ABSTRACT

The following is
a comprehensive
strategic plan
recommendation
for Tesla
Incorporation.

Sule, Victor
MSES 550

TESLA VS GREENHOUSE GAS

EMISSIONS
Environmental Sustainability
 Tesla Incorporation Strategic Recommendation
1. Client Name and Mission

Client name: Tesla Incorporation

Mission statement

Tesla s issio state e t as to a ele ate the o ld s t a sitio to sustai a le t a spo t.

However, in mid- 6, u de Elo Musk s leade ship, the o pa ha ged the o po ate
issio to to a ele ate the o ld s t a sitio to sustai a le e e g . This e state e t
indicates a slight ut sig ifi a t shift i the o pa s usi ess, to add ess a ket
opportunities for renewable energy. In a way, the new corporate mission recognizes the
ele a e of the fi s atte ies a d elated e e g sto age p odu ts i a kets i additio to
the ele t i ehi le a ket. Tesla I . s issio state e t has the follo i g ota le
components:

• To accelerate
• The o ld s t a sitio
• To sustainable energy

Vision

Tesla s isio state e t is to eate the ost o pelli g a o pa of the st e tu

d i i g the o ld s t a sitio to ele t i ehi les. This o po ate isio e phasizes the
o pa s fo us o e e a le e e g . “pe ifi all , the corporation addresses the electric
vehicle market as a major avenue for facilitating growth of the global renewable energy market.
The follo i g o po e ts a e sig ifi a t i Tesla I . s isio state e t:

• Most compelling
• Car company
• 21st Century
• The wo ld s t a sitio to ele t i ehi les
Culture

Tesla s o ga izatio al ultu e eates oppo tu ities fo i ovation that keeps the
competitiveness of the electric car business. The characteristics of this corporate culture
e ou age the o pa s e plo ees to ge e ate e ideas a d solutio s. I this o pa
analysis case, such behavioral factors contribute to Tesla I . s o petiti e ess i fa i g
automobile manufacturing firms like General Motors Company, Toyota Motor Corporation,
Honda Motor Company, Nissan Motor Company, Bavarian Motor Works (BMW), Volkswagen,
and others.

Tesla, Inc. has an innovative problem-solving organizational culture. This type of corporate
culture motivates employees to develop profitable solutions to current and emerging problems
in the target market. For example, the company employs its organizational culture in
developing advanced electric vehicles as a solution to environmental issues surrounding
automobiles that have internal combustion engines. Tesla Inc. identifies six main features of its
organizational culture:

• Move Fast
• Do the Impossible
• Constantly Innovate
• ‘easo f o Fi st P i iples
• Think Like Owners
• We are ALL IN

Move Fast. “peed affe ts Tesla I . s o petiti e ad a tage. This ha a te isti of the
o ga izatio al ultu e highlights the i po ta e of e plo ees apa ilit to apidl espo d to
trends and changes in the international market.

Do the Impossible. In developing cutting-edge products, Tesla must ensure that its corporate
culture encourages employees to think outside the box. This cultural characteristic recognizes
the importance of new ideas and solutions, but it also emphasizes the benefits of considering
unconventional ways.
Constantly Innovate. Innovation is at the heart of Tesla, Inc. This feature of the organizational
culture focuses on the continuous nature of innovation at the company. For example, the
corporation continuously researches and develops solutions that improve current energy
storage product designs.

Reaso fro First Pri iples. CEO Elon Musk promotes reasoning from first principles. These
principles revolve around identifying root factors to understand and solve problems in the real
world. For example, Tesla Inc. s e e g sto age p odu ts a e o e of the solutio s to halle ges
in using renewable energy, and challenges in improving the efficiency of energy utilization.

Think Like Owners. Tesla employs its organizational culture as a tool to maintain a mindset that
supports business development. For example, the company motivates its workers to think like
the o the o ga izatio . This o e ship i dset suppo ts Tesla s o po ate isio a d
mission statements by encouraging employees to take responsibility and accountability in their
jobs and in the overall performance of the multinational business

We are ALL IN. Tesla, I . s o ga izatio al ultu e u ifies e plo ees i to a tea that o ks to
improve the business. For example, this cultural characteristic helps minimize conflicts through
tea o k. “u h tea o k also de elops s e g i the o pa s hu a esou es. As a
esult, the o po ate ultu e a i izes the e efits f o e plo ees tale ts a d skills.

