MMP_7_ISM

Individual Management Report

Prepared By: Faryal

Student ID: 4234327

Course Title: International Strategic Management and Innovation

Module Co-Ordinator: Dr. Uros Delevic

Word Count: 5000 (excluding cover page, table of contents and references)

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Table of Contents
Introduction................................................................................................................................3

Findings......................................................................................................................................3

Strategic Analysis of the Current Positioning of Tesla...........................................................3

External Macro Environment Analysis (PESTEL).............................................................3

External Micro Environment (Porter’s Five Forces Model) Analysis................................5

Internal (Value Chain) Analysis..........................................................................................6

TOWS Analysis..................................................................................................................8

Tesla's Current Innovation Strategy......................................................................................11

Form of Innovation...........................................................................................................11

Sources of Innovation.......................................................................................................12

Tesla's Strategic Choice........................................................................................................13

Future Competitive Strategies..........................................................................................13

Future Methods of Strategic Expansion and Directions...................................................15

Recommendations....................................................................................................................16

Potential Business Strategies................................................................................................16

Diversification into Energy Services................................................................................16

Partnership and Collaboration Strategy............................................................................16

Justification.......................................................................................................................17

CANVAS Business Model....................................................................................................17

Conclusion................................................................................................................................18

References................................................................................................................................19

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Introduction
Tesla Inc. is a well-known US company with its electric vehicle and cleantech business based
in Palo Alto, California. Established in July 2003 by Martin Eberhard and Marc Tarpenning,
the company has grown into a world dominant player in the area of designing, manufacturing,
and selling electric vehicles as well as their components (Mangram, 2012). In 2021, Tesla
was the most valuable automotive brand worldwide, with a brand value of $42.6 billion
approximately. It was the most successful brand ever in the history of the world as it saw the
highest growth of 157% in 2021, with it becoming the fastest-growing brand globally. In
addition to this, Tesla's market capitalization peaked at $641 billion, and its share price
reached a staggering height of over 264%. Tesla is active in North America, Europe, and
Asia, and it has been able to establish a strong presence in those areas (Marketline, 2021).

The current CEO and former chairman of Tesla, Elon Musk, has led to Tesla being seen as an
independent automaker and technology company that is committed to offering affordable
electric vehicles to the mass market (Saxena and Vibhandik, 2021). Tesla has achieved this by
having plants in Fremont, California, and Gigafactory Shanghai and changing the automotive
industry to be environmentally friendly and innovative.

The aim of this report is to investigate Tesla Inc.'s present strategic positioning in the UK
market, whereby its strategic situation and the current innovation strategies will be
scrutinized and future sustainable innovation strategies will be proposed. This report will
focus on both internal and external factors to pinpoint strategic chances for Tesla to keep and
further increase its competitive position. The research process for this report mainly utilized
secondary data collection, including data from company's website, reports, academic
journals, and authoritative electronic sources. The emphasis was laid on the accuracy and up-
to-date nature of the data obtained during the entire course of the study.

Findings
Strategic Analysis of the Current Positioning of Tesla
External Macro Environment Analysis (PESTEL)
Political Factors
Political factors are the most important factors for the development of the regulatory system
of the automotive industry. Governments around the globe are now more determined than
ever to guarantee environmental sustainability, which is manifested through tightening
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vehicle emissions and fuel efficiency standards (Lam & Mercure, 2021). For the United
Kingdom (UK), the government has established a leading position in this regard by striving
to reach the goal of net-zero emissions by 2050, which is accompanied by a big focus on the
transportation sector. These regulations pose both chances and barriers to Tesla as the pioneer
of electric vehicle technology. While Tesla can gain a lot from state subsidies and government
support for eco-friendly cars, they may also face the problem of adjusting to the rapidly
changing regulatory conditions regarding the safety and emissions of vehicles.

