STRATEGIC MANAGEMENT ANALYSIS
Ubaid Hassan Sabri
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Table of Contents
I. About Tesla .......................................................................................................... 3
II. Introduction ......................................................................................................... 3
I. PESTLE Analysis .................................................................................................... 4
A. Political Factors: ............................................................................................................................ 4
B. Economic Factors: ......................................................................................................................... 4
C. Social Factors: ................................................................................................................................ 4
D. Technological Factors: .................................................................................................................. 4
E. Legal Factors: ................................................................................................................................. 5
F. Environmental Factors: ................................................................................................................ 5
III. SWOT Analysis for Tesla Incorporation. ................................................................ 6
A. Strengths ........................................................................................................................................ 6
B. Weaknesses.................................................................................................................................... 7
C. Opportunities ................................................................................................................................. 8
D. Threats ............................................................................................................................................ 8
IV. Strategic Goals and Structure.............................................................................. 10
V. Recommendations According to PESTLE and SWOT Analysis ............................... 10
References .......................................................................................................................... 12
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I. About Tesla
This article is an analysis of Tesla Motors from a strategic perspective, “In which manner Tesla
Motors Inc. may improve its approach to maintain its edge over competitors in the market for
electric vehicles and sustain its status as a global innovator in sustainable living?” let’s start with
the company and its achievements till now.
II. Introduction
Tesla is an American electric vehicle manufacturer headquartered in Austin Texas. Tesla also
sells solar panels and provides services in the solar energy space however selling and
manufacturing electric vehicles is the main segment of its business and the main driver of its
revenues. Tesla is owned by billionaire Elon Musk and was established in 2003. Tesla on the
website and as said by its CEO Mission is to “accelerate the world's transition to sustainable
energies” (Incorp 2022). The company has more than 70,757 employees and has an annual
revenue of 31.54 billion dollars (Jin 2022). Tesla is considered the most valuable, automotive
company car of Tesla, its largest, capacity, can take you up to 600 kilometers in one full charge
it is the fastest selling electric car company all around the globe (Incorp 2022). Now let's start
with the PESTLE analysis of the company.
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III. PESTLE Analysis
A. Political Factors:
This part will identify the impact of government on Tesla and its business. The Department of
Energy provided Tesla with a $465 million low-interest loan, which Tesla has since repaid, but
except it, it might not be possible to get the company to draw in as many investors.
The U.S. Government has shown interest in renewable energy and electric automobiles.
State tax gives of more than $5,000 are offered by several states, like Virginia and
Colorado, to incentivize people to purchase electric cars.
Rather than using privately owned dealerships as a middleman, Tesla plans to deliver
cars directly to consumers.
An Exhibition provides information on dealer transactional financing. Lately, H.B. 5606
was approved in Michigan, requiring all manufacturers to use third-party dealerships.
Since vehicles need less maintenance, electric cars are inappropriate for this industry
(Chinta and Michigan 2021).
B. Economic Factors:
Although the US is facing weak growth, consumers are still using credit to purchase automobiles
through offers like 0% financing. The drawback, that most people are unaware of, is that the
interest is already included in the MSRP (Manufacturer's Suggested Retail Price) when the
vehicle is sold, which raises the base price while giving the impression that the consumer is
getting a good bargain over time.
Since the 2008 crisis, the number of new car sales has been increasing quickly. The sales
have back to where it was earlier to the collapse of the market. By increasing stock
prices, Tesla has achieved development after the collapse (Richter 2021).
C. Social Factors:
The majority of individuals are in the support of utilizing tax dollars to purchase products and
fuels which are made from sustainable resources.
Most of the businesses that received substantial government loans did not succeed, up
till now, Americans still support efforts to build a stable economy. In these days, the
saying "go green" is progressively common.
D. Technological Factors:
Tesla set up a team that included both Silicon Valley natives and automobile industry experts.
Musk thought that Tesla's roots in Silicon Valley provided them a significant advantage when it
comes to this sort of innovation.
