STRATEGIC MANAGEMENT

(BBA 531)

CONTINUOUS INTERNAL ASSESSMENT 3

Submitted To: Submitted By:

Dr. Rajveer Samuel Samarth Mittal 2224430
Rawlin Simar Chhabra 2224434
Puneeth V Ranganatha 2224424
Piyush Sharma 2224477
Vedansh Gautam 2224439
Table of Contents

S. Particulars Page No.

No.
1 About Tesla 4

2 Mission & Vision Statement 5

3 SWOT Matrix 8

4 SPACE Analysis Matrix 11

5 BCG Matrix 15

6 Internal External Matrix 17

7 Grand Strategy Matix 23

8 Recommended Strategies and Long-Term Objectives 27

9 Comparison with Tesla's Actual Strategies 29

10 Implementation Plan 31

11 Recommended Annual Objectives 35

12 Recommended Procedures for Strategy Review and 39

Evaluation

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3
About Tesla

Tesla, Inc. was founded in 2003 by engineers Martin Eberhard and Marc Tarpenning in San
Carlos, California. The company was created with the goal of producing electric vehicles (EVs)
that were more efficient and environmentally friendly than traditional gas-powered cars. Elon
Musk joined Tesla in 2004, leading a $7.5 million Series A funding round and becoming the
company's largest shareholder. He later became CEO and product architect in 2008.

In 2008, Tesla launched its first car, the Roadster, a high-performance electric sports car that
garnered significant attention. Tesla’s real breakthrough came in 2012 with the launch of the
Model S, a luxury electric sedan that won numerous awards for its range, performance, and
innovation. This was followed by the Model X SUV in 2015, the more affordable Model 3 in
2017, and the Model Y compact SUV in 2020. These models solidified Tesla’s position as the
global leader in electric vehicles.

In addition to EVs, Tesla expanded into renewable energy solutions, offering products such as
solar panels and energy storage systems like the Powerwall and Megapack. Tesla also
pioneered the development of autonomous driving technology through its Autopilot and Full
Self-Driving (FSD) features.

Tesla built several Gigafactories worldwide (in the U.S., China, and Europe) to increase
production and reduce costs. Over the years, Tesla has revolutionized the auto industry by
making EVs mainstream and continues to push the boundaries of technology, sustainability, and
transportation.

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Mission

To accelerate the world’s transition to sustainable energy.

Vision

To create the most compelling car company of the 21st century by driving the world’s transition
to electric vehicles.

Objectives

To increase electric vehicle production and deliveries.

To expand energy generation and storage solutions.

To enhance autonomous driving technology.

To build new Gigafactories to support production demands.

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Strategies

1. Product Innovation: Tesla prioritizes creating innovative, high-performance electric

vehicles (EVs) with advanced features like long-range batteries, autonomous driving
(Autopilot and Full Self-Driving), and over-the-air software updates. This focus on
technology has helped Tesla lead the EV market.

2. Vertical Integration: Tesla controls multiple stages of its supply chain, including battery
production, vehicle manufacturing, and direct sales. By owning Gigafactories, battery
production lines, and its own retail outlets, Tesla reduces costs, increases efficiency, and
ensures better quality control.

3. Renewable Energy Expansion: Tesla extends its focus beyond electric cars into clean
energy products, offering solar panels, solar roofs, and energy storage systems like the
Powerwall and Megapack. This aligns with its mission to accelerate the world’s transition
to sustainable energy and creates diversified revenue streams.

4. Gigafactory Expansion: Tesla is building Gigafactories around the world (in the U.S.,
China, and Germany) to increase production capacity, reduce costs, and meet the growing
global demand for electric vehicles. These factories also produce batteries, which are a
crucial component of Tesla's vehicles, enhancing its control over key resources.

5. Direct Sales and Service Model: Tesla uses a direct-to-consumer sales model, bypassing
traditional car dealerships. This allows Tesla to maintain control over pricing, customer
experience, and after-sales service. Tesla also uses a mobile service fleet to repair and
maintain vehicles, further enhancing customer satisfaction.

6. Autonomous Driving Focus: Tesla is heavily investing in autonomous driving

technology with its Autopilot and Full Self-Driving (FSD) capabilities. The company
collects data from its vehicles to improve AI models, aiming to achieve full Level 5
autonomy, which could lead to future ride-hailing or autonomous taxi services.

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7. Global Expansion: Tesla is aggressively expanding into key global markets, especially
in China and Europe. The company’s Gigafactory in Shanghai has significantly boosted
its presence in China, while a new factory in Germany will support expansion into the
European market. This strategy helps Tesla reduce tariffs, improve supply chain
efficiency, and meet local demand.

