STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
STRATEGIC MANAGEMENT (MGT 510)
LECTURER: Ms. Senani Rajamantri
NAME: Thilaksha Deemal Weerasooriya
STUDENT ID: 11699329
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
JOURNAL 01
COMPANY BRIEF & MACRO
ENVIRONMENT ANALYSIS
(PESTEL MODEL)
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
TESLA Inc.
Company Overview
Tesla is known as one of the most inventive new-energy vehicle manufacturing company in the
world. Even though it has not an extensive history, since 2003 Tesla is on the journey, molding
the future era of the renewable- energy with their significant involvement to the harvesting of
free energy. Founded by the American entrepreneurs Martin Eberhard and Marc Tarpenning
and the company was named after Serbian American inventor Nikola Tesla.
Though Tesla is known as a pioneer in electric vehicle manufacturer it also on the process of
manufacturing, marketing and retailing electric vehicles, solar panels, and energy-saving
equipment. Tesla’s core conjurer is that the faster the world stops relying on fossil fuels and
moves towards a zero-emission future, the better.
In 2008 Tesla unveiled the Roadster the electric powertrain with its cutting edge battery
technology and from there they launched the world’s first ever premium all-electric sedan –
model S. With the use of their nonpareil technology Model S became the best car in its class in
every category. Combining safety, performance, and efficiency. In 2015 Tesla expanded its
product line with Model X that ascertained as the safest, quickest and most capable sport utility
vehicle in history. In 2016, as a result of the CEO Elon Musk’s “Secret Master Plan” Tesla
introduced Model 3 targeting to expand their customer base due to its low-price. 2017 Tesla
unveiled the Tesla Semi that brought to light as the safest, most comfortable truck ever.
Since Tesla’s core mission is to accelerate the world's transition to sustainable energy, it also
manufactures a unique set of energy solutions, Powerwall, Powerpack and Solar Roof, enabling
homeowners, businesses, and utilities to manage renewable energy generation, storage, and
consumption. (Burns & Greg, 2015).
General External Ecosystem Analysis.
It is a decisive factor to every organization to engage an external eco system or macro
environment analysis to perceive the opportunities and treats that is a key element to obtain its
goals by overcoming the potential future obstacles. Presented below is the macro environment
analysis of the Tesla Inc. contributing the PESTEL model. (Gillespie, 2007).
Political Factors
It is clear that the current world is globally affected from the natural environmental hazards
due to the vast technological developments and the population growth. Global warming and
the rapid cessation of petroleum fossil fuels are the two main key factors that the mankind is
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
rooting to go for the alternative of renewable energies. As a result of this Government has
taken many stances for supporting the development of hybrid and electric vehicles. This
particular circumstance is benefited to Tesla more significantly to expand its products.
Additionally new trade agreements are blooming among the globe to import/export electric
and hybrid vehicles due to the minimization of carbon emissions. As a matter of fact there are
immense opportunities for Tesla in future when political factors are considered. (Thompson,
2015).
Economic Factors
Since the world is moving into eco-friendly alternatives in almost every sectors there is a huge
potential of market inflation for electric vehicles. Below are the three important criteria that
Tesla would need to address in order to analysis the economic factors.
1. Decreasing renewable energy Cost (Opportunity)
2. Decreasing battery costs (Opportunity)
3. Unstable Economy (Threat)
First two factors are crucial for Tesla to work on future models to manufacture more budget
friendly vehicles and products since the affordability is the prime sequel to uplift more sales.
(Thompson, 2015).
Social/Sociocultural Factors
Observing the current trend in the automobile sector in the globe there is vast impact of going
hybrid and electrical by eliminating the petroleum. Below are some few factors relate to Tesla
Inc.
1. Increasing popularity of Hybrid and electrical vehicles.
2. Increasing preference of renewable energy.
3. Less expensive than those of traditional cars in terms of maintenance and running cost.
As a result of trend moving towards to eco-friendly alternatives Tesla has huge potential of
future business opportunities in terms of Social Factors. (International Energy Agency, 2017).
Technological Factors
In today’s world rapid technological change has been affected to Tesla and moreover this could
be gained positive and negative impacts in future. The below factors are significant to Tesla’s
automotive business more significantly,
1. Rapid Technological Change (Opportunity/Treat)
2. Increasing Automotive Business. (Opportunity)
3. Increasing popularity in high tech products. (Opportunity)
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
The key element of opportunity to Tesla in the Technology is the rapid development. But it
could be also a treat due to its extension that make the process more complex along with the
potential rapid obsolescence of technologies used in the products. Nonetheless, increasing
business automation is a trend that creates opportunities for Tesla Inc.
