Executive summary

Tesla Motor Inc. is one of the leading players in the automotive industry. It has high specialization in the electric vehicle market where it is involved in the manufacture of vehicles as well as electric powertrains. It is wise to point out that the company has been performing well in the industry as the demand for electric vehicles and electric components have been on the rise. Although the company recently started its operations, it has been competitive in the sector where other players such as BMW, Toyota and the General Motors (GM) have dominated the market for a long time. Nevertheless, the company is in high hopes as the market for electric vehicles is expected to increase significantly in the coming years and Tesla is optimistic that its sales and profitability will also increase substantially. It is imperative to note that with the increasing fuel prices and greater environmental concern, Tesla (Wheelen & Hunger, 2012) Corporation is in a good position as the demand for energy efficient automobiles is expected to increase. It is, therefore, essential for the firm to stay focused on its goal to ensure that it invest in research and development that will lead to utmost customer satisfaction.  A strategic approach will enable the firm to remain competitive and deal with other brands like BMW, Toyota, and GM, which have been dominant players in the automotive industry.

History of the company

Tesla Motors, Inc. is an American auto industry that was founded on July 1st, 2003. The company was founded by a group of brilliant and innovative entrepreneurs, Martin Eberhard and Marc Tarpenning, who worked as engineers.  The company was named after a Serbian-American inventor Nikola Tesla. The two entrepreneurs were determined to make a point that electric vehicles could be a better substitute of the gasoline powered automobiles. The company does not only designs, market and produce electric vehicles but it is also involved in the provision of electric power train components to other car manufacturers such as Toyota and Daimler.   Tesla’s headquarters are located in Palo Atlo, California in the United States.  Also, the company has other wholly owned subsidiaries in other parts of the world that include; North America, Asia and some parts of Europe. It is reported that the company has over 13,000 employees working in its 31 stores and service centers globally as at 2015. Tesla is said to have total assets amounting to 8.09 billion dollars while the company’s equity was estimated at 1.08 billion dollars as at December 2015.  All the company’s vehicles are produced at its factory which is based in Fremont, California, a previous venue of the New United Motor Manufacturing Inc was jointly owned by Toyota and General Motors (Grant, 2015). The company is in an expansion program and in 2012; it opened its first store in Toronto as the first step to enter the Canadian market. It is prudent to point out that the company intends to open other stores in other parts of the world to increase its presence.

Over the years, the company has strived to offer high performance and electrical vehicles at affordable prices. The company first gained widespread attention in 2008 after the introduction of Tesla Roadster in the market. This was solely electric sports car and consequently was very much appreciated in the market. Tesla later produced Model S and Model X, which embraced high technology and the models are zero-emission sports cars (Corporate Social Responsibility & Sustainable Business: A Guide to Their Leadership Tasks & Functions, 2009). It is a company where technology is greatly valued and offers the most efficient path to sustainable energy in future.

 

Mission and vision statement analysis

Mission and vision statements are important in any organization as they act as the guiding principles in the firm’s daily activities. The stakeholders in any organization must be guided by the mission and vision statements of their respective organization.  To start with, Tesla’s mission statement reads ‘’ To accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.’’ The mission statement of a company outlines the goals and objectives of a firm. For instance, Tesla’s goal and the objective are to accelerate the world’s shifting from gasoline-fueled vehicles to electric vehicles that are not only affordable but also environmental friendly. The company’s management is fueled by the desire to fulfill that electric vehicle are better than gasoline-fueled vehicles (Grant, 2015). As a result, the company is committed to investing in research and development to ensure that they bring the most effective and efficient cars into the market. One of the company’s core values is to ensure that they are fast moving in providing best innovations in the automobile industry. The company’s products are not only environmentally friendly but are also fun to drive. It is prudent to note that the company is always working to ensure that its products are available in all parts of the world through improved technologies.

Corporate governance

The company’s success can be attributed to the good corporate governance experienced in the organization. The following is a list of the executives spearheading the operations of Tesla Inc;

Elon Musk:

He is the chairperson, product architect and also the company’s chief executive officer (C.E.O). He is a co-founder and has the responsibility for overseeing the company’s product strategy including the design, engineering, and manufacturing of affordable and efficient electric vehicles in the company. He has the responsibility of ensuring that the company’s products meet the consumer demands. He has vast experience in business management and administration since he also founded other companies like PayPal and space (“Tesla Power wall in the United States and Portugal – A Comparative Analysis on the Use of Storage with Small-Scale Photovoltaic Systems”, 2016).

JB Straubel:

He has the title of the company’s chief technical officer. The primary role involves overseeing the technical and engineering design of the electric vehicles with an emphasis on battery, power electronics, motor and high-level software sub-systems.

Deepak Ahuja:

He is the company’s chief financial officer. He is a great asset to the company as he brings with him over 15 years of global automotive financial experience to the team. In his role as a financial officer, he has been able to bring invaluable experience to the firm thus enabling it to be a leading manufacturer and producer of efficient and effective electric vehicles in the world.