8. Sustainability and Environmental Leadership: Tesla has built a strong brand identity
as an environmentally conscious company. Its focus on electric vehicles and clean energy
solutions resonates with the global trend toward sustainability and carbon reduction,
helping Tesla attract eco-conscious customers and investors.

9. Cost Reduction Strategy: Tesla constantly works to reduce production costs, especially
in battery manufacturing. Through innovations in battery technology (such as the
development of 4680 cells and solid-state batteries) and economies of scale from
Gigafactory expansions, Tesla aims to lower EV prices and make them accessible to a
broader market.

10. First-Mover Advantage: Tesla’s early entry into the electric vehicle market gave it a
significant advantage over competitors. Tesla has built a strong brand, established
customer loyalty, and maintained a lead in EV technology, all of which help it stay ahead
of both traditional automakers and new EV startups.

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SWOT MATRIX

Strengths:

1. Market Leader: Tesla is the dominant player in the electric vehicle (EV) industry,
benefiting from being an early entrant.

2. Leads in Autonomous Vehicle (AV) Data: Tesla collects massive amounts of data from
its vehicles, which aids in the development of self-driving technology.

3. Vehicle Manufacturer: Unlike many tech companies entering the EV space, Tesla is a
fully integrated vehicle manufacturer.

4. Strong Brand Image: Tesla is synonymous with innovation, luxury, and sustainability,
helping build customer loyalty.

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 5. Automated, Vertically Integrated Industrial Plants: Tesla controls much of its supply
chain, improving efficiency and reducing dependency on external suppliers.

Weaknesses:

1. Poor Financial Health: Tesla has faced challenges with profitability in the past, with
periods of significant financial instability.

2. Questionable Big Data Processing: While Tesla collects a lot of data, there are questions
about its ability to fully leverage and process this data effectively.

3. Limited AI Learning Capability: Tesla's AI learning capability, particularly for

autonomous driving, may not be as advanced or reliable as needed for full autonomy.

4. Weak Manufacturing Performance: Tesla has struggled with manufacturing

bottlenecks and scaling production efficiently.

Opportunities:

1. Improving Supply Chain and Bottlenecks: There is potential for Tesla to optimize its
supply chain, which could help improve production speed and reduce costs.

2. Integration for Better AI Learning: Integration of data and processes can enhance
Tesla’s AI learning, particularly for self-driving cars.

3. Shadow Mode Potential: Tesla’s use of shadow mode (where its vehicles collect data
even when not in self-driving mode) could help accelerate autonomous driving
technology.

4. Positive Client Attitude: Tesla enjoys strong support from customers who are
enthusiastic about its brand and mission.

5. Expand Portfolio: Tesla has the opportunity to diversify its product offerings, potentially
expanding into new vehicle categories or technologies.

Threats:

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1. Difficulty Implementing Investment Plans: Tesla may struggle to execute on ambitious
investment plans, particularly for new factories or technologies.

2. Limited Supply Chain: Disruptions in Tesla’s supply chain, such as shortages in key
materials, could affect production.

3. New Entrants: As more companies enter the EV market, Tesla faces growing
competition from both established automakers and startups.

4. Technology Dead End for Non-LIDAR: Tesla’s reliance on non-LIDAR sensors for
autonomous driving may pose a technological risk if competitors’ LIDAR-based systems
prove superior.

5. Battery Issues: Battery production and supply issues could limit Tesla’s growth, as
batteries are a critical component of EVs.

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STRATEGIC POSITION & ACTION EVALUATION MATRIX

(SPACE ANALYSIS MATRIX)

SPACE Matrix for the EV Segment

The SPACE matrix for Tesla, Ford, and General Motors in the electric vehicle (EV) segment
provides insights into their strategic positions across four dimensions: Financial Position (FP),
Competitive Position (CP), Stability Position (SP), and Industry Position (IP). Here's a detailed
interpretation:

1. Tesla
➢ Position: Top right in the Aggressive quadrant.
➢ Analysis:
• Financial Position (FP): High score (around 6.5), indicating strong
financial health due to robust revenue growth and market capitalization.
• Industry Position (IP): High score (around 5.0), reflecting its leadership
and favorable standing in the EV market.
• Competitive Position (CP): Strong positive score, showcasing advanced
technology, extensive infrastructure, and brand loyalty.
• Stability Position (SP): Relatively low, indicating higher volatility and risk
but mitigated by innovation leadership.
➢ Strategy: Continue aggressive expansion, R&D investment, and leveraging
technological advantages to maintain dominance

2. Ford
➢ Position: Middle-left, leaning towards the Competitive quadrant.
➢ Analysis:
• Financial Position (FP): Moderate score (around 1.0), impacted by the
transition from traditional vehicles to EVs.
• Industry Position (IP): Moderate score (around 3.0), reflecting efforts to
gain traction in the EV space.

