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Introduction

●The Tesla Inc. is a manufacturing company that designs, develops and sells energy storage systems and electric vehicles, moreover installs and operates solar and energy storage products (Tesla Inc., 2018).

●The Tesla Inc. formerly known as Tesla Motors is established by Martin Eberhard and Marc Tarpenning in July 2003 based in Palo Alto, California (Tesla Inc., 2018).

● The Tesla Motors was later joined by J. B. Straubel, Elon Musk and Ian Wright, all of whom are altogether considered co-founders of the organiastion.

●The current presentation is going to describe the strategy of Tesla along with the analysis of the external and internal environment of the company.  

●In addition, the presentation will include the PESTEL analysis, competencies framework, Porters five force analysis, value chain analysis, the VRIO framework and the SWOT analysis of the company.

●Moreover, the opportunities and threats, the strength and weakness and the consistency of the strategy of Tesla will also describe in the present presentation.

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1. Strategy of Tesla

•  From the mission and vision statements of Tesla, the primary aim of the organisation could be identified as to dominate in the global market of electric vehicles.

•  Moreover, transforming the entire operation to a sustainable manner was also intended by Tesla, and therefore the entire strategy was formulated by considering sustainable operations.  

•  According to the reports of Thompson (2017), the internationalisation strategy followed by Tesla is a global strategy which intends to enter into the new markets with models possessing low price level.  

•  The three main aspects considered by Tesla during the business growth are enhancing the facilities of selling, servicing and charging the electric vehicles.  

•  Executing innovations in the products and thereby improving the automotive industry was focused by Tesla during each growth stage.

•   Building the safest factories in the world is another objective of Tesla along with providing on the job training which helps in ensuring the highest safety rate in the business operations (Tesla, 2018).

2. The analysis of the external environment of Tesla Inc.

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2.1 Pestle analysis

•As per the observation of Srdjevic et al. (2012) PESTLE analysis assess the macro-environment of the organisation, in the present case the activities in the energy industry and storage industry will be analysed.  

•While assessing the political factors, it was identified that the government are providing incentives for manufacturing the electric automobiles and new global trades are proposed which favour the operations. Moreover, a stable political environment was existing in the society which was favourable to the business operations.  

•The decreasing cost of renewable energy and batteries is encouraging the business operations; however, an unstable economic condition prevailing especially in the Asia and Europe adversely affects the financial performance of the organisation (Rhodes, 2018).  

•The administrative team of Tesla has ensured to develop the strategies which align with the existing social trends in the society. Awareness regarding the low carbon lifestyle and the tendency to use renewable energy among the people was beneficial for the business in the society.   The strategy of Tesla which focused on the developing market with the intention of increasing the wealth distribution gained significant support from the society which indicated the positive inclination of the consumers towards the business (Forbes, 2016).

•When evaluating the technological inclination of Tesla, it was evident from the reports of Matousek and Thompson (2018) that automation has been widely incorporated in the business and the advancements in the online mobile systems has been effectively employed in the business operations which indicated the effective use of technological change in the organisation.

• Moreover, Tesla has concentrated to ensure feasible standards for waste disposal practices and has employed environmental programmes by considering the climatic change (McMahon, 2018).

•The business development of Tesla has focused on the laws and legal system underpinned in business operations such as regulations regarding energy consumption, dealership and sales regulation, and other regulations concerning international transactions. Besides, the labour laws and supply chain laws have been assessed by Tesla for ensuring hassle-free operations.

2.2 Porters five force analysis

•According to Porter and Heppelmann (2014), Porter's five force analysis helps in understanding the strengths of the organisation which could lever profitability in the industry.

     

Source: Rothaermel (2015)

•Industry Rivalry : Strong

•Bargaining power of buyers : Moderate

•Bargaining power of suppliers : Moderate

•Threat of substitutes : Moderate

•Threat of new entrants: Weak  

2.3 Opportunities and threats

•  From the pestle analysis and Porter's five force analysis, the major opportunities and threats possessed by the Tesla was able to analyse which is outlined in the present session.

