Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study SWOT Analysis Solution
Case Study Description of Tesla Motors (in 2011) and the U.S. Auto Industry (Case B)
Now a public company, Tesla Motors has grown from an IPO and partnerships with Daimler and Toyota. Telsa has forgone the traditional dealership business model to sell directly to the public creating a unique customer experience. Now faced with negative press and reports from analysts that Tesla vehicles are too expensive, Elon Musk must decide what the next steps for Tesla Motors are.
Swot Analysis of "Tesla Motors (in 2011) and the U.S. Auto Industry (Case B)" written by Michael Janovec, Frank T. Rothaermel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tesla Motors facing as an external strategic factors. Some of the topics covered in Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) case study are - Strategic Management Strategies, Joint ventures, Leadership, Mergers & acquisitions, Sustainability and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, geopolitical disruptions,
banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, etc
Introduction to SWOT Analysis of Tesla Motors (in 2011) and the U.S. Auto Industry (Case B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tesla Motors, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tesla Motors operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) can be done for the following purposes –
1. Strategic planning using facts provided in Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) case study
2. Improving business portfolio management of Tesla Motors
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Tesla Motors
Strengths Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tesla Motors in Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) Harvard Business Review case study are -
Training and development
– Tesla Motors has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Successful track record of launching new products
– Tesla Motors has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tesla Motors has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High switching costs
– The high switching costs that Tesla Motors has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Analytics focus
– Tesla Motors is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Michael Janovec, Frank T. Rothaermel can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Tesla Motors
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tesla Motors does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Tesla Motors in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Tesla Motors is present in almost all the verticals within the industry. This has provided firm in Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Effective Research and Development (R&D)
– Tesla Motors has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Tesla Motors is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Tesla Motors is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Tesla Motors is one of the leading recruiters in the industry. Managers in the Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Tesla Motors digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tesla Motors has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Tesla Motors is one of the most innovative firm in sector. Manager in Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) are -
Products dominated business model
– Even though Tesla Motors has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Tesla Motors needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Increasing silos among functional specialists
– The organizational structure of Tesla Motors is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Tesla Motors needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tesla Motors to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Tesla Motors has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Need for greater diversity
– Tesla Motors has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High cash cycle compare to competitors
Tesla Motors has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– It come across in the case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) can leverage the sales team experience to cultivate customer relationships as Tesla Motors is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael Janovec, Frank T. Rothaermel suggests that, Tesla Motors is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to strategic competitive environment developments
– As Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) HBR case study mentions - Tesla Motors takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Lack of clear differentiation of Tesla Motors products
– To increase the profitability and margins on the products, Tesla Motors needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B), in the dynamic environment Tesla Motors has struggled to respond to the nimble upstart competition. Tesla Motors has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Tesla Motors can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Tesla Motors can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tesla Motors can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tesla Motors can use these opportunities to build new business models that can help the communities that Tesla Motors operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Tesla Motors can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Tesla Motors to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Tesla Motors can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tesla Motors can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Tesla Motors has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tesla Motors to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Tesla Motors has opened avenues for new revenue streams for the organization in the industry. This can help Tesla Motors to build a more holistic ecosystem as suggested in the Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) case study. Tesla Motors can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Tesla Motors in the consumer business. Now Tesla Motors can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Tesla Motors to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tesla Motors can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Tesla Motors (in 2011) and the U.S. Auto Industry (Case B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) are -
Stagnating economy with rate increase
– Tesla Motors can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology acceleration in Forth Industrial Revolution
– Tesla Motors has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Tesla Motors needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Tesla Motors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Tesla Motors will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Tesla Motors needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Tesla Motors can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Tesla Motors business can come under increasing regulations regarding data privacy, data security, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Tesla Motors needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Tesla Motors high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B), Tesla Motors may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tesla Motors can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tesla Motors in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Tesla Motors in the Strategy & Execution sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Tesla Motors can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Tesla Motors (in 2011) and the U.S. Auto Industry (Case B) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Tesla Motors needs to make to build a sustainable competitive advantage.