Strategic Management Case Project
Ronniel Espigul Garcia
Saint Leo University
MBA-599 Strategic Management
Kenneth Moss
June 14, 2020
Student Signature: Ronniel Espigul Garcia
Table of Contents
Introduction to the Company ………………………………………………………………3
Description of the Firm and its Product
Company History
Vision and Mission Statement
External Assessment…………………………………………………………………………5
External Factor Evaluation (EFE)
Competitive Profile Matrix
Internal Assessment…………………………………………………………………………8
Financial Ratios Analysis
Internal Factors Evaluation (IFE)
Cu
ent Strategy
SWOT Analysis
Possible strategic alternatives
Evaluation of cu
ent organizational structure
Recommendations
References…………………………………………………………………………………14
Tesla Motors
Introduction to the Company
Description of the Firm and its Products
Tesla Motors the popular electric car company, which is a clean based company based in California, USA. The company is known for manufacturing electric cars which run on batteries where the energy is stored from home to the grid scale and through the power acquired from solar panels and solar roof tiles. There are many product ranges with which Tesla deals with such as their car models such as Model S, Model 3, Model X and Model Y. along with cars, Tesla also deals Powerwall, Powerpack and Megapack batteries along with solar panels, solar roof tiles and many more (Tesla, 2020).
Company History
Tesla motor became a reality in July 2003 by two engineers Martin Eberhard and Marc Tarpenning. Their vision was to form a modern technology company and an independent automaker, which is aimed at providing the latest technology of electric cars at a very affordable price that, will be accessible for the average customers. Bilbeisi and Kesse XXXXXXXXXXhave further explained the strategic decision to focus on the energy-efficient vehicles led to the demand and growth of Tesla Inc. with investment in the R&D with more focus on energy efficient products and that to at a very reasonable cost, had led to the higher demand growth of the company. By the end of 11 years in the business, Tesla had been ranked as the world’s best-selling plug-in battery electric passenger car. This has resulted to a 17% market share in the plug-in segment and a 23% market share in the battery-electric segment. Sharma XXXXXXXXXXhas further added that this phenomenal strategy has given an added advantage that led Tesla to be a market leader and none of the competitors were close to the service and products that Tesla offers at a very reasonable cost.
Vision and Mission Statement
Every company has mission and vision statement based on which the guiding principles are formed. Bowen XXXXXXXXXXhas discussed that the mission and vision statement represents the methodologies on which the company will work and this provides a guiding path to the workers of the company to follow and work based on that guiding path and principle. Similarly, Tesla do have a mission statement which says that “to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” The vision statement of the company acknowledges that the world is on the verge where the only source of energy that can be helpful to run the mankind is through the renewable source of energy (Tesla, XXXXXXXXXXThis represent the future forecasting of the company and based on that the mission of the company is to increase their production further to meet the challenges faced by the industry because of the use of the fossil fuel. This will further reduce the consumption of fossil people by normal people as when they will get an option in hand where they can utilize the renewable source of energy to run their day-to-day life then they will opt for the best company providing this blessing to the mankind.
External Assessment
The External Factor Evaluation of Tesla has seen the evaluation of the company's external factors such as the government, social, and economic. A low-interest loan of $465 million was granted to Tesla by the Department of Energy as the company's electric vehicles and sustainable strategies caught the interest of the US government. Evaluation of the external factors have reported the ban on Tesla sales in around 5 states. Tesla sales have been ever-increasing since the recession in 2008 impacting the country's economy positively with the helping hand of the public. The external stakeholders such as US citizens have been a strong supporter of the company transition to it development by investing in fuels and products of sustainable nature.
External Factor Evaluation (EFE) of Tesla
Opportunities
Weight
Rating
Weighted Score
New Product innovation with latest sophisticated technology
0.11
4
0.44
Latest taxation policies benefits for electric cars
0.05
3
0.15
The core competency of Tesla in the electric car manufacturing segment
0.09
4
0.36
Tesla offers diverse ranges of electric vehicles
0.06
3
0.18
Latest Tesla car models: Model S, Model 3, Model X & Model Y
0.07
4
0.28
Tesla's sales expansion in the Asian Markets
0.08
4
0.32
Tie-up with Panasonic for in house production of car battery
0.08
3
0.24
Introduction of new pickup trucks by Tesla Motors
0.05
4
0.20
Manufacturing less expensive cars with high features like Model S and Model 3 cars
0.08
3
0.24
Threats
Weight
Rating
Weighted Score
Tesla's autopilot vehicles are all not successful
0.05
2
0.10
Extensive competitive market in the Hy
id car segment from BMW, AUDI, Toyota etc.