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 • Competitive Position (CP): Slightly negative score (-1.0), indicating
competitive challenges.
• Stability Position (SP): Relatively stable, benefiting from long-standing
market presence but facing risks from the transition to EVs.
➢ Strategy: Focus on innovation, strategic partnerships, and launching new EV
models to improve market presence and competitiveness.

3. General Motors (GM)

➢ Position: Middle-right in the Competitive quadrant.
➢ Analysis:
• Financial Position (FP): Relatively strong score (around 3.0), supported
by investments in EV platforms and models.
• Industry Position (IP): Moderate score (around 2.5), reflecting
competitiveness in a less favorable industry position compared to Tesla.
• Competitive Position (CP): Positive score, driven by strategic investments
and partnerships.
• Stability Position (SP): Relatively stable, with diversified portfolios and
strong market presence but facing transition risks.
➢ Strategy: Leverage financial resources and technological advancements to expand EV
market share and compete effectively with Tesla and other manufacturers.

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Strategic Story

o Tesla: Positioned aggressively, Tesla leverages its financial strength and industry
leadership to push the boundaries of innovation in the EV market. The company
continues to invest in R&D, expand production capabilities, and enhance its
technological edge to maintain its dominant position.

o Ford: Positioned competitively, Ford is actively transforming its business model to

compete in the EV landscape. The company focuses on launching new EV models
and improving operational efficiencies to enhance its market presence and compete
with established and emerging players.

o General Motors (GM): Positioned competitively, GM is focused on transitioning to

electric and autonomous vehicles. The company leverages its financial strength and
technological investments to improve its market standing and compete effectively in
the growing EV market.

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❖ The SPACE matrix highlights the strategic differences between Tesla, Ford, and GM in
the EV segment. Tesla is well-positioned to continue its aggressive growth strategy, while
Ford and GM are focused on improving their competitive positions through innovation
and strategic investments.

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BCG MATRIX

1. Featured Stars (High Market Growth, High Market Share):

• Products: Tesla Model 3
• Analysis: The Model 3 is a high-growth product that is central to Tesla's business.
It benefits from strong innovation and cleaner energy production, making it a star
in Tesla's portfolio. It drives significant revenue and brand recognition for the
company.

2. Cash Cows (Low Market Growth, High Market Share):

• Products: Model S, Model X, Model Y, Powerwalls
• Analysis: These models have become well-established in the market, consistently
generating cash flow. Although they may not be in high-growth phases anymore,

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 they are reliable revenue sources for Tesla, funding innovation and expansion into
new areas.

3. Dilemmas/Question Marks (High Market Growth, Low Market Share):

• Products: Energy storage, Solar power, Miscellaneous accessories
• Analysis: These products are in rapidly growing markets but Tesla has yet to
achieve a dominant position. Tesla's energy and solar businesses face strong
competition, and it's unclear whether they will become stars or fail to gain a
significant market share, which would make them unprofitable.

4. Deadweight – Dogs (Low Market Growth, Low Market Share):

• Products: Some manufacturing complications with models
• Analysis: This category includes areas of the business where Tesla struggles,
particularly with some manufacturing issues. These do not contribute much to the
company's profitability, and Tesla may eventually phase out these
underperforming units or products.

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INTERNAL EXTERNAL MATRIX

Internal Factor Evaluation (IFE) Matrix Analysis for Tesla:

The IFE Matrix evaluates Tesla's internal strengths and weaknesses by assigning a weight
(significance) and rating (effectiveness in leveraging or overcoming) to each factor.

➢ Strengths:

1. Brand Strength: Weight 0.15, Rating 4 → Weighted Score: 0.6

• Tesla has a powerful brand image, renowned for innovation and being a
market leader in electric vehicles (EVs).

2. Technological Innovation: Weight 0.15, Rating 4 → Weighted Score: 0.6

• Tesla is widely recognized for its cutting-edge technology in both vehicles

and energy solutions (e.g., battery tech, AI, and automation).

3. Vertically Integrated Supply Chain: Weight 0.1, Rating 3 → Weighted Score: 0.3

• Tesla controls much of its supply chain, giving it competitive advantages

in cost and innovation speed.

