STRATEGIC MANAGEMENT ASSIGMENT
SATANIK CHAKRABORTI-UAI02MFC2426
1.Do you agree with the assessment that Elon Musk and Tesla successfully fulfilled the
first master plan published in 2006? Why or why not? To answer this question, apply the
three step process for crafting a good strategy explained in Section 1.1 (diagnose the
competitive challenge, derive a guiding policy, and implement a set of coherent actions).
Yes, Tesla successfully fulfilled the first master plan published in 2006. Applying the three-step
strategy process:
•
Diagnose the competitive challenge: Tesla aimed to prove that electric vehicles could
be high-performance and desirable, challenging the perception that they were inferior to
gasoline cars.
•
Derive a guiding policy: Tesla followed a clear roadmap: (1) build a high-end sports car
(Roadster), (2) use profits to develop a more affordable car (Model S and Model X), and
(3) further scale to an even more affordable vehicle (Model 3).
•
Implement coherent actions: Tesla executed its plan successfully by introducing the
Roadster (2008), Model S (2012), Model X (2015), and Model 3 (2016). Additionally, it
expanded charging infrastructure and battery technology, further reinforcing the strategy
2. Does Tesla have a good strategy? Why or why not? How do you know? Consider: By
summer 2019, Tesla’s market cap had fallen by 30 percent to $45 billion, down from $65
billion a year earlier. Many wondered: Is Tesla in trouble?
Tesla’s strategy is innovative but comes with financial volatility.
•
Market Cap Decline (2019): By mid-2019, Tesla’s market cap dropped 30% to $45
billion from $65 billion, raising concerns about its financial health .
•
Competitive Positioning: Tesla’s strategy focuses on differentiation through
technology, sustainability, and branding, enabling it to compete against established
automakers. However, challenges such as production delays, supply chain constraints,
and cash flow issues create risks.
•
Conclusion: While Tesla has a strong long-term vision, short-term financial struggles
indicate the need for better cost control and execution.
3. Describe the rationale behind Tesla’s new master plan. How does this new strategy help
Tesla fulfill its vision? To view Tesla’s “Master Plan, Part Deux” in its entirety, see Tesla’s
blog: www.tesla.com/blog/master-plan-part-deux.
The new strategy focuses on:
•
Expanding electric vehicle offerings across all segments.
•
Advancing self-driving technology to enhance safety and enable autonomous ridesharing.
•
Developing solar energy solutions and battery storage to create a fully integrated
sustainable energy ecosystem.
This aligns with Tesla’s vision of accelerating the transition to sustainable energy.
4. Apply again the three-step process for crafting a good strategy (see Section 1.1), this
time to each element of the new master plan. On which steps of the new master plan has
Tesla made the most progress? Explain. Also, what recommendations would you offer Elon
Musk? Support your arguments and recommendations with examples and observations
from the Chapter Case.
Diagnose the challenge: Transitioning from a niche electric vehicle producer to a massmarket leader while integrating energy solutions.
Guiding policy: Investing in autonomous driving, mass-market electric vehicles, and
renewable energy.
Coherent actions: Tesla has made notable progress in launching the Model Y, developing Full
Self-Driving (FSD) software, and expanding solar and battery storage solutions .
Recommendations for Musk: Improve production efficiency, strengthen financial
sustainability, and address regulatory challenges in autonomous driving to ensure long -term
success.