Groupassignment topic tesla strategy analysis

In this business analysis of Tesla, the organizational structure is traditional, taking into account the company's managerial concentration and control, as well as its limited global ope

VIETNAM MARITIME UNIVERSITY INTERNATIONAL SCHOOL OF EDUCATION

GROUP ASSIGNMENT TOPIC: TESLA STRATEGY ANALYSIS

COURSE: INTERNATIONAL BUSINESS 1 INSTRUCTOR: MSc BUI THI THUY LINH

Truong Bich Ngoc 84248

Haiphong, July 2021

PART 1: INTRODUCTION OF TESLA

1 General information:

Tesla was founded in 2003 by a group of engineers who intended to show that driving electric didn't have to be a tradeoff - that electric vehicles could be better, faster, and more fun to drive than gasoline cars Tesla now manufactures not only all-electric automobiles, but also infinitely renewable energy generation and storage systems Tesla believes that the sooner the world stops depending on fossil fuels, the better society can happened The Roadster, which debuted in 2008, showcased Tesla's cutting-edge battery technology and electric drivetrain From there, Tesla created the world's first luxury all-electric sedan from the ground up, the Model S, which has gone on

to become the finest car in its class in every category In 2015, Tesla increased its product range to cover all categories of national highway safety authorities with Model X, the safest, fastest and most competent sports utilities in its history, with 5-stars ratings In 2016, Tesla completed CEO Elon Musk's

"Secret Master Plan" by introducing Model 3, a low-cost, high-volume electric vehicle that went into production in 2017 Soon after, Tesla debuted the Tesla Semi, the safest, most comfortable vehicle ever, which is expected

to save customers at least $200,000 in fuel expenditures alone over a million miles In 2019, Tesla introduced the Model Y, a mid-size SUV with seating for up to seven people, as well as the Cybertruck, which will be more utilitarian than a typical truck yet faster than a sports car

2 Business Activities:

Source: https://bstrategyhub.com/wp-content/uploads/2019/06/Business-model-Canvas-Tesla-.png

3 Organizational structure:

Tesla, Inc (previously Tesla Motors, Inc.) features an organizational structure that encourages long-term business growth The architecture and system that defines the patterns of interactions among the company's components is known as the organizational or corporate structure In this business analysis of Tesla, the organizational structure is traditional, taking into account the company's managerial concentration and control, as well as its limited global operational expansion

Tesla Inc., for example, uses its corporate structure to permit comprehensive control of the company as a manufacturer of electric autos, batteries, solar panels, and related transportation and energy solutions Elon Musk's leadership effectiveness is determined by the corporate structure's ability to disseminate and support the adoption of innovative business growth and improvement methods Through its organizational structure, the corporation maximizes its ability to implement new strategies and manage operational operations and objectives

Tesla's operations management is reliant on the business structure's ability to accommodate strategic changes and implementations Despite its expanding foreign operations, Tesla Inc.'s organizational structure fosters characteristics that enable strong managerial control of the business The complexity and challenges of growth increase For example, worldwide expansion necessitates a broader set of considerations in order to successfully implement Tesla's generic strategy for competitive advantage and intensive growth tactics The structural qualities of the corporation help optimize top-level managers' understanding about these difficulties, allowing them to respond appropriately Tesla's business goal and vision statements, which stress worldwide leadership in the automobile and energy solutions markets, are thus supported by this organizational structure

Tesla has a functional or U-form organizational structure The unitary-form (U-form) structure employs organizational function as the major defining component The firm, for example, has a structural set of people for engineering and another for sales and service Some structural elements of other forms of corporate structures may also be seen in Tesla, but to a lesser level The most important aspect in this firm analysis case is grouping based

on business function The following characteristics are significant in Tesla’s organizational structure:

Function-Based Hierarchy: The function-based hierarchy in Tesla's global

organization is the most notable feature of its corporate structure This structure includes functional teams or offices in charge of domestic and foreign activities This characteristic is most common in conventional corporate systems, when businesses strive to maintain strong managerial control over their activities The following functional offices direct and reflect the worldwide hierarchy in this business analysis example of Tesla's organizational structure:

1 Chairman & Chief Executive Officer

2 Finance

3 Technology

4 Global Sales and Service

5 Engineering

6 Legal

Centralization: Tesla's corporate structure is based on centralization.

