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Project Report
Submitted by:
Abeera Allahwasaya
Aima Amir
Alizah Majeed
Saba Naseer
Waleed Qaiser
Zainab Haider
Zumaika Iftikhar
Tesla, Inc.
Table of Contents
Executive Summary .................................................................................................................................... 2
Background ................................................................................................................................................. 4
Statement of strategic issues/problems including current strategic posture of the firm ...................... 4
Corporate Governance ............................................................................................................................... 6
Analysis of the external environment ........................................................................................................ 9
The Porter’s Five Forces Analysis ......................................................................................................... 9
PEST Analysis ....................................................................................................................................... 10
Analysis of Internal environment ............................................................................................................ 12
Tesla Core Competencies ..................................................................................................................... 12
Analysis of Strategic Factors.................................................................................................................... 13
Business level strategy .......................................................................................................................... 13
Corporate level strategy ....................................................................................................................... 14
Functional level Strategy ...................................................................................................................... 15
Analysis of Strategic Factors, Strategic Alliance and Recommendation ............................................. 15
Implementation, Evaluation and Control ........................................................................................... 17
References .................................................................................................................................................. 18
Appendices ................................................................................................................................................. 19
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Tesla, Inc.
Executive Summary
Tesla Motors is an energy company with a core objective to be the catalyst for
renewable energy products in today’s consumer marketplace .Tesla had been seen to
have adopted the differentiation strategy from the very beginning. Tesla Motors Inc.
manufactures and sells 100% electric cars and advanced electric vehicle components. The
company produced the first car to integrate zero petroleum consumption, high-energy
efficiency and great driving performance. Tesla is still planning on producing different
models of cars in the future. The company has released the roadster and Model S. These
two cars have made waves in the car industry. Elon Musk, who is the CEO, owns Tesla.
However, the company also has shareholders who are partly owners of the company. Tesla
motors have different board of directors and committee structures that help in the
effective running of the business. Tesla is an ethical and social responsible company that
sees to the proper functioning of the environment. It produces cars with zero emission of
gas. It also produces batteries that are no toxic and easily recyclable. Tesla Motors is a
well-known company that has a global presence. It products are highly demanded around
the world. Tesla has it strengths, which it uses as a competitive advantage over it
competitors. It has weaknesses and also opportunities it can invest in. The company also
has it threats, which come from its competitors. Lastly, Tesla performs its functions of
It also has an effective communication channel. Tesla’s leadership style is very effective.
It motives and inspires everyone to work hard and accomplish the company’s goal. Tesla
also uses effect strategic and tactical plans to achieve its mission and vision efficiently.
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Tesla, Inc.
Tesla measures the performance of the organization effectively by comparing its output to
the objectives set by the organization. It should work on installing energy generation
solar roofs and storage products in homes, tapping into new markets, Improving their
autonomous driving software and developing a teals share fleet and app to customers’
cars can make money for their owners while they are not in use. However, Tesla needs
improvement on its controlling and planning process because it’s lacking in some areas.
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Tesla, Inc.
Background
Tesla was founded in 2003, shortly after GM destroyed the prototypes for its electric vehicle, the
EV-1. In 2004, Elon Musk came to the fledgling company and provided much of the initial
capital support to run it. It was founded with the idea to create effective electric cars and sell
them to the masses. To do so, it created a 3 tiered strategy. The first phase was to release a sports
car, which was then the only effective type of electric vehicle in terms of return on investment. It
would be followed by a $60,000 sedan, and eventually a $30,000 sedan, sold to the masses.
Tesla has faced a number of challenges this year, including concerns over its finances, ability to
build cars at scale, and public comments attributed to Musk and Tesla. Now, the company is at
an inflection point.
It was a painful production ramp-up for the Model 3, Tesla's first vehicle aimed at the mass
market. Famously described as "production hell" by CEO Elon Musk, the company's heavy lift to
attain a production rate of 5,000 Model 3s per week involved such drastic measures as
assembling cars in a makeshift tent. At the end of the third quarter, Tesla reported that it
produced 5,300 of the vehicles in the last week of the quarter, and the company has said that it
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Tesla, Inc.