•  The incentives provided by government authorities and the revised global trade agreements offered opportunities to Tesla for enhancing the business operations (Export.gov, 2015).

•  Moreover, the declined cost of the battery and the efficacy to use renewable energy resources and the lowered price of the renewable energy created added advantage to Tesla.

•  At the same time, Mann (2016) has noted that the instability in the economic condition is the major threat of the business operation of Tesla as it directly influences the financial performance of the organisation.

•  Even though technological advancements offers enhanced business functionalities, the high cost required for the adoption of technologies and the proficiency required during the execution was a threat faced by Tesla.  

•  Another threat posed to the organisation is the regulations underpinned in the dealership sales in US (Economic Times, 2018).

•   However, the patent protection at an international level and the regulations in the energy consumption enhances the possibility of business opportunities of Tesla.

3. The analysis of the internal environment of Tesla Inc.

3.1 Identification of the main resources and competencies (through the value chain analysis)

●Organisations use the value chain analysis in order to find out the primary as well as the maintenance activities that provide value to the finishing product of the company (Bolwig et al., 2010).

●The value chain analysis also supports an organisation in analysing the maintenance activities in order to minimise the costs or improve the differentiation (Olivetti et al., 2017).

●In addition, the value chain analysis can assists the firms in attaining a better understanding of the main abilities as well as recognise the areas for development.

●The value chain analysis of Tesla Inc. is a logical framework that supports identifying the major resources and competencies of the company.  

Primary activities of Tesla:

Inbound logistics of Tesla:

●The inbound logistics of Tesla includes the delivery and storage of fresh resources to construct energy storing systems, electric automobiles and solar panels.

●In addition to this, Tesla also utilises a range of limited materials like steel, cobalt, lithium, nickel, aluminium and copper.

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●The Tesla mainly prefers a build-to-order method in the automobile creation process; which defines the limitations in the distribution of the parts may be a major problem for the company.

●Hence, it is important for the firm to develop long-term tactical associations with the suppliers of the company.

Operations of Tesla:

●Tesla produces and assembles the operations mainly in  California and the Netherlands (Tesla Inc., 2018).

●The operations of Tesla are majorly segmented into two parts such as automotive and energy generation and storage.

Automotive:

●This section involves the development, production, designing and sales of electric cars.

Energy generation and storage:

● This section comprises the production, design, installation, and sale of energy storing products as well as solar energy systems.

●Besides, this section also includes the sale of electricity produced by Tesla solar energy systems to consumers.

   

     Figure 1: value chain analysis of Tesla.

    Source:  Olivetti et al., (2017)

Outbound Logistics of Tesla:

●The warehousing and supply of energy storing systems, electric cars and solar panels generated by the organisation are the outbound logistics of Tesla.

●Tesla prefers to sell the products directly to the customers; which can be considered as an important source of value creation in the outbound logistics of Tesla (Potti and Saurav, 2016).  

Sales and Marketing  of Tesla:

●The sale and marketing of Tesla Products majorly rely on word of mouth instead of any other type of advertisement.

●Moreover, the sale process of Tesla is mainly by the online websites and showrooms owned by the company.

Service policy of Tesla:

●Recently, Tesla faced some complaints related to the customer service.

●In order to resolve this issue, the company permits the customers to register the issues directly to the company executive.

●In addition, the company is constructing new service centres and rolling out new service vans.  

3.2 Threshold and Distinctive Resources and Capabilities

•As per the opinion of Chrisman et al. (2009) threshold and distinctive resources are the two different types of resources utilised for assessing the competency of the organisation.

•Prange and Verdier (2011) recommend threshold capabilities as the requirements that must be possessed by the organisations to compete in the market and thereby to successfully accomplish the business activities.

•Whereas, Minichilli et al. (2010) pinpointed that distinctive capability will be a unique feature possessed by the organisation which assist in achieving a competitive edge in the market.  