Centralization focuses on managerial control over the entire organization through decisions made by a central group or team In this instance, the corporation's central headquarters, which has direct authority over all activities, is made up of the heads of the global hierarchy's offices Tesla's regional or abroad offices have the bare minimum of autonomy in this organizational structure The majority of decisions for overseas operations are made at the company's headquarters

Divisions: The amount of geographical or other sorts of divisions in Tesla

Inc.'s automobile industry is the subject of this feature of the corporate structure These departments are responsible for implementing various marketing plans and campaigns, as well as organizing financial data and reporting The company's corporate structure is divided into two primary divisions: (1) Automotive and (2) Energy Generation and Storage These divisions are minor in comparison to the organization's function-based hierarchy Also, for financial reporting, Tesla's organizational structure contains the following geographical divisions: (1) United States, (2) China, (3) Norway, and (4) Other

4 Business result: Tesla's revenue increased by 28% to roughly $31.5 billion

in the fiscal year 2020, compared to the previous year Tesla's biggest market

is the United States

Revenue rises on model additions: Tesla's automotive business, which includes car design, manufacturing, and sales, generates more than 27 billion dollars in revenue for the company

5 Major products/services, facilities & equipment:

The Tesla Model S, Tesla Model X, Tesla Model 3, and the newly announced Tesla Y are among the electric vehicle (EV) maker's model lineup as of March 2020

Model 3 legacy: Tesla's Model 3 has become the company's best-selling car, but it has also battled with continuous net losses in recent years, spending a growing amount on both selling, general, and administrative (SG&A) and research and development (R&D) efforts

Much of Tesla's expenditure has been focused on the manufacturing of its new Model 3, a highly popular and in-demand automobile Tesla's 2018 purchase

of property in Shanghai, China for the building of a Gigafactory, was one response to the Model 3's increase in popularity A plant in China will offer Tesla with consistent access to the Chinese electric car market, which will be welcomed in the context of trade tensions between the United States and China

PART 2: STRATEGY ANALYSIS

1 Competitive strategy:

Tesla's objective is to provide electric items to customers while also entering the car market with a line of premium vehicles geared at affluent clients When the product is steadily improved and well-sold, the company will join a popular market with more competitors One of Tesla's stated aims is to increase the number of current electric vehicles that are adopted into the mainstream by:

 Selling cars manufactured by the Company through online channels and showroom systems and online

 Sell electric vehicle components to other car manufacturers

 To be a catalyst and a positive role model for other car manufacturers

Tesla focuses on pure electric technology, even for large segments and distances of further than 200 miles Musk was named the 2010 Automotive Inventor of the Year for his contributions to the global automotive industry's development of electric cars

Tesla shops or galleries are located in shopping malls in 22 U.S states and Washington, DC Customers cannot purchase automobiles in shops; instead, they must order through the Tesla Motors website The stores serve as showrooms for Tesla Motors and its automobiles, allowing customers to learn more about the company and its products Showrooms are located in states where regulations prohibit the discussion of price, financing, test drives, and other topics

Tesla's direct-sales technique at its stores is a significant divergence from the contemporary business paradigm in the US market Tesla, Inc is a vehicle company that sells automobiles to customers directly rather than via independent dealers Even though Tesla has no independent dealers, dealer organizations in various states have filed litigation against them Tesla is attempting to prohibit Tesla from selling automobiles in certain states North Carolina and New Hampshire supported Tesla, while Virginia and Texas supported the opposing side This has made it impossible for Tesla to operate

in both countries

2 Organizational Strategy Analysis:

Tesla's objective, according to the About Tesla page, is to speed the world's transition to sustainable energy Tesla Roadster, the company's first cutting-edge and high-performance electric sports vehicle, was unveiled in 2008 Tesla Motors CEO and Co-Founder Elon Musk remarked, “Tesla Motors aims

to assist hasten the transition from a mine-and-burn hydrocarbon economy to

a solar electric economy, which I believe to be the major, but not sole, sustainable solution” (Musk, 2006)

