Motors Case Study Strategic Management
Tesla is an American automotive company that makes electric cars with zero-emission. It is the best replacement for gasoline sports cars that have high torque and speed. The roadster is the best car for Tesla in this regard. Likewise, Tesla S is the most common model in America. The company has a simple business strategy; it entered the high end of the market but differently in which customers pay to develop low-cost family car unless other car manufacturers (Clifford, 2019).
Tesla Motors Case study Questions Answer#1:
The company produces electric cars that are speedy and environment friendly. The cars use Lithium-Ion batteries, and the torque is equal to Lamborghini, but the emission is zero. It means that t=0. The roadster is the sports car of the company that goes from 0-60 mph in 3.2 seconds with negligible noise. S model of Tesla is termed as “The Most Loved Vehicle in America.” The cars have only a few moveable parts, and there is no traction control and other such units. However, the handling of cars is world-class, and it is the reason that it is giving a tough time to the BMW 7 Series and Mercedes S class (Patrick, 2013).
Corporate Level Strategy Statement of Tesla Motors
The primary goal or objective of the company is to support the ecosystem and to overcome the issue of global warming through the development of electric cars that have negligible emissions. The company aims to manufacture high-end vehicles equivalent to high-end gasoline sports cars, but Tesla cars have a low price and high quality. The company aims to position itself in the global car market through its innovative and technologically advanced manufacturing. The vision of the firm is sustainability, and it is using this vision with great expertise to build high-end sports cars along with sedans (Perkins, 2018).
The company seeks to attract customers through its high-quality vehicles with almost half the cost of other branded vehicles with the same specifications, low maintenance cost, and focusing on energy preservation. The company has a particular advantage of its technology because it is making vehicles free from gasoline. It plans to use solar energy for power generation at its charging points, and it is why people can have free charging in the future. It means that the running cost of vehicles along with their maintenance cost would come to a minimum level (Perkins, 2018).
Tesla Motors Case study Questions Answer#2
Strategic Position of Tesla Motors
| Strategic Position | Source | Results |
| Macro Environmental opportunities and threats | Tesla can develop new giga-factories. The company needs to reduce its profit along with the cost of its products. The gigafactories would help the company to improve its production. Likewise, it can get a discount on bulk buying of raw materials. The company has to focus on the concept of its self-driving cars, and it needs to explore new markets. On the other hand, the company faces various issues or threats such as high competition from Toyota, Google, and Ford. The company has high debt, it can strand its aim to build big factories, and it would have a direct impact on its profit (Perkins, 2018). | Tesla can explore new markets, and it has already lowered the cost of its vehicles by building 2 gigafactories, and the third is under process. It would improve its profit margin and increase the productivity of the company (Perkins, 2018). However, it has to reduce its debt. Otherwise, it would become a hard nut to crack for Tesla to achieve its targets. |
| Managing Industry forces | Porter’s Five Forces | It would help the company to deal with various threats and to devise a robust and dynamic policy for managing and handling industry forces such as the bargaining power of buyers, bargaining power of suppliers, and the threat of substitute products (www.just-auto.com, 2019). |
| Alignment of stakeholders to organizational purpose | Through investment and taking care of their stakes | Stakeholders are aligned with the organizational purpose by investing in the company and supporting the company to improve its sales and profit. They all have their stakes aligned with Tesla. They cannot afford to hurt their stakes at any cost (www.just-auto.com, 2019). |
| Purpose of organization | Manufacturing electric cars and to use renewable energy resources to support ecosystem | It would help the company to appear as a corporate socially responsible company. It would improve its brand image and attract more sustainability and ecosystem lovers. The company is going to set a new trend in the market, and it is superior to others in terms of its technology (Patrick, 2013) |
| Culture fits the strategy. | Increased awareness of sustainable production | Culture fit the strategy of Tesla perfectly as it is clear that electric cars are pollution-free, and they can use solar energy for power generation. People are now more concerned with sustainable business practices, adding value to the company, and society and culture would welcome it (www.just-auto.com, 2019). |
Strategic Choices
| Strategic Choices | Sources | Results |
