Question

About Tesla company. ( please include references thank you )

5. Internal Environment: Strengths and Weakness within the Company a. Determine   whether the company   has any strengths and/or weaknesses in the following areas: i. Corporate   structure ii. Corporate   culture iii. Marketing,   finance, operations, human resources,   information technology, etc…[In finance section you   would   need to review   financial   statements or   any financial   information provided   in the case. If you can   get more current   info, use that as well.]
1. Here is where you’ll want to perform some financial analysis using ratio analysis
2. Compare the company’s success   or lack   thereof   with its competitors     
iv. Determine   which   of these factors are   core/essential   to the   success of this   company. Use   the IFAS table,   page 161)

6. Analysis of   Strategic Factors(SWOT)
a. Based on the external and   internal   factors   that you’ve determined for this company, which   ones are key to the company’s success?
b. Based on the issues/problems that you’ve determined,   are the   current mission and   objectives still   appropriate? Should the mission and objectives be   changed? If so, how?   If   they are changed, what will be the effects on the firm?
7. Recommended Strategy (Based on Business or Corporate Strategy concepts)
8. Implementation
a. What step would you recommend   for management to do in order to implement your   recommendations.
b. Is your recommendation financially feasible? Why? c. Lay out the steps   you would take   to implement

Answer 1

SWOT OF TESLA

Strengths

1.A Top Employer Company

It has recently been listed as one of the ideal places to work, attracting young jobseekers with fresh talents and energy. The company has also been featured in Forbes’ ‘America’s Best Employer 2019’.

2.The Leading Automotive Company

Tesla has become a leading automotive brand for 2019, delivering 367,500 vehicles ,the company has left behind some very exclusive automobile brands like Mercedes and BMW.

3. Best-in-class Electric Cars

Tesla has left behind every other brand in the race of the finest electric cars. When compared by their range, Tesla’s electric cars have proven to be the best covering maximum distances. The recent comparison shows that Tesla occupies the top three places in terms of range. The Tesla Model S will get you the furthest – traveling up to 600 kilometers on a single battery charge. The nearest another brand has got is the Opel Ampera, with a range of 520 kilometers.

4. Tesla Dominates the U.S Electric Vehicle Sales

According to Statista, Tesla model 3 is the most sold electric vehicle of 2019 with a sales number of 187,971. On the second position, Chevrolet Volt stands, with 155,477 cars sold. Where Tesla model S is again on the third position with a close call, having 134,392 cars sold. In short, Tesla is topping the electric car sales chart.

5. Cross-sell and Diversification

Tesla has launched a comprehensive insurance program for its vehicles in association with Liberty Mutual insurance company called as InsureMyTesla.

6. Innovative Company

Tesla has a very high rate of innovation, (not to forget the recent developments of world’s first fully electric semi truck and new sports car). Therefore, the market trust and expects the company to develop competitive and profitable products which of course leads to substantial financial gains.

Weaknesses

1. Manufacturing Complications

The higher standard of innovation, the greater will be mechanical complications and production risk factor. Tesla faces continuous launch, manufacturing and production ramp delays while launching their new vehicles and other products.

For example, Tesla faced endless manufacturing challenges when they were about to launch Model X, which lead to constant delays for distribution. Similarly, the company went through extreme troubles while manufacturing Model X’s battery module assembly line at Gigafactory 1.

2. Unable to meet demand might affect brand value

Due to highly experimenting and complicated procedures, Tesla’ might face an unbalanced supply and demand, unable to meet the production requirement. In fact, their delivery rate in the first quarter of 2019 is quite alarming. The company has delivered 63,000 cars in the first quarter of 2019, which is a 31% drop from last quarter of 2018.

3. Lack of High Volume Production

There is no doubt that Tesla is the pioneer of actual energy-saving cars. But it has failed to produce high volumes of automobiles for any of its models. Even now, as the company plans to manufacture Model 3 vehicles at high volume, it faces issues in terms of production cost and management resources and space expansion in Gigafactory 1.

4. Shortage of Batteries

In the annual shareholder meetings, CEO Elon Musk accepted that their production rate has decreased due to the limited supply of batteries. The shortage directly affected the sales of electric vehicles and energy storage systems.