Economic Factors
Economic conditions have a tremendous influence on consumer spending habits and the
general demand for automobiles. The post-COVID-19 crisis times have the negative effect on
the economy, causing a drop in consumer confidence and a decrease in purchasing power.
Consumers have shown resilience in the face of economic recovery but the future remains
unpredictable and can influence consumer behavior. Tesla's premium pricing strategy may
have to cope with problems occurring in the times of economic slumps, making pricing
strategies flexible being crucial for maintaining market presence and continuing the growth.

Social Factors
Social trends, which include the new interest in health and environment after COVID-19, are
reshaping the way people spend money and behave as consumers. The demand for
environmentally friendly and sustainable transportation is growing which is causing an
increase in the need of electric cars (Alanazi, 2023). Conversely, the shift of mobility
preferences from cars to the use of walking and shared vehicles is a challenge to Tesla's
market expansion strategies.

Technological Factors
Technology innovations such as electric vehicles technology, automation and connectivity are
the drivers of change in the automotive industry. Tesla's attention to innovation and
technological superiority sets the brand on the top of the list of electric vehicle technology
(Saxena and Vibhandik, 2021). Consequently, the rapid technological advancements also
increase competition, which requires the organization to innovate constantly to be on the top
of the competition.

Environmental Factors
The environmental issues such as climate change and air pollution are leading to the creation
of regulations and consumer tastes for a eco-friendlier transportation. Tesla's vision to
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completely eliminate emissions from its electric vehicles is in line with these environmental
concerns (Maradin, Malnar and Kaštelan, 2022). The electrochemical production of batteries
has however been reported to occur at the expense of the quality of water and air and
violating strict environmental regulation.

Legal Factors
Legal frameworks which cover such aspects as vehicle safety, emissions standards, and
intellectual property rights, are the basis for operating environment in the automotive sector.
Tesla faces a complex legal environment due to different legal requirements in different
markets and the need to protect its intellectual property and patents against infringement.

External Micro Environment (Porter’s Five Forces Model) Analysis

Threat of New Entrants (Low)
The threat of new entrants into the electric vehicle industry, especially with respect to the
upper segment of the market, which is mostly occupied by Tesla, is low. Expensive capital,
advanced technology and established brand name act as the main factors of barriers to entry
(Saxena and Vibhandik, 2021). The brand image and innovative technology that are already
established by Tesla as well as economies of scale are barriers that prevent to new entrants
compete in the market with efficiency.

Threat of Substitute Products (Moderate)

The threat of substitute products in the automotive industry is rather moderate. Though
conventional internal combustion engine vehicles are still popular, the growing need for
environmental sustainability and the fact that many countries have some regulations that are
favorable to electric vehicles make Tesla’s products look even more attractive. Nevertheless,
the comparatively high cost of electric vehicles against the conventional cars does present a
moderate threat, as the consumers may prefer other modes of transportation or hybrid
vehicles.

Bargaining Power of Suppliers (Moderate)

The suppliers' bargaining power in the automotive industry, especially for batteries, is
considered as moderate. Tesla is dependent on multiple suppliers for vital parts, including
Panasonic for battery cells (Maradin, Malnar and Kaštelan, 2022). Although the high volume
orders of Tesla may weaken suppliers influence in general, the dependence on a few key
suppliers could still be a challenge. But, the vertical integration initiatives of Tesla, including

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 the acquisition of Grohman Automation and the emphasis on in-house manufacturing,
partially minimize the supplier bargaining power.

Bargaining Power of Customers (Moderate)

The bargaining power of customers in the automotive industry can be considered moderate.
While Tesla's customers are able to select from the other manufacturers of electric vehicles,
the special features, performance, and the brand reputation of Tesla's vehicles still contribute
to customer loyalty (Statista, 2021). On the other hand, although the factor of switching costs
remains moderate and there are other electric vehicle options available on the market, that
kind of consumer power can change the bargaining power. The degree of price sensitivity and
the competition from other electric vehicles manufacturers likewise have an impact on
customer power to some extent.

