Question

The answer to the first part of the question posed may be Tesla Inc., the U.S. electric automobile manufacturer founded in 2003 and headquartered in Palo Alto, California. The answer to the second part of the question may be “by matching internal strengths/weaknesses with external opportunity/ threats” using SWOT analysis. For the first time ever, in 2017, Tesla joined the Fortune 500 largest companies in the United States; the company’s annual revenues exceed $7 billion. An integral part of Tesla’s excellent strategic plan is to capitalize on the 6.5 percent annual gross domestic product (GDP) growth in China, compared to the GDP growth of about 2 percent in the United States. Tesla’s sales in China skyrocketed in recent years as CEO Elon Musk of Tesla capitalizes heavily on the firm’s technological prowess (internal strength) matched with China’s booming GDP (external opportunity) and China’s strong preference for electric vehicles (external opportunity). In 2016, sales of electric and plug-in hybrid automobiles in China rose 50 percent to 507,000, more than triple the comparable figure in the United States. Electric vehicles are viewed in China as a way to help clear smoggy skies (an external opportunity), and that is a primary reason why China’s government has ex-empted electric cars from rigid license plate restrictions in six large cities: Shanghai, Beijing, Shenzhen, Hangzhou, Guangzhou, and Tianjin; these six cities report the highest Tesla sales. Tesla’s strategic plan includes manufacturing cars in China by the end of 2018, because shipping cars from California to China is costly. Tariffs and taxes incurred to export cars to China increases the price of Tesla sedans and SUVs by 50 percent (external threat). The number of electric vehi-cle charging stations in China exceeds one thousand (external opportunity). Tesla mass produces its Model X SUV because China’s obsession with SUVs is a decade old and growing rapidly. Sales of SUVs in China now comprise nearly 40 percent of all passenger-vehicle sales in that country. Turning to Australia, Tesla recently supplied the largest battery in the world to Jamestown, Aus-tralia. The battery is storing electricity from a new wind farm that supplies thirty thousand homes with power. The battery has a 100-megawatt capacity. Tesla’s strategic plan is for the whole world to use its batteries in cars, trucks, homes, and businesses.

Questions:

- Identify several internal strengths and weaknesses that face Tesla.

- Match several of your external and internal factors to formulate several strategies that Tesla is (or could) use going forward.

Answer 1

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Identify several internal strengths and weaknesses that face Tesla.

Strenghts — Tesla, Inc. is known for its high breakthrough rate, especially when launching the world's first fully electric sports car. This internal strategic element is a strength which enables the firm to grow competitive and profitable products. Through this SWOT study, the Tesla name is still used as a clear icon of creativity and clean energy technologies, through keeping with the corporate ambitions of CEO Elon Musk. Having a good identity optimizes the potential of the company to recruit and retain new customers. The internal aspect of effective control over manufacturing processes is based on vertical integration, as well as the centralization and hierarchy in the organization of Tesla.

Weaknesses — Tesla faces a small footprint on the market. The organization earns much of its sales in the US, for example, and has a limited footprint in China and the developing world. The internal strategic element is a limitation the restricts business growth dependent on overseas markets' rapid economic development. This study also determines that the restricted supply chain of the business is a related limitation which prevents the business from expanding rapidly in those markets. Tesla's vehicles are, however, comparatively more expensive than comparable automobiles, especially those with internal combustion engines. Such high costs prohibit the company from increasing its client base rapidly.

Match several of your external and internal factors to formulate several strategies that Tesla is (or could) use going forward.

Tesla, Inc. has the capabilities to be competitive in the industry in the coming years. However, as described in this report, the company must resolve numerous concerns to preserve its competitiveness and maximize its profitability. Tesla wants to strengthen its position at the multinational. New facilities and distribution activities in high-potential emerging countries, for example, will fuel economic growth, meeting Tesla's corporate mandate and vision statements. In fact, the organization will maintain its substantial research and development (R&D) spending in order to deliver profitable technologically advanced products.

Tesla Inc. is encouraged to extend activities in international markets to leverage the rapid growth of the clean energy sector by recognizing the findings of this study with the goal of enhancing economic profitability, growth and development. Continue or raise expenditure to develop the goods and Diversify the supply chain to reduce risks to the supply side.

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