BUSINESS STRATEGY

CASE ANALYSIS - TESLA

Group-3B
ZR1902004 Mohammad Akhter Aziz
ZR1902024 Md Firoz Alam
ZR1902028 Hasan Ahmed Jahedi
ZR1902036 Md. Imran Hossain
 INTRODUCTION OF TESLA

• Company Name: TESLA Motors ( Electric Cars Company)

• Founded in 2003 & Public Limited Company
• Head Quarter : California, USA
• CEO: Elon Musk (South African National)
• Product line : Roadster, Model S, X and 3
• Objective: To become the world’s Biggest producer of electric
vehicle
 CASE QUESTION

CAN TESLA’S STRATEGY WIN THE CHALLENGES POSED BY

LOW GASOLINE PRICE AND FIERCE COMPETIONS
 ENTERPRISE LEVEL
Strengths Weaknesses

• Structured organizational Infrastructure

• Strong Science Driven people and Background • High R&D and SGA Cost produced Net loss
• Forward Vertical Integration - Own sale galleries, • Forecasting Error & Unplanned Product development
Capability
serveries station, and Recharge Stations • Struggling to Lower the Battery Cost
• Exclusive R&D - Innovative Product Technology • Not enough charging stations out of USA
• Own production facilities

• Negative Cash flows from operating activities ( 2011 –

• Low interest Loan from Government
2015)
Capital • Easy Equity Financing due to Goodwill & Prospect
• Increasing trend of Debt Equity Ratios from 19% to 32%
• Share and Debt Market Accessibility
from 2011 to 2015

• Visionary and Dynamic Leadership

• Micro-management at operational level
Culture • Innovative and Risk taking work culture
• Imposing & overruling management decision practice
• Long term achievement philosophy
 INDUSTRY LEVEL
Opportunities Challenges

• Pioneer in Electric Car Market

• Downward trend of gasoline price favors the competitors
• Competitors are following the footprints of TESLA
• Lack of ECO system out of North America
Competitor • Big Market Size ( Almost 90 million cars sold in 2014 and
• More attractive price & features of gas driven car
2015)
• Hybrid Car at affordable price from Competitors
• Market share of Plug-in Cars is only 0.6 Percent in 2015

• Building Long term agreement with battery makers & other

• Protest from Franchised dealer associations
key components suppliers
Collaborator States Legislations to prohibit the direct Retailing
• Cumulative effort with suppliers to improve the performance •
• Competitors’ strong Dealers’ network
& reduce cost

• Strong word of mouth

• Loyal customer base
Customer • Customer Hesitation on long distance drive with Electric Car
• One stop, smart solution & service
• Buyback option
 MACRO LEVEL
Opportunities Challenges

• Reduction of Fossil Fuel dependency

• Federal tax credit & rebate facilities • Significant drop on Gasoline prices across the world
State & Society
• Promoting zero carbon emission for better world • Local legislation for preventing from opening sales galleries
• Govt. Support for Green Car Production

• Electric drivetrain technology has disrupted typical

• Hybrid cars - safer in long distance
automobile manufacturing
Tech & Innovation • New technology - Hydrogen fuel cell which has using
• New innovation like Powerwall & Power pack for household
Quicker Charging capacity than Tesla
and industry use to accustom people with energy savings

• Expanding business in global domain to attain EOS

Free sharing TESLA patents to develop ECO System
International Forces • • Lack of Infrastructure for supercharging network Globally
• Geneva Motor Show Highlighted Electric cars’ importance
• Well accepted theme - Green and Sustainable Planet
 DECISION CONTEXT
• Focused Differentiations to “Broad Differentiation
Strategy” as targeting Mass Broad
Focused
Differentiation Differentiation
• Product features, service and safety are three Focal Strategy Strategy
Points for USP

• Outsourcing service centers facilitate to serve mass Broad

segments. Differentiation
Strategy
• Strategic relationship with Key suppliers.

• Strategic Decision needed for global Sales, like ZEV, Cost Leadership
Focused Cost
& GHG credits. Strategy Strategy

• Next generation’s hydrogen fuel cell can be a

strategic move to meet the future demand.
 RECOMMENDED STRATEGIC MOVES
• Licensing or JV with big car makers like Toyota or Nissan to grab the Asian and other similar Markets.

• Play active roles in media to highlight the adverse environmental impact.

Only word of mouth not enough to get the volume sale.

• Joint venture with other tech driven organizations for making the batteries as this is major cost driver
component.

• R&D to focus on increasing per hour miles counts – to boost customer confidence on long drive

• Expand the number of charging stations in remote areas to create new customer segment

• Lastly, Tesla should stick on their current strategy and add more mid price point product lines ranging
around USD 50,000 to 70,000 to get volume as their objective is to save the earth and become the biggest
electric car producer.