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The preparation of company stakeholders is described in Exhibit 8 (Pressman 2015). The
model Roadster 3.0 will be the first car with an anticipated range of 400 miles because
to their new technology in batteries, airflow, and rolling resistance, that are increasing
range efficiency by 40–50 percent and the external technology elements.
Tesla Incorporated of automobile industry must consider the speedy pace of
technological progress (Emmanuel Mogaji 2018) all improvements in autonomous cars.
E. Legal Factors:
Same as political factors, the legal factor also take the rules and regulation of the country into
examination. Tesla must follow the rules and must enhance its policies to fulfil with them as it
increase its operations internationally. Tesla has the potential to expand its international
copyrights portfolio while marketing its environmental friendly automobile.
Moreover, it might be decide to launch it’s requires a lot of energy goods in other
markets. In addition to the boundaries several states have placed on direct sales, Tesla's
limited international operations may be problematic.
General, it is obvious from Tesla's PESTEL research that the company has a space to grow
in the global car industry by giving its legal macro-environment and external power.
F. Environmental Factors:
Driving cars without the usage of fuel is excellent, but utilizing energy produced from coal-fired
power plants is unhelpful. In order to fully utilizing the solar energy, Tesla is working to develop
battery packs that can be used with the solar panels.
Market global warming was impacted by natural and external forces. It has been shown
that Tesla achievements from higher standards for waste disposal.
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IV. SWOT Analysis for Tesla Incorporation.
A. Strengths
Tesla is the pioneer in sustainable energy. The first name in our mind when people think of a
sustainable future and no other electric vehicle manufacturer has mass-produced electric
vehicles in the volume.
Tesla have done so definitely the far head of the race call it for the manufacturing of
electric vehicles in that process company have also built a very valuable brand out of
Tesla everyone knows.
Tesla in a positive light and everyone knows Tesla will be around for a while firm also
very innovative which is the reason why it had so much success so far as seen in the
pictures here:
Tesla cars are very unique it has a lot of space software that has a very unique design
with the suicide doors. Number of their electric vehicle quite looks like this is why
company done so well.
Tesla also have the government at their backs as reported in their 10-q report on
October 25th, 2021 company received around 20 million dollars in revenues from ZEV
credits which is a sustainability program run by the government and some states
participate in it so it received 20 million dollars in credits from that (COMMISSION 2021).
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B. Weaknesses
Some weaknesses for tesla are the shortage of chips and batteries. These are some of the
essential components for their
cars and if company cannot get
these in supply then it won't be
able to produce vehicles at full
capacity (Roper 2021). Tesla
will always have to be at
limited capacity until it can get
their hands on some chips and
batteries. This in turn if affects
the affordability of their
vehicles that can also affect the
loyalty of their consumers
because the whole idea of
buying a tesla is that it's a very
affordable electric car.
The last weakness for tesla is
Elon musk's availability he's also the CEO of SpaceX and as well as a boring company so his lack
of availability for tesla can be a weakness.
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C. Opportunities
Some opportunities for tesla are:
Tesla’s autopilot technology which is renowned as one of the best out of all car makers,
not just electric vehicle makers. It is still in its beginning stages so if tesla can continue
evolving and developing this autopilot technology can be used in their advantage for
competitive reasons. Development in Asian markets is also very important for tesla.
Tesla's Giga-factory in shanghai it's a huge factory if company build one of these in china
or all across Asia like in India or Indonesia. This can be very helpful for them.
Growing consumer awareness for environmental sustainability is definitely going to
bring more demand for electric vehicles in general so tesla will and should be prepared
for that.
D. Threats
Some threats for tesla are of the biggest financial hits that company takes are from legal claims
against product quality problems (SIRDESHMUKH 2022).
If Tesla spend more on quality assurance making sure the products are going out are
quality will definitely save some costs for the company, in the long run.
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Tesla is also facing competition from their automakers as shown in the photo that's a
Porsche P-1 Can which is Porsche’s first all-electric vehicle and it's not as affordable as
tesla's vehicles but the fact that other car makers can make cars like this means Tesla
compotators are not too far ahead in the race. Tesla will be caught up pretty soon and
this is why Tesla will have to keep being innovative to stay in the game.
