Tesla’s Global Strategy & Sustainability

Contents
Introduction......................................................................................................................................3

Task-1 (The External and Internal Environment)............................................................................4

SWOT Analysis...........................................................................................................................4

PESTEL Analysis........................................................................................................................5

Task-2 (Tesla’s Strategy in Global Environment)...........................................................................7

Task-3 (Tesla’s Corporate Strategy)................................................................................................9

Task-4 (Strategic Purpose- Ethics and CSR).................................................................................10

Conclusion.....................................................................................................................................11

References......................................................................................................................................11
Introduction
The goal of the famous company Tesla, Inc. (Tesla) is to make the world more use to sustainable
energy. The company was founded 18 years ago in 2003 as Tesla Motors by Marc Tarpenning
and Martin Eberhard.  The founders wanted to build a company that focuses on automobile and
technology both (A. Allerhand, 2020). The company is growing and making news almost
everyday and this is because Tesla has successfully revolutionized the automotive industry’s
future. Keeping the fact in the mind that there are some people who want to drive luxurious cars
but also, they have an eco-friendly attitude, Tesla has made premium electric cars that have cool
features. Tesla has been successful in making the market go gaga over its new launch. Model X
and Model S are such examples of Tesla’s products that have ruled the market. After acquisition
of the company called SolarCity, Tesla has made its way into more broad business opportunities
by implementing products made of lithium battery (Z. Guo, 2019). Owning a Tesla car comes
with added features like solar panels, regular and automatic software updates, customizable
product, auto pilot mode and supercharging compatibility. Tesla as a company is thriving and
there are other opportunities lying for the company that can help in more growth. Tesla is
expanding its business in other global markets like Asia and also investing in “gigafactories”.
The lithium deposit of Tesla has made the relationship strong with material suppliers and as a
result the material cost of Tesla has been decreased. Another important factor of Tesla is that it
doesn’t spend any money in direct advertisements, this is because the twitter account of Tesla’s
CEO, Elon Musk, gains a lot of media attention. As mentioned earlier, Tesla gives the
opportunity to place an order online after the customers are done with customizing the cars, this
makes the sales tactic of Tesla unique (K. M Bilbeisi & M. Kesse. 2017). Tesla’s HR department
solely believes in productivity which makes the company’s work culture strict that includes
TQM metrics.  The global strategy of Tesla is not for short-term, their current focus is on battery
technology, electric vehicle automation and other eco-friendly products such as solar roof tiles,
etc. The journey of Tesla is not as smooth as it may sound, the main issue with the company is
despite focusing on the productivity it fails to meet the demand of the customers. According to S.
Kulkarni et al., (2020), the demand for Tesla car has increased so much as people are getting
more concerned about the environment, moreover, as the company has decreased their products
prices, the middle-class people are also demanding the same as it can be affordable to them now.
Here in this report the goal is to identify the global and other strategies of Tesla and develop a
business report on it.

Task-1 (The External and Internal Environment)

Using PESTLE and SWOT analysis, the external and internal analysis of Tesla can be easily
done.

SWOT Analysis
From the SWOT analysis part, the strength, weaknesses, opportunities and Threats of Tesla can
easily be derived. The competitive advantages of this company are they offer various premium
products, and the customizable part makes more difference. When the company went public,
after a short time, the share price got spiked, and it was around $32 in 2013, which was
obviously indicating the hype of it in the global mark- this and marketing strategies of Tesla with
Elon Musk’s mind, made Tesla a strong company (N. Alghalith, 2018). Implementing modern
technology has always been a plus point for the company because it helped in productivity,
engineering, manufacturing and storage of energy. Electric cars are major competitors for every
automobile company in the world. Other top companies have also got some innovative
developments by using Tesla’s technology. Moreover, the expansion in other effective markets
such as China has opened more opportunities for Tesla. Inc. It purchased a 210acre plot in
Shanghai, China, to have a manufacturing unit over there. Other quintessential strengths are
political support, working as a supplier for other manufacturing companies, brand value and
obviously its vehicles that run on electricity. Expansion in other markets is a positive part;
however, it also increases the competition (D. Dang et al., 2020).

