Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
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Case Study SWOT Analysis Solution
Case Study Description of Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry?
Elon Musk's reputation as a serial entrepreneur has people wondering what will happen with his current focus, Tesla Motors. In the heavily-fragmented, alternative fuel vehicle industry, Tesla has established itself as the leader in all-electric car technology. Despite the Tesla Model S being named the Motor Trend 2013 Car of the Year and a soaring stock price, Tesla faces many challenges going forward.
Swot Analysis of "Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry?" written by Frank T. Rothaermel, Erin Zimmer 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 2013): Will Sparks Fly in the Automobile Industry? case study are - Strategic Management Strategies, Entrepreneurship, Innovation, Leadership, Sustainability, Technology and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? casestudy better are - – challanges to central banks by blockchain based private currencies, technology disruption, 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%, there is increasing trade war between United States & China, increasing transportation and logistics costs,
supply chains are disrupted by pandemic , wage bills are increasing, etc
Introduction to SWOT Analysis of Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? 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 2013): Will Sparks Fly in the Automobile Industry? can be done for the following purposes –
1. Strategic planning using facts provided in Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? case study
2. Improving business portfolio management of Tesla Motors
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Tesla Motors
Strengths Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tesla Motors in Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? Harvard Business Review case study are -
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 Frank T. Rothaermel, Erin Zimmer 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? firm has clearly differentiated products in the market place. This has enabled Tesla Motors to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Tesla Motors to invest into research and development (R&D) and innovation.
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 2013): Will Sparks Fly in the Automobile Industry? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Tesla Motors has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tesla Motors to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Ability to recruit top talent
– Tesla Motors is one of the leading recruiters in the industry. Managers in the Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? 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 Innovation & Entrepreneurship 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.
Ability to lead change in Innovation & Entrepreneurship field
– Tesla Motors is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Tesla Motors in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Highly skilled collaborators
– Tesla Motors has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 2013): Will Sparks Fly in the Automobile Industry? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Tesla Motors is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? are -
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.
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry?, it seems that the employees of Tesla Motors don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry?, is just above the industry average. Tesla Motors needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow decision making process
– As mentioned earlier in the report, Tesla Motors has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Tesla Motors even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
No frontier risks strategy
– After analyzing the HBR case study Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry?, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Low market penetration in new markets
– Outside its home market of Tesla Motors, firm in the HBR case study Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Frank T. Rothaermel, Erin Zimmer 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry?, 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.
Aligning sales with marketing
– It come across in the case study Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? 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 2013): Will Sparks Fly in the Automobile Industry? can leverage the sales team experience to cultivate customer relationships as Tesla Motors is planning to shift buying processes online.
Opportunities Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? | 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 2013): Will Sparks Fly in the Automobile Industry? are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tesla Motors in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
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 2013): Will Sparks Fly in the Automobile Industry? - 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 2013): Will Sparks Fly in the Automobile Industry? case study. Tesla Motors can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Tesla Motors to increase its market reach. Tesla Motors will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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 2013): Will Sparks Fly in the Automobile Industry?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
Developing new processes and practices
– Tesla Motors can develop new processes and procedures in Innovation & Entrepreneurship industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
Building a culture of innovation
– managers at Tesla Motors can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tesla Motors to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Tesla Motors to hire the very best people irrespective of their geographical location.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tesla Motors is facing challenges because of the dominance of functional experts in the organization. Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? 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 2013): Will Sparks Fly in the Automobile Industry? are -
Shortening product life cycle
– it is one of the major threat that Tesla Motors is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 2013): Will Sparks Fly in the Automobile Industry? .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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 Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
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.
Regulatory challenges
– Tesla Motors needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Technology acceleration in Forth Industrial Revolution
– Tesla Motors has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Tesla Motors needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Consumer confidence and its impact on Tesla Motors demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship 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.
Increasing wage structure of Tesla Motors
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Tesla Motors.
Weighted SWOT Analysis of Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? 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 2013): Will Sparks Fly in the Automobile Industry? 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 2013): Will Sparks Fly in the Automobile Industry? 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 2013): Will Sparks Fly in the Automobile Industry? 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 2013): Will Sparks Fly in the Automobile Industry? 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.