Competitive Rivalry (High)

The degree of rivalry within the automotive industry, especially in the electric vehicle
segment is very high. Tesla has to struggle against the well-established competitors and the
newcomers attempting to get a strong position in the electric vehicle market (Saxena and
Vibhandik, 2021). Although Tesla's unique technology and powerful brand positioning give it
an advantage, the intensifying competition, low switching costs for consumers, and the
prevalence of a few dominant players make rivalry more complex. Further, rapid
technological developments and the ongoing quest for market share also contributes to the
high level of competitive intensity.

Internal (Value Chain) Analysis

Value Chain Description Strategic Significance
Activity

Research and Tesla invests significantly in R&D to innovate Strategic and distinctive as it drives
Development new technologies for electric vehicles. innovation, technological
(R&D) advancements, and product
differentiation.

Manufacturing Tesla operates advanced manufacturing Essential for controlling production

facilities like Gigafactories for producing quality, cost efficiency, and scalability.
electric vehicles and batteries.

Supply Chain Tesla maintains strategic partnerships with Critical for ensuring a steady supply of
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Management suppliers for timely delivery of high-quality necessary materials and components for
components. production.

Marketing and Sales Tesla's unique direct sales model through Differentiated approach enhances
showrooms and online channels distinguishes customer experience, brand image, and
its marketing strategy. market penetration.

Customer Service Tesla offers personalized customer service, Provides a competitive edge by
including software updates and maintenance fostering strong customer relationships
services, to enhance customer satisfaction. and loyalty.

Technological Continuous innovation in electric vehicle Core competence driving Tesla's

Innovation technology, battery technology, and competitive advantage by offering
autonomous driving systems sets Tesla apart. cutting-edge products.

Software Tesla's software development capabilities Strategic capability enhancing product

Development enable over-the-air updates and continuous functionality, performance, and
improvement of vehicle features. customer experience.

Table 1: Tesla's Internal (Value Chain) Analysis

 Tesla's investment in R&D is structured to propel continuous innovation, which in

turn results in innovative technologies and products that are unique, thereby
contributing significantly to its competitive edge (Qin, 2022).
 Tesla with its advanced manufacturing capabilities in the Gigafactories, it is able to
maintain control of production quality, costs and scalability and by the same token
improve its competitiveness on the market (Cooke, 2020).
 Strategic partnerships with suppliers are a guarantee of safe and reliable supply of
high-quality components, which in turn helps Tesla to remain competitive and meet
the production efficiency and customer demand, that is its competitive power (Qin,
2022).
 Tesla's direct sales model differs from the usual automotive manufacturers' approach,
which aims to improve customer experience, brand image and market penetration by
delivering competitive advantage.
 Being customer oriented is one of the strategic advantages of Tesla that is driven by
the fact that it enhances the relationship between the customers and the brand. This

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 leads to increased customer loyalty and retention which in turn increases customer
satisfaction and loyalty (Qin, 2022).
 Tesla's core competence in technological innovation is the key factor in its
competitive advantage as it comes up with ground-breaking products which are laced
with advanced features. This drives the customers to the company and at the same
time differentiates it from competitors (Statista, 2021).
 The software development expertise of Tesla allows for the implementation of
continuous improvements of vehicles using over-the-air updates which enhance
functionality, performance and customer experience thus contributing to the
company’s competitive position (Qin, 2022).