Strength

Usage of technology, luxurious products, “electric power train” technology.

Diversified portfolio when it comes to Tesla’s product range.

A loyal customer base.

Strong media attention.

Strong marketing strategy.

Investment in Gigafactories for battery manufacturing.

Weakness

Less experience in handling major demands.

Increased debt and liabilities.

Less profit margin.

Dependent on battery powerpack manufacturing.

Opportunities

Concentrating on the fact to reduce the fuel consumption and working on sustainable energy.

Creating more growth opportunities with the increased attention to save the ecosystem.

Threats

Dependency on supplier base that is limited.

Competition from other top automobile manufacturing companies (A. Kauerhof, 2017).

The UK is no longer part of the European Union.

The fluctuating exchange rates in foreign countries.

PESTEL Analysis
Political

Tesla has always been supported by the government because of its environmental-friendly
approach. There are some states in the US that believe that owning a car is a necessity. To
encourage people to invest in electric cars, the Federal government lays off $7500 from the tax
as a credit. Other states like Virginia or Colorado also work in the same path by providing some
amount of tax credit on the purchase of electric cars. Apart from that, the US government also
approved a massive loan of $465 million to Tesla in such low interest, which Tesla has paid off;
however, the money has helped Tesla to be in the place that it is currently holding (S. Sathish &
E. Weenk). After all of these, Tesla also likes to omit any private dealership; instead, it wants to
reach the consumers directly as a manufacturer, which is good for the consumers because they
can save approx $2000 by not dealing with the dealers in between.

Economics

The economic part of Tesla has been really good; first, the support of the government, next, the
ever-increasing demand for Tesla cars has always shown a positive effect on the economic part
of Tesla. On the other hand, the mastermind plans like 0% interest while purchasing the cars on
credit have made consumers attracted towards the deal. However, they don’t understand that the
interest price is always included in the base price of the MSRP (J. Liu & Z. Meng 2017). The
share price of Tesla has even made the company walk out of the rapid recession in 2008. The
expansion in the Asian market has created a great hype which eventually will lead to more sales.
SolarCity acquisition has always been a great move for Tesla because it has helped in reducing
the battery cost, which eventually led to a decrease in the product cost, hence more demands
from the consumers.

Legal

While Tesla prioritizes the fact that there will not be any third party involved while selling or
purchasing a car apart from manufacturers and buyers, there are some states that oppose it. States
like Michigan have banned any activities from Tesla that includes the sale, hiring or even test-
driving. There are four more states that have banned such activities of Tesla. Michigan even has
passed a law (H.B. 5606) that forces the automobile manufacturers to get open up opportunities
to the private dealership. There are some reasons behind it such laws. As opined by J.P
MacDuffie (2018), automobile dealerships are not only effective when people purchase cars
those are also helpful in repairs and other services that happen after-sales. When it comes to
electric cars, the maintenance cost or the repair cost is very less; thus it does not suit the
automobile industry’s business model. However, forcing such laws is only making the
automobile dealerships gain profit; there are not others who might get benefitted by following
such rules and regulations.

Social

Going green is a trending thing. As opined by B. Brown (2017), people in the US love to invest
in environmental-friendly and less payable tax options. American people like the idea of working
with sustainable energy and leaving fewer carbon footprints which makes Tesla get huge social
support.

Technology

As already mentioned earlier, Tesla has always prioritized technology when it comes to their
vehicles or other products. They are the ones who are responsible for the automobile industry’s
revolution. The company continues to work more to make their cars more efficient. Tesla has
shown increased efficiency in their batteries, rolling resistance power and aerodynamics which
made it possible to design a car that ranges 400 miles (D.J. Teece, 2018).  