Supply chain issues are continuing to be a problem for tesla and will continue to be a
problem throughout the year 2022 as projected in their earnings report. Until it can be
fix that issue so won't be able to produce at full capacity.
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V. Strategic Goals and Structure
Tesla has such a functional organizational structure that allows it to apply effective business
control (Meyer, 2016, "Structure"). The different functional divisions include Global Sales,
Services, Engineering, Processes and Autopilot, Manufacturing, and Business Development.
Tesla is able to manage its operational activities and enhance its capacity to execute new
initiatives by applying to this structure. Additionally, Tesla has some geographical
segmentations, mainly four: the United States, China, Norway and an all-purpose division for
different operations in other countries. With the use of these organizations, Tesla is able to
customize its business plans, advertising campaigns, and financial analysis to suit the needs of
different market segments and regulatory strategies.
Tesla puts a strong focus on global centralization, which means that while retaining regional
boundaries, decisions made by a single team or group control the whole business. The CEO of
every office in Tesla's worldwide structure is located at the business's central headquarters, the
company opposes regional or international offices' autonomy. Most of the operational choices
for Tesla's worldwide operations are in its made at the corporate level.
VI. Recommendations According to PESTLE and SWOT Analysis
Tesla's research has assisted the business in understanding that how strongly the macro
environment is connected to business growth.
Tesla has a room to develop in the international car industry. With tough competition
from other companies, the company has had consistent growth in previous years. Tesla
have effectively analyses the outside elements and have taken benefits of them.
Company must understand development potential and reduce market-based risks to a
minimum if company wants to experience additional progress.
The factory in Shanghai is a huge achievement and currently working to build a factory
in Germany if Tesla build one in Indonesia, India, or in different areas in Asia that could
be very valuable.
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It is also essential to remain invested in research and development to stay reasonable
against companies like Porsche lucid and Toyota.
Tesla diversify their manufacturing supplies since supply chain issues are going to be
problematic for the next year (Bianca Cardenas 2021). It will expand supplies might not
be a bad idea, keep making numbers up throughout the year.
Company should focus on increasing convincing emotional commercials for the variety
of globalization and the use of technology, which recommends a change from vastly
selective and imperfect advertising policy to the development of innovative adverts that
promote Tesla's business and improve their sales globally (Emmanuel Mogaji 2018).
Consumers are affected by emotionally powerful advertising that gives them a sense of
belonging to the company. According to research, “advertising that evokes strong
emotions boost brand recognition and improve customer loyalty”. With emotionally
exciting commercials, Tesla must continue to focus on worldwide’ s branding
consciousness, which will eventually enable cost structures to be improved and
attraction in more customers.
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References
1. Bianca Cardenas, P. D. (2021). "Tesla Case Study: Complete Assessment of
Social/Organizational Culture, Leadership, Teams, Communication,Talent/Knowledge
Management & Recommendations."
2. Chinta, R. N. N. and U. o. Michigan (2021). "Tesla -Strategic Analysis and Future Outlook,
Harvard."
3. COMMISSION, S. A. E. (2021). "10-Q Tesla, Inc.".
4. Emmanuel Mogaji, B. C., Annie Danbury (2018). "Emotional appeals in UK business-to-
business financial services advertisements." International Journal of Bank Marketing.
5. Incorp, T. (2022). "Tesla’s mission is to accelerate the world’s transition to sustainable
energy.".
6. Jin, H. (2022). "Elon Musk wants to cut 10% of Tesla jobs."
7. Pressman, M. (2015). "TESLA EYE CANDY, EXHIBITION 8."
8. Richter, F. (2021). "Tesla Inc.’s Organizational Structure Type & Features." Data
Journalist.
9. Roper, W. (2021). "Tesla Stock Surges."
10. SIRDESHMUKH, M. (2022). "Examine Tesla's business through SWOT analysis."
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