2. Environmental Issues

Over the last several years, many car manufacturers have faced the competitive pressure to

produce eco-friendly or fuel-efficient vehicles. Environmental factors such as increasing

awareness of climate change lead to changes in operations and o pa ies products and
services, because customers are getting more aware of environmental effects of production.

3. Communication Concerns
Unlike every other car company in the world, Tesla doesn't spend much money on marketing
and mostly relies on word of mouth.

But, Lately, the company hasn't been very communicative with its investors, especially in a
timely manner. This is an ingenious marketing strategy that leads to anticipation making each of
the company s new exhibition a mouth watering one. However, a review is needed.

4. Public of Concern

Since Tesla is a company focused on putting a check on greenhouse gas emissions and
environmental sustainability it will be safe to say all publics are involved here including all
geographic and demographic distribution. However, specificity does exist:

• Employees (mid -high-networth income earners); internal and external

• Government (elected and employees); internal and external
• Donors (internal and external)
• Heavy-weight business tycoons (internal and External)
• Community (partnership)
• Students

5. Media Expectation

Traditional methods

Tesla does not spend millions of dollars in a traditional ad campaign. They let you and I discuss
it, rave about it, hate on it, or rejoice in the spirit of going electric in a Tesla, be the catalyst to a
viral and brilliant marketing campaign. At the end of the day, Tesla advertising is free.

• Word of mouth
 • Usually, the company's new announcements come directly from Elon Musk on the
company's blog.
• Twitter
• Special Tv interviews
• Facebook

6. Research and Recommendations

SWOT analysis

shows that the company has the strengths needed to maintain profitability in the long term.
This positive outlook holds despite challenges in expanding the business. The results of the
SWOT analysis also suggest st ategi efo to e su e Tesla s o petiti e ess a d lo g-term
success in the global automotive market.

In considering the results of this SWOT analysis, with the goal of improving business
competitiveness, growth, and development, it is recommended that Tesla Inc.:

• Expand operations in foreign markets to exploit the global growth of the renewable
energy industry.
• Continue or increase investments for product innovation.
• Diversify the supply chain to reduce supply-side risks.

Tesla s eak esses i te al st ategi fa to s

Tesla biggest problems is the lack of liquidity. Despite the high sales of new Model S in 2013,
company continue to have lost over 70 million because of the large sum of debt, the slow rate
at which clients are buying Tesla motors and failure to achieve planned cost reductions and
controlling operational cost. “e o d, o pa s li ited manufacturing capacity, only Fremont
factory, can lead to failure to meet the increased customer demand in future, especially with
the Tesla s e pa di g strategy to Europe and Asia. Additionally, company struggles with lithium
battery cell shortage and heavy reliance on suppliers that can harm brand image due to delays
in delivering vehicles to its customers.

Finally, Tesla motors founded in 2003, having limited operating history, lack of brand

recognition and expertise in auto-manufacturing industry compared with well-established

company such as Ford or General Motors. This creates additional concern about how they

can manage problems that may emerge and affect the business.

The internal factors that limit organizational performance are identified in this aspect of the
“WOT A al sis. These i te al fa to s a e eak esses that a edu e Tesla s o petiti e ess
and business growth.

• Limited market presence

• Limited supply chain
• High prices

Tesla Moto s has a opportunities, which were created by external factors in automobile

environment. Obviously, one the most significant changes is customer awareness about

benefits of having electrical car, especially during the substantial rise in the price of

petroleum and increasing concerns about environmental pollution and global warming create

a good opportunity for the company to generate demand for its vehicles.

Next, US governmental subsidy programs and loans for green-energy companies help to find

additional investments for growth, as well as government incentives across many developed

ou t ies i suppo t of ―g ee car adoption will encourage customers to purchase of such

vehicles.

Finally, the company is in the market segment which is largely untouched and rapidly
growing in terms of demand. Due to factors mentioned above, this gives them opportunity to

expand and produce more vehicles, thus, acquiring more market share and earning more

profit.

Opportunities for Tesla incorporation (external strategic factors)

This aspect of the SWOT Analysis focuses on the external factors that present potential growth
and development for the organization. They include:

• Global sales expansion

• Global supply chain expansion
• Business diversification

7. Objectives

Tesla Motors, Inc. must overcome challenges linked to the external factors identified in this
PESTEL/PESTLE analysis. The PESTEL/PESTLE Analysis is a strategic tool that determines the
effe ts of the i dust s e ote o a o-e i o e t o the o pa . The pu li s ei g the
center of attraction.

