Tesla Motors was co-founded in 2003 and is based in Palo Alto, California. Since its inception in 2003, the company has made significant growth in the electric vehicle market. Tesla Motors designs, manufacture, and sells electric PowerStation components and cars. Also, the company manufactures battery charging equipment (Motors, 2010). This assignment will focus on the key strategic management processes of the Tesla Motors and the internal and external environment of the organization. It will also focus on the trends and conditions in the external environment that affects the firm’s strategic actions. We will examine the advantages and risks that the firm’s business strategy faces (Hughes & Drury, 2015). Lastly the task will identify the challenges that the firm is likely to face as it grows and the recommendations to reduce the risks.
Electric cars are likely to overtake the traditional vehicles and demand for transport services like Uber are being preferred to public transportation and owning vehicles altogether. Tesla motors emerged to be the world’s manufacturer of these electric cars but its facing competition from Federal signal, Ford Motor Company, General Motors, Honda Motor Company, Toyota Motor Corp and many other companies. Due to this competition, the company has experienced loss of $0.01 per share than the expected sales. Even though it has invested heavily in infrastructure, it’s expected to reduce the costs of batteries that are set in the vehicles by 30%. Tesla is among the most shorted stocks because its stock price has remained inflated as compared to Ford and General Motors. One source of its competitive advantage is that it is a technology firm which builds technology platforms other than being an automotive company(Mangram, 2012). This has made it to become a leading player in the energy industry because the aim is to bring the same integration and data analysis as it did in the automobile industry. Tesla has taken advantage over its competitors by equipping its new cars with sensors necessary to the autopilot software. Every function of Tesla cars is controlled by software hence the company has optimized its functioning just like the google search do. Another competitive advantage is that; Tesla will be able to use these improved technologies to create a Tesla Network that will enable the car owners to rent their cars as taxis hence making profits from this (Yurynets & Tomyuk, 2014). Tesla has ensured that its business is diversified in case the automotive industry sinks. The batteries of the Tesla cars are commercializing because they are rechargeable hence providing people with solar-captured which they use at night when there is power shortage (Rothaermel, 2015). Tesla has been able to provide energy storage systems to utility companies and this increased their production hence a cost advantage.