SWOT Analysis on Tesla
SWOT analysis on Tesla, Inc. with each analysis containing at least 75 words each and write a 600 word summary of your findings using the information from the SWOT analysis and incorporating the business’s structure, culture, and interrelationships to write the summary.
- Explain how you would match the business’s strengths to its opportunities.
- Analyze how you would convert the business’s weaknesses into strengths.
- Explain the actions the business needs to take to advance its goals and/or expand its competitive advantage.
- Analyze interrelationships among distinct functional areas of the organization and how it may affect your SWOT analysis.
Part A: Tesla, Inc – SWOT Analysis
Strengths
- Strong brand image, i.e. enjoys dominance in the luxury electric cars industry. Tesla’s strong brand is also greatly impacted by the CEO (Elon Musk’s) personal brand.
- Highly innovative processes. Tesla, Inc. has transformed the manner in which people travel by turning innovative ideas into reality, e.g., electric vehicles.
- Excellent and robust control over vehicles production processes. For example, Tesla manufactures most of components required for vehicle production.
Weaknesses
- Limited market presence – For example, Tesla generates most of its revenues in America and enjoys a limited market presence in China as well as in developing countries.
- High prices – Tesla’s automobile products are relatively more costly to customers compared to competing cars. As a result, Tesla finds it difficult to grow its customer base and market share in the industry.
- Limited supply chain – Tesla’s limited supply chain prevents the automobile player from fastly expanding in overseas markets.
Opportunities
- Global sales expansion – Tesla ventures most in the United States automobile market. Thus, Tesla can raise its revenues by expanding to China and through expansion in Asian automobile markets.
- Global supply chain network growth – Tesla has the opportunity to diversify its supply chain network by supporting the global expansion of vehicle production and sales operations.
- Business diversification – Tesla can raise its performance through product and market diversification. For example, it can acquire new businesses to lower exposure to risks in the automobile industry.
Weaknesses
- Aggressive/stiff competition from rivals – Tesla faces aggressive competition from other automobile companies, such as Volkswagen, Nio, and BYD Company. This is a major threat to Tesla.
- Government and dealership regulations – Dealership regulations is a major threat to Tesla, Inc., for example, in states like Texas and Virginia, direct sales are restricted.
- Material prices fluctuation – There are fluctuations in terms of material prices, for example, the cost of lithium, which affects Tesla’s capability to produce.
Part B: Tesla, Inc – SWOT analysis Summary
Matching Strengths to Tesla’s Opportunities
As highlighted in Tesla’s SWOT, the company succeeds as an innovative automaker and energy solutions company. Tesla’s key strengths include highly innovative processes, strong brand, and strong control over its production processes (Kissinger, 2018). On the other hand, Tesla’s market opportunities include global sales growth, global supply chain network expansion, and business diversification. To remain successful in the automobile industry, the company must exploit these existing opportunities and convert them as their strengths. To match these strengths to Tesla’s opportunities, the company needs to improve its multinational/global presence (Kissinger, 2018). For instance, sales operations and new facilities in high-potential Asian markets and developing countries need to be exploited to steer the company’s growth and market presence. Also, Tesla must continue investing in R&D to produce technologically and innovative advanced products whose demand in the industry is unmatched. Also, Tesla should capitalize on its brand to steer business diversification as well as global sales expansion.
Converting Tesla’s Weaknesses into Strengths
To uphold its corporate mission and vision, corporate culture, and organizational values, Tesla needs to convert its weaknesses into strengths. Tesla’s weaknesses include limited supply chain, limited market presence, and high cost on its automobile products (Alghalith, 2018). To promote its positive brand image, encourage innovation, and exercise control over production processes, Tesla must resolve these weaknesses to their advantage. Thus, Tesla needs to diversify its supply chain network to reduce supply chain risks. Also, Tesla needs to expand its business operations in international markets to explore and exploit global expansion in the automobile and renewable energy sector (Kissinger, 2018). By this doing, the issues of limited market presence would have been solved and converted to Tesla’s strength/advantage. In addition, Tesla needs to produce cost-efficient electric vehicles to curb the increasing competition from other automobiles whose cars are relatively cheaper. With affordable car prices, Tesla would rapidly expand its customer base and market share.
Actions Tesla needs to take to Advance/Expand Competitive Advantage
As per Tesla’s SWOT analysis, the company’s major threat is competitive pressure from the rival firms. According to (Mangram, 2012), competitive forces from competitors like Volkswagen limit Tesla’s revenue growth from the global market for electric cars, solar panels, and batteries. To advance its corporate goals and expand its competitive advantage, Tesla needs to address aggressive competition threats, dealership regulations, and fluctuation in material prices. By this doing, Tesla would be able to maintain resilience, acquire competitiveness, and maintain a sustainable market position in the automobile industry. To achieve this, Tesla needs to adopt and invest in a culture of innovation, where the management supports its employees to innovate advanced vehicles that match market needs. Also, Tesla needs to embrace and encourage a divisional and flexible organizational structure, where all departments are flexible to interact in decision making (Alghalith, 2018). Besides, Tesla must adopt an alternative sales technique since direct sales are not allowed in some states and regions. This would help Tesla remain profitable and competitive despite the aggressive competition from other automobile companies.
Interrelationships among Distinct Functional Areas and their Effect on SWOT Analysis
Tesla’s organizational structure is characterized by a function-based hierarchy. This hierarchy encompasses functional offices/teams that oversee local and global operations. In Tesla’s structure, six (6) functional offices direct and represent its international hierarchy (Meyer, 2018). These functional areas include (1) Chairman and CEO, (2) Finance, (3) Technology, (4) Global Sales and Service, (5) Engineering, and (6) Legal department. This function-based hierarchy strengthens Tesla’s global position, performance, and operations (Meyer, 2018). In SWOT, the unique hierarchical structure improves Tesla’s brand image, recognition, and competitiveness.
References
Alghalith, N. (2018). Tesla: Innovation with information technology. International Journal of Business Research and Information Technology, 5(1), 37-51.
Kissinger, D. (2018, September 12). Tesla Inc. SWOT analysis & recommendations. Retrieved January 25, 2021, from Panmore: http://panmore.com/tesla-motors-inc-swot-analysis-recommendations
Mangram, M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing, 20(4), 289-312.
Meyer, P. (2018, September 8). Tesla Inc.’s organizational structure & its characteristics (analysis). Retrieved January 25, 2021, from Panmore: http://panmore.com/tesla-motors-inc-organizational-structure-characteristics-analysis