Ecological/Environmental Factors
In this analysis framework, environment factors are the key opportunities for Tesla because of
their entire production is eco-friendly and focus on renewable energy.
1. Climate Change (Opportunity)
2. Global Expansion of Environmental friendly products. (Opportunity)
3. Rapid cessation of petroleum fossil fuels. (Opportunity)
Considering the above factors Tesla Inc. has immense upside potential of its sales inflation
based on the concerns of the environment. The Tesla’s electric vehicles, batteries and solar
panels are considered ideal in directly addressing these above mentioned external factors
which has significant growth in future opportunities. (Pressmen, 2016).
Legal Factors
There are both positive and negative aspects which has affected on Tesla’s business strategy in
terms of legal issues. The main legal obstruction occurred to Tesla in 2019 when two vehicles
crashed and Transportation safety Board are investing the main causes of these crashes. Apart
from that another legislation is implemented on the Tesla’s dealerships. Now it is required to
engage with a third party dealership that results more expense and less profitability when
delivery is considered. But there are also constructive impacts on Tesla based on the below
factors.
1. Expansion of patent protection internationally.
2. Energy consumption regulations.
Considering the above elements though there are few drawbacks as far as the Legal factor are
considered there are positive factors which point out that Tesla can expect growth
opportunities. (Pressmen, 2016).
Conclusion
Overall there is a huge potential of business inflation for Tesla in future considering the PESTEL
analysis and only few downside impacts on legal and economic factors, thus Tesla is in a
position to improve its operations in the global automotive market. Mainly all the
environmental factors play a key role to mold Tesla’s future more significantly since they are in
the process of harvesting free energy sources.
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
Mainly free trade agreement contributes to the expansion of the business globally and the
rapid technological change also is a vital factor since Tesla need to continue on heightening the
current trends while focusing on obsolescence of technology along with. Apart from that it is
also recommended that Tesla need to increase their market shares not only in united stated but
in other counties as well since it could reduce market based risks considering the fact they have
limitations in sales operations overseas.
References
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Burns, Matt, Greg Kumparak, and Anna Escher. 2015. A Brief History of Tesla. TechCrunch, July
28, 2015. https://techcrunch.com/gallery/a-brief-history-of-tesla/.
Gillespie, A. (2007). PESTEL analysis of the macro-environment. Foundations of Economics,
Oxford University Press, USA.
Housing Industry Association (2011). An Introduction to PESTLE Analysis. HIA Ltd.
International Energy Agency. (2017). Electric Vehicles Initiative (EVI). Retrieved from OECD/IEA:
http://www.iea.org/topics/transport/subtopics/electricvehiclesinitiative/
Murphey, M., & Gause, R. (1974). UCF Research Guides. Industry Analysis. PESTLE
Analysis. Business Horizons, 17(5), 27-38.
Pressman, M. (2016). Tesla Owner Survey Results. Retrieved April 16, 2017, from Evannex:
https://evannex.com/blogs/news/116150725-tesla-owner-survey-results
Roper, K. (2012, November). BIM Implementation: PESTEL Drivers & Barriers (Cross-national
Analysis). In World Workplace 2012. IFMA.
Tesla, Inc. – Form 10-K.
Thompson, A. A. (2015). Tesla Motors’ Strategy to Revolutionize the Global Automotive
Strategy. In A. A. Thompson, M. Peteraf, J. E. Gamble, A. J. Strickland, & 20th (Ed.), Crafting &
Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases (pp. C245-C273).
New York: McGraw-Hill/Irwin.
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
JOURNAL 02
Porter’s Five Forces Model
TESLA Inc.
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
Tesla, Inc. Porter Five Forces Analysis
Porters Five Forcers Analysis is an apparatus of strategic management which maneuvers to
identify the overall competition of an organization by using five factors related to its particular
competitive external environment. This apparatus also influence to develop the strategy to
inflate the profitability by analyzing these external factors. (Grundy, 2006).
When Tesla’s external environment is considered it is typically the automobile industry
and the energy solution industry that matters the most. As the industry pioneer of free energy
source Tesla is required to address such factors to safeguard its competence and conserve from
the rivalry of their adversaries like Honda Motor Company, General Motors Company, Ford
Motor Company, Volkswagen, Toyota Motor Corporation, Nissan Motor Company, and BMW.
