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Running Head: TESLA, INC 1

TESLA, INC 2

Tesla, inc.

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Question 1

Introduction

According to (COM et al., 2015), SWOT analysis is a planned strategy and technique used to assist any organization or company or a person in distinguishing the qualities, shortcomings, openings, and dangers concerned with company project planning business competition. The name Tesla came from a great scientist called Nikola Tesla; he was a researcher who imagined many advancements like electrical designing of Serbian drop and Radio advances during his time, making him useful in inventio. Tesla company is one of the greatest and influential associations, and it is the most analyzed and discussed company in the business world. The following SWOT analysis shows that the Tesla organization has the strength needed to sustain its profitability in the business market. This will still hold despite the many challenges surrounding the company. This SWOT analysis also gives Tesla strategic suggestions to help the company be competitive and thriving in the global automotive and recycled energy. Such reforms should increase strategic effectiveness in addressing the vital force of competition shown in Porter's Five analysis of Tesla Inc. as the biggest company in producing electric vehicles. Hence it gains a lot from global expansion (Carlson, 2015).

Strength of Tesla

The following strengths have made Tesla company to become one of the best and successful company worldwide. The shape the competitive nature of Tesla's business in the automotive industry: employment of the best employees, strong brand, highly innovative processes, and strong control of production processes. One of the things that make Tesla's company very successful is the presence of the best employees. Today Tesla has been recorded as probably the best work environment, and it pulls in and utilizes youngsters who have extraordinary desire and gifts. Tesla has become the leading automotive company, which has delivered 367,500 vehicles, and due to its innovation of luxurious vehicles, it has defeated some massive companies like BMW and Mercedes Benz making it to become the best in the production of electric cars. Compared to other companies such as range electric cars, Tesla has proven to produce the best electric cars that cover maximum distance. Tesla has a very high rate of innovation; therefore, the market trust and expects the company to develop competitive and profitable products, which of course, leads to substantial financial gains (Mas, 2018).

Weaknesses of Tesla

All the inside factors that can cause any distraction, damage or a negative effect on an organization's SWOT analysis can be weaknesses. Due to Tesla's higher standard innovation, there is great space for mistakes. More complicated innovations result in more manufacturing complications, so Tesla faces delays in launching, producing, and assembling their items. Tesla faces unbalanced supply and demand due to its highly complicated procedures and experiments; hence, it cannot meet the production requirements. It has failed to produce a high volume of electric vehicles. This is due to the high-cost production and lack of management resources. Lack of enough batteries has affected the production of more electric automobiles (Mas, 2018).

Opportunities of Tesla

The SWOT analysis also shows outside factors that can present potential development and growth of Tesla, and these factors are the great opportunities that Tesla company can utilize to improve its growth and performance; for example, Tesla can increase its position in the world automobile market, which will support its growth. Tesla has to improve its competitiveness in the global automobile in a way such as expanding its global sale; for instance, the Asian market is the main chance, the organization needs to grow its business more on locales that they have never reached, and this will assist Tesla with extending its worldwide market henceforth expanding their monetary security and presence of a more grounded market. When Tesla reduces its vehicles' price by producing less expensive cars, this will attract more customers who can afford cars, increasing its market. Also, by Tesla producing their own batteries instead of buying from other battery companies, it will change the game to increase its production rate and reduce its production cost. Through diversification Tesla can improve its performance; the factor includes creating or getting new knowledge to eradicate the company from exposure to dangers and risks that can lead to its failure (Mas, 2018).