Political factors (Public of concern: Government) (Objective: motivate and interest)

With selling cars in 17 countries of North America, Western Europe and Asia, Tesla Motors must
deal with distinctive political patterns influencing its business operations.

One of the major political factors affecting the industry is environmental protection laws to

induce production of more environmental cars to meet strict emission levels. The second
important factor is US government energy loan

programs for research and development of new vehicle technologies. In this case, many auto
manufacturers will be interested in entering the market.
This part of the PESTEL/PESTLE Analysis identifies the governmental impacts on businesses and
the remote or macro-environment. Significance here are;

• Governmental incentives for electric automobiles (opportunity)

• Expanding free trade agreements (opportunity)
• Political stability in most of major markets (opportunity)

Social/ sociocultural factor (Public of Concern: community, Donors, HNIs) (Objective:

conviction and participation)

Social factors are related to increase environmental concerns, attitudes and emphasis on

products, which are eco-friendly. Buyers are losing faith in gasoline fuel and associated cost in
production, trying to help the environment. Moreover, undoubtedly the current society judges
people based on the type of the car they own and the idea of having electric vehicles improves
the social status of an individual. Another social change is increase in ageing population with
most wealth and savings, who would likely to spend more money on premium electrical cars.

“o ial o ditio s a d t e ds affe t a fi s e ote o a o-environment, as shown in this part

of the PESTEL/PESTLE Analysis. Significance here are;

• Increasingly popularity of low-carbon lifestyles (opportunity)

• Increasing preference for renewable energy (opportunity)
• Improving wealth distribution in developing markets (opportunity)

Ecological/Environmental factor (Public of Concern: all publics) (Objective: inform and

educate)

Over the last several years, many car manufacturers have faced the competitive pressure to

produce eco-friendly or fuel-efficient vehicles. Environmental factors such as increasing

awareness of climate change lead to changes in operatio s a d o pa ies p odu ts a d

services, because customers are getting more aware of environmental effects of production.

A fi s e ote o a o-environment is subject to the effects of ecological conditions covered

i this pa t of the PE“TEL/PE“TLE A al sis. I Tesla s ase, the follo i g e ologi al e te al
factors affect the market:

• Climate change (opportunity)

• Expanding environmental programs (opportunity)
• Rising standards on waste disposal (opportunity)

Legal factors (Public of Concern: Advocacy groups & all internal and external bodies)
(Objective: advocacy)

Many regulations emanate from green movements introducing energy loan programs and

putting pressure on production eco-friendly cars such as increase taxation to incorporate the

e ethods of g ee usi ess, the u h e pa ded ― a o ta and other green policies.

Another major concern is franchise laws in US that protect car dealers and creates challenge to
Tesla selling its car directly to customers. Other factors that might affect the manufacturing of
battery car include the tax incentives and subsidies to increase the demand among consumers.

The issues covered throughout the PESTLE analysis shaped many opportunities for Tesla

Motors for further expansion and success of electrical cars within automotive market.

However, together with opportunities they also create threats, thus, the company should be

concerned about rapid technology advancement and political regulations within the industry

it operates.

In this part of the PESTEL/PESTLE Analysis, the effects of regulatory factors on the remote or
macro-environment are determined.

• Expanding international patent protection (opportunity)

 • Energy consumption regulations (opportunity)
• Dealership sales regulation in the United States (opportunity & threat)

8. Tools and Tactics

Tesla Motors, Inc. uses a marketing mix that stands out in the automotive industry. The
marketing mix or 4Ps (Product, Place, Promotion & Price) is the set of strategies that a
company uses for its marketing plan. Tesla maintains significant control in all components of its
a keti g i . “u h le el of o t ol a i izes the o pa s effe ti e ess i ea hi g its
target customers and optimizing profits. As a major producer of electric automobiles in the
United States and other countries, Tesla continues to use its marketing mix to support market
penetration and potential expansion in overseas locations.