1. Threat of New Entrants
Considering the current platform of Tesla’s establishment though it is moderate, the threats of
new entrants there are several external factors Tesla need to address in order to persist in the
industry. Main factors to be considered would be the pricing strategy by mitigating the costs, and
providing new value propositions to the customers.
Getting into the automobile manufacturing and energy solution industry is a barrier for new
corporations, even a greater barrier to compete with the brand image that Tesla has inaugurated.
But Tesla need to safeguard its competitive edge by Innovation, which is a key strategy to cope
up with the potential emulations. This is merely not only to attract new customers but also a
reason to the current customers to hold onto. (International Energy Agency.2017).
2. Bargaining Power of Suppliers
Most of the automobile manufacturing companies acquire there raw materials from different
sources and suppliers. The higher the supplier’s dominance in the market, the higher their
expertise of bargain. The profitability of the automobile industries are entirely depend on their
suppliers bargaining power and this directly impacts on the profitability of the industry. (Roy,
2011).
Tesla could overcome this by maintaining an efficient and reliable supply chain with multiple
suppliers. Since innovation is the phenomenal factor to grow in the field of automobile and
energy solutions Tesla could always go for different materials if the price of the particular in the
market would go high. In such case Tesla could also create a strong impact on their current
suppliers and the factor of having ascendancy market in the industry Tesla could always have
dedicated suppler chain to gain greater benefits.
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
3. Bargaining Power of Buyers
Customers’ psychology towards a particular product or service and their demand is a direct factor
to its sales revenue to rely upon. Customers always demands and all the time they consider to
gain the best quality in product or service by paying the minimum wage possible. This external
aspect is also a significant for Tesla to work on in order to look for a profitable sales margin. (Roy,
2011).
Main solution to this would be by generating more customers and having a large base of
customers would prospectively minimize their bargaining power. Generally the market tendency
of expecting higher bargain is for existing products, through Tesla’s innovation they could replace
new products to existing ones that would results to decrease the bargaining power of its
customers.
4. Threats of Substitution
Threats of substitutes is always a higher risk for every industry, products or services industry’s
profitability is affected when the need of the particular customers meet in a different way. This
external aspect also could influence on Tesla that eventually leads to its market deflation.
By understanding the core needs of the customers and addressing them in the most favorable
manner is the most efficient solution for this threat. Not only to be product oriented but at the
same time being service oriented as well, position Tesla in a most secured platform in terms of
the satisfaction of the customers and also consequence towards to the customers commitment
and loyalty for the brand that terminally would results to a key factor for Tesla’s sales inflation.
(International Energy Agency.2017).
5. Rivalry among the Existing Competitors
Dealing in the automobile manufacturing market and energy solution industry Tesla is operating
in highly competitive market as there are numerous potential adversaries to one another which
operates in large scale. The higher the intensity of the rivalry among the competitors the harder
it gets to maintain a profitable market in the industry due to the lack of ease of keeping a higher
market price.
To overcome the force of rivalry among the existing competitors Tesla could execute different
strategies. Mainly they could create a differentiation which could take it as the main focal aspect
to generate the customer base higher and to drag new customers as well. Raising the bar high is
another key factor to be considered in terms of rivalry among the existing competitors and not
only in the product but also in the service and moreover better integration with the competitors
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
to increase the market size would also help Tesla to results inflation of the market price in a
significant manner. (Thompson, 2015).
By analyzing all the five forces of Porter, there is a clear image of the potential treats to the
company in future and through a better strategic analysis and considering the factors stated on
behalf of every five aspect of Porter’s Tesla’s market strategy could be successful in all the future
treats and encounters no matter how worsen the circumstance would be, as it results to the
creation of game changing trends in the automobile and energy solution market.
Reference
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pg. 10
Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces
model. Strategic Change, 15(5), 213-229.
International Energy Agency. (2017). Electric Vehicles Initiative (EVI). Retrieved from
OECD/IEA: http://www.iea.org/topics/transport/subtopics/electricvehiclesinitiative/
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business
Review, 86(1), 25-40.
Roy, D. (2011). Strategic Foresight and Porter’s Five Forces. GRIN Verlag.
Tesla, Inc. – Form 10-K.
Thompson, A. A. (2015). Tesla Motors’ Strategy to Revolutionize the Global Automotive
Strategy. In A. A. Thompson, M. Peteraf, J. E. Gamble, A. J. Strickland, & 20th
(Ed.), Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and
Cases (pp. C245-C273). New York: McGraw-Hill/Irwin.