5. Elon Musk as Tesla’s Sole Representative

Tesla accepts that the company is a ‘one-man show.’ Sadly, that man, Elon Musk has a lot on his shoulders to give his hundred percent to the company. Musk is also deeply involved in other projects like space launch vehicles at Space Exploration Technologies Corporation and The Boring Company.

Opportunities

1.Sales expansion in untapped Market

The most significant opportunity for the company right now is the Asian market, which is still unsaturated in the field of automotive and renewable energy markets. Especially in the situation where Tesla needs to expand its global market to increase its financial stability and stronger market presences.

2. Less Expensive Car

Tesla is expensive due to its unconventional reliance on innovation, which requires maximum financial support to entertain new technology.

Recently, Tesla has launched Model 3, which is a more affordable version of Model S with less range, power, and fewer features. However, it is an excellent opportunity for Tesla to expand the size of their audience market.

3. Bringing battery production technology in-house

Tesla intends to make its own battery cells. The move can be a big game-changer as it will help the company to increase its manufacturing rate while reducing its production cost. Currently, Panasonic is their primary supplier of battery.

4. Introduction of pick up truck

According to National Automobile Dealer Association market share data, Pick up truck accounts for 17.6 percent of the US automotive market, which has huge opportunity of growth in Electric Vehicle.

5. Market Confidence in Tesla

The stock market has shown confidence in Tesla after seeing two consecutive profitable quarters. The price of Tesla stock has doubled since the start of this year.

Threats

1.Product Liability Claims

Despite Tesla’s premium quality assurance and high standards of manufacturing, the automobile industry, in particular, is accustomed to facing significant product liability claims which the company’s fears to be one of the biggest financial blows.

Tesla has launched many autopilot vehicles, and not all of them have been successful in case of an accident. The company has faced lawsuits and claims related to the failure of technology in their products. If these liability claims continued, then Tesla may be subjected to greater financial setbacks.

2. Extensive Competition

Tesla, Inc. faces aggressive competition from both alternative fuel vehicles (Hybrid, Plug-in hybrid, fully electric car) and self-driving technology. Many automotive brands in the luxury segment like Mercedes, BMW, Audi, Lexus and in the economy segment like Toyota, Ford, Volvo, General Motors are getting ready for a fierce competition.

Many brands are not only launching or planning to launch their environment-friendly/ self-driving technology but also, they are offering them at a comparably lower price. It is a definite threat for a company like Tesla, which thrives on its unique value for innovative cars which are extremely expensive and unaffordable for many.

3. Product Defects

Due to highly complex engineering for innovative vehicles, Tesla’s cars and other energy products have exhibited major flaws in many cases. The defected products often have weaknesses in design, manufacturing, and other features which can harm the company’s image permanently.

4. Long term confidence

For any company, the assurance of long term sustainability is essential to maintain the public image and the company’s morale. Tesla, due to its unstable manufacturing conditions, suffers from disbelief among the public about its long-term existence, which can result in a deficiency in further business development.

5. Costumer Adaptation

Any business run along the lines of customer’s acceptance. If the public is ready to adapt change, companies benefit from the innovative range of products. However, it can be a slow, unforgiving process, producing new challenges for companies like Tesla. The organization highly depends upon customers willingness to adopt electric vehicles.

6. Self-Driving Cars Are Still a Concern for Pedestrians

In a survey from YouGov, US adults still feel unsafe, to walk around self driving cars. Especially, people above the age of 55 are the most afraid to be around self-driving vehicles.

7. Disruption of Supply Due to Shortage of Materials

Tesla can face major suspensions in the supply of manufacturing materials due to the increased prices. The company uses aluminum, steel, lithium, nickel, copper, and cobalt, as well as lithium-ion cells from suppliers. All these materials have volatile prices, which can affect the company’s production line severely in the future.

8. High-Risk Factor Due to Usage of Lithium-ion

Tesla uses lithium-ion cells in their battery packs. Lithium is a highly reactive and explosive element, which increases the risk factor of our products. Tesla has faced a few cases where their cars have caught fire and vented smoke, which has defamed the company on a major level.

