Tesla strategic management final

1. Presented
by:
Karim El
Deeb
Nadine
Khattab

2. Agenda
• History
• Current Situation (products,
milestones and financial)
• Environment Scanning (IFAS, EFAS)
• TOWS matrix
• 4 corporate strategies with
Advantage and disadvantage
• Cascading to Business Functions
• Evaluation & KPIs measurements

3. History
• Tesla Motors, Inc. is an American company
based in California that designs,
manufactures and sells electric cars and
electric vehicle powertrain components
• It was founded in 2003 by a group of
intrepid Silicon Valley engineers “Martin
Eberhard”, “Marc Tarpenning”, and “Ian
Wright” named after the scientist Nikola
Tesla.
• The founders didn't have the money needed
to realize their idea, so they contacted Elon

4. Products & Milestones
• Roadster was introduced by 2006 where
only 2,500 units were sold
• Commercial deliveries of Model S was in
2012, selling more than 7,500 unit by end of
Q1 2013

5. 6/29/2010
7/29/2010
8/27/2010
9/28/2010
10/27/2010
11/26/2010
12/28/2010
1/27/2011
2/28/2011
3/29/2011
4/28/2011
5/27/2011
6/28/2011
7/28/2011
8/26/2011
9/27/2011
10/26/2011
11/25/2011
12/27/2011
1/27/2012
2/28/2012
3/28/2012
4/27/2012
5/29/2012
6/27/2012
7/27/2012
8/27/2012
9/26/2012
10/25/2012
11/28/2012
12/28/2012
1/30/2013
3/1/2013
4/2/2013
5/1/2013
5/31/2013
7/1/2013
7/31/2013
8/29/2013
9/30/2013
10/29/2013
11/27/2013
12/30/2013
Stock Market Information
• Tesla's IPO was on June 29, 2010
priced at $17 per share
Stock price
• Today closing closing price is 149$ per
share
200
180
160
140
120
100
80
60
40
20
0

6. Income statement
Item
Total revenues
Details
Cost of Selling
Gross profit
Research and
development
Total
operating
expenses
Loss from
(Q1-Q3) 2012
2011
2010
2013
1,398,277 413,25 204,2 116,74
6
42
4
1,098,60 383,18 142,64 86,01
4
9
7
3
299,673 30,06 61,59 30,731
7
5
2009
111,94
3
102,4
08
9,535
163,523
273,9 208,9 92,99 19,28
78
81
6
2
184,080 150,37 104,10 84,57 42,15
administrative
2
2
3
0
347,603 424,3 313,0 177,56 61,43
50
83
9
2
(47,930) (394, (251,4 (146,8 (51,8

7. Internal Factor Analysis
Summary
Strengths (3.7)
Internal
Factors
Strong R&D
department
Calibers
Strong
Management
Team
Excellent
Designs
Great
Location,
close to best
calibers in the
Weig
Rating
ht
0.45
0.3
0.1
0.05
4
4
3
3
Wgt.
Score
Comment
1.8
1.2
The CEO Elon Musk has
earlier founded
companies like PayPal
and SpaceX, so he has a
good track record
0.3
The Model S won the
2013 Motor Trend's Car
of the Year award
0.1
They are building their
cars in California . They
can find many computerand electrical engineers

8. Internal Factor Analysis
Summary
Weaknesses (2.2)
Internal Factors
Wei
ght
Ratin
g
Wgt.
Score
Relatively High
Priced
compared to
fuel cars
0.25
3
0.75
Few Charging
stations
0.2
2
0.4
Low Battery
Range
0.3
2
Comment
Tesla Motors are
doing their best to
change this by building
Superchargers, which
are like gas stations
but for electric
vehicles only.
0.6
Slow Charging
0.3
1
0.3
Battery Charging could
take around 30

9. External Factor Analysis
Summary
Opportunities (4.1)
External Factors
Weig
ht
Rating
Wgt. Comm
Score
ent
The world is running out of oil.
Electricity is a renewable energy.
0.35
5
2
People care more about
environmental issues.
0.05
2
0.2
Can use their battery technology in
other areas, such as storing power
from solar panels.
0.1
4
0.6
The growing support by
governments across the globe for
environmentally friendly vehicles
0.1
3
0.3
Large International Market
Potential Particularly Europe, Asia,
and Canada.
0.2
4
1

10. External Factor Analysis
Summary
Threats (2.4)
External
Factors
Very Strong
competition
with less
operating Costs
Wei
ght
0.3
Ratin
g
2
Wgt.
Score
Comment
0.6
Like BMW, Mercedes, and
Lexus expected to join the
market soon
Electric cars are still
expensive and a new
recession, like the one in
2008, may limit the
demand
Economical
slowdown
0.15
2
0.3
Limited supply
for raw
materials
0.3
2
0.6
0.15
4
0.6
Limited
Experienced