•  While analysing the case of Tesla, it could be identified that the threshold capabilities of Tesla are manufacturing capacity, efficient engineering team and significant in-house design.

•The other main threshold activities are established and stable supply chain, marketing opportunities and other transportation facilities.  

•It was noted from the reports of Business wire (2015) that the uniqueness of the electric powertrain possessed by the organisation which is capitalised for the designing process is one of the distinctive capability of Tesla.

•Moreover, it was noted that the employees with the higher knowledge of computer-aided design were the added advantage of the organisation.

•Moreover, the highly professional and advanced research and development system of Tesla is another distinctive recourses occupied by Tesla.

•Likewise, Ong (2017)has noted in the studies that talent management, employee training and brand identity are the other main distinctive capabilities of the organisation which helped in creating a competitive position in the market.

3.3 Assessment of the Distinctive Resources and Competencies (through the VRIO)

●The VRIO framework is used by most of the organisations as a tactical analysis tool in order to reveal and safeguard the resources and abilities which provide the company with a long-term modest advantage (Rothaermel, 2015).

     Figure 2: VRIO framework.

●It is comprehended from the VRIO analysis that, the resource and capability factors such as the battery packs and supercharger network competitively advantage for the organisation.

●On the other hand, the resources such as gigafactory are potential for sustained competitive advantage for the company,and the direct sales are the temporary competitive advantage or the company (Pillai et al., 2011).  

3.4 Main Strengths and Weaknesses

Strengths:

●Tesla is altering the way of driving and delivering the advanced new technologies in the automotive industry which allows the company to gain a unique position in the auto market (Hagens et al., 2018).

●Tesla has produced as well as led, the automotive market for luxury and long-term electric vehicles; which is considered as the major strengths of the organisation (Tesla Inc, 2018).

● Moreover, the sales growth of Tesla is very strong as the automobile sale of the company has increased recently.

●In addition, the robust demand for the Model S car of the company led to the extraordinary growth of the organisation.  

Weaknesses:

● The negative cash flow and the higher debt load are considered as the major weaknesses of the company (Mangram, 2012).

●The investment in the research and development for gaining the innovative technology caused the negative cash flow in the company.  

●Further, the organisation relatively has a high debt load in recent years.

●In order to this, Tesla has to increase more debt and sell more stocks.

●However, the weakness of the company is comparatively lower than the other automotive organisations.  

4. SWOT Analysis

Table 2: SWOT Analysis of Tesla.

Strength

●Majorly, the sales growth of Tesla is very robust as the automobile sale of the company has increased recently.

● Further, Tesla is altering the way of driving, and delivering the advanced new technologies in the automotive industry which allows the company to gain a unique position in the auto market.

Opportunity

●The inducements offered by the government and the revised global trade agreements provide opportunities to Tesla for improving the business operations .

●Further, the weakened cost of the battery and the efficiency to use renewable energy resources and the dropped price of the renewable energy produced added advantage to Tesla.

Weakness

●The negative cash flow and the higher debt load are considered as the major weaknesses of the company.

● The investment in the R&D for obtaining  the new technology caused the negative cash flow and a higher debt load in the company.

Threats

● The instability in the economic condition is the main threat of Tesla as it directly influence the financial performance of the organisation.

●Another main threat faced by the organisation is the regulations underpinned in the dealership sales in the US.  

5. The consistency of the strategy of Tesla

•From the reports of Matousek (2018) it was noted that Tesla was subjected to several challenges during the past few months such as failing to achieve the targeted production and other economic challenges.

•The strategy of Tesla was far beyond merely selling the cars and increasing the profitability. Transforming the global energy grids were the ultimate aim of Tesla while introducing new products.  

•It was evident from the reports of Matousek (2018) that the strategy employed by Tesla was efficient enough to invest cost without confronting the deficits.  Hence it was noted that the strategy executed by the company is consistent.