Dangers facing Tesla

According to (Neumann 2020), the Dangers of Tesla are outside factors that try to reduce or reduce the company's functioning ability, and they are all analyzed in this SWOT analysis. The outside or external factors tend to bring difficulties in the organization. Those problems hinder the company's normal function; hence, they weaken the company by preventing it from increasing the benefits of its chances. An excellent example of these external factors that prevent the company's success is the competition from other companies. Such competition limits the company's potential revenue from the world market for solar panels, batteries, and electric cars. Although Tesla inc. has proved and showed the world its success, it faces many threats from every corner of the world, and it must address its threats. Some of these threats are the deal's regulations, raw material price fluctuation, and high competition from other companies. External factors such as high competition from automobile companies threaten Tesla, which can be dangerous to Tesla's market since a competitive company can come out of nowhere and take over Tesla's market. The sudden changing or fluctuation of raw material prices, for example, the price of lithium going up, affects the company since lithium is used to make the battery, which is the source of energy for electric vehicles. Tesla also faces threats from dealerships, which increases marketing prices; mostly, Tesla does not use dealership programs to market their products. In some states like Virginia, one cannot do business without a dealership, so it's difficult for Tesla to market their products in places such as Virginia. On this SWOT analysis, we can say that for Tesla to prosper in the future, and it has to maintain its competitive advantage despite the high competition from other large automobile vehicles.

Implications and Conclusion

In this SWOT examination for the industry, we featured every one of the qualities, shortcomings, opportunities, and dangers which Tesla encounters on the lookout. Tesla needs to make lively moves to develop its market. However, there is no uncertainty that, notwithstanding the limitation factors, the industry is an extreme image of progress and development (STOKES, 2020).

Recommendation

In many years to come, the Tesla organization has a lot of strength to remain in business power and successful. Through this SWOT analysis, we can see a lot of issues that Tesla company should take action and address since by addressing the issue, it will have a great chance to maintain its successful position in the business world, and it will be able to improve its profits. Tesla must continue to do a lot of research. It must invest a lot in their research since the research will enable them to produce advanced technologies that can be competitive with other big companies. Considering the results of this SWOT analysis, it is recommended that Tesla increase and expand its market; this will help the company exploit the renewable energy industry's global growth. Secondly, Tesla company should continue to increase its investment in product innovation; this will help the company increase its production and by so it will have high chance in competing in the competitive world of business. Through those recommendations, Tesla will be the leading company in production or electrical automotive and it will have less or no competition from other competitive automotive companies like BMW (STOKES, 2020).

Question 2

Daimler and Tesla began collaborating after Mercedes engineers, who were developing a second-generation electric Smart car, bought a Tesla Roadster. They were impressed by the way Tesla packaged batteries, so arranged a visit to Silicon Valley to meet Musk in January 2009 and ordered 1,000 battery packs. The collaboration expanded. At a joint press conference in the Mercedes-Benz museum in Stuttgart in May 2009, Tesla said the partnership would “accelerate bringing our Tesla Model S to production and ensure that it is a superlative vehicle”. For its part, Mercedes wanted to use Tesla’s batteries to power an electric version of its compact Mercedes-Benz B-Class. The Tesla Model S would hit the road in 2012. Through such partnership, the potential pitfall can be the creation of strict government rules, and certain monopolies and such pitfall can lead to Tesla losing its essential identity name and also it can lose their market to their competitors (Hoffman, 2011).

Question 3

Tesla applies diversification, but only as a minimally significant intensive growth strategy. This intensive strategy helps grow the company through new business creation. For example, the firm aims to create new battery products for a variety of non-automotive applications. However, this intensive growth strategy currently has insignificant effects on the company’s financial performance. Tesla focuses most of its efforts on market penetration and product development to grow its automotive and energy solutions businesses. The company can apply the differentiation generic competitive strategy to increase the likelihood of success in using this intensive growth strategy. A strategic objective linked to diversification is to increase Tesla’s R&D investment to identify new business opportunities. Another strategic objective based on this intensive strategy is to acquire other firms or enter joint ventures to develop entirely new products.

The diversification strategy that would launch Tesla energy is related to its technology diversification, so by Tesla using the related diversification it will help them to migrate in a new organizational industry that has the same significant features as the other existing firm. Tesla will meet the cooperate advantage since the business is attractive and has a robust potential profit (COM et al., 2015).