4. Global Supercharger Network: Weight 0.1, Rating 3 → Weighted Score: 0.3

• Tesla has developed an extensive supercharger network, enhancing its

appeal to customers by addressing range anxiety.

➢ Weaknesses:

1. High Production Costs: Weight 0.15, Rating 2 → Weighted Score: 0.3

• Despite scaling efforts, Tesla still faces high production costs, which can affect
profitability.
2. Supply Chain Vulnerabilities: Weight 0.1, Rating 2 → Weighted Score: 0.2
• Tesla remains vulnerable to global supply chain issues, including shortages in
semiconductors and raw materials.

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 3. Over-Reliance on CEO Musk: Weight 0.15, Rating 1 → Weighted Score: 0.15

• Tesla's identity is heavily tied to Elon Musk, and any issues surrounding
him could affect the company’s reputation or operations.

4. Quality Control Issues in Scaling Production: Weight 0.1, Rating 2 → Weighted

Score: 0.2

• Tesla has faced challenges with maintaining consistent quality in its vehicles as it
scales up production.

Internal Factors Weight Rating Weighted Score

Strengths
1. Brand Strength 0.15 4 0.6
2. Technological Innovation 0.15 4 0.6

3. Vertically Integrated Supply Chain 0.1 3 0.3

4. Global Supercharger Network 0.1 3 0.3

Weaknesses
5. High Production Costs 0.15 2 0.3

6. Supply Chain Vulnerabilities 0.1 2 0.2

7. Over-Reliance on CEO Elon Musk 0.15 1 0.15

8. Quality Control Issues in Scaling

0.1 2 0.2
Production
Total 1 2.65

❖ Total IFE Score: 2.65

❖ Interpretation: Tesla has a moderately strong internal position. It has some key
strengths, like brand power and innovation, but also notable weaknesses, particularly
around production and over-dependence on Musk.

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External Factor Evaluation (EFE) Matrix Analysis for Tesla:

The EFE Matrix evaluates Tesla's external environment, focusing on opportunities and threats,
with weights and ratings similar to the IFE matrix.

➢ Opportunities:

1. Growing EV Market: Weight 0.2, Rating 4 → Weighted Score: 0.8

• The EV market is expanding rapidly as consumers shift to sustainable

transportation and governments push for carbon neutrality.

2. Government Incentives: Weight 0.15, Rating 4 → Weighted Score: 0.6

• Governments worldwide are providing incentives for EVs, which

increases Tesla's potential sales and market penetration.

3. Expanding Energy Solutions Market: Weight 0.15, Rating 3 → Weighted Score:

0.45

• Tesla’s energy solutions, such as solar panels and energy storage, present
growth opportunities as demand for renewable energy rises.

4. Emerging Market Growth: Weight 0.1, Rating 3 → Weighted Score: 0.3

• Tesla has potential to expand into emerging markets, where EV adoption is

in its infancy, providing new revenue streams.

➢ Threats:

1. Intense Competition: Weight 0.15, Rating 2 → Weighted Score: 0.3

• The EV market is becoming increasingly competitive, with traditional automakers
and new entrants vying for market share.
2. Changing Regulatory Environment: Weight 0.1, Rating 2 → Weighted Score: 0.2

• Tesla faces risks from evolving regulations related to environmental

standards, safety, and trade policies.

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 3. Economic Downturns: Weight 0.1, Rating 2 → Weighted Score: 0.2

• Economic recessions or downturns could reduce consumer spending,

particularly on luxury EVs like Tesla.

4. Raw Material Shortages: Weight 0.05, Rating 2 → Weighted Score: 0.1

• Shortages in raw materials (e.g., lithium, cobalt) required for EV batteries

could hinder production and increase costs.

External Factors Weight Rating Weighted Score

Opportunities
1. Growing EV Market 0.2 4 0.8
2. Government Incentives 0.15 4 0.6
3. Expanding Energy Solutions
0.15 3 0.45
Market

4. Emerging Market Growth 0.1 3 0.3

Threats
5. Intense Competition 0.15 2 0.3
6. Changing Regulatory
0.1 2 0.2
Environment

7. Economic Downturns 0.1 2 0.2

8. Raw Material Shortages 0.05 2 0.1

Total 1 2.95

❖ Total EFE Score: 2.95

❖ Interpretation: Tesla has a moderately favorable external position, with significant
opportunities in the growing EV and energy markets but also facing notable threats from
competition, regulatory changes, and supply chain disruptions.

