Tesla Motors Company’s Strategy Levels and Analysis

Tesla Motors has been in operation for quite some time. It has built a brand that is acceptable to the niche market as well as to all other segments. To continue with its renowned style of business, it needs to invest a lot of capital. The paper would address the challenges and successes of Tesla and how to win more customers for its products.

Issues affecting Tesla

At the time the case study ended, Tesla had exceeded its expectations. The clients who were ordering for its latest model were so many that the company had to keep increasing its investment (Thompson, Peteraf, Gamble, & Stickland, 2015). Surprisingly, it had suffered five years of losses amounting to $943.5 Million. But Tesla had managed to get back to profitability. It has had to undergo a cash crunch several times. There is high market demand for Tesla’s products. The company staff needs reorganization.

Analysis of the External Environment

Tesla was a well-known brand. The newspaper magazines and media kept on publishing the company’s new model without receiving any money for advertisement (Thompson et al., 2015). The word of mouth by the people enabled the product’s knowledge to spread fast. Some people had the idea of making the environment clean. They could buy the company’s products because of the desire to prevent air pollution. Another important factor is the government’s effort to support businesses.

The George Bush Administration had created United States Department of Energy program. It was to help businesses grow (Fialka, 2015). It advanced Tesla with $ 465Million to continue with the production of fuel-efficient electric vehicles that were affordable. The public’s expectation was also a reason for growth. When the company launched its Initial Public Offer of 13,300,000 shares in 2010, it raised $226 Million. Germany’s Mercedes-Benz manufacturer the Daimler AG also bought 10% of the company’s shares at $50 million. It showed that even major Multinational Corporations recognized Tesla’s success.

Analysis of the Internal Environment

Tesla Company had highly qualified staff. The production of the S Model was as a result of intense levels of study. The idea arose from the former colleague of Thomas Edison called Nikola Tesla. He was an electric engineer. The two Silicon Valley engineers Martin Eberhard and Marc Tarpenning trusted in the dream of creating electric vehicles. They incorporated the Tesla Company in 2003. They also financed the company before they could find other investors.

Another financier by the name of Elon Musk also joined the company after raising $6.35 million (Thompson et al., 2015). He became the company’s chairperson. In short, the company could easily access funding for its projects from its shareholders. Some of the investors included a private equity investment group, Technology Partners, and Google founders Sergey Brin and Larry Page. The company invested a lot of money in the Research and Development and several product changes. The R & D was essential for the young company that had started to grow and expand its expensive product line. The company had to raise capital several times because of its ability to create a product that had very high demands. Some of the problems it faced included the excess costs.

The Different Levels of Strategy

Tesla had adopted various methods of setting the company’s vision. The company started as a vision of two people, Martin Eberhard, and Marc Tappenning. They managed to set in place a mechanism that would enable other shareholders to join the company. The Board of Directors ensured that they gave the Chief Executive Officer Terms and time limits for the attainment of targets.

The CEO should work with the Research and Development team to improve on existing company brands as well as develop new brands. It also updated the CEO and the board on the impending challenges and successes. The production department used the concept from the R & D to develop the needed brands (Greiner & Cummings, 2009).

Summary of the SWOT Analysis and Creation of the TOWS Matrix

The TOWS analysis typically complements the SWOT analysis. Creating the TOWS analysis from the SWOT analysis is imperative. The outline of the SWOT analysis is as follows;

Internal Strengths Internal Weaknesses
  1. Had a recognized brand
  2. The company has highly qualified staff
  3. Research and Development
  4. Talented owners
  5. Orientation of product design
  6. Varied models
  7. Finance availability from old and new shareholders
  8. Proactive in product development
  9. World’s largest exotic vehicles producer
  10. Quality, durability, and reliability
  1. Stretch the cash limits
  2. Production delays
External Opportunities External Threats
  1. Market demand is high
  1. Capital raising is easy and faster
  2. Increase government support
  3. Environmental safety
  4. A greater percentage of available market in the US, China and Europe
  5. Availability of viable means of production
  1. Lack of enough raw materials
  2. Competition from other companies
  3. Increased costs of raw materials
  4. Market volatility

The following is the TOWS matrix:

SO Strategies WO Strategies
A recognized brand (SI, O1)
Qualified staff (S2, O7)
Various models (S6, S5, O5)
Unique name S1 model (S9, O4)
Lack of enough funds (W1, O3, O7)
Delays in production (W2, O2,
ST Strategies WT Strategies
Availability of raw materials (S3, S8, T1)
The market competition (T2, S4, S7, S 10, S11)
Cost of raw materials (T3, S8, S7, S1)
Market volatility (T4, S9, S11, S4)
Cash limits (W1, T1, T3)
Cash delays (W2, T3,

The TOWS matrix strategy cells indicate the matching of strength with available opportunities and weaknesses with available opportunities. It also shows the matching of Strengths with possible threats and weaknesses with potential threats. The company may select the most viable options for implementation (Fialka, 2015). The possible strategies would enable Tesla to access its most viable opportunities and strengths to match with the threats and opportunities. Although the matrix would not determine the best strategies, it would give direction to what would be suitable.

Solution to the Issues

Tesla has several available issues it needs to sort. It has to increase its shareholders and shareholder value. The company needs to raise funds through a Rights Issue. It would get the available shareholders to enhance its holding in the enterprise. It also needs to control the capability of a few shareholders taking over 50% of the business. It needs to reinvigorate itself towards growth (Greiner & Cummings, 2009).

It has the potential for growth in the new China and European markets. While expanding the US market, it also has to start concentrating on external markets as it becomes the sole producer of a unique brand. While expansion options are viable to the European and Asian countries, the company should also allow them to buy stakes in the enterprise. When Germany’s Daimler purchased 10% stake in the operation, it reinvented the company’s global approach and market viability (Fialka, 2015).

Conclusion

Tesla is a renowned company. It has the essential attributes of becoming one of the largest Multinational Corporations. The company owners are talented and well able to take the company to greater heights of success. The staff and management are ready for the new ventures through research and development. Government’s effort to support business has helped Tesla to set a niche in the market.

References

Fialka, J. (2015). Car wars. New York: Thomas Dunne Books, St. Martin’s Press.

Greiner, L. & Cummings, T. (2009). Dynamic strategy-making. San Francisco, CA: Jossey-Bass.

Thompson, A., Peteraf, M., Gamble, J., & Stickland, A. (2015). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases (20th ed., pp. 631-633). New York, NY: McGraw-Hill Higher Education.