About Tesla Incorporation

About Tesla Incorporation

Tesla Incorporation is an automobile company that deals with electric cars. The company was founded in 2003 by engineers who believed electric vehicles are better than fuel-driven automobiles. The organization’s sole mission is accelerating the world’s transition from fossil fuel-driven cars to clean and sustainable energy. The company also deals with large scale manufacture of clean and renewable sources of energy. Its directors believe the faster the transition to electric driven machines which produce zero-emission to the environment, the better.

In 2008, the organization launched its first state-of-the-art battery technology and its ever first electric powertrain. This advancement followed the manufacture of the world’s first all-electric sedan car. The technology combined performance, efficiency, and safety to come up with the world’s first electric car with the most extended battery life, an acceleration time of 2.28 seconds from 0-60mph. In 2015, the organization improved its model to model x, which had better safety, performance, and efficiency features. The model has a five-star safety rating from the National Highway Traffic Safety Administration. The automobile company introduced its model 3 in 2016, which includes low cost and higher battery life. Immediately after, the company launched its tesla mini, which is the safest, and the most comfortable track. The truck is designed to save the users over $200,000 over one million miles on fuel. Users enjoy improved stability and speed.

The company operates from its Fremont, California factory, where all the vehicles are manufactured. Most of the car parts are also manufactured in this factory. One of the company’s principal values is enhancing the safety of its employees. To achieve this goal, all employees participate in multi-day training programs before they start working in the factory. The company further provides on-job-training programs to ensure employees improve their safety practices and their overall production output.

Alongside its car production plant, the company also manufactures modern energy solutions such as Solar Roof, Powerwall, and Powerpack. These products enable businesses and homeowners to manage green energy production and consumption. The company also produces high-quality, low-cost batteries in its Gigafactory 1. This facility creates thousands of job opportunities.

Swot analysis of tesla Inc.,

SWOT analysis refers to a strategic planning technique of evaluating organizational strengths, weaknesses, opportunities for growth, and threats arising from competition and internal management structure. This analysis aims to make adjustments within its operations to remain competitive and capture new market opportunities that are yet to be exploited by its competitors. The current growth in electric car production has been on the rise, not only in the U.S but also across the world. Adoption of the latest trends in technology is the only option electric automobile producers can stay relevant; else, they will soon be phased out.

Strengths

Robust design, efficiency, and safety

The company produces equally competitive automobiles compared with its competitors. The company provides not only highly efficient cars and renewable energy sources but also manufactures safe and durable products. A combination of these factors confides its customers on the use of its products. This arises because, alongside other features, customers are more concerned about their safety and the efficiency of the products they use.

Revenue growth

The company’s revenue has been growing in recent years, providing a better opportunity for expansion. In the fiscal year 2017, the company recorded a revenue growth of 68%, which was the highest in the electric car manufacturing industry in the U.S. The company uses this revenue to support its new product’s development, research, and in outsourcing new technologies. The revenue growth is attributed to the sale of used automobiles in its trade-in shop. The company also generated revenue in the battery and renewable energy factories.

Innovation

The company concentrates on improving its products by adopting the latest technologies and integrating them into its production. This has seen the company produce better and improved automobile cars every year. The company also offers a wide range of renewable energy solutions to homeowners and businesses. This combination keeps it at the top of the other car manufacturing companies, which have to outsource most of the car parts.

Technology

Tesla values new ideas and technology. The company’s adoption of the latest technologies in the field of engineering has propelled the company to be the leader in developing the most stable and the fastest automobiles in the car production industry. The company integrates these techniques with properly tested computer software to enhance efficiency and safety.

Weaknesses

High debts

Tesla is battling with high debts, which have scared investors who wish to invest in the company. The company had a totally long term debt of $9418 million compared to its debt of $5973 million in 2016. This marked a 57.5 % increase in long term debt. These debts are attributed to the company’s expansion in interest expenditure of $300 million between 2016 and 2017. This trend will pose a potential risk of accessing credit as well as generating enough revenue to run its business. High debt rates negatively affected its D/E ratio (2.4) rating against its potential competitor, Bayerische Motoren Werke (1.0).

Lawsuits

The company has recently suffered a negative image from several lawsuits filed against it. The acquisitions vary from breach of contracts, as in the lawsuit filed by the founder in 2009 to stealing of designs and personal information presented by Fisker Automotive. In 2018, a family filed a suit against Tesla concerning a relative who died in an accident while driving one of the company’s models claiming low safety standards. These lawsuits not only cost the company a lot of money to settle but also give it a bad corporate image.

