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Tesla Strategic Management Plan
Laura Ashley Roberts
MGT/498
04/15/2019
John Olmstead
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Tesla Strategic Management Plan
Evaluation of the Internal and External Environments
Tesla is the best known electric car manufacturing company globally and assessing its
environment shows that there is a potential for the growth of the company further. When
conducting an environmental scan of the external environment such as the technology being used
Tesla looks to be at par, if not ahead, with other manufacturing companies. This is because the
current trend in the automotive industry is the increased need of automation in the assembly
process, to cut down on manufacturing costs allowing companies to produce more for less.
It is for this reason that Tesla, since its inception, has strived to create a close to fully
automated assembly line especially during the Tesla model 3 production. However, the ambition
to create such an assembly line has been met with various challenges, making the assembly line
almost inoperable and forcing the company to build the Model 3s by hand (Sherman, 2018). The
company has come a long way, and in 2017 was able to build 5000 vehicles in 7 days. It was
even expected that the company would now be able to manufacture 200,000 vehicles in the yar
2018.
Secondly, car automakers are expected to deliver their cars after production to dealers,
and most car brands have been able to do this with the advantage of having been around for
several decades. This is another challenge that Tesla has had to deal with of delivery logistics
where most times the company has found it difficult to deliver their cars to customers. This
challenge is mostly attributed to Teslas decision to own its dealerships where most other
companies prefer to leave the job to franchised dealers. Fro this reason, any unsold inventory in
any of their dealerships is a burden that Tesl alone contends with. The United States differing
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state laws also seem to pose a challenge for Tesla’s dealership capability. Some states limit
Tesla’s ability to put up many dealerships with the states of North Carolina and Colorado only
allowing for one (Sherman, 2018).
However, Tesla has also assessed that the process of buying and selling products and
services has gone online and have tried to capitalize on this. To manage the challenges faced on
delivery, Tesla’s customer are given a chance to go through the delivery awaiting process online
on Tesla’s web page. They do this by uploading required documents.
Tesla is also concerned with electric vehicles, and for this reason, the company has
created its unique niche market. The company realized that the adoption of electric vehicles has
been slow in the past because the technology has always been viewed as inferior and
cumbersome by the majority. Cumbersome because electric vehicles require charge which often
takes a long time and charging stations are usually limited when compared to oil stations. To
correct this, the company has created a network of charging stations which allow for customers
to fully charge their vehicles in about half an hour (Zucchi, 2018). However, the company still
faces the challenges of mass adoption because currently the charging stations are mostly set up in
countries such as the UntiedStates with the company promising to increase them in Europe and
Asia.
Competitive Advantage Analyzed
To remain competitive for most companies, those within the automotive industry and
those without, companies have been forced to expand their business model. Companies such as
General Motors have branched out to not only selling vehicles but now also offer financial
services. This is a trend that Tesla has also followed, and it now offers standard loans and leases.
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The decision to fully focus on electric vehicles is the major competitive advantage the
company has. Though the company is facing the challenge of changing customers perception of
electric cars, it is a leader in the electric market scene. However, the company is not alone in the
electric markets with other electric cars such as the Rivian. However, their competition fails as
no other company has a fully working assembly line dedicated to the production of electric
vehicles. Similarly, the company also has the advantage that the vast amount of charging stations
also gives it an advantage over any other electric manufacturing company.
The company is also a leader in battery technology. This has been mostly driven by
projects such as the Gigafactory 1 in Nevada, a project that was started in 2014. The company
decide to open the factory as the largest battery concerned company which would allow for the
company to increase production and adoption of battery-related technology and in turn help
reduced the high costs of electric vehicles. Currently, the factory is 30 percent complete, and
Tesla is hopeful that the factory can also help reduce the per kilowatt-hour cost of their batteries
b the same percentage. This is encouraging as the company also reports that demand for their
battery sales is way over what they are currently able to supply (Korosec, 2019)
Evaluation Strategies Tesla uses to Create Value and Gain Competitive Advantage
Tesla creates value for themselves by firstly focusing on key areas that help it penetrate
the market. Firstly, to change the perception of people that electric cars are inferior to petrol and
diesel ones with their inability to perform better or have great design, Tesla has tackled both
issues. Rather than build many cars at different price ranges, Tesla realized that battery
technology was still far off from being cheap. For this reason, the company has mostly focused
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on building high end expensive electric car models. Currently, their cheapest vehicle the Tesla
Model 3 is going for $39000.
To also create value, the company has also made promising acquisitions such as that of
Maxwell Technologies, a company that is concerned with ultracapacitors and battery
manufacturing. Maxwell technologies is said to have a dry electrode technology that can be used
for Tesla’s batteries and has also had an ultracapacitor business that brought them around $90
million in 2018 (Lambert, 2019). The dry electrode technology is expected to reduce the weight
of Tesla battery while also increasing range with claims that the technology allows for an energy
density of around 500 Wh/Kg soon (Lambert, 2019)
Measurement Guidelines Tesla Uses to Verify Strategic Effectiveness.