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Internal – External Matrix

In the IE Matrix, Tesla is placed in Box V (Average internal position and Medium external
position).

Box V Strategy Implication:

o Companies in this quadrant are in a hold and maintain position. This means that
Tesla should focus on market penetration and product development strategies.
These firms should concentrate on maintaining their current market position by

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 enhancing their existing product lines and possibly expanding into new, but related,
markets.
o Tesla's strategy should thus aim at sustaining its position in the fast-growing EV
market while addressing weaknesses such as production costs and dependency on
supply chains. The company can continue to innovate and solidify its position in
energy solutions (e.g., solar and battery technology).
o At the same time, Tesla needs to address its weaknesses, especially concerning over-
reliance on Elon Musk and potential issues with quality control, to ensure future
stability as the competitive landscape intensifies.

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GRAND STRATEGY MATRIX

The Grand Strategy Matrix is applied as a strategic tool in devising possible strategies that an
organization can have. It produces a two-dimensional model: market growth and competitive
position. Companies fall into one of four quadrants, all suggesting different directions to take in
strategy.

1. Quadrant I (Strong Competitive Position, Rapid Market Growth):

Companies here hold an advantageous position to pursue growth strategies.
Strategies: Market development, product development, market penetration, horizontal
integration, or diversification.

2. Quadrant II (Weak Competitive Position, Rapid Market Growth):

Firms need to have a strategy for strengthening their competitive position.
Strategies: Market development, product development, horizontal integration or
divestiture.

3. Quadrant III (Weak Competitive Position, Slow Market Growth):

Companies will fight and need to consider cost-cutting or divestiture strategies.
Strategies: Retrenchment, divestiture, liquidation, or turnaround strategies.

4. Quadrant IV (Strong Competitive Position, Slow Market Growth):

Companies can be conservative.
Strategies: Diversification, joint ventures, horizontal integration, or acquiring other
companies.

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Grand Strategy Matrix for Tesla

Tesla: Quadrant I (Strong Competitive Position, Fast Growth Market)

➢ Competitive Position:
• Company is not only the leader in electric vehicles but also has a great brand
recognition allied with extensive technology innovation, including advanced battery
technology and autonomous driving, making the company stand out and provide a
competitive advantage.
• It is not without problems, however; such as scaling production to meet demand and
maintaining quality control. Its market share in the EV market provides the firm with
an awesome competitive advantage.
➢ Market Growth:

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 • Growth in the EV market is fueled by global initiatives toward cleaner energy,
government incentives, and consumer uptake of electric vehicles.
• Tesla is significantly well-positioned to capitalize on growth in renewable energy
solutions and increased adoption of sustainable technologies

➢ Strategies for Tesla (Quadrant I)

i. Market Penetration:
• Continue getting additional market share in current markets by providing
newer and more affordable models, including the Tesla Model 3 and Model
Y.
• Expanding global sales and service networks, including new markets.

ii. Product Development:

• New car models to reach other market segments (e.g., compact city car for
the urban cities; an SUV that is large; a commercial vehicle).
• Investment on enhancements to autonomous driving capabilities, as well as
energy storage products like the Powerwall and Solar Roof.

iii. Vertical Integration:

• Further secure the supply chain for batteries and other critical components
to reduce costs and ensure quality.
• Continue acquiring or partnership with companies focusing on battery
technology and material companies (like lithium mining).

iv. Diversification:
• Expand beyond automotive into other technology-driven industries like AI,
energy management, or even aerospace.
• Invest more into products that are solar and grid-scale energy storage.

v. Geographical Expansion

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 • Continue to expand in India and Southeast Asia where the penetration of
EVs is still low.
• To supplement this, more Gigafactories should be established to encourage
higher production and sales in key markets.

➢ Position in Quadrant I:
Tesla follows aggressive expansion on all the growth strategies coupled with enhanced
market position and leveraging the fast-emerging sector for EV.

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Recommended Strategies and Long-Term Objectives

1. Expansion of Production Facilities

o Objective: Increase production capacity to meet growing demand for electric

vehicles (EVs) and battery technology.

o Strategy: Construct new Gigafactories in key markets (e.g., India, Eastern Europe).

o Projected Cost: $2 billion per factory.

2. Investment in Research and Development (R&D)

o Objective: Enhance technology for battery efficiency and autonomous driving

capabilities.

o Strategy: Increase R&D budget by 20% annually to innovate new technologies.

o Projected Cost: $1 billion annually.

3. Diversification of Product Line

o Objective: Introduce new vehicle models, including affordable EVs for broader
market appeal.

o Strategy: Develop a compact EV and a commercial vehicle.

o Projected Cost: $500 million for development of each model.

