Tesla: A Comprehensive Strategic
Analysis
By: Herb Benson, Robert Korn, Samantha Nettnin, and Kevin Peterson
Tesla Motors (TSLA) History
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Founded in 2003 by Elon Musk (Current CEO), JB Straubel (CTO), Martin Eberhard, Marc
Tarpenning, and Ian Wright
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Tesla Roadster
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Model S
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SUV, expected to be sold in early 2016
Model 3
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•
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Currently only vehicle offered, 2012-present
Model X
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First manufactured product, offered from 2008-2012
Expected to be offered in 2017
Target Price: $35,000
IPO: January 29, 2010, raised US$226 million
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First American car company to go public since Ford (F) in 1956
Turned first profit in Q1, 2013
Mission and Vision
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Mission Statement: Tesla Motors designs and sells high-performance, highly efficient
electric sports cars, with no compromises. Tesla Motors cars combine style,
acceleration, and handling with advanced technologies that make them among the
quickest and the most energy-efficient cars on the road.
Courtesy www.teslamotorsinc.blogspot.com
•
Vision Statement: To “create the most compelling car company of the 21st century by
driving the world’s transition to electric vehicles.”
Copyright | CENGAGE Learning | Strategic Management
General Environment Analysis
Segment
Elements
Political/Legal • Regulations on Emissions and Safety Standards
• National Traffic and Motor Vehicle Safety Act, 1966
• Energy Policy and Conservation Act, 1975
Technology
Sociocultural
Industry Effect
Neutral
• Higher demand for reliable, fuel efficient vehicles
• Alternate fuel vehicles (Ethanol, Biodiesel, Hydrogen Fuel
Cells)
• Online shopping/research
Positive
• Luxury vs. Economy Vehicles
• Power vs. Fuel Efficiency
Positive
Industry Analysis
Force
Description
Influence on Industry
Threat of New Entrants
• Mature Industry has reached Economies of
Scale
• High Initial Capital Requirements
• Difficult Access to Distribution Channels
Low
Bargaining Power of
Buyers
• Private and Commercial buyers account for
majority of revenue
• Low Switching Costs
• Buyers are unable to integrate backwards
Moderately High
Intensity of Rivalry
Among Competitors
• Gaining Market Share means Reducing
Market Share of Competitor
• Few Opportunities for Differentiation
Type of Firm
Description
High
Industry Attractiveness
New Entrants
High Startup Costs, Legal Fees, Intense Competition
Very Unattractive
Incumbent
High Liquid Assets, Distribution, Holding Costs
Moderate
Integrated SWOT Analysis
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•
Strengths
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Brand Equity
•
Product Quality
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Eco-friendly Product Line
Enhanced Opportunities
•
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Increase Market Share through High-Growth EV Industry
Limited Threats
•
Consumers Deterred due to “Range-Anxiety”
Competitor Analysis: Toyota
Strategy
Current Strategy
Business
Differentiation: The firm seeks the broadest possible market with distinctive
offerings
Corporate
Related Linked: The firm operates five automotive brands (including Toyota, Lexus,
and Scion) in addition to partnerships with other automotive and nonautomotive firms
Cooperative
Horizontal Complementary Strategic Alliance: Each partner is committed to
combining their resources and skills to create value within the value chain
International
Transnational: the firm seeks to achieve both global efficiency and local
responsiveness.
Competitor Analysis: General Motors
Strategy
Current Strategy
Business
Differentiation: The firm seeks the broadest possible market with distinctive
offerings
Corporate
Related Linked: The firm operates thirteen brands (including Chevrolet, Buick and
Cadillac) in addition to partnerships with other automotive and nonautomotive firms.
Cooperative
Horizontal Complementary Strategic Alliance: Each partner is committed to
combining their resources and skills to create value within the value chain
International
Transnational: The firm seeks to achieve both global efficiency and local
responsiveness.
