Tesla Motors Harvard Case Solution & Analysis

Tesla Motors Case Solution

Main issues

The main issues faced by the company are that whether

  • Will the company be able to reduce its cost of manufacturing?
  • Will the customer continue to accept the relatively new technology of electric cars?
  • Bringing improvements in the company’s distribution channels and its limited market presence globally.

Strategy components and relationship

Nowadays, the demand for cars has grown considerably in the U.S. In the midst of the growing demand and advancement in technology, companies need to innovate and improve their processes and quality while reducing their costs in an attempt to gain advantage over the competition.

In order for a company to grow in the market and to ensure its going concern,it needs to formulate both long-term and short-term strategies, setting precise objectives and taking effective decisions to ultimately reach those objective to implement the strategy formulated. Tesla Motors is one the fastest growing industries in the designing and manufacturing of electric cars.

There are three main strategic components for Tesla Motors.

  1. Strategy formulation.
  2. Strategy implementation.
  3. Strategy evaluation.

Strategy formulation:The first component of the strategy is planning, setting goal and objective, missions and vision of the company. Moreover, the company has to analyze the internal and external challenges faced by the company, its competitors and the industry of its operation or any other element that might affect the company. The company should create or formulate strategies under the given situation. Hence, Tesla motors must develop a strategic plan that best fits its needs and helps the company in gaining the benefit from the strategy in the present as well as in the future.Tesla’s vision is to create this century’s most technically advanced company, and its mission is to move towards sustainable solar economy.

Strategy implementation:The second phase of the strategy is the implementation process,where the organizational structure, leadership and procedures affect the strategy implementation process. Tesla, at the operational level, needs to define its goals where it has to decide between different alternatives,and whether it should manufacture high-end cars or manufacture luxury cars or whether it should manufacture affordable cars for the masses.All these factors should be considered when implementing the strategy.

Strategy evaluation:The last phase is the evaluation process where the management of Tesla needs to evaluate and assess the strategy formed and implemented, and whether it performed as it was supposed to be performed. The strategy can be evaluated by comparing with the competitors or with the performance of the previous year.

Tesla Motors formulated different strategies when building alliances with different companies to further progress on its own mission. Moreover, these strategies and alliances helped the company to raise its capital as well as helped it to increase its sales in the market.Take Tesla and Solar City's alliance, for example, both require batteries that are cost effective, and this is a factor which links these two companies. Further more, Tesla Motors needs batteries that are cheaper in order to reduce the cost of its electric cars so as to decrease the selling price whereas,Solar City needs batteries that are cost effective in order to gain independence from the grid. This shows how both companies provide benefits to each other where both companies have battery ambitions that line perfectly and provide synergy between the companies and help both the companies to prosper in the market.Tesla Motors Case Solution

Tesla Motors has also collaborated with Mercedes-Benz to build components of electric power train for Mercedes-Benz A-Class as Tesla was the first company to make all electric car with power train which in turn increased the range of the car up to 200 km. In the year 2010, Tesla Motors and Toyota became partners and worked on electric car development. Tesla motors provided electric vehicle’s parts,production systems and engineering support to Toyota. All of these alliances brought synergies to Tesla as well as to the other participants of the strategic alliance and benefited both parties involved in the alliances. As a result, this enabled Tesla to increase its revenue as well as its sales in the electric car market where others failed......................

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