Tesla has different measurement guidelines to assess the effectiveness of its strategic
plan. The first guideline is assessing the uptake of electric vehicles and also the public opinion
about electric cars. To this end, the company’s plan has been effective as currently, surveys
indicate that more and more people are considering adopting electric vehicles than before. In the
United Kingdom, a survey concluded that half of the millions would want to have an electric cars
and a quarter of parents also were up for adopting electric vehicles (Harrabin, 2019). It has also
been reported that electric vehicles are slowly moving from being viewed as products of a niche
market with more people willing to purchase them (Gillies, 2018). In the United States, an
anxiety over the range of electric vehicles has also fallen because of the vast network of
supercharger network, and this has also increased the appeal of Tesla electric vehicles. The
second measurement guideline the company used is its business model of focusing on expensive
high-end cars and then raising enough capital to produce cheaper electric vehicle car models.
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The vision seems to be working with the inception of the Model 3, but the company still faces a
challenge of reducing the costs as battery technology is still expensive.
Effectiveness of the Measurement Guidelines
Looking at the measurement guidelines the Tesla company has put for itself, it could be
said that they can effectively assess whether their strategies are working. Firstly since the
company was set up, electric vehicle hype has risen considerably, and this has been mostly
because of the company. Most people associate electric vehicles with the Tesla company at it is
hard for consumers to name other electric vehicle car options. Secondly the company’s strategy
of raising capital can also be used to measure the success of the company as currently, the
company has still not been able to fully deliver on an affordable car for the masses, but there is
hope that with increased efficiency and with more effort, the company can still deliver on its
promise in coming years.
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References
Gillies, T. (December 23, 2018). How electric cars are slowly moving from niche to something
‘people want to buy’. Retrieved from https://www.cnbc.com/2018/12/23/electric-carsare-moving-from-niche-to-something-people-want-to-buy.html
Harrabin, R. (July 12, 2018). Survey: Half of young people want electric cars. Retrieved from
https://www.bbc.com/news/science-environment-44798135
Korosec, K. (April 11, 2019). Tesla, Panasonic modify expansion plans for gigafactory.
Retrieved from https://techcrunch.com/2019/04/11/tesla-panasonic-modify-expansionplans-for-gigafactory/
Lambart, F. (February 4, 2019). Tesla acquires ultracapacitor and battery manufacturer for over
$200 million. Retrieved from https://electrek.co/2019/02/04/tesla-acquires-ultracapacitorbattery-manufacturer/
Sherman. L. (December 20, 2018). Tesla Survived Manufacturing Hell--Now Comes The Hard
Part. Retrieved from https://www.forbes.com/sites/lensherman/2018/12/20/teslasurvived-manufacturing-hell-now-comes-the-hard-part/#3b7b3d7efae2
Zucchi, K. (October 27, 2018). What Makes Tesla's Business Model Different? Retrieved from
https://www.investopedia.com/articles/active-trading/072115/what-makes-teslasbusiness-model-different.asp
Strategy Implementation, Evaluation and
Control Grading Guide
MGT/498 Version 4
Strategic Management
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Strategy Implementation,
Evaluation and Control Grading
Guide
MGT/498 Version 4
Individual Assignment: Strategy Implementation, Evaluation and Control
Purpose of Assignment
Week 3, 4 and 5 Individual Assignments are integrated to generate a Strategic Management Plan. This is part
three of the three part Strategic Management Plan addressing strategy implementation, evaluation and control.
The Purpose of the Week 5 individual assignment is to allow the student to discuss and explain how the
strategies discussed in prior weeks are converted into implementation activities both domestically and
internationally, in alignment with legal, social and ethical considerations. Furthermore, the student has an
opportunity to explain and discuss how the strategic plan and implementation activities will be monitored.
Resources Required
Textbook Chapters 9, 10, 12, 13 and 14
Grading Guide
Content
Met
Partially
Met
Not Met
Total
Available
Total
Earned
6
#/6
Comments:
Student addresses the following regarding
strategy implementation:
a. Discuss International Strategy.
b. Discuss Strategic Implementation.
c. Explain the influence of Governance and
Ethics.
d. Discuss the Company Social Value.
e. Discuss Innovation and Diversification.
f. Discuss Legal limitations.
Student addresses the following regarding
evaluation and control:
a. Explain Strategic Metrics.
b. Discuss Key Financial Ratios.
The paper is 1,050 words in length.
Writing Guidelines
The paper—including tables and graphs,
headings, title page, and reference page—is
consistent with APA formatting guidelines and
meets course-level requirements.
Met
Partially
Met
Not Met
Comments:
2
Strategy Implementation,
Evaluation and Control Grading
Guide
MGT/498 Version 4
Writing Guidelines
Met
Partially
Met
Not Met
Total
Available
Total
Earned
3
#/3
9
#/9
Intellectual property is recognized with in-text
citations and a reference page.
Paragraph and sentence transitions are
present, logical, and maintain the flow
throughout the paper.
Sentences are complete, clear, and concise.
Rules of grammar and usage are followed
including spelling and punctuation.
Assignment Total
Additional comments:
#
Comments:
3
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