Environment

It is an obvious fact that Tesla supports the environment by using sustainable energy instead of
making their cars work on fossil fuels. The company is also focusing its work to develop such
battery packs that can be manufactured using solar panels.

From the above-mentioned SWOT and PESTLE analysis, it can be said that the major strength of
Tesla is its technology, political support and the increasing demand for Tesla cars. However, as
stated by P. Fernandez Garces, the company needs to hire experienced persons who can take care
of the productivity part to solve the issue of the demand and supply.
Task-2 (Tesla’s Strategy in Global Environment)
Tesla has implemented a transformational strategy for international market expansion. According
to S. Albukhaitan (2020), the transformational strategy is all about implementing and accepting
major changes within a company for extending the viability in both terms (long and short). Tesla
has accepted the fact that it needs to locate the economics of a state or a country and set its
product prices according to that. There are some key components that accompany the market
comprises which are behind the success of Tesla’s renovations (T. Kostandov, 2018), those
components are:

Patent-driven realization

Competitions based on costings.

Incorporating with the system.

Designing the system based on consulting.

Organized platforms.

Manufacturing and customizations.

Innovative support and administration.

As underlined by A. Akakpo et al., (2019), when a company is focusing on development and

new innovation, it means the company accepts the changes to cater the consumers. However,
according to G. Perkins & J.P Murman (2018), the main focus of a company is needs to be on the
marketing mix that is the four Ps (product, price, place & promotion). Emphasizing the 4Ps in
the following:

Product-- Innovative market disrupting products with amazing offers.

Process—Changes in the development process to make more profit and more attention.

Position— changes in the administration or item presentation settings. The outraging

innovations of the electric cars with auto pilot feature can be contextually analyzed to determine
the global strategy.

Promotion—Maintaining transparency to make people aware of new products.

The main concentration of Tesla is on three transactional segments that help to penetrate a
standardized product to offer. So, when it comes to launching the sports car (Tesla Roadster) or
Sedan cars such as Model S and Model X made the market gets really hyped. Initially, Tesla
faced some problems majorly because of the high prices, which the company never overlooked
and come up with affordably priced models that even middle-class people can purchase. Other
competitors like Toyota, BMW, Ford, or Volkswagen raised the competition barrier for Tesla.
The productivity of the competitors is considered high when it comes to meet the demand-supply
expectation (J. W. Lang, B Reber & H. Aldori, 2021). Tesla is also trying hard to increase
production by creating such services that have some value; along with that global network,
superchargers and service centers have made Tesla increase its productivity. Although the
productivity is not as it has been expected, Elon Musk still thinks they will exceed the
expectation of manufacturing within few years. Being a tech-savvy company, Tesla has to face
some constraints in the case of technology too. High R&D and high operational costs have made
Tesla make some changes in its global strategy. However, as Tesla has successfully lowered the
switching cost from other fuel-driven cars to electric cars and made the “go green” movement a
trend, the demand has already increased.  According to T. Habib et al. (2020), Tesla is yet to
achieve its full-fledged accomplishment in the near future.

Task-3 (Tesla’s Corporate Strategy)

Tesla as a company implies a transformational leadership strategy when it comes to its corporate
strategy. Experts have high opinions on electric vehicles than any other car. According to D.
Callandra et al. (2020), electric cars will rule the future market as it is clear from a report
published in 2018 by IEA (International Energy Agency) that by 2030, there will be more than
120 million people that will own an electric car. Currently, there are 4-5million people that drive
an electric cars. Keeping all these data in mind, Tesla develops its business model. Elon Musk
knows as the fact that electric cars are not only the future for the automobile industry, it can also
take on the global economy in the upcoming decade. According to D. Manocha, D. Pandey & D.
Saini (2020), the rising of electric cars depends on some key points such as 1) expectations and
demands of the customers, 2) electric cars provide more advancement in terms of technology, 3)
Government’s pre-applied rules and regulations on emissions and safety. The focus of this
company was not on sustainable energy initially, as Elon Musk confirmed that they wanted to
develop a car that can give tough competition to those cars which are gasoline-driven.
Ultimately, they launched a sports car, Tesla Roadster, that is lithium-battery powered. This car
was a game-changer for Tesla as 3000 cars of the same model got sold, making Tesla gets media
hyped as well as earn more capital from its sponsors. From then the company was more focused
on evolving its business model to sell the cars, provide servicing and charging.