•However the current financial insecurities imposed on Tesla has posed some threats on the business  operations. Therefore, it is recommended to make necessary modifications regarding the financial investments especially while investing in the technological advancements  as it requires huge investments.

Conclusion

●The current presentation dealt with the strategy of Tesla along with the analysis of the external and internal environment of the company.

●The presentation is also included with the PESTEL analysis, competencies framework, Porters five force analysis, value chain analysis, VRIO framework and the SWOT analysis of the company.

●Furthermore, the opportunities and threats, the strength and weakness and the consistency of the strategy of Tesla have also explained in the current presentation.

●Hence, it has been pinpointed from all the analysis which mentioned in the previous section of the presentation that, the current strategies implemented by the company is consistent with the external environment and the resources and the competencies of Tesla.

●However, it has been comprehended that modifying the strategies could be more beneficial for the company.

Reference:

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●Bolwig, S., Ponte, S., Du Toit, A., Riisgaard, L. and Halberg, N. (2010) Integrating poverty and environmental concerns into value‐chain analysis: a conceptual framework. Development Policy Review, 28(2), pp.173-194.

●Business wire (2015) Eastridge Strengthens Employee Engagement With Tesla Incentive. Available at: https://www.businesswire.com/news/home/20150812005090/en/Eastridge-Strengthens-Employee-Engagement-Tesla-Incentive (Accessed: 25 October 2018).  

●Chrisman, J.J., Chua, J.H. and Kellermanns, F. (2009) Priorities, resource stocks, and performance in family and nonfamily firms. Entrepreneurship Theory and Practice, 33(3), pp.739-760.

●Economic Times (2018) Tesla still has challenges after settling Elon Musk tweet suit. Available at: https://economictimes.indiatimes.com/news/international/business/tesla-still-has-challenges-after-settling-elon-musk-tweet-suit/articleshow/66012082.cms (Accessed: 25 October 2018).  

●Export.gov (2015) Tesla's new electric vehicle, ‘Model E' is about to make first appearance in Jeju Island in 2016. Available at: https://2016.export.gov/southkorea/tesla/eg_kr_098827.asp (Accessed: 25 October 2018).

●Forbes (2016) The Carbon Footprint Of Tesla Manufacturing. Available at: https://www.forbes.com/sites/quora/2016/04/22/the-carbon-footprint-of-tesla-manufacturing/#223604b76096 (Accessed: 25 October 2018).  

●Hagens, M.H., Burggraaff, J., Kilsdonk, I.D., de Vos, M.L., Cawley, N., Sbardella, E., Andelova, M., Amann, M., Lieb, J.M., Pantano, P. and Lissenberg-Witte, B.I. (2018) Three-Tesla MRI does not improve the diagnosis of multiple sclerosis: A multicenter study. Neurology, pp.10-1212.

●Kissinger, D. (2018) Tesla, Inc. PESTEL/PESTLE Analysis & Recommendations. Available at: http://panmore.com/tesla-motors-inc-pestel-pestle-analysis-recommendations (Accessed: 25 October 2018).

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●Matousek, M. and Thompson, C. (2018) Tesla just doubled down on its plan to create the 'machine that builds the machine'. Available at: https://www.businessinsider.in/Tesla-just-doubled-down-on-its-plan-to-create-the-machine-that-builds-the-machine/articleshow/64007810.cms (Accessed: 25 October 2018).  

●McMahon, J. (2018) How Tesla Scored A Zero On Climate Management. Available at: https://www.forbes.com/sites/jeffmcmahon/2018/06/27/how-tesla-earned-a-zero-score-for-climate-management/#6ca992d52e2f (Accessed: 25 October 2018).  

●Minichilli, A., Corbetta, G. and MacMillan, I.C. (2010) Top management teams in family‐controlled companies:‘familiness',‘faultlines', and their impact on financial performance. Journal of Management studies, 47(2), pp.205-222.

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