Walder, J. (2013). A critical evaluation of Michael Porter’s Five Forces Framework. GRIN
Verlag.
STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
JOURNAL 03
Internal Analysis
TESLA Inc.
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Thilaksha Weerasooriya
11699329
STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
TESLA Inc. (Internal Analysis).
Internal analysis could be defines as general investigation of an organization to determine its
capabilities, competitive viability and the cost position in its desired marketplace. The key
outcome by performing an internal analysis in an organization would be to identify its strengths,
weaknesses, opportunities and threats and to take the necessary measures. Internal analysis
helps to gather information and develop the company strategies and to sustain with a better
growth in the market. (Pearce, 2015).
Tesla’s Strengths.
To understand the organization’s strength and weakness is one of the most crucial measures
when it comes to the analysis of the organization internally.
The reason behind Tesla’s dominance in the electric vehicle and energy solution market is that
its strength and the competency in the market. Below are the key aspects of the strength it has
been qualified to acquire since its inception.
1. A Best Employer Company.
The better the employs, the better the organization. This is one of the main key factors to the
remarkable success of Tesla throughout the past decade. Due to its innovation, encouraging
culture and diversity, Tesla has been recommended in the wall Street journal reports as an ideal
working place for its employees. (America’s Best Employer, 2019)
2. Pioneer Automotive Company.
As a matter of fact Tesla has some legal issues it sales has only been increased when the market
is considered. Currently Tesla is a leading automotive company manufacturing 90,000 vehicles
for the last quarter of 2018. Which concludes by 63,150 Model 3 (+13% from Q3), 13,500 Model
S, and 14,050 Model X vehicles. The main reason behind its success could be identified as Tesla’s
exceptional innovations on its products. (Houser, 2018).
3. The unparalleled electric car.
When taking the measures of the comparative analysis of the current best electric vehicles in the
market Tesla’s electric cars have proven to be the best. In terms of energy consumption and
utilization Tesla’s vehicles cover the maximum distances and the best safety features available.
(Houser, 2018).
4. Tesla’s Dominance in the market
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
Tesla has the highest records in terms of electric vehicle sales across the globe. Tesla model
3 became the most sold electric vehicle of 2019 with sales of 187,971. Next to Chevrolet,
Tesla model S achieved the third best sales in the electric car market with 134,392 cars sold.
(Statista, 2019).
5. Tesla as an Innovative Company.
Since innovation is the phenomenal factor to grow in the field of automobile and energy solutions
Tesla has achieved its record breaking sales in the electric vehicle market. Not only cars, the
recent developments by Tesla introduced the world’s first electric semi tuck along with the
concept of its newest sport car yet to be launched in 2020, the new Roadster which most of the
analysts in the vehicle industry believe it would be the next revolution of the world of sport cars.
(Evennex, 2019).
TESLA’s Weaknesses
When in terms of internal analysis of an organization weaknesses are being considered as the
areas that the organization can improve on. These are the factors that prevent the company to
reach its fullest potentials. Once these weaknesses are identified prior to any decision making,
management can overcome its failed objectives and to improve by eliminating those
weaknesses. (Pearce, 2015).
Below are the shortcomings of Tesla’s organizational structure which need the attention to
generate the growth of the business.
1. Manufacturing Difficulties
The higher the level of the innovation, the greater will be the tendency of higher complications
when it comes to the production. Due to the continuous change of the technology Tesla used to
manufacture their product line there were many technical and mechanical difficulties they have
faced since the inception. Since innovation is the key factor of the Tesla’s performance in the
market they are facing challenges daily. For instance the most extensive issue Tesla faced
recently when they were about to launch the Model X, particularly the assembly of its battery.
(Houser, 2018).
2. Difficulties of meeting the demand
Tesla’s manufacturing process takes extended duration due to its complicated procedures. This
results of finding hard to meet the current demands and this would directly affects the brand
name of Tesla has been established. Their delivery rate has been deflated comparing to 2018
first quarter by 31% in 2019 delivering only 63,000 cars. (Statista, 2019).
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
3. Shortage of Batteries
Tesla has accepted that due to the shortage of the battery their production has been
decreased. This is one of the major weakness Tesla need to be find a better technical solution
since its directly affecting its sales of both vehicles and energy storage systems. (Houser, 2018).