Franz Van Holzhausen:

Franz is Tesla’s chief designer.  He has the responsibility of driving the overall design direction at the firm and is expected to establish a world-class design that is competent for all future design concepts and production of automobiles.

George Blankenship:

He is the company’s vice president, sales, and ownership experience. Just like Deepak, George is also full of experience especially in retail and design at the world’s hottest brands. He joined Tesla in 2010 and comes with three decades of experience to the company. He previously worked at Apple and was behind the revolutionary stores at the company (Johnson, Scholes, & Whittington, 2008). Tesla hopes that he will be able to repeat these heroics here as he did with Apple.

EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (EFAS)

This involves analysis of external factors affecting the business, and the business management has little or no control over such matters. The following is a summary of opportunities and threats that face Tesla Motors;

OPPORTUNITIES

External factors	Wgt	Rating	Wgt. Score	comments
There is increasing need for renewable energy as the world is running out of oil.	0.35	5	2
Increased global warming has accelerated need for environmental conservation	0.05	2	0.2
The battery technology at Tesla can be used in other areas such as storage of solar power	0.1	4	0.6
There is increased political and government support for environmental friendly vehicles	0.1	3	0.3
There is huge potential market specifically in Europe, Asia and Canada	0.2	4	1

THREATS

External factors	Wgt.	Rating	Wgt. Score	Comments
Relatively strong competition with less operational costs	0.3	2	0.6	Other companies like BMW, Lexus and Mercedes have been dominant in the market for long
The world is experiencing an economic slow down	0.15	2	0.3	Instances of global recessions like the 2008 may adversely affect the demand for luxury cars.
Scarcity and lack of enough raw materials	0.3	2	0.6
Limited access to experienced human resource	0.15	4	0.6
Limited awareness on the importance of electric vehicles	0.1	3	0.3	A good proportion of the world population not aware of the importance of electric vehicle.

 

 

INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES

This is an analysis that involves analysing the internal factors that affect the performance of the business.

The following is Internal Factor Analysis Summary (IFAS) at Tesla Corporation

STREGTHS

Internal factors	Wgt.	Rating	Wgt. Score	comment
Tesla invests a lot in R&D	0.45	4	1.8
A strong and experienced management team	0.3	4	1.2	The CEO and other top executives have vast experience having worked with similar companies.
Superb designs	0.1	3	0.3	For instance, Model S won the 2013 TCOYA.
Strategically located close to best calibres in the US	0.05	3	0.1	Tesla’s operations are in California where they can find all sorts of computer engineers.
Large production capacity	0.1	2	0.3	The company has the ability to develop vehicles completely and in large quantities

WEAKNESSES

INTERNAL FACTORS	Wgt.	Rating	Wgt. Score	Comments
Electric vehicles relatively expensive compared to gasoline fuelled cars	0.25	3	0.75
Scarcity of charging stations	0.2	2	0.4	They are working to reduce this problem by building superchargers in most parts.
Low battery range	0.3	2	0.6
Slow charging process	0.3	1	0.3	Battery charging takes quite long
Less strong brand recognition	0.05	3	0.15	Tesla has recently begun its operations compared to other car established manufacturers.

 

 ANALYSIS OF STRATEGIC FACTORS- SWOT Matrix

SWOT analysis is an important strategic tool used to determine the position of a firm. It is concerned with the strengths, weaknesses, threats and opportunities of a firm. The figure below is a SWOT matrix for Tesla motors;

Strengths ·         Strong and experienced management team ·         Strong R&D department ·         Superb designs ·         Strategic location close to best calibers in the United states ·         Tesla has large production capacity ·

Weaknesses ·         The company’s vehicles are relatively expensive compared to fueled vehicles. ·         There are insufficient charging stations ·         Slow charging process ·         Low brand recognition and product awareness among the public ·         Low battery range

Opportunities ·         There is global fear of extinction of oil reserve and increased need for source of renewable energy ·         Global warming has brought about increased environmental concern. ·         The battery technology can be used in other areas such as storage of power using solar panels. ·         Increased global support of environmental friendly vehicles. ·         There is huge potential international market especially in Asia, Europe and Canada.

Threats ·         Very stiff competition in the industry from dominant players such as BMW, Mercedes and Toyota ·         Global Economic recession ·         Inadequate supply of raw materials ·         Inadequate supply of experienced human resource ·         Lack of awareness on the importance of electric vehicles.