Tesla isn't the only game in town in the electric vehicle market, and that will be even more true
next year. Competition is poised to heat up in EVs soon, with higher-end models from Porsche
and Mercedes coming to market in 2019. At the lower end of the market, Volkswagen is
When the White House announced a trade truce in early December, Tesla was seen by investors
as a beneficiary of potentially improved trade relations between the U.S. and China. That's
because China could serve as both a manufacturing base and a key consumer market for Tesla.
Tesla could be looking to ramp up even sooner than in China, with one recent report suggesting
that a planned Gigafactory in Shanghai could start producing cars by the latter half of 2019.
It's hard to believe it's only been two months since Elon Musk settled with the SEC over the "go-
private" fiasco on Twitter that led to charges of fraud against the volatile executive. In that time,
Tesla appointed a new board chair, Robyn Denholm, but Musk has continued to needle
regulators, saying recently that he "does not respect the SEC", among other remarks implying
that he may not intend to fully comply with the terms of his settlement with the agency.
Musk and Tesla aren't completely out of the woods, however. Aside from Tesla's entanglement
with the SEC, a Department of Justice criminal investigation is underway exploring fraudulent
claims concerning Model 3 production in 2018. Adding to a string of executive departures at the
carmaker, Tesla's longtime general counsel left the firm weeks ago and was replaced by Dane
Butswinkas, a top trial lawyer experienced in handling fraud claims which could be a sign of
things to come.
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Tesla, Inc.
Corporate Governance
Tesla’s Board of Directors consists of 11 people. First there is Elon Musk who is the Founder,
CEO and Director. Then there is Robyn Denholm who is the chairman of the board. The rest of
the nine board members include Ira Ehrenpreis, Antonio Gracias, Kimbal Musk, Stephen
Jurvetson, Brad Buss, Linda Johnson Rice, James Murdoch, Lawrence Ellison and Kathleen
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Tesla, Inc.
For years, Tesla's board remained almost invisible, staying behind the curtain as superstar
Chairman and CEO Elon Musk guided the electric car maker to huge stock price increases. Now,
given Musk's recent questionable behavior, experts say it's time for the board to step onstage and
The list of Musk's offenses include berating Wall Street analysts on a conference call and
labeling as a pedophile via Twitter a British diver involved in the cave rescue of trapped Thai
soccer players.Add to that his abrupt Twitter announcement of a plan to take the company
private even though funding hasn't been solidified, as well as confessing to being overwhelmed
with job stress in a recent interview, and it's likely that most other company boards in a similar
position would have taken action, corporate governance experts say.Yet Tesla's nine-member
board, which includes Musk and his brother, Kimbal, has largely been silent, save for forming a
three-member committee to decide on the go-private plan that has already drawn scrutiny from
At least five of the company's eight non-executive directors have strong ties to Musk or one of
his other companies, throwing their independence into question. (Tesla's Board Problem, 2018)
"I believe Elon Musk is a genius and he needs to be admired and encouraged, but this board of
directors has to do more management oversight of the company. The board of directors is not
School and an expert on corporate governance issues. (Tesla's Board Problem, 2018)
Kimbal Musk is among the five directors with ties to Musk. Lead director Antonio Gracias
founded a private equity firm and also is a director of SpaceX, Musk's privately held rocket
company. Director Steve Jurvetson is also a SpaceX director. He's been on leave from his
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Tesla, Inc.
venture capital firm since allegations of sexual misconduct appeared last year. (Tesla's Board
Problem, 2018)
One of the five, New York City Comptroller Scott Stringer, who manages investments in Tesla,
said in a statement Monday that it's time for the board "to take a hard look at Tesla's governance
and compensation structures to ensure that there are proper processes in place for strong board
Columbia's Klepper said Tesla didn't need more board members; it needed assertive ones. "They
need to make some hard choices about the existing board members and decide whether their
expertise really fits with Tesla's mission," Klepper said.(Tesla's Board Problem, 2018)
Two major firms that specialize in corporate governance issues advised Tesla shareholders to
shake up the company's board earlier this year, citing troubling conflicts of interest and decisions
that raised questions about the directors' links with Musk. (Tesla's Board Problem, 2018)
Tesla's stock has been on a roller-coaster since Musk used Twitter on Aug. 7 to say he was
considering taking the publicly traded company private. Even though Musk said funding had
been secured for what could be at least a $20 billion deal, the company later disclosed that it
wasn't. On the day of the announcement, shares rose 11 percent but since have fallen almost 19
percent, closing Monday at $308.44.Experts say under more normal circumstances, the board
committee would have evaluated the plan before it was made public, a sign that Tesla's directors
aren't taking an active role in running the company. (Tesla's Board Problem, 2018).