0.04
2
0.08
Defective products detected can hurt the
and image of Tesla
0.03
2
0.06
Customer's adaptation to new car models can be slow
0.05
1
0.05
Self-driven Tesla cars can lead to accidents and is a concern for the pedestrians
0.06
1
0.06
Supply of raw material can create disruption in the car manufacturing process
0.03
1
0.03
Usage of Lithium-ion in the batteries of Tesla cars are highly risky
0.04
2
0.08
Imitation of Tesla cars by other car manufacturers are bigger concern
0.03
2
0.06
TOTALS
1.00
2.93
Here, a rating of 1 = Poor, 2 = Average, 3 = Good and 4 = Outstanding. Weights are allotted as per the importance of the evaluation factors on Tesla.
As per the EFE of Tesla Tesla’s core competency in the electric car segment is given the highest weighted score. Whereas as per the threats it is the Tesla’s newly launched autopilot cars which are not fully successful on roads are given the highest weighted score. Capital stands at the top among the success factors. There are four main success factors behind Tesla motors namely Disruptive technology, Customer Experience, Superchargers, and Strong, Consistent Image. Disruptive technology drives Tesla to be at the apex in the industry of electric vehicles as the technology follows the efficient powering of a vehicle that performs highly with lithium-ion batteries (Endsley, XXXXXXXXXXCustomer Experience factors help Tesla to avoid middlemen in their dealings and educate their customers to turn to an electric vehicle. Tesla's Superchargers is the most efficient charging station. Committing to sustainable energy with its unique designs, Tesla has maintained a strong and consistent image in the market.
Competitive Profile Matrix (CPM)
Tesla
BMW
Audi
Critical Success Factors
Weight
Rating
Score
Rating
Score
Rating
Score
Advertising
0.05
2
0.10
2
0.10
3
0.15
Product Quality
0.09
4
0.36
3
0.27
2
0.18
Price Competitiveness
0.08
3
0.24
4
0.32
4
0.32
Management
0.10
1
0.10
3
0.30
3
0.30
Financial Position
0.15
4
0.60
4
0.60
3
0.45
Customer Loyalty
0.13
4
0.52
4
0.52
3
0.39
Global Expansion
0.15
2
0.30
3
0.45
3
0.45
Market Share
0.25
3
0.75
3
0.75
2
0.50
Total
1.00
2.97
3.31
2.74
Here, rating value of 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 = major strength. As indicated by the total weighted score, Audi is the weakest.
As per the customer profile matrix of Tesla compared with BMW and Audi Hy
id cars Tesla stands second to BMW. BMW has an edge over Tesla on Price competitiveness, Global Expansion by making their cars available across the world and its management operations. Audi is third with a total score of 2.74 as compared with 2.97 score of Tesla on evaluation of the critical success factors. Tesla has scored the lowest in its management as it is too much centralized and is controlled as per the directive of its chairman Elon Mask. Also, Tesla emphasizes advertising only through social media platforms like Automobile magazines, LinkedIn, Twitter and Facebook. They seldom advertise through television, newspaper ads. Hence, these are the two sectors Tesla has some drawbacks when compared with other care
ands.
Internal assessment
An organization culture for innovative problem solving is present in Tesla which helps in the internal assessment and development of profitable solutions for problems. The company's IFE had registered highly innovative processes, strong control over the production processes, and a strong
and image. Tesla has shown an efficient and consistent increase in the conversion of its inventory into sales (Mangram, XXXXXXXXXXResearch has reported a decrease in the company's financial ratio by XXXXXXXXXXwhich has registered a reduction in the company's cu
ent assets and payment to long and short-term obligations.
Summary of Key Financial Ratios
2019
2018
Liquidity Ratio
Cu
ent Ratio
1.13
0.83
Quick Ratio
0.80
0.52
Leverage Ratio
Debt to Total Assets Ratio
0.37
0.37
Debt to Equity Ratio
1.80
2.08
Long Term Debt to Equity Ratio
1.56
1.63
Times Interest Earned Ratio
0.30
-0.52
Activity Ratio
Inventory Turnove
5.77
5.60
Fixed Assets Turnove
1.10
1.20
Total Assets Turnove
0.77
0.74
Accounts Receivable Turnove
21.63
29.31
Average Collection Period
19.66
16.14
Profitability Ratio
Gross Profit Margin
16.55
18.83
Operating Profit Margin
-0.28
-1.81
Net Profit Margin
-3.51
-4.55
Return on Total Assets (ROA)
-2.26
-3.57
Return on Stockholders' Equity (ROE)
-10.38
-18.46
Earnings per Share (EPS)
-4.92
-5.72
Price- Earnings Ratio
0.00
0.00
The Liquidity ratio of Tesla looks average with the ideal cu
ent ratio should be 2:1 and quick ratio 1:1. But, it is observed that Tesla has not achieved the ideal ratio in any of the years.
The Leverage ratio is much better in 2019 compared to 2018. The ideal leverage ratio should not cross 3:1 limit.
In analyzing the Activity ratio, we can see that the Average college period in days from the sundry debtors or on credit sales have increased in 2019 compared to 2018 for Tesla. This is not a positive sign for Tesla.
The profitability ratio of Tesla is positive till the gross profit margin for both the years. It has started to reflect negative balances on its Net profits. This is due to higher operating costs and more time required collecting the debts from the