For this assignment, students are expected to respond to the following questions about the case:
- Identify several external opportunities and threats that face Tesla.
- Identify several internal strengths and weaknesses that face Tesla.
- Match several of your external and internal factors to formulate several strategies that Tesla is (or could) use going forward.
- What is Tesla’s competitive advantage in the automobile industry?
In order to address these questions, the students are expected to do some research reviewing different relevant reports to identify a list of potential opportunities, threats, strengths and weaknesses. The sources should be reliable and relevant to the Tesla case. Having identified the list, students should write a short paragraph explaining the external (opportunities and threats) and the internal factors (strengths and weaknesses). Once that is done students are expected to identify 2 strategies for SO (Strengths & Opportunities), 2 strategies for WO (Weaknesses & Opportunities), 2 strategies for ST (Strengths & Threats) and 2 strategies WT (Weaknesses & Threats). Having identified a total of eight strategies. The students should write a short paragraph outlining Tesla’s competitive advantage and the strategy that Tesla should be adopting.
WHICH AMERICAN COMPANY DOES THE BEST JOB OF STRATEGIC PLANNING, AND
HOW IS IT DONE?
The answer to the first part of the question posed may be Tesla Inc., the U.S. electric automobile
manufacturer founded in 2003 and headquartered in Palo Alto, California. The answer to the second part of the question may be “by matching internal strengths/weaknesses with external opportunity/threats” using SWOT analysis. For the first time ever, in 2017, Tesla joined the Fortune 500 largest companies in the United States; the company’s annual revenues exceed $7 billion.
An integral part of Tesla’s excellent strategic plan is to capitalize on the 6.5 percent annual gross
domestic product (GDP) growth in China, compared to the GDP growth of about 2 percent in the United States. Tesla’s sales in China skyrocketed in recent years as CEO Elon Musk of Tesla capitalizes heavily on the firm’s technological prowess (internal strength) matched with China’s booming GDP (external opportunity) and China’s strong preference for electric vehicles (external opportunity). In 2016, sales of electric and plug-in hybrid automobiles in China rose 50 percent to 507,000, more than triple the comparable figure in the United States. Electric vehicles are viewed in China as a way to help clear smoggy skies (an external opportunity), and that is a primary reason why China’s government has exempted electric cars from rigid license plate restrictions in six large cities: Shanghai, Bei, Shenzhen, Hangzhou, Guangzhou, and Tianjin; these six cities report the highest Tesla sales.
Tesla’s strategic plan includes manufacturing cars in China by the end of 2018, because shipping
cars from California to China is costly. Tariffs and taxes incurred to export cars to China increases the price of Tesla sedans and SUVs by 50 percent (external threat). The number of electric vehicles charging stations in China exceeds one thousand (external opportunity). Tesla mass produces its Model X SUV because China’s obsession with SUVs is a decade old and growing rapidly. Sales of SUVs in China now comprise nearly 40 percent of all passenger-vehicle sales in that country.
Turning to Australia, Tesla recently supplied the largest battery in the world to Jamestown, Australia. The battery is storing electricity from a new wind farm that supplies thirty thousand homes with power. The battery has a 100-megawatt capacity. Tesla’s strategic plan is for the whole world to use its batteries in cars, trucks, homes, and businesses.
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