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Tesla, Inc.
In the case of TESLA, the threat of new entry is low. This is because there are less number of
competitors who have their own niches. Apart from that, entrants would require large
The bargaining power of buyers is moderate since it is a premium product it is catering to a niche
segment hence the bargaining power with the buyers would be low
The threat of substitutes in an automated car industry is considerably high because there are so
many brands like Audi and BMW present in the market who areworking hard to improve
themselves every day. Customers have large choices available in the premium car industry who
The bargaining power of suppliers is very high. This is mainly because TESLA is very reliant on
their suppliers because TESLA purchases mechanisms from over 200 suppliers all over the
world and despite of building close partnerships with their main suppliers working together on
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Tesla, Inc.
replacing Lotus supplier’s chassis with trading by themselves and developing the new battery
The rivalry in the automated car industry is very competitive. Companies have been trying to
generate their own niches by developing alternatives like environmental friendly cars such as
hybrid cars. Companies have to become more intensive and will need to keep improving and
generating better cars because in the future, rivalry will be more demanding.
Competitors:
1. Jaguar i-pace
3. Audi e-Tron
4. Mercedes-BenzEQC
5. BMW i4
6. Hyundai Kona
7. The hybrids
PEST Analysis
Political
Trading cars in 17 countries of North America, one of the foremost political factor which are
affecting the TESLA industry is the Environmental Protection laws to make more environmental
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Tesla, Inc.
cars to meet strict emission levels. Another essential factor is the US government energy loan
Economic
Economic factors involve economic growth in the alternative energy industries and increase in
the cost of using the cars mainly due to the rise in fuel prices in the short period. Thus, the
demand for more-efficient cars has become higher. The recovery of GDP and inflation rate in
most of the developed countries from the declining period in 2008/2009 has a major impact on
Social
Social factors are concerned about increasing environmental concerns. Consumers are losing
trust in gasoline fuel and associated cost in production trying to help the environment. Another
social aspect is that increasing in ageing population with most wealth and savings, consumers
Technological
Improving technology, rapid globalization has a major effect on the automotive car industries.
There has been much technology advancement within the industry such as the introduction of
fully electrical cars and computerization of cars that allow automotive car driving and avoid
accidents. In future, this will lead to improvements in safety and convenience of cars.
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Tesla, Inc.
RESOURCES
CAPABLITIES
Tesla
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Tesla, Inc.
Tesla generate self-reinforcing enthusiasm for the brand, create and utilize cutting edge
Extendability Competitor
differentiation
Tesla use of cutting edge technology from top to bottom is a sign of commitment related to the
Being able to take risks allowed Tesla to find its position in the market, and more importantly,
Tesla had been seen to have adopted the differentiation strategy from the very beginning. History
has it that Tesla (the company) succeeded in the market place by introducing products which were
different from what the other competitors proposed. The company makes sure that the products
are differentiated and not resemble with what the other companies have to offer. Consumers are
able to identify the products by Tesla which had been made easy by the differentiation strategy
that the company engages itself into. Furthermore, the company enjoys the liberty of
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Tesla, Inc.
outcompeting its rivals due to the environment friendly technology that it had enveloped along.
This had the advantage that other companies that were out there, they had vehicles that used
combustion engines while Tesla on the other hand manufactured electric vehicles.
Comparatively, other rival companies such as Toyota had been engaging in the cost leadership
strategy but Tesla on the flip side was not concerned with this. Apparently, Tesla had been found
out to be one of the highest pricing companies which focuses upon differentiating itself rather
than running for the low cost leadership. The company boasts about the technology and the
electric vehicles that they manufacture and doesn’t consider the vehicles which use gasoline
powered engines as their benchmarks. Their technologically advanced operations allow them to
make unique electric cars which are environmentally friendly as well in comparison to the
gasoline vehicles, this had allowed Tesla to enjoy an increasing share in the market.
Tesla has a unique way to advance towards its corporate strategy. Tesla sells most of its products
through its company owned showrooms and also through its online platforms that it owns. This
strategy might seem to be a growth strategy in its own. The revenue from the company owned
showrooms and through commissions that they earn give them a way out to more revenues from
their products. Ethical behavior and culture can be seen as the center of Tesla. The company
provides environmental friendly products that avoid harming the societies, nature and people
around. Furthermore, the company distributes reasonable and sufficient remuneration to its top
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Tesla, Inc.