TOWS Analysis
External Factors

Opportunities (O) Threats (T)

 Expansion in new  Intense competition
markets  Defect and liability
 Improve claims
technology
 Use trucks for pick-up
Strengths (S) SO Strategy ST Strategy
 Strong brand image  Utilize strong brand  Use brand image to
 Technological image to expand into gain market share
innovation new markets  Focus on delivering
Internal  Unique design  Leverage technological high-quality products
Factors  Software innovation to develop to minimize defects
updates superior products and liability claims
 Distribution
network
Weaknesses (W) WO Strategy WT Strategy
 Manufacturing  Minimize manufacturing  Bring manufacturing
complications complications using in-house
 High cost of technology  Partner with
production  Cost minimization and multiple vendors
 Dependence on expansion in new  Develop alternative
suppliers markets technologies
Table 2: TOWS Analysis

In the TOWS analysis (Table 2), there is an overall assessment of Tesla's strategic situation
which plots internal forces (Strengths and Weaknesses) against external factors
(Opportunities and Threats). Tesla's strengths including its remarkable brand image,
technological innovations and unique design are the main drivers of the company's
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competitive advantage in the electric vehicle (Qin, 2022). These virtues enable Tesla to
separate its products and draw cliental to itself, therefore, a platform for success.

While this provides an opportunity for Tesla, the company confronts challenges such as
manufacturing issues, high production costs, and supplier dependence (Qin, 2022). It may be
a problem for Tesla to keep up with other brands on the market and stay a leader for the long-
term development. Hence, Tesla should try to work out these gaps through a strategic plan
that has a focus on enhancing operational efficiency and cost effectiveness.

The external environment of Tesla is full of threats and risks. These include the tough
competition and potential product defect and liability claims (Saxena and Vibhandik, 2021).
To counter these risks, Tesla must emphasize quality control and risk management measures,
therefore, prevent product reliability and safety (Qin, 2022). Moreover, Tesla should keep on
putting money on research and development to be ahead of others and have its dominance in
the industry which is expected to be strengthened by this move (Qin, 2022).

While Tesla faces a few obstacles including the technology development and the demand for
green transport solutions, Tesla has some more options in the emerging trend to take
advantage of (Chiaroni, Chiesa and Frattini, 2010). Through integrating its strong points and
making use of strategic partnerships as well as market extension schemes, Tesla can take the
chances and become stronger (Qin, 2022).

Implications
The TOWS analysis maps Tesla's strategic positioning, matching internal strengths and
weaknesses to external opportunities and threats. Tesla's strengths; such as the powerful brand
image, technological innovation, and one of a kind designs, support in its competitive
advantage in electric vehicle market (Qin, 2022). The above advantages of Tesla include the
exceptional differentiation of its products and the retention of customers, which in the long
run helps the company to sustain its success.

Nevertheless, the firm has to tackle the difficulties that include manufacturing difficulties,
high production costs, and supplier dependence. These vulnerabilities might possibly impede
Tesla's attempts at successful competition and long-term growth. Hence, it is crucial for Tesla
to work out the kinks through tactical procedures targeting the enhancement of operational
efficiency and costs effectiveness.

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Besides the external threats such as the fierce competition and the possibility of defect and
liability claims, these can pose a significant risk on Tesla's business (Saxena and Vibhandik,
2021). To minimize these dangers, Tesla should be striving for the highest quality standards
and effective risk management measures to guarantee the dependability and safety of their
products. Moreover, Tesla's management must allocate a decent amount of its resources on
research & development to surpass its competitors and continue to be the industry leader.

Tesla is challenged by some emerging trends such as the impact of technological

advancement and the rising demand for sustainable transport solutions, but it simultaneously
presents itself with an opportunity to take advantage of them (Chiaroni et al., 2010). Through
capitalizing on its strengths and exploring possible partnerships and market expansion
directions, Tesla can catch up with these chances and eventually, become a market leader.

Critical Evaluation
Tesla's strong points include the brand image and technological innovation that enable the
company to differentiate its products from the rest and be ahead in the game (Qin, 2022).
While the enterprises has the advantage of suppliers and manufacturing which it can use to
grow in the long run, there are major weaknesses that can hinder the growth prospects (Qin,
2022). These challenges clearly emphasize the need for business to streamline operations and
to have a better supply chain management system to boost efficiency and reduce costs.