11. TOWS Matrix
Strengths
Internal Factors
IFAS
External Factors
EFAS
Opportunities
O1: The world is running out of oil.
Electricity is a renewable energy.
O2: People care more about
environmental issues
O3: Can use their battery technology
in other areas, such as storing power
from solar panels.
O4: The growing support by
governments across the globe for
environmentally friendly vehicles
O5: Large International Market
Weaknesses
S1.Strong R&D
W1: Relatively High Priced
department Calibers
compared to fuel cars
S2. Strong Management W2: Few Charging stations
Team
W3: Low Battery Range
S3. Excellent Designs
W4: Slow Charging
S4. Great Location, close
Process
to best calibers in the
W5: Limited operating
US
history
S5. Large Production
Capacity
SO Strategies:
WO Strategies:
-Focus on new product Promote the awareness
development with new
of environmental
technologies and be
friendly cars(O1,4,W1)
ahead of the market
-Outsourcing some
-Expand in new markets operational activities to
-Develop new products
a low Cost (O5,W1)
in an industry different
than the company's core
operation

12. Corporate Strategies
1. Horizontal Growth Strategy:
Market Development
•
•
Tesla should keep focusing on its Niche segment as the current
status but expand in different markets such as Europe & Asia in
order to increase revenues. This could be done by opening
additional retail locations or adding an online presence
Chinese central planners have said that they want to have 5
million electric cars on the road there by 2020. That's only
seven years away.
Advantages:
• Organization becomes pioneer at its specialization
• Build Brand Name Globally
• Avoids the fierce competition in USA Increase sales and thus
revenues.
• Risk diversification.
Disadvantages:
• Organization is vulnerable to industry and other external

13. Corporate Strategies
2. Horizontal Growth Strategy:
Product Development
Tesla could benefit from its strong R&D department and focus
on innovating new cars to target a wider range of customers. If
the strategy is properly implemented, Tesla can gain a
reputation as a company that is on the leading edge of EV
industry
Advantages:
• Increase Brand Awareness.
• Increase number of customers and accordingly Consumer
Loyalty.
• Capture more market share
• Having multiple product lines may allow a growing business to
diversify risk.
• Attract buyers with different preferences, increase
•

14. Corporate Strategies
3. Stability Strategy: Pause/Proceed
with caution
•
Tesla is now doing fine by introducing the Model S by end of
2012, to introduce and develop new products we will need a
huge investment in R&D but instead we could test the ground
before moving ahead with a full-fledged grand strategy,
trying to overcome previous losses as a result Tesla will
be able to move on with growth strategies. So it is just a
temporary strategy.
Advantages:
• Enables the company to focus on its new product the Model
S
• Gain Some Profit to overcome previous losses
• Focus on internal issues and enhancing internal processes

15. Corporate Strategies
4. Conglomerate Growth:
Diversification
Diversifying into a different industry that the current
company’s operation; producing EV cars. Use its battery
technology for other uses such as storing power from
solar panels. Leveraging the use of common brand name and
combining resources to create new competitive strengths
and capabilities
Advantages
• Transferring skills & capabilities from one business to
another
• Fully utilize existing resources and capabilities
• Sharing facilities or resources to reduce costs
• Opportunities to achieve economies of scale
• Opportunities to expand product or service offerings and
preserve unity in businesses
•

16. •
Cascading Strategy2 to
Business Functions
Marketing:
Marketing researches to identify customer’s needs and best
areas to penetrate.
o Build brand equity.
o Promotions.
o Broad Price ranges.
Research & Development:
o Pioneer new products that increase buyer value.
Human Resources:
o Recruit new talents with diverse backgrounds with low pay.
o Provide sufficient trainings
Logistics:
o Create & maintain strong, reliable & fast supply chain to
react conveniently to customers demand
Finance:
o Prepare sufficient cash and assets needed for investments
Purchasing:
o Hold good deals with new suppliers needed for the new
o
•
•
•
•
•

17. Evaluation & KPIs
measurements
Evaluate the R&D performance
Compare your own intelligence function against industry peers
using GIA (Global Market Intelligence) Survey results in terms of
• Annual budget
• Level of development
• Number of employees within the intelligence team
Evaluate the Marketing performance:
•
•
Social Media fan growth rates, engagement rates, and response
rates
Onsite market interviews
Evaluate the Operating & Financial performance:
•
Speed-to-market—putting the right product in the right market
segment faster than a competitor, measuring time from idea
formulation to delivering product in market

18. Thank You