Competitor Analysis: Conclusions
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Strategic Competitive Advantages
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Toyota
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Market Power
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Capital Resources
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Just-in-Time (JIT) Inventory Management
System
General Motors
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Capital Resources
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Diverse Product Offering
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First to Offer New Technology
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Chevrolet Volt, Wi-Fi in cars
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Future Industry Assumptions
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Culture shift towards energy efficient
and renewable energy
•
Eco-Friendly companies will have more
long term success
Future Major Objectives
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“Greening”
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Product Lines
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Supply-Chain Networks
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Operations
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Marketing Messages
Current Strategies
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Business Level: Focused Differentiation
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Corporate Level: Related Constrained
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Dominant business selling cars but also sells electric power train parts
Cooperative Level: Strategic Alliances
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Target early adopters with high income
Panasonic, Toyota, Dailmer, Mercedes Benz,
International Level: Transnational
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U.S, Asia, Australia, Europe, and Canada
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Centered in California
Value Chain Comparison
Toyota
General Motors
Marketing
Superior
Superior
Distribution
Inferior
Inferior
Important Financial and Nonfinancial Data
Tesla
Toyota
General Motors
Earnings Per Share
-$2.36
$10.67
$1.64
ROE
-10.81%
14.8%
7.5%
Net Income
-$294,000,000
$19,891,000,000
$3,949,000,000
Long-Term Debt to
Capitalization Ratio
55.5%
2.8%
18.4%
Revenue
$3,198,000,000
$256,585,000,000
$155,929,000,000
Important Nonfinancial Factor: Culture
VRIN Analysis: Batteries
Valuable
Yes
Rare
Yes
Inimitable
Yes
Nonsubstitutable
Yes
Result: Sustainable Competitive Advantage
Strategic Issues
•
Small company
• Limited capital
•
Niche market
• Charger network
• Range concerns
•
Lithium-ion batteries
•
Distribution network
Distribution Network
New Strategy Formulation
Strategy
Positives
Negatives
Response
New Strategy Formulation
Strategy
Positives
Negatives
Response
New partnerships for
supplying drive train
components
-Growth potential
-Valuable expertise
-Furthers EV adoption
-Early-mover
-Distribution network
-Low risk
-Limited Resources
-Competitor conflicts
-Lower Margins
-Imitation
New Strategy Formulation
Strategy
Positives
Negatives
Response
New partnerships for
supplying drive train
components
-Growth potential
-Valuable expertise
-Furthers EV adoption
-Early-mover
-Distribution network
-Low risk
-Limited Resources
-Competitor conflicts
-Lower Margins
-Imitation
Enter mainstream
automotive market
-New customers
-Furthers EV adoption
-Limits partnerships
-Lacking resources
-Distribution network
-Moderate risk
-Pricing
-Alliance relations
-Litigation
New Strategy Formulation
Strategy
Positives
Negatives
Response
New partnerships for
supplying drive train
components
-Growth potential
-Valuable expertise
-Furthers EV adoption
-Early-mover
-Distribution network
-Low risk
-Limited Resources
-Competitor conflicts
-Lower Margins
-Imitation
Enter mainstream
automotive market
-New customers
-Furthers EV adoption
-Limits partnerships
-Lacking resources
-Distribution network
-Moderate risk
-Pricing
-Alliance relations
-Litigation
Enter renewable
energy market
-Growing industry
-Valuable IP
-Green Energy
-New Market
-Lacking experience
-Higher risk
-Pricing
-Contracts
New Partnerships for Drive Train Components
Strategy
Old
New
Business
Differentiation
Differentiation
Corporate
Related Constrained
Related Constrained
International
Transnational
Transnational
Cooperative
Strategic Alliances
Strategic Alliances
7S Implementation
Strategy
Expansion of production facilities, Aggressive R&D
Skills
Acquire employees with mass production experience
Staff
Increase in all levels of staff
Action Item
Timeline
New production facility – additional capital required
2-4 years
Develop partnerships to supply drive-train components
1+ years
Enter Mainstream Automotive Market
Strategy
Old
New
Business
Differentiation
Differentiation
Corporate
Related Constrained
Dominant Business
International
Transnational
Transnational
Cooperative
Strategic Alliances
Vertical Strategic Alliances
7S Implementation
Strategy
Expansion of production facilities
Skills
Acquire employees with mainstream automotive experience
Staff
Increase in low and mid-level staff
Action Item
Timeline
New production facilities – additional capital required
4-5 years
New distribution network
2+ years
Enter Renewable Energy Market
Strategy
Old
New
Business
Differentiation
Differentiation
Corporate
Related Constrained
Related Linked
International
Transnational
Transnational
Cooperative
Strategic Alliances
Horizontal Strategic Alliances
7S Implementation
Strategy
Expansion of production facilities
Skills
Acquire employees with renewable energy experience
Staff
Increase in upper-level staff
Action Item
Timeline
New production facilities – additional capital required
2-3 years
New partnerships with similar companies
1+ years
Consumer-level renewable energy
1-2 years
Business-level renewable energy
3-4 years
New Strategy Choice
Strategy
Reason
New partnerships for
supplying drive train
components
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
Enter mainstream
automotive market
x Distribution network
x Moderate risk
x Competitor response
Smallest change from current strategy
Least risk
Large growth potential
Shortest time frame
Distribution network
Enter renewable energy x Largest change from current strategy
market
x Unfamiliar with market
x Competitor response
x Contracts