| Competition of business unit | Market survey and customer feedback | Market surveys and customer feedback would help the company to compete for business units. Customer feedback is the key to success in this regard as it would help the company modify its vehicles according to their needs and requirements (www.tesla.com, 2019). Market survey is important to understand market trends. |
| Businesses include in a portfolio. | Car manufacturing, maintenance, renting, and household batteries business | Tesla can go for various businesses in this portfolio, such as supplying batteries to homes, offices, and other commercial needs. Likewise, it can go for renting businesses such as Uber. |
| International Competition | Developed nations and emerging economies | Tesla needs to focus on developing nations with surplus electricity and emerging economies that cannot afford gasoline vehicles. |
| Innovation | Latest technology IA | It is using IA and self-driving concept in its future that is highly innovative. |
| Buying other companies | Alone | Other companies are not producing pure electric cars. They are making hybrid and semi-hybrid cars, and Tesla should not share its technology at this point without dominating the market (www.just-auto.com, 2019). |
Strategic Actions
| Strategic Actions | Source | Results |
| Nature of strategies | Suitable, feasible, and acceptable | The strategies of Tesla are suitable, feasible, and acceptable. The strategy would help the company to increase its productivity and to produce low-cost vehicles with world-class quality. Likewise, the strategy is acceptable as it aligns with the mission and vision of the company, and it would help Tesla to expand its business operations (Perkins, 2018). |
| Strategy-Making Process | Innovative and risk-free | The company needs to develop an innovative and risk-free strategy-making process. The primary advantage of this process is that it would help Tesla to improve its productivity along with the quality of its products. In the same manner, it needs to have a risk free strategy-making process to ensure that the strategies help the company to achieve its targets (www.tesla.com, 2019). |
| Organizational structure and system | Divisional Organizational chart | It would help the company to target different regions in terms of its production lines. |
| Change management | Kotter’s 8 Step Change Model | It would help the company manage change using 8 steps of this strategy, and it can handle fluctuations with ease and perfection (www.just-auto.com, 2019). |
| Who is responsible for the strategy process | Board and senior management along with chairman | The senior management of the company, including its board members and chairman, has to devise and implement robust and dynamic strategies. |
Tesla Motors Case study Questions Answer#3:
The market’s reaction to Tesla’s strategy is positive, and it is the primary reason that it is termed as the most important car company in the world even though it started its business operations in 2008. Market supported its products and services, and the S model of Tesla is the most favorite car of Americans in the contemporary modern world. In my opinion, the strategy of Tesla is highly successful, and it is the major reason for its success. It is competing BMW 7 series and Mercedes S class due to its high-quality products and its highly efficient strategy. The market shares of the company are experiencing an increase (www.tesla.com, 2019).
It experienced a growth of 33.23% in its market shares in 2018, and it sold 90,700 units in the last quarter of 2018. The company has an increase in its share price, and the CEO of the company plans to raise $2 billion from investors in 2019. The company is progressing rapidly, and it is why it has $33 billion as its revenue and income. The company is doing extremely well, and it is a great threat for old industry players because its performance is exceptional (www.just-auto.com, 2019).
Conclusion
To conclude, Tesla produces environmentally-friendly electric vehicles. Roadster is the best sports car for Tesla and the hot-selling item of the company. The car has amazing features and world-class quality. The price is less than other such high standard vehicles, and it is the reason it is selling like hot cake. The study highlights strategic position along with its strategic actions and other related information that can help it to improve its services. The company is doing extremely well, and it is the major reason that people are investing in it. Tesla needs to reduce its debt to become successful.
Tasla Case study Video
References
Clifford, C., 2019. cnbc.com. [Online]
Available at: https://www.cnbc.com/2019/06/06/early-on-elon-musk-gave-tesla-a-10percent-chance-of-success.html
[Accessed 16 August 2019].
Patrick, S., 2013. Nikola Tesla: Imagination and the Man That Invented the 20th Century.. s.l.: Oculus Publishers..
Perkins, G. a. M. J., 2018. What does the success of Tesla mean for the future dynamics in the global automobile sector?.. Management and Organization Review, 14(3), pp. 471-480..
www.just-auto.com, 2019. just-auto.com. [Online]
Available at: https://www.just-auto.com/market-research/tesla-motors-inc-strategy-swot-and-corporate-finance-report_id306865.aspx
[Accessed 17 August 2019].
www.tesla.com, 2019. tesla.com. [Online]
Available at: https://www.tesla.com
[Accessed 16 August 2019].