The Lotus Elise chassis forms the base for the Roadster Its lithium-ion battery pack, which costs $109,000, allows it to go 244 miles on a single charge Tesla was first brought into the automobile market as a Niche Differentiator, targeting high-tech car categories with its sustainable competitive advantage to distinguish itself from traditional automobile producers with sustainable, eco-friendly electric cars

Meanwhile, Musk stated, "Tesla intends to start at the top end of the market, where buyers are willing to pay a premium, and then push the market down as quickly as possible to high unit volume and lower pricing with each succeeding model" (Musk, 2006) In other words, Tesla's competitive strategy

in the vehicle business is a broad differentiation to target both categories by targeting luxury consumers and low-price purchasers Based on that basic approach, Tesla distinguishes itself from rivals by expanding its research and development expenditure year after year in order to build a highly inventive unique environment for generating returns on an economic scale

Furthermore, Tesla offers a wide range of products and services all over the world, including the premium electric vehicle Model S, Model 3, Model Y, and Model Y SUV They have a range of 250 to 370 miles and varying battery performance, as well as configurable seats and storage They also sell solar roof solutions, powerpack solar panels, megapack batteries, and other related products To better establish a clean-energy ecosystem, SolarCity combined with Tesla, Inc., in accordance with the broad differentiation approach “We think pretty strongly that Solar City's Silevo Front technology combined with Panasonic's cell technology will result in the most efficient and, eventually, the cheapest solar cell in the world,” Musk said (Pressman 2016) Tesla will cut its material costs on batteries through R&D and automation to drive down the market with a cheaper price as a specialty became wide differentiator to leverage on their competitive advantages

3 Production Strategy

Tesla produces all of its automobiles in Fremont, California Most recently, they constructed a "tent" or factory within the Fremont headquarters to support the weekly manufacturing of 5,000 Model 3 automobiles Furthermore, they manufacture critical components of each automobile, including as the electric motor, battery pack, and charger Tesla manufactures lithium-ion batteries in a Nevada subassembly facility, in addition to its Fremont headquarters They also purchase necessary manufacturing parts in the United States, Europe, China, and other locations Tesla, for example, frequently sources lithium from China and Australia Furthermore, as electric vehicles grow more popular, lithium costs have been constantly rising Because of their strong agreement with a Ganfeng lithium supplier, Tesla now has a tiny competitive advantage over other competitors Tesla is assured 20%

of their required Lithium supply through 2020 and possibly for years to come Within the Five Forces frameworks, their production technique of supply assurances, in addition to automation and in-house parts, minimizes the leverage of suppliers Tesla reduces buyer leverage by delivering customisable autos through their manufacturing procedures Tesla transforms its former supply chain weakness/threat (capacity restrictions) with a strength (automation) and lasting competitive advantage in the SWOT analysis

Source: https://alecfurrier.medium.com/tesla-business-model-strategic-analysis-c7d00bdc0339

Similarly, Tesla perfects the staging component of the Strategy Diamond diagram by fine-tuning their automated performance effectively and efficiently Tesla's automation technologies, for example, may assist in the automation of whole workflows, learning, and adaptability Furthermore, automated robots are used to aid with tasks like as automated stamping, painting, welding, and even final assembly on the assembly line While machines and robots can be useful to the manufacturing industry, Tesla also employs humans to replace robots that are inefficient and underperforming Overall, automation is one of Tesla’s many strengths that sets them apart from other companies and aid them in being able to supply large quantities of custom vehicles that are necessary to keep up with the high demand

4 Adoption of new development strategy in recent years

a Mergers and Acquisitions:

It is not uncommon for people to express an interest in purchasing Tesla stock However, let us consider the locations where Tesla has undertaken purchases and mergers in recent years Tesla has acknowledged multiple acquisitions totaling US$96 million over a nine-month period The declaration was included in the company's 10-Q SEC filing Notably, Tesla did not reveal the identities of the companies it has purchased

According to previous reports, Tesla purchased Hibar Systems, a small Canadian technical firm specializing in battery production, as well as DeepScale, an AI start-up These two businesses must now collect the whole acquisition cost that Tesla had announced in 2019 DeepScale looks to be largely "acqui-hire," and those who join Tesla are likely to receive a large number of shares

Aside from these two companies, another acquisition that generated waves was Maxwell Technologies Tesla acquired the energy storage startup in an all-stock transaction valued at $218 million USD The agreement was