Question 4

Vertical integration is a strategy whereby a company owns or controls its suppliers, distributors or retail locations to control its value or supply chain. Vertical integration benefits companies by allowing them to control process, reduce costs and improve efficiencies. However, vertical integration has disadvantages, including the significant amounts of capital investment required.

Using vertical integration, Tesla used the forward integration in which the company can gain back their ownership over the previous customers. The advantage of this strategy is that it reduces the cost since it cuts off the market's transaction cost. Through the forward integration, there is the improvement of quality supplies. Lastly, forward integration improves coordination in the supply chain, which offers a greater market share (Carlson, 2015).

Question 5

Michael E. Porter of the Harvard Business School introduced the concept of the value chain. This model includes the entire range of activities from the procurement of raw material to the production, marketing, sales, and after-sales service. Each of these stages adds value to the final product. Analyzing the value chain and optimizing it helps achieve superior results. Through the optimization of their value chains, companies can increase their operational efficiency as well as build new sources of competitive advantage.

Tesla’s value chain outsources assist in better management and dealing with the strategic sense, so any problem or challenge can be prevented since only a small part is taken care of (Hoffman, 2011).

Question 6

There are several generic strategies that can be used to generate competitive advantage. These strategies are cost leadership, differentiation and focus. They are further divided the last one into two categories – cost focus and differentiation focus.  Apart from it, there are four intensive strategies that brands can use to grow their customer base and sales. The focus of this essay are the strategies used by Tesla

The 5 strategies that Tesla is pursuing are: keeping an eye on internal and external frameworks, diversification, product development, high technology automobiles, and market development. These generic strategies will help the Tesla company know their focusing area in the market world to distribute their products worldwide (Mas, 2018).

Question 7

Tesla organizational culture integrates the following three key elements: 

1. Ambitious innovation. Tesla has been founded right after auto giant General Motors recalled and destroyed its EV1 electric cars. Starting a business in a segment where large and experienced players such as GE have failed is a clear indication of abundant ambitions of founders including Elon Must. Founders have adapted product and process innovation as a strategic tool to realize their ambitions in practice and ambitious innovation has been deeply ingrained in Tesla organizational culture.

 2. Adherence to ‘First Principles’ method. Elon Musk insists that employees use First Principles method, also known as reasoning from first principles in dealing with problems. It has been noted that “first principles thinking requires you to dig deeper and deeper until you are left with only the foundational truths of a situation”. Arguably, process and product innovations at Tesla can be credited to the successful application of first principles to a significant extent.

 3. Lack of bureaucracy. An email from CEO Elon Musk sent to employees a few years ago stressed that “anyone at Tesla can and should email/talk to anyone else according to what they think is the fastest way to solve a problem for the benefit of the whole company. You can talk to your manager’s manager without his permission, you can talk directly to a VP in another dept, you can talk to me, you can talk to anyone without anyone else’s permission.”

These key elements of Tesla's culture are that it is dynamic, and it has been viewed to be adaptive per the growing cultural needs. The problems foreseen are that the company does not bring its culture to various places rather adapt to the global environment and offers similar benefits (Mas, 2018).

REFERENCES

Carlson, W. B. (2015). Tesla: Inventor of the electrical age. Princeton University Press.

COM, 5., Speth, C., & Probert, C. (2015). The SWOT analysis: Develop strengths to decrease the weaknesses of your business.

Hoffman, A. N. (2011). Tesla Motors, Inc: The first U.S. car company IPO since 1956.

Mas, S. M. (2018). Tesla Motors. SWOT analysis and corporate strategy. GRIN Verlag.

Neumann, S. (2020). Tesla, Inc., and the world's transition to electric vehicles. Risks, strengths, opportunities, and strategic recommendations. GRIN Verlag.

STOKES, M. D. (2020). Tesla, Inc.