Security Exchange Commission settlement

The U.S security exchange recently investigated the company’s manipulation of its stock prices. The company’s stock prices are said to have risen by a 13 percent margin due to a tweet by the organization’s CEO and chairperson, Elon Musk. The settlement included the resignation of the CEO, followed by the election of interim directors. A fine of $20million followed this.

Summary of Strengths and Weaknesses

Strengths

weaknesses

Innovation

Debts

High Revenue Growth

Lawsuits

Technology

SEC settlement

Strong Design, Efficiency, And Safety

Opportunities

New projects

The company has embraced growth through opening new projects across the U.S. This expansion has seen the company improve on volume outputs. Through launching new projects, the company will definitely increase its revenues and serve the increasing demand for automobile cars in the U.S and other markets. These projects will help the company in achieving its objective of transforming the car industry by transiting from fossil fuel-driven vehicles to electric powered automobiles. The company’s partnership with the state of Australia will allow it to expand its customer base beyond the United States. Its virtual power plant in Australia will significantly lower the cost of electricity, which will enable customers to see the efficiency of adopting electricity-powered cars. The new Tesla Roadster project will provide customers with a new model with improved features that are equally competitive in the market.

Demand expansion

Cars that are fully powered by electricity will increase the demand for cars in the market. This increase will happen because many people are more concerned about Carbon and lead compound emissions from the current fuel-powered cars. The current environmental concerns will be reduced, leading to the demand for electricity-driven cars.

Threats

Competition

The current innovations by Tesla’s competitors pose a significant threat to its existence. The emergence of auto driven cars has shifted customers’ interests from just electric driven cars to auto driven models that can better serve them. More experienced companies such as fold, BMW, Audi, and Mercedes are inventing new ideas daily. In addition to this, the company also faces competition from traditional fuel-driven models, solar-powered cars, and hybrid cars due to their cost and efficiency. The existence of hydrogen driven vehicles in the market has posed stiff competition to the company.

Business seasonality

The demand for electric cars falls during the winter and rises over summer. This seasonality will significantly affect the company’s revenue during the low season. The company will incur extra expenses paying its employees during the low season in spite of the fact that their productivity will relatively be lower. The fluctuation of operational costs will negatively affect the company’s current and future business performance.

Summary of Tesla’s Opportunities and Threats

Opportunities

Threats

New Projects

Competition

Increase In Demand

Business Seasonality

Tesla’s external environment analysis

Political factors

Several political factors favor the growth for Tesla Inc. they include the government incentives for electric-powered vehicles, new global trade pacts, and the current political stability that supports business growth.

Economic factors

Tesla’s growth will significantly rely on global economic conditions. These conditions include factors that affect the automobile business. They are market growth, currency rates, and trade levels. For instance, market growth in solar panels will improve its solar equipment business and vice versa. The current decrease in the cost of producing batteries and low renewable prices are an opportunity for Tesla. However, the prevailing global economic instability poses a threat to the growth of the organization.

Socio-cultural factors

Several socio-cultural factors have been cited to be an opportunity for Tesla to grow. They include the increasing popularity of low carbon lifestyles, the increased preference for green energy, and increased wealth distribution in emerging countries.

Technological factors

The high rate of technology advancement is a threat, as well as an opportunity for the company. Tesla will have to incur costs to advance its technology in the industry. The increased automation in production will be an excellent opportunity for the company to reduce its operational costs. Lastly, the popularity in online marketing and shopping will allow the company to reach global markets.

Environmental factors

Climate change, as well as the expansion of ecological programs that advocate for green energy, is an excellent opportunity for Tesla to thrive. In addition to these, the rising waste disposal standards and costs will be a plus to the organization.

Legal factors

The expansion of global patent protection will enable the company to reach international markets safely. Energy regulation policies in the U.S will be an opportunity for the company’s growth.

Evaluation of the SWOT analysis

The company stands in an excellent position to grow, depending on its strengths. However, the company needs to work out its operational costs to cut down its long term loans. The organization can compete effectively with other automobile companies by strategizing on pricing and keeping abreast of the latest technologies. Tesla, Inc. needs to expand its research centers that will develop the newest computer software, which will lower the cost of outsourcing.

