Table of Contents
TESLA’S BUSINESS ENVIRONMENT ————————-3
External Analysis of the Company ——————————–3
Opportunities ———————————————————4
Threats —————————————————————-4
Internal Analysis of Tesla ——————————————-5
Critical Factors ——————————————————–7
STRATEGY IN THE GLOBAL ENVIRONMENT ————9
Motives for Global Expansion ————————————–9
TESLA’S CORPORATE STRATEGY —————————-9
Vertical Integration and Outsourcing —————————–10
Horizontal Integration and Strategic Alliance ——————-10
STRATEGIC PURPOSE: ETHICS & CORPORATE SOCIAL RESPONSIBILITY (CSR) —————————————–13
Employee Health and Safety —————————————13
Gender Equality and Minority Groups —————————-13
Recycling ————————————————————-15
Ethical Aspects of Tesla’s Business ——————————16
Bribery and Corruption ———————————————16
Bad corporate governance ——————————————16
Poor PR management ———————————————–17
Self-driving cars —————————————————–17
Conclusion ———————————————————–17
References ————————————————————18
Self-evaluation for completing the task ————————–20
- TESLA’S BUSINESS ENVIRONMENT
Tesla rules the U.S. electric vehicle (EV) market and there are huge prospects from the global EV industry, which is predicted to grow at a compound annual growth rate of 21.5% between 2018 and 2026. Tesla sold three of America’s five best-selling EVs within the first four months of 2018, and major competitors are Toyota’s Prius Prime (plug-in hybrid) and General Motors’ Chevy Volt although both brands lack Tesla’s appeal. But despite having a strong market visibility in both U.S. and global markets, Tesla is struggling with production challenges as well as some ethical and corporate social responsibility (CSR) issues (Chen & Perez, 2018; Crane & Matten, 2016; Tesla, 2020).
Figure 1: World’s Most Efficient EVs
Source: Statistica (2020)
External Analysis of the Company
The external environment includes industry-related factors that present opportunities or threats to business. The following factors emphasize Tesla’s opportunities for growth.
Opportunities
- Sales expansion: Evidence-based studies show that high awareness level on environmental issues and the huge untapped renewable energy markets in Asia and Australia are opportunistic factors capable of increasing competitive advantage and business sustainability.
- Supply chain expansion: Tesla needs to leverage on a strong and efficient supply chain (that is, production and sales operations) to support its global expansion objective. In comparison to Ford and General Motors (GM), Tesla’s global supply chain is relatively small, but growth opportunities can be maximized through innovation, networking, production of quality products, and effective marketing strategic.
- Diversification: Tesla should tap into diversification opportunities in the global market by establishing, acquiring or merging with other companies to increase profitability. Tesla’s diversification efforts should include ending supply agreement with Panasonic to produce its own battery cells.
Threats
- Product Liability Claims: Notwithstanding the high standard and premium quality assurance Tesla integrates in its manufacturing process, the U.S. automaker is prone to significant product liability claims arising from defects accidents, fire outbreaks, disabilities or deaths.
- Aggressive Competition: There is cut-throat competition between alternative fuel vehicles (Hybrid, Plug-in hybrid, fully electric car) and self-driving technology. Moreover, some electric vehicle (EV) manufacturers are not only planning to introduce eco-friendlier, self-driving technology but also, have plans to offer the new products at a comparably lower price.
- Scarcity of Raw Materials & Fluctuation of Material Prices: Cobalt (raw material used in producing lithium-ion batteries) is scarce. Tesla and its market competitors are therefore using legal and unethical means to acquire and sustain Cobalt supplies from other countries. The increasingly high and fluctuating cost of lithium (another material used in making energy storage products) adds to the cost of Tesla’s product portfolio—and price is a determinant marketing factor.
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