Tesla’s promise towards its product and brand controls many aspects of its supply chain and this
in turn influences its supply chain strategy – more directly towards its sales and customer
service.
Tesla wants its cars to be sold by more knowledgeable men so for that they sell them under their
own name and through their own men and salespeople. Just because Tesla spends so much
money to brand their product, it wouldn’t have been possible through some third party dealer
ship because of which Tesla has taken this reaponsibilty on its own self. This attention towards
quality and brand is reflected through the training of their employees and in the atmosphere and
design of their stores. The sleek and fast charging stations as compared to typical charging
stations, the owners of Tesla are incentivized to buy Tesla electric cars.
A differentiation strategy is followed by Tesla and this strategy helps them to build competitive
advantage and developments of products and creating a differentiation factors from their rivals.
Differentiation and innovation exist at the core of Tesla. The kind of services they provide add
value to their work and it becomes a culture. Tesla generally focus on advanced technologies in
their electric motors by competing against General motors, Toyota motors, Honda motors,
Nissan motors, Bavarian motors and Volkswagen.Tesla products are competitive because they
made environmental friendly technology, considering the vast majority of automobiles of today
use combustion engine. Tesla also used differentiation focus by coming up unique and
innovative products that not only grab the attention of consumer but also focused mainly on early
adopter and high end market for electric vehicles. Since their production cost are declining and
they need to invest in the research and development centres. They also strengthen
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competitiveness by broadening its market reach to generate more sales and increase brand
popularity.
Inorder to bring sustainability in their sales and improve brand popularity, there are four main
objectives that tesla need to work on in order to be in the game and that is:
1. Installing energy generation solar roofs and storage products in homes to work in
2. Tapping into new markets such as electric semis and public transport buses in order to
4. Developing a tesla share fleet and app to customers’ cars can make money for their
Building the company with competency, capabilities and resource strength, creating strategy
supportive policies and procedures, instituting best practices and a commitment to continuous
improvement in unique way of so that no rival imitate it, installing support system and value
added services and maintain low cost. As Tesla tries to position itself in the business of
sustainable and decentralized energy, the relationship with Panasonic is significant. Tesla'sability
to attract and manage leading companies in the automotive and other key industries as strategic
Tesla should focus on improving its manufacturing efficiency. Tesla should work on diversity of
supply chain as their current supplier is single source. The production process become slow in
Tesla so for that reason, it should provide training to their workers or need to hire more skilled
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Tesla, Inc.
workers to keep up with the planned production growth and introduction of new electric semi.
The company currently has single battery cell supplier and this is the one reason that cause
delays in production process in order to overcome this, Tesla need to have multiple battery cell
The Tesla is a unique company and it has unique culture as well. The company stricture is in U-
Form or in other words it has divisional structure which comprised of number of divisions such
as energy, engineering, legal, production, HR, communication, finance, sales and software. The
benefits of having this structure as it have less bureaucracy compared to other companies. This
structure also helps to increase the communication among different layer of management with
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Tesla, Inc.
References
http://thespherepress.com/tesla-motors-external-analysis-pestle/
https://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1060&context=honorstheses
https://research-methodology.net/tesla-organizational-structure-divisional-and-flexible/
https://www.whereisroadster.com/tesla/
https://www.thestreet.com/world/tesla-biggest-challenges-2019-14813474
https://www.businessinsider.com/tesla-challenges-in-2018-2018-4#the-doj-is-reportedly-
investigating-teslas-statements-about-model-3-production-34
http://panmore.com/tesla-motors-inc-generic-strategy-intensive-growth-strategies-analysis
https://www.feedough.com/tesla-business-strategy-and-business-model/
https://brainsandbliss.files.wordpress.com/2018/05/tesla-strategic-analysis.pdf
https://www.bloomberg.com/research/stocks/private/board.asp?privcapId=27444752
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https://www.cbsnews.com/news/experts-say-tesla-board-may-have-too-many-ties-to-ceo-musk/
https://www.businessinsider.com/tesla-board-of-directors-full-list-elon-musk-chairman-
replacement-2018-8
Appendices
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