4. Tesla’s CEO as the sole proprietor
Tesla’s CEO Elon Musk handles the business as the sole proprietor and this leads to a weakness
of being as a “one man show” in the business. Since he is deeply involved in other projects such
as launching space vehicles at Space Exploration Technologies Corporation and The Boing
Company would not be in the ideal position to give his best to the company. (Shen, 2017).
Conclusion
Related to sustainability all the Tesla’s products from vehicles to solar energy and to energy
solution systems is based on free energy – renewable energy. By analyzing the internal
environment of the organization main aspects to be considered would be its strengths and
weaknesses. Considering these factors it is clear that Tesla has a huge potential of acquiring a
better market share in the future.
Reference
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Evannex (2019) “Tesla ranked most innovative brand in the US” Teslarati, Available
at: https://www.teslarati.com/tesla-ranked-most-innovative-brand-in-us/
Houser, K. (2018). 7 Ways Tesla Is Changing Everything. Retrieved February 17, 2018,
from https://futurism.com/ready-for-edit-7-ways-tesla-is-changing-everything/
McGraw-Hill Higher Education; Essentials of Strategic Management: The Quest for
Competitive Advantage, 2nd Edition; John E. Gamble, Arthur A. Thompson, Jr.
Pearce, J. A., & Robinson, R. B. (2015). Strategic management: planning for domestic &
global competition. New York: McGraw-Hill.
Shen, L. (2017, July 3). Everything You Need to Know about Tesla’s Cheapest Car Ever.
Retrieved February 19, 2018, from http://fortune.com/2017/07/03/tesla-model-3electric-car/
Statista (2018) Available at: https://www.statista.com/statistics/502208/tesla-quarterlyvehicle-deliveries/
Statista (2018) Available at: https://www.statista.com/statistics/502208/tesla-quarterlyvehicle-deliveries/
Statista (2019) Available at: https://www.statista.com/statistics/502208/tesla-quarterlyvehicle-deliveries/
Tesla Market Cap 2009-2018 | TSLA (2018) Macro Trends, Available
at: https://www.macrotrends.net/stocks/charts/TSLA/tesla/market-cap
STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
JOURNAL 04
Business Level Evaluation
TESLA Inc.
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
TESLA Inc. (Evaluation of the Business Level Strategy)
Strategy Overview
Talking about the key business strategy of Tesla could be identifies as differentiate. Being
distinct from others Tesla has established their brand in the market successfully. To be unique
and to get a better identification of the product in the market differentiate results in a
significant manner. Since the mission of Tesla is to harvest the free energy, the environment
friendly technology results in their current position in the market which they dominate with a
greater customer base.
When comparing Tesla’s rivalry most of the other manufactures undertake the strategy of cost
leadership such as Toyota, Honda, Nissan, Hyundai, Mazda..Etc. The impact of the greener
technology Tesla uses which differs from others results them to use this particular strategy that
already has kept in the position of their current successful market platform. (Wieland,
Hartmann & Vargo 2017).
Tesla’s Corporate strategy is based on three business models which it concept is widely accepted
as the key aspect of the establishment of the brand Tesla. Selling, servicing, and charging is the
three models that uplifted their business strategy on to a successful platform.
1. Sales
Unlike other manufacturers Tesla doesn’t have any franchise dealerships. Tesla’s sales are mainly
based on direct sales and through self-owned showrooms across many of the major urban
centers in the world. The most significant impact of this is the customers buying experience.
Most of Tesla’s showrooms are combined with service centers which is a facility and a
convenient factor on the customers point of view.
2. Servicing
Since Tesla run their own service centers again without any franchise their service centers are
established in almost all the showrooms. Their “Service Plus” showrooms along with mobile
technicians called Tesla Ranges, also is an added advantage and a better convenient for its
customers.
3. Charging Centers
To increase the level of the effectual of the charging centers Tesla has a wide network along
with “Supercharge Centers” where the customers can charge their vehicle in just 30minutes
free of charge. This is one of a major initiative Tesla has taken to uphold the rate of customers’
adaptation of their product.
(Galloway, Miller, Sahaym & Arthurs, 2017).
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
Tesla Value Chain Analysis
Tesla Inbound Logistics
Mainly discussing about the Tesla’s inbound logistics it mainly involves the receipt and storage
of raw materials along with solar panels and energy storage systems. Tesla uses a range of
scarce materials along with the main raw materials such as steel, aluminum, copper, nickel. In
the Oaks Logistics Centre in Livermore, Calif, Tesla has their main massive three warehouses
which spreads over 1.3million square feet.