In addition to this, Tesla is in a highly competitive field and it is liable to get sued, so the
company has to take strict quality control measures and put risk management strategies in
place (Saxena and Vibhandik, 2021). Tesla is facing these difficulties in its environment, but
it may take advantage of the upside potential of the emerging trends like technological
advancement and the growing need for sustainable transportation systems (Chiaroni, Chiesa
and Frattini, 2010). Through exploiting its advantages and implementing the strategic
initiatives, Tesla can avoid risks and benefit from growth opportunities to retain and
strengthen its leadership position.

Besides, the assessment of the way Tesla deals with innovation and market development is
also a concern. The company showed different level of disruption in the automotive industry,
but the company's daring targets and fast growth make operational scalability and financial
sustainability issues arise (Stringham et al., 2015). Furthermore, Tesla's premium pricing
strategy could backfire and it may not be able to penetrate mass markets as well as compete

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with lower-cost alternatives as long as the higher prices are concerned (Eisler, 2016). Hence,
Tesla needs to find middle ground between innovation, affordability and accessibility to the
market for sustainable growth and viability.

Tesla's Current Innovation Strategy

Form of Innovation
Tesla Inc. is well-known for its dedication to innovation, specifically in the area of electric
vehicles (EVs) and sustainable solutions in energy. Another kind of innovation the company
is trying to develop is disruptive innovation. Disruptive innovation is the process of bringing
to market a new product or service that completely changes the current market landscape or
creates a new market altogether. Tesla’s disruption innovation can be felt in different aspects
of its business models, product lines, and technical breakthroughs.

Electric Vehicle Technology

The most significant instance of Tesla's disruptive innovation is its ground-breaking research
and development in the electric vehicle technology. Not only has Tesla changed the outlook
of the automotive industry but also has provided a new hope of fully electric cars with up-to-
date technology that threatens the traditional internal combustion engine vehicles. Tesla's
premier vehicles, like the Model S, Model 3, Model X, and Model Y, are designed to be fully
electric with extraordinary performance, long-range capabilities, and sophisticated features
such as Autopilot.

The launch of the Tesla Roadster in 2008 was a first step in the world’s history with the
emergence of the first highway-capable electric vehicle. It demonstrated Tesla's dedication to
the extensive research and development of EV technology and the company's readiness to
defy the norms of the conventional automotive industry (Movement, 2022). The Roadster
was the first vehicle that proved that electric cars could be as efficient as gasoline-powered
vehicles regarding performance, range, and sustainability, while at the same time providing
the same driving experience.

Autonomous Driving Technology

The Tesla's ambition of disruptive innovation is also seen in its development of autonomous
driving technology. This company's Autopilot technology is a groundbreaking advancement
in automotive technology that allows semi-autonomous driving, which makes road trips safer,
more convenient, and fuel-efficient at the same time. The combination of cameras, sensors,

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and advanced software algorithms used by autopilot feature enables such features as adaptive
cruise control, lane-keeping assistance, and automatic lane changes.

The gradual progression and making of Autopilot symbolize Tesla's efforts to boost driverless
vehicles technology. The software update of Autopilot by the Tesla over-the-air can be done
and the new features and enhancements can be deployed to the Autopilot-equipped vehicles;
thereby, the driving experience would be transformed and the company would be established
as an autonomous vehicle technology leader (Qin, 2022).

Energy Storage Solutions

Tesla's innovation strategy also involves an energy storage solution which is the other field of
innovation tapped by the company. The battery technology and energy storage systems
developed by the company is a game changer in the process of renewable energy integration
in the grid, stabilization of the grid, and the quest for energy independence. Tesla's portfolio
of Powerwall, Powerpack, and Megapack products provides the necessary energy storage
capacity for the residential, commercial, and utility scale applications.

Sources of Innovation
One of the most remarkable sources of Tesla's innovation is its research and development
strategy that covers the spheres of electric vehicle technology, autonomous driving, and
energy storage solutions.