9. Lack of Regulations for Self Driving

As there are no proper regulations for self-driving in many countries, including the US, Tesla’s sale is effected by the self-driving restrictions in many areas. This confusing situation of legal complexity increases uncertainty about Tesla’s self-driving project’s future.

10. Elon Musk’s Erratic Behavior Affecting Tesla’s Reputation

Tesla’s entire reputation is built upon the revolutionary personality of Elon Musk. But recently, his strange behavior and impulsive reactions are affecting Tesla’s worth as an iconic, innovative brand.

Recently his marijuana smoking incident on Joe Rogan’s podcast created controversy for being inappropriate. Subsequently, Tesla’s stock value dropped close to 9 percent by this unexplainable behavior from a man who is a visionary genius.

TESLA'S MISSION, VISION, AND RECOMMENDATIONS

Mission Statement

Tesla’s mission statement was “to accelerate the world’s transition to sustainable transport.” However, in mid-2016, under Elon Musk’s leadership, the company changed the corporate mission to “to accelerate the world’s transition to sustainable energy.” This new statement indicates a slight but significant shift in the company’s business, to address market opportunities for renewable energy. In a way, the new corporate mission recognizes the relevance of the firm’s batteries and related energy storage products in markets in addition to the electric vehicle market. Tesla Inc.’s mission statement has the following notable components:

1. To accelerate
2. The world’s transition
3. To sustainable energy

The “to accelerate” component of the corporate mission statement establishes Tesla’s role in pushing the industry toward advanced technologies for sustainable business and products that rely on renewable energy. The corporate mission also mentions “the world’s transition,” which indicates the company’s expectation of successful dominance in the global market for electric automobiles and related products. This component directly relates with the corporate vision statement’s emphasis on the global market. Moreover, the change from “sustainable transport” to “sustainable energy” shows that Tesla, Inc.’s corporate mission statement evolves to match the current strategic objectives of the business. For example, the company used to focus on producing electric automobiles only. However, this company analysis case shows that the growing demand for renewable energy is now reflected in the corporation’s improved business scope, to cover products like batteries and other potentially profitable renewable energy solutions in the future.

Vision Statement

Tesla’s vision statement is “to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” This corporate vision emphasizes the company’s focus on renewable energy. Specifically, the corporation addresses the electric vehicle market as a major avenue for facilitating growth of the global renewable energy market. The following components are significant in Tesla Inc.’s vision statement:

1. Most compelling
2. Car company
3. 21st Century
4. The world’s transition to electric vehicles

In its corporate vision statement, Tesla, Inc. aims to be the most compelling in the industry. This component indicates leadership and excellence in the business. The company approaches this aim by integrating advanced technology in its electric automobiles and related products. On the other hand, the “car company” component of the corporate vision focuses Tesla Inc.’s efforts on designing and manufacturing cars. The company’s leadership in electric vehicle design and production satisfies the “21st century” component. This component implies the firm’s use of advanced technology to address current concerns, such as environmental conservation. The fourth component points to the company’s global goals. For example, the business continues to expand its operations, with plans for new factories in developing regions in Asia. Such expansion addresses major competitors, such as Toyota Motor Corporation, General Motors Company, Volkswagen, Nissan Motor Company, Honda Motor Company, and BMW (Bavarian Motor Works), among others, considering the competitive landscape described in the Porter’s Five Forces analysis of Tesla Inc. Thus, in this business analysis case, the company’s vision statement reveals the organization’s aim to be the dominant player in the global electric vehicle market.

Analysis & Recommendations

Tesla, Inc.’s mission statement is satisfactory in terms of presenting the company’s goals. It adequately covers the kinds of products that the company sells, the market scope of the business, and the market position of the company. However, it does not provide adequate information about the general direction of Tesla’s organizational development. Thus, a recommendation is to improve the corporate mission by including more details about the company’s approaches in fulfilling its corporate vision.

Tesla Inc.’s vision statement effectively describes business aims. However, it does not cover current business endeavors. For example, while the corporate mission statement has already changed to consider “sustainable energy,” the corporate vision still focuses on “electric vehicles.” In this regard, a recommendation is to adjust Tesla Inc.’s vision statement to reflect the organization’s increasing interest in products other than electric vehicles.