Moreover Tesla currently practices a unique system of manufacturing vehicles and that is based
on build-to-order in which a highly sophisticated involvement of the inbound logistics not takes
place in large scale. But it is essential to maintain a long-term strategic relationship with
suppliers. (Annual Report (2017) Tesla Inc).
Tesla Operations
Tesla’s manufacturing process occurs in few different facilities across US and Netherlands;
Fremont, California; Lathrop, California; and Tilburg, Netherlands. Base on the products Tesla’s
operation can be categorized into two segments.
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TESLA Inc.
Thilaksha Weerasooriya
11699329
1. Automotive – Design, development and manufacturing and sales of all the vehicles
comprise in this category. Below is the statistics of the production of vehicles since 2016
first quarter till 2nd quarter of 2019. (Statista, 2019).
(Statista, 2019).
2. Energy generation and storage – The design, manufacture, installation and sales of the
energy storage products and solar energy generating products. Below is the statistics of
the power generation and storage of Tesla past few years.
(Statista, 2019).
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STRATEGIC MANAGEMNT (MGT510)
TESLA Inc.
Thilaksha Weerasooriya
11699329
Tesla Outbound Logistics
Warehousing and distribution of electric vehicles, energy storage systems and solar panels are
the main involvement of Tesla’s outbound logistics. Tesla currently ships its vehicles to their
own showrooms in the US and 29 other countries globally and Tesla also delivers vehicles
directly to customers as well. Tesla maintain a relatively smaller inventory when it comes to
direct sales as majority of their customers prefer to customize their vehicles by ordering online.
The main fact to talk about in terms of outbound logistics that Tesla doesn’t have any dealers
thus sales are being done directly to its end users. This mainly results to sell the vehicle in the
allocated market price without and inflation due to sales through dealers and also decreases
the time of delivery to the customers. (Hogg, 2016).
Tesla Marketing & Sales
Considering the unconventional method of marketing according to the Tesla’s CEO Elon Musk;
“Tesla shells out virtually nothing on advertising and endorsements, and relies heavily on word
of mouth.” Though Tesla is relatively relying on word of mouth it has the potential of attract
extensive media coverage in terms of increasing the brand awareness for example Tesla’s
launces of new products such as 2019 Roadster, Model X and S). Tesla doesn’t deal with any
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TESLA Inc.
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sort of dealerships or franchise since the sales are being done directly, online sales are one of
the main key feature to be highlighted in terms of sales. Apart from the vehicles, the solar
panels and energy storage units could be finance through the home mortgage that is another
added advantage for Tesla’s customers. (Leonhardt & David, 2018).
Tesla Service
In the recent years Tesla had few high-profile customer complaints after releasing of their new
Model X in 2016. Due to the high role of customer frustration Tesla was unable to address them
in an effective manner thus customers had to wait almost weeks to get their service done
mostly repairs. As a result of that to deal with this in a more functional way Tesla allowed their
customers to address their issues directly to a company executive. Currently Tesla provides post
sale services at all their service locations and it also in a process of constructing 100 new service
centers along with to top the 150 service centers they already have across US. Apart from that
Tesla also working on to launch 350 new on-demand service vans to access their customers and
to provide their service in an optimum level. (Ryan, 2017).
Conclusion
Tesla in a position of not seeking inflation of their sales by setting up their goals but to
manufacture eco-friendly products and to accelerate the world into harvesting free and
sustainable energy. Nevertheless to uphold the company’s mission Tesla need to diversify their
product line and to penetrate in to more locations around the world and to establish their
stores and service centers by expanding globally.
Reference
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pg. 20
Annual Report (2017) Tesla Inc.
Annual Report (2018) Tesla Inc.
Dyer, J., Gregersen, H. & Furr, N. (2015) “Decoding Tesla’s Secret
Formula” Forbes, Available
at: https://www.forbes.com/sites/innovatorsdna/2015/08/19/teslas-secretformula/#4db8e44d653c
Field, K. (2017) “Tesla Warehouse Lease Deal: Largest in San Francisco Bay Area
History” Inbound Logistics, Available
at: https://www.inboundlogistics.com/cms/article/tesla-warehouse-lease-deal/
Hogg, R. (2016) “Tesla’s supply chain set for a surge” Automotive Logistics, Available
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STRATEGIC MANAGEMNT (MGT510)
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Thilaksha Weerasooriya
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Thank you!
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TESLA Inc.