UNIVERSITI KUALA LUMPUR

BUSINESS SCHOOL

JULY 2021 SEMESTER

EEB 30103
INTERNATIONAL BUSINESS STRATEGY

TITLE OF ASSIGNMENT:
TESLA, INC. (INDIVIDUAL ASSIGNMENT)

GROUP:
IB10

PREPARED BY:
MUHAMMAD IESRAF BIN SAMNI (62215119577)

PREPARED FOR:
DR. ALISA BINTI IBRAHIM

SUBMISSION DATE:
6TH AUGUST 2021
Company: Apple

Discuss the four (4) fundamental questions in strategy .

- Why do firms differ?

Before Tesla invented their electric cars, other company have already
invented it but differs in term of selling the products. For example, direct sales, other
car manufacturer sells through franchised dealership, unlike Tesla, they sells directly
to consumers. This has creates a better consumer buying experiences and also gain
an advantage on developing their products. Unlike other electric car dealership,
Tesla showroom have no interest and customer deal only with Tesla sales employee
and service staff
- How the firms behave?
Industry-based view: Competitive forces in the electric car industry is
bargaining power of customers. The idea behind this force is that if the customers
enjoy market power, they are in a better position to negotiate for lower prices with the
venders, better quality of the products they are buying, and any other additional
services being offered (Ryall, 2013). This oftenly can be found in industries that have
more competitors but less in consumers. For Tesla, their sales are directly
determined by their customers. Low switching costs, the availability of substitutes,
and the low volume of unit purchases per customer are all external factors that can
help maintain their customers' bargaining power.
Resource-based view: Tesla internal strengths includes, a company that is
highly innovative, strong brand and strong control on production processes.Tesla,
Inc. is known for its high rate innovation, especially in term of  introducting the world's
first fully electric sports car. With the Tesla CEO Elon Musk's business goals, the
Tesla brand is a strong symbol of innovation and renewable energy solutions. The
strong control on production processes is based on vertical integration, as well as the
centralization and hierarchy in Tesla’s organizational structure. For Tesla internal
weaknesses, it includes limited market presence, limited supply chain and high
prices. Tesla is affected by a limited market presence. The company, for example,
makes the majority of its money in the United States and only has a minor presence
in China and the developing world. Tesla limited supply chain is related weakness
that prevents the company from highly expanding in the industry.Tesla's vehicles are
more expensive than competitors', particularly those with internal combustion
engines.
 Institution-based view: Government bodies are some of the key forces
that can either make or break a business environment. A company's or an industry's
performance can be affected by trade policies. This can have a significant impact on
revenue collection.In Tesla’s case, political factors that are of significance to the
company include government incentives for electric car
-What determine the scope of the firms?
Due to the strength of its brand, it is safe to conclude that Tesla has what it
takes to compete at the highest level. It will, however, need to work on expanding its
global presence, which it can do by opening new facilities and sales depots in
potential market areas. More money should be put into research and development in
order to produce more advanced vehicles that will keep the company ahead of the
competition. Management should also consider diversifying the company's supply
chain to reduce supply chain risks.

