GRADING KEY

A: Outstanding generator of value, genuine strategic importance.

B: Valuable, but not crucial source of advantage.

C: Useful but declining significance.

D: Already declining significance, unlikely to be sustainable.

V R I O S STRATEGIC IMPLICATIONS

SKILLS (People strengths)

Elon Musk A A A A A Tesla’s most significant resource is its award winning CEO, Elon Musk. His vision, skills and networking capabilities has helped Tesla emerge as a global leader in Electric vehicle industry in such a short span of time. Elon, who is also leading SpaceX and Solar City has helped Tesla earn worldwide recognition, good funding, government grants and a series of awards.

Management and

Leadership

A A A A A Tesla’s cofounder and CTO, JB Straubel is an expert in vehicle engineering and design with degree from Stanford. Tesla also has industry veterans at various VP positions like VP I.T, VP Powertrain Operations, VP Supply Chain etc. Recently, Tesla hired Audi veteran, Peter Hochholdinger as VP- Vehicle Production to lead the mass

production of Model 3. The combination of experts and industry experience offers a

great competitive advantage to the company.

Networking skills

A A A A A Elon Musk’s networking skills has helped Tesla form an effective network of

stakeholders. His involvement in SpaceX, Tesla Energy and Tesla Solar offer immense technological and resource advantage to the company.

Fund and Grants raising skills

A A A A A Tesla due to its socially responsible mission and promising leadership has attracted good investments and government grants. Having access to these funds and grants have played a key role in company’s timely launch of high performance pioneer electric vehicles.

Design and engineering excellence

A A A A A Tesla cars, especially Model S is an architectural excellence. Tesla cars excel in design as well as H/ware and S/ware engineering capability. Tesla’s state of the art manufacturing unit is fully automated with robotics. The complete in-house integration of vehicles through robots is an architectural innovation making Tesla creations difficult to imitate. The team has core competencies in computer aided design and crash test simulations to reduce the development time for new models.

Pioneer in long and producing long range, high performance electric vehicles. Their Model S won the car of the year award in 2013. Although their success is generating tough competition in this developing industry, but the being the pioneers in electric vehicle technology offers them a lot of advantage.

CAPABILITIES (Tangible assets) Powertrain

technology

A A A A A Tesla’s proprietary Powertrain and Lithium ion battery for powering the Electric vehicles is an innovative technology and gives its cars a technological and

performance edge over other electric cars.

Tesla has over 140 patents awarded and over 240 patents pending for the

revolutionary Powertrain technology. Tesla also sells this technology to other auto manufacturers. one of the world’s most advanced

automotive factories, containing 5.3 million square feet of manufacturing and office space.

Giga factory A A A A A Tesla has invested $5 billion to set up a battery production plant in Nevada. The Giga factory will handle the worldwide production of Lithium ion batteries and would bring down the overall production costs by 50% by 2020. The factory would be a net zero energy footprint and will run by renewable sources of energy (wind and solar). The factory will play a key role in the production of 400000 Model 3 cars.

Company own network of sale stores

A A A A A Tesla’s sales strategy involves selling the cars directly to customers. This gives them immense advantage towards rightly

educating the customers about their cars and provide hassle free service.

Network of Super Charger stations

A A A A A Tesla has and is continuously building an extensive network of Super Charger stations across the world to help their customers fast charge their cars and even swap their

batteries during travel. This service offers

Tesla a huge competitive advantage against any other competitor in the EV industry.

Safety and Efficiency features

A A A A A Tesla’s Model S won the car of the year award in 2013 by Motor Trend. Apart from its design and engineering excellence, the car won accolades for its efficiency and safety features. The car also received the 5-star safety rating by U.S National Traffic Safety Administration.

Strategic Alliances

A A A A A Collaborative alliances offer great competitive advantage in today’s competition and innovation driven

environment (Holmberg, 2011). Tesla has intelligently capitalized upon this by forming various strategic alliances:

1. Supplier alliance: Lotus Cars, Panasonic

2. R&D alliance: Panasonic 3. OEM alliance: Toyota, Daimler STRATEGIC ASSETS and design thinking. As per Elon Musk, the revenue generated by sales is directly put in the R&D. Firm’s technological innovations offer it a key competitive advantage and it is extremely important for them to have a persistent innovation culture to stay ahead of their competitors.

