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Strategic Management Essay

5821 words - 24 pages

How Tesla Motors can manage the extreme competition from large and premium manufactures

Daniil Chaika (119102547)
Workshop Tutor: John Davison
SIM336 - Strategic Management

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Contents
1.0 Introduction ……………………………………………………………………………….3
2.0 Company Background………………………………………………………………….….3
3.0 PESTEL Analysis……………………………………………………………...…………..3
4.1. Political……………………………………………………………………………..3-4
4.2. Economic……………………………………………………………………………...4
4.3. Social………………………………………………………………………………….4
4.4. Technological…………………………………………………………………………4
4.5. Environmental………………………………………………………………………...5
4.6. ...view middle of the document...

This research will describe the electric vehicle manufacturing company, Tesla Motors, and how it can manage the extreme competition from large and premium manufactures.
The report starts from introduction of ‘Tesla Motors’ company. Next, the company strategic position will be analysed through main strategy models, including PESTEL and Porter’s five Forces frameworks, Value Chain and SWOT analysis. Afterwards, based on the findings from the models the conclusion and recommendation will be provided.
2.0 Company Background
Tesla Motors was established in 2003 by Martin Eberhard and Marc Tarpenning (Tesla, 2014), Silicon Valley engineers, as an electric car manufacture, and in 2006 the company launched the production of the first electric sports car, the Roadster, which eventually sold 2,250 vehicles (Fuel-efficient-vehicles.org, 2008). Nowadays, Tesla Motors provides power train components for car producers, including Daimler and Toyota, designs and manufactures Model S (Tesla.com, 2014), the first world’s premium zero-emission sedan that became the third best-selling all-electric car in the U.S (HybridCars.com, 2013) and Europe (Pontes, 2014). The company is worth more than $25 billion (Groom, 2014) – roughly half that of General Motors (GM) and has one of the highest growth rate in U.S. This success of the company is contributed to Elon Musk, the CEO and Product Architect of Tesla (Tesla, 2014), who has a very strong vision of company’s future.
3.0 PESTEL Analysis
The PESTEL framework evaluates the external environment variables to identify general opportunities and risks of particular strategies, because changes in these factors can lead to the significant transformation of industries, especially over the long run (Witcher and Chau, 2010). PESTEL highlights Political, Economic, Social, Technological, Environmental and Legal group factors.
3.1 Political
With selling cars in 17 countries of North America, Western Europe and Asia (Tesla, 2014), Tesla Motors has to 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 (Environmental-protection.org.uk, 2014). The second important factor is US government energy loan programs for research and development of new vehicle technologies (Department of Energy, 2014). In this case, many auto manufacturers will be interested in entering the market.
3.2 Economic
Economic factors include economic growth in the alternative energy industries and increase in the cost of using the cars mainly due to the rise in fuel prices in the short period (BBC News, 2014). Therefore, the demand for more-efficient cars is higher than before. Next, recovery of GDP and inflation rate in most of the developed countries from the recessionary period in 2008/2009 has a significant impact on the customer purchase power (World Bank,...

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