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Tesla strategic management final

Tesla strategic management final

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Tesla strategic management final

  1. 1. Presented by: Karim El Deeb Nadine Khattab
  2. 2. Agenda • History • Current Situation (products, milestones and financial) • Environment Scanning (IFAS, EFAS) • TOWS matrix • 4 corporate strategies with Advantage and disadvantage • Cascading to Business Functions • Evaluation & KPIs measurements
  3. 3. History • Tesla Motors, Inc. is an American company based in California that designs, manufactures and sells electric cars and electric vehicle powertrain components • It was founded in 2003 by a group of intrepid Silicon Valley engineers “Martin Eberhard”, “Marc Tarpenning”, and “Ian Wright” named after the scientist Nikola Tesla. • The founders didn't have the money needed to realize their idea, so they contacted Elon
  4. 4. Products & Milestones • Roadster was introduced by 2006 where only 2,500 units were sold • Commercial deliveries of Model S was in 2012, selling more than 7,500 unit by end of Q1 2013
  5. 5. 6/29/2010 7/29/2010 8/27/2010 9/28/2010 10/27/2010 11/26/2010 12/28/2010 1/27/2011 2/28/2011 3/29/2011 4/28/2011 5/27/2011 6/28/2011 7/28/2011 8/26/2011 9/27/2011 10/26/2011 11/25/2011 12/27/2011 1/27/2012 2/28/2012 3/28/2012 4/27/2012 5/29/2012 6/27/2012 7/27/2012 8/27/2012 9/26/2012 10/25/2012 11/28/2012 12/28/2012 1/30/2013 3/1/2013 4/2/2013 5/1/2013 5/31/2013 7/1/2013 7/31/2013 8/29/2013 9/30/2013 10/29/2013 11/27/2013 12/30/2013 Stock Market Information • Tesla's IPO was on June 29, 2010 priced at $17 per share Stock price • Today closing closing price is 149$ per share 200 180 160 140 120 100 80 60 40 20 0
  6. 6. Income statement Item Total revenues Details Cost of Selling Gross profit Research and development Total operating expenses Loss from (Q1-Q3) 2012 2011 2010 2013 1,398,277 413,25 204,2 116,74 6 42 4 1,098,60 383,18 142,64 86,01 4 9 7 3 299,673 30,06 61,59 30,731 7 5 2009 111,94 3 102,4 08 9,535 163,523 273,9 208,9 92,99 19,28 78 81 6 2 184,080 150,37 104,10 84,57 42,15 administrative 2 2 3 0 347,603 424,3 313,0 177,56 61,43 50 83 9 2 (47,930) (394, (251,4 (146,8 (51,8
  7. 7. Internal Factor Analysis Summary Strengths (3.7) Internal Factors Strong R&D department Calibers Strong Management Team Excellent Designs Great Location, close to best calibers in the Weig Rating ht 0.45 0.3 0.1 0.05 4 4 3 3 Wgt. Score Comment 1.8 1.2 The CEO Elon Musk has earlier founded companies like PayPal and SpaceX, so he has a good track record 0.3 The Model S won the 2013 Motor Trend's Car of the Year award 0.1 They are building their cars in California . They can find many computerand electrical engineers
  8. 8. Internal Factor Analysis Summary Weaknesses (2.2) Internal Factors Wei ght Ratin g Wgt. Score Relatively High Priced compared to fuel cars 0.25 3 0.75 Few Charging stations 0.2 2 0.4 Low Battery Range 0.3 2 Comment Tesla Motors are doing their best to change this by building Superchargers, which are like gas stations but for electric vehicles only. 0.6 Slow Charging 0.3 1 0.3 Battery Charging could take around 30
  9. 9. External Factor Analysis Summary Opportunities (4.1) External Factors Weig ht Rating Wgt. Comm Score ent The world is running out of oil. Electricity is a renewable energy. 0.35 5 2 People care more about environmental issues. 0.05 2 0.2 Can use their battery technology in other areas, such as storing power from solar panels. 0.1 4 0.6 The growing support by governments across the globe for environmentally friendly vehicles 0.1 3 0.3 Large International Market Potential Particularly Europe, Asia, and Canada. 0.2 4 1
  10. 10. External Factor Analysis Summary Threats (2.4) External Factors Very Strong competition with less operating Costs Wei ght 0.3 Ratin g 2 Wgt. Score Comment 0.6 Like BMW, Mercedes, and Lexus expected to join the market soon Electric cars are still expensive and a new recession, like the one in 2008, may limit the demand Economical slowdown 0.15 2 0.3 Limited supply for raw materials 0.3 2 0.6 0.15 4 0.6 Limited Experienced