Internal Research and Development (R&D)

Tesla devotes a significant amount of financial strength to its internal R&D division, which is
focused on the development of technology, and other innovations that the company can bring
to the market place. The company runs a dedicated Research & Development department
which is comprised of engineers, designers and scientists who cover topics ranging from
vehicle design and battery technology to software development and energy management
systems.

The company's devotion to R&D is reflected in its desire to produce vertically and have its
own manufacturing facilities. The decision to manufacture the essential electric vehicle parts,
including battery packs, electric motors, and vehicle software, in house is aimed at affording
the company more control over the quality of its products, timelines for innovation cycles,
and management of costs (Qin, 2022). Tesla is able to keep all the value chain elements under

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its control and this enables Tesla to speed up innovation more rapidly and act as a responsive
organization that can react to changing customer needs.

In addition, the iterative approach of Tesla to product development helps the company to
carry out rapid prototyping, testing and iteration of new technologies. The company apply
data gathered from its fleet of vehicles in the real world to identify problem areas and
improve current features using over-the-air software update. For instance, Tesla is able to
develop its Autopilot system further by collecting driving data from millions of miles driven
by customers and using machine learning algorithms to enhance performance and safety
(Qin, 2022).

Strategic Partnerships and Collaborations

Besides concentrating on internal R&D, Tesla drives innovation through strategic alliances
and partnerships with other firms, institutions, and stakeholders of the industry. Tesla can
speed up the development and commercialization of new technologies by offering external
skills, knowledge and contacts, while at the same time reducing the risks and costs associated
with independent research and development.

A noteworthy instance where Tesla has employed strategic partnerships is in its joint venture
with Panasonic Corporation in the production of battery cells. Lithium-ion batteries needed
for both Tesla’s electric vehicles and energy storage products are manufactured in the
Gigafactories operated in partnership with Panasonic (Cooke, 2020). This collaboration
allows Tesla to obtain the necessary Panasonic battery production skills but still keep control
over the important steps, such as cell chemistry, design, and integration, in the production
process.

Further, Tesla has collaborated with global technology giants, such as NVIDIA and Mobileye,
to enhance the hardware and software solutions for autonomous driving. Such partnerships
where hardware design, artificial intelligence, and sensor technologies of each partner are
combined for a faster development of autonomous vehicle systems are realized (Qin, 2022).

Tesla's Strategic Choice

Future Competitive Strategies
The Strategic choice of Tesla Inc. is based on differentiation and innovation, which is in line
with the Generic Strategies of Competition framework proposed by Michael Porter. Porter's
framework outlines three generic strategies: cost leadership, differentiation and focus. The
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strategic choice of Tesla can be primarily categorized as differentiation, where the company
tries to create different products or services that are unique and different from the products
and services of its competitors in the automotive and energy sectors.

Product Differentiation
Tesla's core strategy is based on the uniqueness of its products that make them different from
the competition. The corporation's electric vehicles (EVs) not only consist of the greenest
technology but also are a leading brand with instant acceleration, superior performance, and a
stylish design. Tesla's vehicles integrate the most innovative features like over-the-air
software updates, autopilot autonomous driving technology and top of the line battery
technology. Such features serve as the distinguishing features of Tesla's EVs from the typical
gasoline vehicles and electric vehicles on the market (Qin, 2022).

Brand Image and Innovation

Tesla has created a brand image that is closely connected to innovation, sustainability, and
progressive-thinking values. The company's founder and CEO, Elon Musk, is considered by
many as a legendary inventor who stands out for being able to continually stretch the limits of
technology and shake up conventional industries. The innovative character of Tesla is being
seen in the company’s efforts to create not only electric cars but also systems of energy
storage, solar products, and renewable energy. Tesla uses its innovative mindset and
introduces cutting-edge technologies and products into the automotive and energy sectors on
a regular basis, thus the company remains a leader in these industries (Maradin, Malnar and
Kaštelan, 2022).

