Analysis of Strategic Position of Tesla Motors

The main aim of this paper is to analyze the strategic position of Tesla Motors through the key strategy models, which includes, SWOT analysis, PESTEL analysis, and Porter’s Five Forces Model in both Tesla’s External and Internal factors.

  1. External factors analysis
  2. PESTEL Analysis

Political: Tesla, just like other automotive companies need to be aware of political patters that influence their business operations. One of such political factor is the United States loan programs for research and development of new car technologies

Economic: some of the economic factors affecting Tesla include the increase in the cost of maintaining of cars largely due to rise in the cost of fuel and the growth of alternative energy (Rothaermel &David, 9). 

Social: Social factors that affect Tesla are mainly concerned on preserving the environment.

Technical: Improving the technology involved in the development of cars is major concern in the operation of Tesla. Technology that has enhanced the development of fully electrical cars with autopilot capabilities.

Environmental: It has been a challenge for car manufacturers to produce fuel-efficient cars r eco-friendly cars.

Legal: There are numerous regulations from the government and the green movement that affect Tesla, they include franchise laws that restrict Tesla from selling cars directly to customers.

  • Porter’s Five Forces Analysis

Threat of Entry of new firms: in Tesla’s case, the threat of new entries of firms to the market is low.

Bargaining Power of Tesla’s Buyers: The buyers of Tesla’s care have a moderate bargaining power because Tesla depends on the partnership they have with Toyota and Daimler (Rothaermel &David, 16).

Threat of Substitutes: Threat of substitutes to Tesla’s cars is considerably low since there are very few choices that can substitute Tesla’s cars.

Bargaining Power of Suppliers: Bargaining power of the suppliers for Tesla is very high because Tesla is dependent on its suppliers.

The intensity of rivalry in the industry: within the automated car industry, rivalry is very high, however, in the market that Tesla takes part the rivalry is moderate.

  • SWOT Analysis

Strengths: Tesla has developed electric cars that have the auto-pilot functionality. Tesla also enjoys strong supplies. i.e. Toyota.

Weaknesses: Tesla incurs high cost of production hence their prices are higher than their competitors

Opportunities: There is an increasing support for Tesla’s cars by governments across the globe.

Threats: It is difficult for Tesla to produce, distribute and sell their cars due to their current business model.

b. Internal factors

  1. VRIO Analysis

Valuable: Large manufacturers such as Toyota and Daimler are buying components from Tesla to use in their vehicles

Rare: Tesla’s cars are the only ones that can go up to 300 miles on a single charge

Costly to Imitate: No other company can match Tesla’s technology

Organized: Tesla has partnered with various companies and individual to further develop electric cars

  1. SWOT Analysis

Strengths: Rising of revenues and a bold marketing strategy

Weaknesses:  Large debts and high prices

Opportunities: Rising cost of buying fuel has led to customer to buy electric cars

Threats:  increased government regulations

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