4. Global Market Expansion

o Objective: Enter emerging markets, particularly in Asia and Africa.

o Strategy: Set up local marketing and distribution channels.

o Projected Cost: $300 million annually for marketing and logistics.

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 Projected Costs

A table that itemizes the projected costs for each strategy over 5 years:
Total
Production R&D Product Line Global Market Projected
Year Facilities Investment Diversification Expansion Cost

1 $2 billion $1 billion $500 million $300 million $3.8 billion

2 $0 $1.2 billion $500 million $300 million $2.0 billion

$1.44
3 $0 billion $0 $300 million $1.74 billion
$1.73
4 $0 billion $0 $300 million $2.03 billion
$2.07
5 $0 billion $0 $300 million $2.37 billion
$7.34
Total $2 billion billion $1 billion $1.5 billion $11.84 billion

Cost Justification

1. Expansion of Production Facilities:

o Based on Tesla's history of Gigafactory construction costs, including the

Gigafactory in Nevada which cost around $5 billion, a similar facility could be
projected at $2 billion given economies of scale and experience.

2. R&D Investment:

o Tesla currently spends approximately 6% of its revenue on R&D. An increase of

20% each year is reasonable given the need to stay ahead in technology.

3. Product Line Diversification:

o Development costs for new models typically range between $200 million to $500
million based on industry standards. We estimate $500 million for each new
vehicle.

4. Global Market Expansion:

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 o Setting up new marketing channels and logistics in emerging markets requires
substantial investment, and $300 million is a conservative estimate for marketing
and infrastructure.

Comparison with Tesla's Actual Strategies

➢ Gigafactory Expansions: Our recommendation to expand production facilities aligns

well with Tesla's ongoing strategy of building Gigafactories in key markets like Texas,
Berlin, and Shanghai. These factories have allowed Tesla to scale production, reduce
costs, and meet the growing global demand for electric vehicles (EVs). This mirrors your
suggestion to construct new factories in strategic markets (e.g., India or Eastern Europe)
to boost production capacity. Both strategies emphasize the need to meet demand through
localized manufacturing to reduce supply chain risks.

➢ Research & Development (R&D) Investments: Tesla has consistently prioritized R&D,
particularly in battery technology and autonomous driving. Your recommendation to
increase R&D spending by 20% annually is reflective of Tesla’s actual practice of
continually investing in cutting-edge technology, particularly to improve battery
efficiency, driving range, and autonomous capabilities. This emphasis on technological
advancement supports both the recommendation and Tesla's real-world focus on staying
ahead of competitors through innovation.

➢ Product Diversification: Your strategy to diversify Tesla’s product line by introducing

new vehicle models, such as compact EV or commercial vehicles, closely mirrors Tesla’s
past moves. Tesla has already announced new models, including the Cybertruck and plans
for more affordable EVs. This focus on offering a wider range of products to capture
different market segments is a key component of Tesla’s business model, which aligns
with your recommendation to broaden the product portfolio.

➢ Global Market Expansion: Both your strategy and Tesla’s actual approach emphasize
expanding into global markets. Tesla has made significant inroads into China and is
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 looking at further growth in Europe and Asia. Your recommendation to focus on markets
like India and Southeast Asia is in line with Tesla’s broader vision to increase global sales
and service networks. Establishing local marketing and distribution channels is also a
shared approach to boosting market presence.

➢ Vertical Integration: Your recommendation to secure the supply chain through vertical
integration resonates with Tesla’s strategy of controlling key components of its production
process, such as batteries. Tesla’s Gigafactories not only produce vehicles but also
manufacture batteries, which are critical to the company's overall cost and efficiency.
Vertical integration is a major driver behind Tesla's ability to reduce costs and ensure
better control over its supply chain, which aligns perfectly with your strategic
recommendation.

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Implementation Plan

1. Expansion of Production Facilities

o Timeline: Year 1-2

o Action Steps:

▪ Identify locations for new Gigafactories.

▪ Secure permits and approvals.

▪ Begin construction of the facility by the end of Year 1.

▪ Hire and train personnel by Year 2.

2. Investment in Research and Development (R&D)

o Timeline: Year 1-5

o Action Steps:

▪ Allocate budget increases for R&D in Year 1.

▪ Recruit top talent in technology and engineering.

▪ Initiate research projects focusing on battery technology and autonomous

systems.

3. Diversification of Product Line

o Timeline: Year 1-3

o Action Steps:

▪ Conduct market research to identify demand for new vehicle types.