Vertical Integration and Sustainable Practices

Tesla’s strategic selection also involves vertical integration and sustainable business
operations. The firm has its Gigafactories for the battery production and has taken over the
solar panel manufacturing through its acquisition of SolarCity (Cooke, 2020). The company
can therefore vertically integrate the supply chain in order to control the core processes, cut
down costs, and ensure quality standards. Besides this, Tesla’s commitment to sustainability
also matches the trend of consumers seeking for eco-friendly products and operations. Tesla's
sustainability initiatives, which are deployed across its operations, lead to an enhanced brand
name and attract eco-conscious customers.

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Global Expansion and Market Penetration
One more element of Tesla's strategic option is its concentration on international expansion
and market penetration. The company not only did this by expanding its market beyond the
USA and Europe but also by having a strong international presence in most of the areas such
as Asia and other regions (Mangram, 2012). Tesla’s fast-paced growth strategy includes
planting new factories, expanding the supercharger system, and funding the localized
assembly plants to cope with the rising demand in the world's market. Tesla's innovative
approach including entering new markets and offering products for various customer
segments allows the company to maintain its growth and become a world class sustainable
transportation and energy company.

Future Methods of Strategic Expansion and Directions

When it comes to the further development of strategic techniques and directions for Tesla, it
is important to consider the current trend of the company and the potential for development.
Tesla has achieved outstanding innovation and revolution in the automotive industry.
However, to continue its competitive edge and capture new opportunities, it is necessary to
consider multiple options for strategic expansion.

Geographical Expansion
Tesla’s broadening its operations into various other geographical markets is an important
potential for expansion. The company has already demonstrated its ability to go beyond its
home market in the United States and expand its presence globally, with a strong foothold in
Europe, China, and other regions. The data demonstrates that Tesla is selling a lot more in
Europe and that electric vehicles in the region are getting more and more popular (Reuters,
2023). The company should consider the possibility of entering the fast-growing economies
of India and Latin America which will open more doors for new revenue and increase the
company market share.

Product Diversification
While Tesla started with high-end electric vehicles, diversifying the product range may be a
strategic move for the firm. Providing more affordable models that target the mass market
could help Tesla to draw in a larger group of buyers and, thus, make electric vehicles more
reachable. The release of the Model 3, the cheaper sedan from Tesla, has clearly
demonstrated the potential to attract a wider market audience (Davies, 2016). Another way

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Tesla can continue to grow its vehicles segment is by investing in the development of electric
trucks, vans, and even electric planes, which will expand its footprint and revenue potential.

Vertical Integration
The phenomenon of vertical integration means to Tesla is having more control over its supply
and manufacturing. The giant Gigafactories of the company are essential in their production
of batteries, electric drivetrains, and other parts used by their vehicles. The implementation of
Gigafactories and the integration of upstream activities for securing raw material input could
be a major factor for Tesla to achieve a sustainable supply chain and to become less
dependable on external companies (Naor, Coman and Wiznizer, 2021). Additionally, vertical
integration could result in cost reduction and also maintain quality as it ensure production
timelines are met.

Technological Innovation and Partnerships

Collaborating with other firms and investing in technology advancement are the basic
elements of Tesla’s expansion strategy. The purchase of SolarCity and the creation of solar
energy solutions by Tesla are some manifestation of the company's desire to go beyond its
core electric automotive business to other renewable energy and energy storage markets
(Maradin, Malnar and Kaštelan, 2022). Strategic alliances with technology companies to keep
up with the autonomous driving technology, artificial intelligence and connectivity features
for its vehicles will not only make them different from other cars but also enhance the market
position of Tesla.

