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Tesla Motors

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Strategic Audit of Tesla Motors

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Tesla Motors

  1. 1. Burcu Durmuşoğlu Büşranur Akgül
  2. 2. Company Background - Tesla Motors was founded in 2003 by a group of engineers in Silicon Valley. - Tesla designs electric vehicles and electric vehicle engine parts, producing and selling. - First car Roadster produced in March of 2008. - The company had 35 issued patents and approximately 280 pending patent application in 2011.
  3. 3. Vision and Mission Vision: Hoping to develop a greater worldwide acceptance of electric vehicles. Mission: To create efficient electric cars for driving aficionados.
  4. 4. Tesla’s Objectives • Tesla desires to develop alternative energy electric vehicles for people who love to drive. • Tesla has focused on a high-priced, high- performance electric vehicle that competes against traditional performance cars. • Provide technological leadership in the field of electric vehicles, and foster sustainability and social responsibility. • Achieve both growth in sales and profits.
  5. 5. Corporate Level Strategy Market development • Tesla focus on expanding in different markets. Product development • Improving battery charges due to increase the way that is driven. • Focusing on the production of new cars that have higher passenger capacity.
  6. 6. Strategic Partnerships
  7. 7. Competitors of Tesla
  8. 8. Business Level Strategy Cost Focus Differentiation Focus Cost Leadership Differentiation Stuck in the Middle BroadNarrow Cost Differentiation Tesla
  9. 9. Corporate Culture - Tied to the environmental/green movement. - Most staff work in an open room with no walls. - Innovation is top priority.
  10. 10. External Environment Political-Legal Forces - Budget cuts in the “discretionary spending” area that includes alternative energy. - Government supports on loan programs through electric vehicles. Economic Forces - Countries that have macroeconomic conditions cause to high-level of income has created more demand for higher- priced luxury vehicles. - Chancing the cost of oil. - Alternative energy is currently more expensive to produce than conventional energy. Socio-cultural Forces - The “Green Movement” encourages people to use resources that are renewable - Realizing conventional energy cause to more “carbon footprint”. - Consumer perceptions of electric vehicles are a huge challenge to adoption. Technological Forces - Lack of EV-charging infrastructure in the world. - The continuous shift toward green energy. - Power of battery. - Electric vehicles are a newer technology. Societal Environment
  11. 11. Rivalry among Existing Firms Fierce Competition Potential Entrants Threat: Low - High barriers of entry. - Reputation is important in car industry. Substitutes Threat: Low - Low number of company that can produce substitutes of Tesla. Buyers Power: Low - Customer behavior. - High cost for company. Suppliers Power: Strong - Low number of supplier. - Supplier’s product is unique. Five Forces Analysis
  12. 12. Internal Environment
  13. 13. Marketing • Infancy in the market. • Preferring a customized sales approach. • First-mover advantage. Market Development • The high price tag cause to a narrow market segment. • The low cost of maintenance and fuel. • Government tax credit for buying fuel-efficient vehicles. Price • Minimal product offering. • The complex and proprietary components of electricity cars. • Extensive intellectual property portfolio. Product
  14. 14. Marketing • A test drive in customer location and organize vehicle delivery. • Word of mount advertisement instead of traditional advertisement. • Lacking the appropriate physical infrastructure for service vehicles. Promotion • Regional sales representatives. Place • Limit the power of battery supply chain. • Partnership with Panasonic. • Agreement with Lotus. Distribution Channel • Lack of brand name recognition. • Won Globe Sustainability Innovation Award 2009. Brand Reputation
  15. 15. Finance • Total revenues are increasing steadily. • Loan from the US Department of Energy at the beginning. • Enough liquid assets to satisfy current obligations.
  16. 16. Research and Development • Strong R&D capabilities. • High R&D costs. • Unique resources in technology.
  17. 17. Operations and Logistics • Intellectual property and patents. • Strategic partnership with Daimler and Toyota. • Owning own distribution channel. • Many vendors are the single source. • Limited production facility.
  18. 18. Human Resources • Strong leadership with the CEO, Elon Musk who founded PayPal and SpaceX. • Working with top-quality engineers. • Small number of employees. • High intellectual capital.
  19. 19. Information Systems • Software that can be updatable and used on multiple future models. • Online ordering.
  20. 20. SWOT ANALYSIS Strengths -Tied to the green movement. - First-mover advantage. - Intellectual property and patents. - Strategic partnership with Daimler and Toyota. - Strong leadership. Weaknesses - Infancy in the market. - The high price tag. - Lack of physical infrastructure. - Lack of brand name recognition. - Many vendors are the single source. Opportunities - Government supports on loan programs through electric vehicles. - Increasing the cost of oil. - The continuous shift toward green energy. - Threat of new entry is low. - Threats of substitute products is low. Threats - Decreasing the cost of oil. - Alternative energy is currently more expensive to produce than conventional energy. - Lack of EV-charging infrastructure in the world. - Fierce competition. - The bargaining power of suppliers is strong. SWOT
  21. 21. Strategic Alternatives
  22. 22. Growth through concentration new product development Pros: • Increase number of customers. • Creates value for existing customer and new customer thereby using differentiation focus strategy. • Provide a competitive advantage in the automotive market. • Increasing product portfolio. • Increasing market share. Cons: • Different competitors will be added to current competition. • R&D cost. • Too much expansion can result in efficiencies. • Risk of changing consumer buying behavior.
  23. 23. Stability strategy through pause/proceed with caution Pros: • Enables the company to focus on its current product the Model S. • Lower risk. • Pay off debt without new cost and gain from current product. Cons: • Possible loss of market share by competitors who are using growth strategy.
  24. 24. RECOMMENDEND STRATEGY Corporate Level: • The growth strategy through concentric (related) diversification. • Tesla can acquire its cell supplier to reduce its manufacturing cost due to increase profits. • Strategic alliances with local distributors such as Doğuş Automobile due to sell Tesla’s car. • Corporate structure can be divisional structure rather than functional structure.
  25. 25. Business Level: • The recommended strategy is concentrating on differentiation strategy rather than differentiation focus strategy due to a broader market segment. Functional Level: • The recommended strategy is protecting patents that already have and adding new patents to stand in the first mover position. • Focusing on early adopters and environmentalists.

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