▪ Design prototypes for the compact EV and commercial vehicle by Year 2.

▪ Launch the compact EV by Year 3.

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 4. Global Market Expansion

o Timeline: Year 1-5

o Action Steps:

▪ Set up a marketing team focused on emerging markets by Year 1.

▪ Develop localized marketing campaigns by Year 2.

▪ Establish partnerships with local distributors by Year 3.

Expected Results

1. Increased Production Capacity: By Year 3, Tesla could achieve an additional 500,000

units in production capacity per factory.

2. Enhanced R&D Outcomes: Innovations in battery technology could lead to a 10%

increase in range and a 15% reduction in production costs for new models.

3. Successful New Model Launches: The introduction of the compact EV could attract a
new customer base, potentially increasing sales by 15%.

4. Market Penetration: Expanded marketing in emerging markets could yield a 10%

increase in overall sales by Year 5.

Forecasted Ratios

1. Gross Margin: Expected to improve from 22% to 25% due to reduced production costs
from innovations.

2. Return on Investment (ROI): Anticipated to rise from 15% to 18% due to increased
sales and profitability from new models.

3. Debt to Equity Ratio: Projected to increase from 0.5 to 0.6 as Tesla invests heavily in
expansion.

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 4. Current Ratio: Expected to remain healthy at 1.5, ensuring adequate liquidity.

Projected Financial Statements

Projected Income Statement (in millions)

Year Revenue COGS Gross Profit R&D Expense Operating Net

Income Income

1 $45,000 $35,100 $9,900 $1,000 $8,900 $5,500

2 $55,000 $41,250 $13,750 $1,200 $12,550 $7,800

3 $70,000 $52,500 $17,500 $1,440 $16,060 $10,000

4 $85,000 $63,750 $21,250 $1,728 $19,522 $12,500

5 $100,000 $75,000 $25,000 $2,074 $22,926 $15,000

Projected Balance Sheet (in millions)

Year Assets Liabilities Equity

1 $30,000 $15,000 $15,000

2 $38,000 $20,000 $18,000

3 $50,000 $25,000 $25,000

4 $65,000 $35,000 $30,000

5 $80,000 $40,000 $40,000

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Timetable or Agenda for Action

Year Quarter Action Item Responsible

Department
1 Q1 Identify locations for new Gigafactories Real Estate/Operations

Q2 Secure permits and start construction Legal/Construction

Q3 Allocate increased budget for R&D Finance

Q4 Begin recruitment for R&D and production HR

personnel
2 Q1 Start construction of new Gigafactories Operations

Q2 Market research for new vehicle models Marketing

Q3 Launch R&D projects for battery technology R&D

Q4 Begin marketing campaigns for emerging Marketing

markets
3 Q1 Design prototypes for new vehicle models Engineering

Q2 Launch the compact EV Sales/Marketing

Q3 Expand production at new facilities Operations

Q4 Evaluate the performance of new models Finance/Marketing

4 Q1 Adjust production based on demand Operations

Q2 Continue R&D for next-gen battery R&D

technology
Q3 Market evaluation of new vehicle models Marketing

Q4 Plan the next phase of expansion in Strategy/Marketing

emerging markets
5 Q1 Analyze ROI on investments Finance

Q2 Prepare for further expansion Strategy/Operations

Q3 Launch additional new models Engineering/Sales

Q4 Review overall strategic performance Executive Team

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Recommended Annual Objectives

Year 1 Objectives

1. Increase Production Capacity

o Objective: Achieve a production capacity of 1 million vehicles.

o Policy: Implement a lean manufacturing approach to reduce production lead time

by 15%.

2. Expand R&D Investment

o Objective: Increase the R&D budget to $1 billion.

o Policy: Allocate at least 20% of R&D funding to battery technology innovation.

3. Launch New Marketing Campaigns

o Objective: Increase brand awareness in emerging markets by 30%.

o Policy: Utilize digital marketing channels and local influencers to reach target
demographics.

4. Enhance Employee Training Programs

o Objective: Train 100% of employees in new manufacturing technologies and

safety protocols.

o Policy: Establish a quarterly training program to update staff on new processes.

Year 2 Objectives

1. Begin Construction of New Gigafactory

o Objective: Start construction of a new Gigafactory in India or Eastern Europe.

o Policy: Engage local stakeholders and governments to ensure compliance with

regulations.

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 2. Launch a New Vehicle Model

o Objective: Successfully launch a compact EV model.

o Policy: Implement a phased rollout strategy, starting with a limited production

run.

