Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
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 - – increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, there is increasing trade war between United States & China, central banks are concerned over increasing inflation,
increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, 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 -
Operational resilience
– The operational resilience strategy in the Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Tesla Motors are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
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.
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.
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.
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.
Diverse revenue streams
– Tesla Motors is present in almost all the verticals within the industry. This has provided firm in Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? 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.
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.
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 -
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.
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.
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.
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 Innovation & Entrepreneurship 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Tesla Motors 's lucrative customers.
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.
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.
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.
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.
Slow to strategic competitive environment developments
– As Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? 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.
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.
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 -
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.
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.
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 Innovation & Entrepreneurship sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship 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.
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.
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.
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.
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.
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.
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.
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.
Buying journey improvements
– Tesla Motors can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Tesla Motors (in 2013): Will Sparks Fly in the Automobile Industry? suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Loyalty marketing
– Tesla Motors has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, 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 -
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.
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 Innovation & Entrepreneurship industry.
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.
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 2013): Will Sparks Fly in the Automobile Industry?, 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 Innovation & Entrepreneurship .
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.
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.
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.
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.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tesla Motors with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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 Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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.