Sales

As already mentioned earlier, Tesla does not want any dealership to come in between the
manufacturer and the customer. Thus, it as a manufacturing company sells its products directly to
the customer, which makes it a unique business strategy (L. Downes & P. Nunes, 2017).
Consumers can place an order for a car online after customizing the cars per their choice. There
are not so many automobiles company that uses the online platform so well that Tesla does.
Apart from that, the company owns more than 400 showrooms where people can visit and
purchase cars.

Service

Most of the Tesla-owned showrooms are service centers of the cars. Apart from that Tesla also
hires people as mobile workers or generally known as “Tesla Rangers,” who visit the customers
and provide servicing or repair the cars if needed (V. M. Salguiero, 2017). Tesla cars have
functioned in such ways that they can detect any issues within it and upload the related data to
the company to notify the remote workers.

Charging Network

Any electric car owner thinks about the power charging facility availability. There are many
supercharging stations available where people can charge their vehicles for free. Tesla thinks that
if there are more charging stations can be installed, the sale will rise automatically. That’s why
Tesla has increased the installation of charging stations in Asia, Europe and the US.

Apart from all these, Tesla also has assisted other automakers by selling parts, solar panels, solar
roof tiles, batteries, etc.

The transformational leadership has helped Tesla to put their complete focus on the design and
engineering of their products. According to G.R Gali (2020), the tactics that Tesla use is
becoming more mainstream, which is satisfying the concerns of both the customers and the
governments.

Task-4 (Strategic Purpose- Ethics and CSR)

Ethics and CSR (Corporate Social Responsibilities) is important for every company to determine
the action of the company and its impact on society’s wellbeing and environment (J. Van Holt et
al., 2017). The main concept of ethics and CSR of a company lies in the fact that what a
company does to integrate the issues on social and environments into their business strategy. In
addition, they need to also talk about all those issues and business integration with their
stakeholders to maintain ethics. Tesla, when founded, was only focused on developing such cars
that are capable of giving strong competition to fuel-driven cars. Apart from that, the founders
always talk about sustainable energy usage. Their only hope was that to build an electric car that
provides luxury and comfort at the same time. The founders also announced that they would
eventually lower the price once they come up with new strategies to engineer their car model. 
Tesla has kept all the patents of those technologies that they have come up with when designing
such premium-looking cars in the past. In 2014, the company announced that it would release the
patents access totally. This even made the competitors get access to the technologies that Tesla
has previously used to launch the electric cars. The main intention of releasing the patents was
that they wanted intentionally that other competitors to also get the idea of making cars built on
sustainable energy. In this way, the environment can be saved when there is less fuel
consumption or less pollution due to less emission. Achieving such ethics and CSR goals not
only helps the company to get recognized easily, but it also helps in sales. The company
visualizes “creating more compelling cars for the future,” whereas the mission is to “accelerate
the advent of sustainable transport by bringing compelling mass-market electric cars to market”.
The company comes up with its strategy from its mission as well as the vision (M.M. Jennings,
2019) to achieve the position that it currently holds.

Conclusion
According to V.J Thomas & E. Maine, Tesla (2019) is on its way to reaching its ultimate goals.
It has political support, capital, great minds like Elon Musk; the only thing it lacks the experience
to meet the demand-supply goal, which everyone believes that they will eventually achieve with
its effective marketing and showrooms.

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