Discuss the four (4) advantages that associate with “Strategy as Theory”
definition.
-Integrating both planning and action schools
In 2016, Tesla bought Solarcity in order to provide their consumer the
potential of charging electric car at their home. Elon Musk vision is givingconsumer-
friendly energy solution that includes rooftop solar, battery storage, and electric
vehicle charging
-Leveraging the concept of “theory”
Tesla is known for their innovation and excel in executing them. Home
charging is one of them and it is one of the vital reason of people buying Tesla’s
electric car, consumer can just charge overnight and wake up the other day with a
fully charged battery, this also saves on gas money. This will most likely be the future
or car industry where majority consumer will prefer electric car rather than car that
uses petroleum. For an example, Roadster, Tesla’s sport car, as we know, sports car
nowadays consume gas faster than normal car because of the cubic centimeters or
also known as ‘CC’, the higher the CC the higher the speed of the car, and the higher
the CC, the faster gas or petroleum consumed. By consumer buying Roadster, they
will surely saves a lot of money on gas
-Requiring replications and experimentations
Tesla also installed 160,000 charging station in United States alone, the
reason why consumer choose electric car from Tesla rather than Cadillac or
Chevrolet because consumer can drive for long distances and they can find
convenient location to recharge their vehicle. Other electric car manufacturer focuses
on perfecting their car but Tesla focuses on the entire vehicle system such as adding
charging system. This is proven by looking at Tesla Quarterly report since 2015 and
increasing every year in term of revenue.
-Understanding the difficulty of strategic change
Building a new architecture in electric car. In term of product, in the vehicle, it
has a fundamentally different architecture in hardware and software, if a new
architecture technology is made, Tesla and other manufacturer will have a hard time
understanding and adapting. They struggle to adapt because they are hesitant to
both give up and fully integrate the existing capabilities that they have developed
over decades. Even if manufacturer try to imitate the new architecture, they have a
hard time overcoming their old habits and matching the new, purpose-built
architecture's superior performance.

What is “intended Strategy” and “Emergent Strategy”

Intended strategy: Tesla's long-term differentiation strategy focuses on electric

vehicle automation, battery technology, and environmentally friendly products like
solar roof tiles. Tesla's mission, according to its About Tesla page, is to accelerate
the world's transition to sustainable energy.

Emergent strategy: They have change their focus from their original strategy
of developing a minimum viable electric vehicle to test the market. They also
focuses out for their performance defining factor, the battery vertical, and worked to
improve the performance factors that provide them more profit for the company. The
new strategy is to rebuild and innovate energy systems. Tesla is looking to the future
and adapting a strategy to cater for a world of autonomous, sustainable automobiles
that can help you earn money when you are not driving by using the Tesla fleet
system.
Why is it hard to change business strategy? Discuss you answer from the
perspective of strategy as theory.
A business's main goals and objectives are referred to as strategy. When
a company changes its strategy, it will be difficult to forecast exactly what will
happen. Their organization needs a relentless commitment to include people and
their ideas in the decision-making process. The most of change efforts fail due to a
lack of understanding of organizational environment and the social. Because
successful change involves a multi-level approach to succeed, such as top
management's long-term commitment, full employee ownership, and ongoing support
for and from middle management. Next if Tesla want to change their strategy, they
need to start from the basic and it take a lot of times. It because change requires
patience and persistence, measured in months not days. The future of Tesla is
ambitious, but if Elon Musk are able to perfected the building of the ‘machine that
builds the machine’, it should be a huge advantage for them
References:

Zucchi, K. (2021, May 19). What makes tesla's business model different?
Investopedia. https://www.investopedia.com/articles/active-
trading/072115/what-makes-teslas-business-model-different.asp.

Writes, E. (n.d.). Tesla industry analysis. Tesla Industry Analysis.

https://www.academia.edu/40043724/Tesla_Industry_Analysis.

Kissinger, D. (2018, September 12). Tesla Inc. SWOT analysis & recommendations.
Panmore Institute. http://panmore.com/tesla-motors-inc-swot-analysis-
recommendations.

How Tesla's charging Stations left other manufacturers in the dust. Harvard Business
Review. (2021, January 27). https://hbr.org/2021/01/how-teslas-charging-
stations-left-other-manufacturers-in-the-dust.

Elon Musk's complete master plan. Solar Tribune. (2021, July 26).
https://solartribune.com/master-plan/.

Furr, N. (2019, November 27). Opinion: Tesla's strategy is incredibly risky - but it still
makes lots of sense. MarketWatch. https://www.marketwatch.com/story/teslas-
strategy-is-incredibly-complex-but-it-still-makes-lots-of-sense-2019-11-19.

Cijo, M. (2016, December 3). Tesla & global ELECTRIC Motorcars (gem) in light of
disruptive strategy. Medium. https://medium.com/@markcijo/tesla-global-
electric-motorcars-gem-in-light-of-disruptive-strategy-d9afc5bad18b.