Tesla’s Produ ts Produ t Mi

This element of the marketi g i ide tifies the o ga izatio s outputs o p odu ts sold to
target customers. Profitable products provide value that customers pay for. As an automotive
business, Tesla has the following products:

• Automobiles
• Electric vehicle powertrain components
• Batteries

Pla e/Distri utio i Tesla’s Marketi g Mi

The locations or venues used to reach customers are considered in this element of the
marketing mix. An organization distributes or sells its products through such venues. In the case
of Tesla, the following places are used:

• Official Company Website

• Company-owned Stores and Galleries
• Company-owned Service Centers
Tesla Motors, I .’s Pro otio Pro otio al Mi

In this element of the marketing mix, marketing communications strategies and tactics are
o side ed. Tesla Moto s, I . s p o otio al i has the follo i g o po e ts, a a ged
according to significance in the automotive business:

• Viral marketing (most significant)

• Personal selling
• Public relations
• Sales promotions
• Direct marketing

Tesla’s Pri es a d Pri i g “trateg

Price levels and related strategies are covered in this element of the marketing mix. Tesla
Motors, Inc. uses a premium pricing strategy. This strategy involves using high price points
based on u i ue ess o high alue att i uted to the o pa s p odu ts. Fo e a ple,
customers are willing to pay relatively high prices for Tesla automobiles, which are viewed
advanced in terms of technology and ecology. Thus, innovation and product design are
sig ifi a t fa to s i su essfull usi g this p i i g st ateg . P e iu p i i g ag ees ith Tesla s
generic strategy of differentiation, which emphasizes uniqueness of products.

Additional Tools

Electronic media

A multinational industry like Tesla should have a personal Tv channel station both nationally
and internationally via digital satellite with contents such as latest technological developments,
educational contents of climate change awareness and shows inviting special dignitaries the
world to launch their latest products. The industry should also have large solar powered bill
boards in as many strategic positions as possible.

Print media

The company should have a personal print magazine that can also be accessed online. This
magazine can be a monthly publication of the latest release of brand products and copies
should be dropped at strategic places such as big companies, universities and the likes.

Direct media

The industry should possess certified sales executives and communication experts the world
over who can disperse information of company policies and sell company solutions directly to
client through word of mouth and more facilities be built in as many strategic locations to meet
demands.

Social media

Tesla should stick with the trendiest social media used by more of a qualitative than
quantitative amount of people (instagram, twitter) and contents and timing should tally with
those of other media sources.

9. Measurement and Evaluation

Michael Porter developed the Five Forces Analysis model as a tool to understand the impact of
external factors on firms and the conditions of their industry environment. These five forces
alled the Po te s odel ill e used to dete i e the deg ee of the i dust s su ess.
Competition with Tesla motors

Tesla Motors, Inc. operates in a highly competitive market. Considerations are;

• Small number of firms (weak force)

• High aggressiveness of firms (strong force)
• Low switching costs (strong force)

Bargaining power of Tesla’s usto ers/ u ers

The influence of customers on firms and the automotive industry environment is accounted for
here. Considerations are;

• Low switching costs (strong force)

• Moderate substitute availability (moderate force)
• Low volume of purchases (weak force)

Bargai i g power of Tesla’s suppliers

Tesla s usi ess su ess pa tl depe ds o the elia ilit of its supplie s. Co side atio s a e

• Moderate forward integration (moderate force)

• Moderate size of suppliers (moderate force)
• Moderate supply (moderate force)

Threat of substitutes or substitution

Tesla Motors, Inc. experiences the impact of substitutes on the automotive industry
environment. Considerations are;

• Low switching costs (strong force)

 • Moderate substitute availability (moderate force)
• Moderate performance of substitutes (moderate force)

Threat of new entrants

New entrants or firms impact the automotive industry environment, thereby determining the
performance of companies like Tesla. Considerations are;

• High cost of brand development (weak force)

• High cost of doing business (weak force)
• High economies of scale (weak force)
Figure 1. Positioning of Tesla Moto s a s within automobile market (Tesla Motors, 2014)
Figure 2. Bo a s st ategi lo k (Johnson, G., Scholes, K. And Whittington, R.,
2008: 225)
Figure 3: Tesla Model S.
Figure 4: 2016 Tesla Model S P90D New Hybrid Car
Figure 5: Tesla Model 3.
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Tesla's Elon Musk Learns An Old Lesson Fighting Protectionist Dealer

Laws

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Tesla Motors, Inc. Form 10-K.