BUS/475v10
Wk 2 – Apply: SWOT Analysis
Name: Chris Terle
Selected Organization: Tesla
Strengths
Weaknesses
• It is highly innovative.
• Tesla has been operating at a loss.
• It has a strong brand and a high reputation
• It has a huge debt.
• Its vehicles are sold at a high price.
in the electric cars segment.
• It has a strong control of its production.
• Its supply chain is limited.
• It has been growing at a steady pace.
• It has a limited market presence.
• Its value has been increasing consistently.
• It is unable to meet market demands and
production schedules.
Opportunities
Threats
• Tesla can expand to untapped markets.
• Its investment plans are too ambitious.
• Electric cars are in high demand.
• There is a stiff competition from other
• Tesla could lower its vehicle prices
automobile manufacturers.
• Dealership regulations could affect the
through mass production.
• The company could continue to diversify.
• Tesla could soon begin making profits.
company.
• A changing trend in environmental
awareness could affect the demand of
electric cars.
Analysis
Tesla could use its strengths as a means to advance the opportunities that are available in
the market. In one of these efforts, Tesla can use its innovation to lower its vehicle prices in the
future. According to Rezvani, Jansson & Bodin (2015), new technologies promise cheaper and
higher quality products in the electric vehicle market. Besides, Tesla could also lower the
Copyright 2019 by University of Phoenix. All rights reserved.
WK 2 Apply: SWOT Analysis
BUS/475v10
Page 2 of 5
maintenance costs of its vehicles and raise the demand for these vehicles through continued
innovation. For instance, by developing batteries of a higher capacity and improved
aerodynamics in its vehicles, Tesla could increase the distance that its vehicles travel at a single
recharge, which could help the company to achieve a competitive edge over other market
players. On the same note, developing vehicles that are cheap to purchase and maintain could be
an important factor in Tesla’s success in expanding its presence in emerging markets.
Tesla’s high growth rate could help it in expanding its presence in new markets, lowering
its prices, generating profits, and raising the demand for its products. It is reported that the
company has been increasing its production capacity by approximately 134% every quarter,
which is way above the industry average (Marshall, 2019). In this case, continued increase in
production capacity will help Tesla to meet the demand of its vehicles in markets such as China,
the EU, and the US and retain a surplus that could be shipped to emerging markets. On the same
note, increased revenues could help the company to generate higher profits in the near future.
These profits could then be used to diversify operations by increasing investment in battery
production and energy generation and supply.
Tesla can convert its weaknesses into strengths. Despite continued growth, the company
has been generating losses worth hundreds of millions of dollars every quarter (Marshal, 2019).
These losses could be used as a basis to adopt a more aggressive business model that targets on
optimization of revenues and improved management of operating costs, which could then help
the company to transform from a loss-making to a highly productive venture. In fact, the high
revenues that it generates by selling its cars at premium prices provide an opportunity to generate
higher profits as long as the company can manage its operating costs. On the other hand, money
from the huge debt that the company has could be used as capital to expand production and to
Copyright 2019 by University of Phoenix. All rights reserved.
WK 2 Apply: SWOT Analysis
BUS/475v10
Page 3 of 5
improve innovation. The company could also increase the efficiency and reliability of its limited
supply chain. Limited supply chains are easier to manage than complex ones. At the same time,
the limited market presence that the company has could be used as a means to improve its ability
to meet the needs of the consumers. According to Goyat (2011), isolating market segments helps
companies in optimizing their targeting strategies, understanding the needs of the consumers, and
the ability fo create customized products. In this case, the company could improve the value of
its products and create a positive public image by improving the relevance of its products.
There are several ways that Tesla could mitigate threats. One recommendation to mitigate
the threat of over-ambitious business strategies is to conduct extensive market research before
making any decisions. Despite Tesla’s reputation as an innovative company, its business
decisions have been criticized for being too ambitious, which then affects its ability to meet its
goals and the expectations of investors (Higgins, 2017). The company should base its business
decisions on the actual state of the market, which could then help in setting realistic goals. Tesla
should create good relations with car dealers so that they can establish branded dealerships. The
company has been involved in legal issues emerging from its business model that allows
customers to order their vehicles directly from the company and the existing laws that require
automakers to sell through dealerships (Higgins, 2016). Such a partnership could improve
compliance with state and federal laws while helping Tesla to increase its ability to access
consumers. It could also help Tesla in lowering competition. Besides, Tesla could also lower
competition by diversifying its vehicle models, getting more innovative, and lowering prices.
Finally, Tesla should work with other automakers to lobby the government to adopt more
environmentally friendly policies that promote electric cars. Other than suppressing competition
Copyright 2019 by University of Phoenix. All rights reserved.
WK 2 Apply: SWOT Analysis
BUS/475v10
Page 4 of 5
from vehicles that use fossil fuel, the new policy could also help Tesla in accessing more benefits
from the government and energy regulators.
Tesla should consider consolidating its operations, developing diverse models,
developing all components in-house, expanding control of its supply chain, and increasing
expanding its presence in emerging markets. Notably, consolidating operations could lower
operating costs and increase efficiency. At the same time, developing all components in-house
could help Tesla to become more innovative, while expanding its supply chain could increase
efficiency, lower production time, and increase productivity. Finally, expanding the company’s
presence in emerging markets and creating more models could help Tesla to gain more
customers and to gain control over these markets before competitions can establish themselves.
Copyright 2019 by University of Phoenix. All rights reserved.
WK 2 Apply: SWOT Analysis
BUS/475v10
Page 5 of 5
References
Higgins, T. (2016). Tesla Files Suit to Sell Cars Directly to Consumers in Michigan. The Wall
Street Journal. Retrieved from https://www.wsj.com/articles/tesla-files-suit-to-sell-carsdirectly-to-consumers-in-michigan-1474567727
Higgins, T. (2017). Tesla’s Cash Could Burn in Production ‘Hell’. The Wall Street Journal.
Retrieved from https://www.wsj.com/articles/teslas-cash-could-burn-in-production-hell1501782561
Goyat, S. (2011). The Basis of Market Segmentation: A Critical Review of Literature. European
Journal of Business and Management, 3(9), 45-54.
Marshall, A. (2019). Tesla Delivers More Cars—and More Losses. Wired. Retrieved from
https://www.wired.com/story/tesla-delivers-more-cars-more-losses
Rezvani, Z., Jansson, J., & Bodin, J. (2015). Advances in consumer electric vehicle adoption
research: A review and research agenda. Transportation Research Part D: Transport and
Environment, 34, 122-136.
Copyright 2019 by University of Phoenix. All rights reserved.
Purchase answer to see full
attachment