Scenario: Tesla Motors: the future is electric!
Tesla was founded in 2003 by a group of engineers who wanted to prove that people didn’t need to compromise to drive electric – that electric vehicles can be better, quicker and more fun to drive than gasoline cars. Today, Tesla builds not only all-electric vehicles but also infinitely scalable clean energy generation and storage products.
The Tesla Roadstar is a staggeringly quick car with a difference. There’s no wheel spin, no traction control stutter, no drive-line shutter. The Tesla Roadstar is the main product of Tesla Motors. Its charismatic chairman and main funder is PayPal co-founder, and SpaceX CEO Elon Musk. Barely a decade old, Tesla Motors is already gigantic, $33Bn (£20bn) market capitalisation and adored. It’s been called ‘the world’s most important automotive company’ and the Tesla S, ‘the most loved vehicle in America’. Out selling Mercedes S class and BMW 7 series. And yet the last successful American car start-up was Ford, founded 111 years ago. How can Tesla Motors be so successful?
Tesla is the brain-child of three silicon valley engineers convinced by global warning arguments and looking for alternative fuel sources for cars. Co-founder Martin Eberhard. ‘How much of the energy that comes out of the ground makes your car go a mile?’ He observed: hydrogen fuel cells are terrible - no more efficient than gas. Electric cars were superior to everything, he then discovered a bright yellow, all-electric, two seater bullet car with zero emissions, ‘tzero’, built by AC propulsion. Inspired, Eberhard kept saying to potential recruits - ‘try and touch the dashboard.’ He would then hit the accelerator they couldn’t.
But industry logic said electric cars would never succeed. GM spent $1bn developing EV-1 which was then scrapped. Battery technology had not improved in a 100 years. But Ebhard realised lithium-ion batteries were different improving 7 percent p.a. so Tesla was positioned to ride the current of technological history. The founders had no experience making cars, but realised car companies now outsourced everything, even styling. Manufacturing partners were ready to be connected with: a ‘fab-less’ car company was possible. Production began in 2008. The business plan described the Roadster as ‘disruptive technology’ a high end sports car with lower price and emissions than competitors and a lower resource cost to the planet.
Tesla’s strategy was: Unit 32 Business Strategy
To enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each succession model all free cash flow is ploughed back into R&D to drive down the costs and ring the follow on products to market as fast as possible. When someone buys the Tesla Roadster sports car, they are actually helping pay for development of the low cost family car.
Tesla aimed to provide zero emission electric power generation from their ‘giga’ battery factory in line with their ‘overarching purpose to help expedite the move from a mine’-and-burn hydrocarbon economy towards a solar electric company. In 2015, Tesla energy was launched selling batteries for home and business use.
Edison didn’t invent the lightbulb, but he made it affordable and accessible through his electric system. Tesla is also offering an energy system for a world of electric vehicles, homes and businesses, using batteries.
You are suggested to use this case study. Alternatively, you could use your own place of work or the company you would like to work for or any other company of your choice. Make sure that this company has an internet presence.
You have been appointed as a Junior Strategy Manager and you have been asked by your line manager to produce an environmental analysis and strategic growth management plan, based on the use of recognised internal and external analytical tools.
TASK 1: ( LO1, LO2,LO3)
You are required to prepare an internal and external analysis that provides a basis for strategic planning.
- Your analysis should include a PESTLE and SWOT of the organisation and an analysis of the organisation’s internal environment and capabilities.
- Also prepare an analysis of the competitive environment of the organisation using Porter’s Five Forces Model.
TASK 2: (LO4)
You are required to create a strategic plan based on the environmental analysis and findings in task 1:
- To include an evaluation of the different types of strategic directions available to the organisation.
- A justification and recommendation of the most appropriate growth platform and strategies.
- And produce a strategic management plan with strategies, objectives and tactics.
This unit will be assessed and graded in accordance with Pearson’s assessment criteria below.
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