Long term diversification strategy

A A A A A Tesla’s long term diversification strategy to grow Tesla into an energy innovation company creating sustainable products for the power generation industry like

‘Powerwall’ is an excellent strategy to solve the future energy crisis.

Business Model

B B B B B Tesla’s business and sales strategy is not well aligned with their global expansion

goals. The company owned sales and service centers are expensive and not conducive for achieving sales target.

Marketing Strategy

B B B B B Company does not have a well-crafted marketing and advertising campaign. The lack of awareness and education about the Electric Vehicle industry along with high performance features of Tesla cars is a great disadvantage in the existing competitive market.

The evaluation of above analysis clearly shows that Tesla’s strength lies in its dynamic leadership, innovative culture and technological excellence. Firm’s mission is derived from solving one of the most important energy crisis problem and envisions the development of a socially responsible Electric Vehicle and Sustainable energy industry. Tesla’s core- technological competencies like the Powertrain technology, Lithium ion batteries, Robotics driven manufacturing innovation along with strategic alliances with industry leaders are real source of competitive advantage.

If we do a risk-benefit analysis on the Giga Factory, currently I would call it a risky investment keeping in mind the mammoth investment and time needed for it to be fully functional. Keeping this in mind, outsourcing of battery production for existing Model 3 orders would be a good strategic move. Tesla also needs to strike a balance between R&D costs and other operational costs. Despite R&D’s advantages being at the core of the company strategy, the existing industry and stakeholder demands advise them to focus more on business growth and revenue generation. Tesla needs to revisit their business model and be more open to franchise and co-owned sales and service stores across the world. Currently Tesla has company owned stores and super charger stations and their business model allows selling directly to the customers for educational and better service experience. However, global expansion and volume sales would make this model very expensive and challenging to follow. Partnering with like-minded ventures and properly training them would make the sales and service infrastructure viable. Any disruptive technology product needs good investment in marketing and advertising strategy as its success lies in the awareness, accessibility and education around the product. Tesla has not given much importance to this area so far. An integrated and culture based marketing campaign is extremely critical for company’s growth and acceptability.

12. SCOT ANALYSIS

After completing the external and internal environment analysis, the below presented SCOT analysis offers a summary of skills, capabilities opportunities and threats. This analysis plays an important role in formulating an effective future strategy (Schulz, 2013).

SKILLS CAPABILITIES

1.Elon Musk’s bold and thoughtful leadership skills.

2. Pioneers in designing and production of long range high performance electric vehicles.

3. Creators of revolutionary Powertrain battery technology.

4. Persistence innovation culture leading to over 300 patents.

5. The car of the year for Model S shows that Tesla is skilled to design the best Long Range High Performance Electric Car in the world.

6. Highly skilled production team to handle complete in-house computer aided simulations and production.

6. Networking Skills to form strategic alliances and partnerships.

7. The company’s technological innovation skills get an advantage from the innovations in Elon Musk’s other ventures like SpaceX, Tesla Energy and Tesla Solar.

1.Tesla’s state of the art manufacturing plant at Vermont is one of the most advanced automobile manufacturing unit in the world.

2. Complete In-house production capability with advanced robotics, computer aided design and test simulations.

3. Giga Factory for the production of Lithium ion battery with a capacity to produce more batteries by 2020 than the entire world’s output in 2013. The factory will also make Tesla capable of accomplishing their goal of producing 5,00,000 annually.

4. Super Charger Network for charging and battery swapping.

5. Company owned sale stores for direct sales and exclusive service to Tesla customers.

6. Advanced safety, efficiency, infotainment and software enabled features to offer improved experience to customers.

7. Strategic alliances to further improve the production and R&D capability with other industry leaders like Toyota, Daimler, Panasonic and Lotus Cars.