  11. 11. TOWS Matrix Strengths Internal Factors IFAS External Factors EFAS Opportunities O1: The world is running out of oil. Electricity is a renewable energy. O2: People care more about environmental issues O3: Can use their battery technology in other areas, such as storing power from solar panels. O4: The growing support by governments across the globe for environmentally friendly vehicles O5: Large International Market Weaknesses S1.Strong R&D W1: Relatively High Priced department Calibers compared to fuel cars S2. Strong Management W2: Few Charging stations Team W3: Low Battery Range S3. Excellent Designs W4: Slow Charging S4. Great Location, close Process to best calibers in the W5: Limited operating US history S5. Large Production Capacity SO Strategies: WO Strategies: -Focus on new product Promote the awareness development with new of environmental technologies and be friendly cars(O1,4,W1) ahead of the market -Outsourcing some -Expand in new markets operational activities to -Develop new products a low Cost (O5,W1) in an industry different than the company's core operation
  12. 12. Corporate Strategies 1. Horizontal Growth Strategy: Market Development • • Tesla should keep focusing on its Niche segment as the current status but expand in different markets such as Europe & Asia in order to increase revenues. This could be done by opening additional retail locations or adding an online presence Chinese central planners have said that they want to have 5 million electric cars on the road there by 2020. That's only seven years away. Advantages: • Organization becomes pioneer at its specialization • Build Brand Name Globally • Avoids the fierce competition in USA Increase sales and thus revenues. • Risk diversification. Disadvantages: • Organization is vulnerable to industry and other external
  13. 13. Corporate Strategies 2. Horizontal Growth Strategy: Product Development Tesla could benefit from its strong R&D department and focus on innovating new cars to target a wider range of customers. If the strategy is properly implemented, Tesla can gain a reputation as a company that is on the leading edge of EV industry Advantages: • Increase Brand Awareness. • Increase number of customers and accordingly Consumer Loyalty. • Capture more market share • Having multiple product lines may allow a growing business to diversify risk. • Attract buyers with different preferences, increase •
  14. 14. Corporate Strategies 3. Stability Strategy: Pause/Proceed with caution • Tesla is now doing fine by introducing the Model S by end of 2012, to introduce and develop new products we will need a huge investment in R&D but instead we could test the ground before moving ahead with a full-fledged grand strategy, trying to overcome previous losses as a result Tesla will be able to move on with growth strategies. So it is just a temporary strategy. Advantages: • Enables the company to focus on its new product the Model S • Gain Some Profit to overcome previous losses • Focus on internal issues and enhancing internal processes
  15. 15. Corporate Strategies 4. Conglomerate Growth: Diversification Diversifying into a different industry that the current company’s operation; producing EV cars. Use its battery technology for other uses such as storing power from solar panels. Leveraging the use of common brand name and combining resources to create new competitive strengths and capabilities Advantages • Transferring skills & capabilities from one business to another • Fully utilize existing resources and capabilities • Sharing facilities or resources to reduce costs • Opportunities to achieve economies of scale • Opportunities to expand product or service offerings and preserve unity in businesses •
  16. 16. • Cascading Strategy2 to Business Functions Marketing: Marketing researches to identify customer’s needs and best areas to penetrate. o Build brand equity. o Promotions. o Broad Price ranges. Research & Development: o Pioneer new products that increase buyer value. Human Resources: o Recruit new talents with diverse backgrounds with low pay. o Provide sufficient trainings Logistics: o Create & maintain strong, reliable & fast supply chain to react conveniently to customers demand Finance: o Prepare sufficient cash and assets needed for investments Purchasing: o Hold good deals with new suppliers needed for the new o • • • • •
  17. 17. Evaluation & KPIs measurements Evaluate the R&D performance Compare your own intelligence function against industry peers using GIA (Global Market Intelligence) Survey results in terms of • Annual budget • Level of development • Number of employees within the intelligence team Evaluate the Marketing performance: • • Social Media fan growth rates, engagement rates, and response rates Onsite market interviews Evaluate the Operating & Financial performance: • Speed-to-market—putting the right product in the right market segment faster than a competitor, measuring time from idea formulation to delivering product in market
  18. 18. Thank You

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