Corporate-level strategy

The company’s mission is to accelerate the world’s transmission to sustainable transport. The company operates in three primary areas, namely: Electric automobile production, low-cost battery production, and solar panel production. The company’s aspiration for further expansion is likely to incorporate other products that are related to its core business of manufacturing electric cars. One of these is the manufacture of its own computer software, which will significantly lower production costs. While the company’s core business was the production of automobiles, the demand for renewable energy has motivated Tesla to expand its scope of business.

Business-level strategy for Tesla Inc.

Product differentiation (the porter’s model)

The company uses a differentiated approach to succeed in the market by developing products that are unique in the market. Tesla ensures its products’ specifications differ from those produced by its competitors. The company remains competitive by providing its products are easily identifiable by its customers, thus reducing the issues of confusion due to the availability of other products in the market. Because of its environmentally friendly products, they easily outcompete similar products in the market. By producing fully electric-powered automobiles, the company faces competition from hybrid manufacturing cars. However, this gives the advantage of marketing entirely environmentally friendly vehicles that are admired by many customers despite the cost. Tesla, just like other companies such as Toyota, uses price differentiation in its new businesses. For instance, the company offers low price electric cars compared to other electric automobile manufacturing companies in the U.S.

Market Penetration Strategy

Tesla uses the market penetration strategy as one of its growth techniques. The company has expanded its customer base by increasing its production volume to meet the current demand for electric driven cars.

Product development strategy

The organization uses a product development strategy to develop new products that meet customer needs. The company focuses on environmentally friendly products such as solar panels. The company has also developed the world’s first full electricity-powered sports car, the Roadster. Other strategies used by the company are market development and diversification. In the latter, the company produces a wide range of goods such as solar panels and long-life batteries, which supplement its core business.

Structure and control systems

The organization uses a U-form structure. Tesla uses the organizational function and structure as its objective defining factor. For instance, the company has a group of engineering employees supplemented by sales and service group. The company’s structure is characterized by the following features, namely: function-based hierarchy, which is the most important, centralization and divisions.

Function-Based Hierarchy

This constitutes of functional offices whore role is to oversee all business operations, domestically and internationally. Tesla’s function-based hierarchy represents the following offices.

1. The chief Executive officer and Chairperson, Finance,
2. International and global sales and service,
3. Engineering and,

Centralization

The organization uses a centralization strategy in its management structure. The main aim of a centralized structure to enable the company to make centralized decisions that affect the organization’s operations. The heads of various offices are convened into a centralized office in the organization’s headquarters, where all activities are controlled. With a centralized structure, the company limits the regional offices’ autonomy to make decisions. Most of the company’s decisions are made at the headquarters.

Divisions

Tesla uses divisional offices to implement the company’s decisions and projects. They are also responsible for marketing campaigns and keeping regional financial documents and reports. The main divisions in the corporate structure are Energy Generation and Storage, and Automotive. The company further has four divisions based on geographical locations, namely; United States, China, Norway, and Other.

Advantages and disadvantages of Tesla’s corporate structure

The company benefits from a centralized decision-making unit that controls the overall business operations. The regional offices offer the necessary support through marketing and research on new market opportunities in different geographical areas. This strategy enables the organization to outsmart giant car manufacturing companies such as Bavarian Motor Works (BMW), Toyota company, and Honda, among other companies. The central office efficiently monitors and controls the development of competitive advantage.

On the other hand, the centralization of the decision making office delimits the autonomy of the other offices to make decisions that would improve the organization’s market share. The regional offices are limited to only taking directions from the centralized office, which is time-consuming. To address this issue, Tesla should increase the autonomy of the local offices to make decisions that require an urgent response. Delegation of roles in management is a more suitable management strategy.

Recommendations

For the success of this organization, it ought to address its weaknesses and, at the same time, capitalize on its strengths and opportunities to grow its corporate enterprise. The organization needs to utilize its substantial revenue to invest in research to enhance its innovativeness. In addition to this, Tesla Inc. should involve itself in environmental protection campaigns to change a majority of the world’s population who still believe fossil fuels are the only source of energy. The company needs to improve its differentiation market strategy to ensure they produce unique products that cannot be easily be duplicated by competing companies. Further, Tesla Inc. should fully adopt price differentiation as used by other companies to increase its sales turnover. To cut on the operational costs, Tesla Inc. should take automated methods of production, which will also improve the overall organizational production volumes.

The organizational structure for the organization is too rigid for effective leadership. The organization needs to empower regional offices and give them the autonomy to make decisions on marketing strategies as well as carrying out surveys which will see the company find new market opportunities in different geographical locations. Finally, the company should improve on the production of its spare parts to minimize the challenges associated with too much outsourcing.