 

STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY- TOWS Matrix

Tesla motors can adequately use insights from the SWOT analysis to increase its competitiveness in the industry. Use of TOWS matrix will be essential in analysis of strategic alternatives that Tesla can adopt improve its market share and profitability. The following is the firm’s TOW Matrix

TOW MATRIX

External Factors     Internal Factors	Strengths S1. Strong management team S2. Strong R&D department S3. Strategic location S4. Large production capacity S5. Superb designs	Weaknesses W1. Quite expensive vehicles compared to fossil fueled cars. W2. Slow charging process W3. Few charging stations W4. Less brand recognition W5. Lack of sufficient charging stations
Opportunities O1. There is the danger of diminishing oil reserves and need for renewable energy. O2. Increased global warming and need for environmental concern O3. Battery technology can be used in other areas such as solar storage O4. Global support on environmental friendly vehicles O5. Potential market growth in Europe, Asia and Canada.	SO STRATEGIES Tesla to focus on development of new product that meets the market demand (S1,S3,S5+ O1,O2) Work on expanding existing markets (S1, S3, S5 + O5)	WO STRATEGIES Think of outsourcing some operational activities at low cost (O5, W1) Enhance awareness on importance of electric vehicle (O1, 04, W1)
Threats T1. Very stiff competition from dominant players like BMW and Mercedes T2. Global economic recession T3. Lack of sufficient raw materials. T4.Lack of good pool of experienced human resource T5. Little awareness on importance of electric vehicles.	ST STARTEGIES Engage in development of new products targeting different market segment (S1, S5+ T5) Develop new technologies aimed at decreasing operational costs (S1, S5, T1)	WT STARTEGIES Follow a cost reduction strategy with aim of cost reduction (T1,W3) Sell the company with good bargain (T1, T2, W3, W2, W1)

 

IMPLEMENTATION OF RECOMMENDED STRATEGY

From the above analysis, it is clear that Tesla can benefit substantially from its strong R&D department. The company should concentrate on innovation and production of new cars to target a wider range of customers. If this strategy is perfectly implemented, Tesla Motors can enhance its reputation as a corporate organization taking a leading role in the electric vehicle sector. Implementation of this plan will help the firm capture more market share and create an expectation of exciting ideas among its customers (Johnson, Scholes, & Whittington, 2008).  In essence, it is recommended that Tesla Company should engage in the production of different types of electric cars to match consumer expectations in the market. Since its R&D department is one of its strengths, the company should ensure production of various vehicles including four wheel drive cars. This will give the consumers a diverse range of products to choose from and consequently will lead to increased market share. The company’s recognition and brand awareness will also be given a big boost if there is a continuous production of new types of cars.

Besides the introduction of a variety of new vehicles in the market, it is also recommended that Tesla Company must also seek to diversify its operations. From the swot analysis, it is clear that the battery technology can be used in other areas such as storage of solar power (Corporate Social Responsibility & Sustainable Business: A Guide to Their Leadership Tasks & Functions, 2009).  It is, therefore, essential that the company combine the production of electric vehicles with storing solar energy using their battery technology (Grant, 2015). The use of common brand name and combination of resources will be instrumental in creating competitive strengths and capabilities for the company. It will give the firm a chance to exploit its economies of scale, and overall productivity and profitability of the company are also expected to increase significantly.

In essence, Tesla Motors Inc should seek a strategy that will help the company increase its profitability and competitiveness in the motor industry. It is paramount to point out that the company just started the other day and introduced a new product in the market (Lampart, Kosowski, Piwowarski, & Jędrzejewski, 2009). Nevertheless, there is a very stiff competition in the industry, especially from existing companies like Ford and BMW, and it is imperative that Tesla seeks a strategy to enhance its competitiveness.  This will only be achieved if the different departments, including R&D, work together to enhance the firm’s brand recognition. This will ensure that the products are well known in the market, and consequently Tesla will become more competitive in the automobile industry.

References

Amason, A. (2011). Strategic Management: From Theory to Practice, U.S.A: Routledge.

Corporate Social Responsibility & Sustainable Business: A Guide to Their Leadership Tasks & Functions. (2009). [Place of publication not identified].

Grant, R. (2015). Contemporary Strategy Analysis: Text and Cases Edition, 9th Edition. John Wiley & Sons.

Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy. Harlow: Financial Times Prentice Hall.

Lampart, P., Kosowski, K., Piwowarski, M., & Jędrzejewski, Ł. (2009). Design analysis of Tesla micro-turbine operating on a low-boiling medium. Polish Maritime Research, 16(Special). http://dx.doi.org/10.2478/v10012-008-0041-5

Tesla Power wall in the United States and Portugal – A Comparative Analysis on the Use of Storage with Small Scale Photovoltaic Systems. (2016). International Journal Of Technology And Engineering Studies, 2(1). http://dx.doi.org/10.20469/ijtes.2.40003-1

Wheelen, T. & Hunger, J. (2012). Concepts in strategic management and business policy. Upper Saddle, N.J.: Pearson.

Wheelen, T., Hunger, J., Hoffman, A., & Bamford, C. (2015). Strategic management and business policy. Boston: Pearson.

 

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