Service and Infrastructure Expansion

By upgrading its service network and addition of charging infrastructure can be regarded as
the most crucial moves that Tesla needs to take in order to ensure the growth of its customer
base and provide the best ownership experience. Placing emphasis on supercharger networks
development, service centers expansion, and introducing interesting maintenance and repair
services are some of the measures that could make Tesla a favourite of customers and create
loyalty to the brand.

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Recommendations
Potential Business Strategies
Diversification into Energy Services
Tesla could take advantage of its competences in renewable energy and battery technology
and extend in the area of energy services (Maradin, Malnar and Kaštelan, 2022). This plan of
action implies supplying energy storage solutions, solar panels, and energy management
systems for both residential, commercial and industrial customers. The expansion into energy
services by Tesla will facilitate the company's capitalizing on the growing demand for
environmentally friendly energy solutions and create a new non-auto revenue flow.

Partnership and Collaboration Strategy

Another option for Tesla can be to build alliances and co-operations with other competitors’
players. This approach aims at the collaboration of existing automotive manufacturers,
technology companies, and energy developers to create new products, technologies or
business models (Husain, 2014). Under the partnerships, Tesla could get access to new
markets, share R&D costs, and shield itself from the risks related to the mass production and
entry to new industries.

Justification
In terms of the two possible approaches, the one that involves partnership and collaboration
seems to be the most appropriate for Tesla to face the challenges, threats, and opportunities
that have been identified.

 Collaborating with the existing industry leaders enables Tesla to share the cost of
research and development, so it lightens the burden of the financial risks that are
associated with innovation and expansion on the market.
 Collaborative environment gives an opportunity to use complementary resources,
expertise, and technologies which are not available within Tesla, thus allowing for a
faster R&D as well as market launch.
 By partnering with other entities, Tesla can achieve such a goal as expand into new
markets and customer segments more efficiently, utilizing the partner network and the
already existing customer base.
 Strategic alliances shape a symbiosis between the companies whereby Tesla can
harness and unite its expertise in electric vehicles and renewable energy with partners'

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 capabilities in other fields such as manufacturing, supply chain management, and
infrastructure creation.

CANVAS Business Model

Key Activities Key Resources Value Proposition

1. Develop energy storage solutions 1. Battery manufacturing 1. Sustainable energy

facilities solutions
2. Expand solar panel installations
2. Solar panel production 2. Reduced energy costs
3. Launch energy management
capacity
systems 3. Renewable energy options
3. Software development
4. Energy independence
expertise
5. Efficient energy usage

6. Smart energy solutions

Customer Segments Channels Revenue Streams

1. Residential customers 1. Online sales 1. Product sales

2. Commercial clients 2. Tesla stores 2. Service subscriptions

3. Industrial partners 3. Partner distribution 3. Energy storage contracts

Customer Relationships Cost Structure Revenue Streams

1. Personalized support 1. Manufacturing costs 1. Product sales

2. Ongoing maintenance 2. R&D expenses 2. Service subscriptions

3. Technical assistance 3. Marketing and distribution 3. Energy storage contracts

Table 3: Tesla's CANVAS Business Model

Conclusion
In the final argument, Tesla's innovative thinking and continuous quest to redefine the
automotive and energy industries have given the company a position of leadership in those
niches. Tesla has been on the forefront of the revolution in the automobile industry by
introducing innovative electric vehicles and renewable energy solutions that are aimed at
creating a more cleaner and greener future. Tesla may be confronted with some difficulties
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and competition, but its undying aspiration for perfection and technological development
remains unshaken.

As demonstrated by this report, Tesla has received a comprehensive assessment of its external
and internal environment, innovation strategies, and future strategic decisions which offer
useful insights into the company's strengths, weaknesses, opportunities, and threats. With a
strong basis on its key capabilities, effectively addressing the main challenges and adopting
strategic growth opportunities, Tesla can further reinforce their market position while
continuing to be a driving force for innovation. Strategic orientation for top management and
sustainable growth for the company have ensured Tesla leaders in global markets of EVs and
renewable energy solutions.

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