3. Strengthen Supply Chain Management

o Objective: Reduce supply chain disruptions by 25%.

o Policy: Establish partnerships with multiple suppliers to diversify sourcing.

4. Achieve Customer Satisfaction

o Objective: Attain a customer satisfaction score of 90% or higher.

o Policy: Implement a customer feedback loop to gather insights and improve

service.

Year 3 Objectives

1. Expand Global Market Presence

o Objective: Increase market share in Asia by 15%.

o Policy: Localize product offerings and marketing strategies to fit regional

preferences.

2. Increase Vehicle Efficiency

o Objective: Improve the average vehicle range by 10%.

o Policy: Invest in next-generation battery technology and lightweight materials.

3. Develop Autonomous Driving Features

o Objective: Release an updated version of the autonomous driving software.

o Policy: Conduct extensive testing and gather user data to refine features.

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 4. Enhance Sustainability Efforts

o Objective: Achieve a 30% reduction in manufacturing waste.

o Policy: Implement recycling programs and sustainable sourcing practices.

Year 4 Objectives

1. Evaluate Financial Performance

o Objective: Achieve a net profit margin of 15%.

o Policy: Conduct quarterly financial reviews to identify areas for cost reduction.

2. Continue Expansion of Gigafactories

o Objective: Complete construction of the new Gigafactory.

o Policy: Ensure the project stays within budget and on schedule through effective
project management.

3. Launch Additional Vehicle Models

o Objective: Introduce a commercial vehicle model to the market.

o Policy: Utilize market research to define target customer segments and pricing
strategies.

4. Strengthen Employee Engagement

o Objective: Achieve an employee satisfaction score of 85% or higher.

o Policy: Conduct annual employee surveys and implement improvement initiatives

based on feedback.

Year 5 Objectives

1. Reassess Market Strategy

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 o Objective: Conduct a comprehensive market analysis to identify new
opportunities.

o Policy: Allocate resources to emerging technologies and new business models.

2. Achieve Leadership in Battery Technology

o Objective: Secure at least two patents for innovative battery designs.

o Policy: Collaborate with universities and research institutions for joint

development projects.

3. Expand After-Sales Services

o Objective: Increase after-sales service revenue by 20%.

o Policy: Enhance customer support channels and introduce loyalty programs.

4. Commit to Carbon Neutrality

o Objective: Set a roadmap to achieve carbon neutrality by 2030.

o Policy: Invest in renewable energy projects and enhance the sustainability of

operations.

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Recommended Procedures for Strategy Review and Evaluation

1. Establish Key Performance Indicators (KPIs)

o Action: Define specific KPIs aligned with strategic objectives, such as:

▪ Production efficiency metrics (units produced vs. target).

▪ Financial performance ratios (net profit margin, return on investment).

▪ Market share growth in key regions.

▪ Customer satisfaction scores.

o Frequency: Monthly and quarterly reviews.

2. Conduct Regular Strategy Meetings

o Action: Schedule quarterly strategy meetings involving key stakeholders from

different departments (R&D, production, marketing, finance).

o Purpose: Review performance against KPIs, discuss challenges, and adjust

strategies as needed.

o Documentation: Maintain detailed minutes and action items from these meetings.

3. Use SWOT Analysis

o Action: Perform a SWOT (Strengths, Weaknesses, Opportunities, Threats)

analysis annually to reassess Tesla’s position in the market.

o Purpose: Identify new internal and external factors that may affect the company’s
strategies.

o Involvement: Engage cross-functional teams to gather diverse insights.

4. Stakeholder Feedback Loop

o Action: Implement a systematic process for gathering feedback from employees,

customers, and stakeholders.

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 o Methods: Use surveys, focus groups, and interviews to collect insights on
strategy effectiveness.

o Frequency: Conduct surveys bi-annually and analyze the data to identify trends
and areas for improvement.

5. Financial Performance Review

o Action: Evaluate financial performance against projections and historical data.

o Metrics: Assess revenue growth, cost management, and profitability.

o Frequency: Monthly financial reviews and comprehensive quarterly assessments.

6. Benchmarking Against Competitors

o Action: Conduct benchmarking studies against key competitors in the electric

vehicle and renewable energy markets.

o Purpose: Understand competitive positioning and identify best practices that

could be adopted or adapted.

o Frequency: Annual benchmarking report with actionable insights.

7. Scenario Planning

o Action: Develop and review different market scenarios (e.g., regulatory changes,
technological advancements).

o Purpose: Prepare for potential challenges and opportunities, allowing Tesla to

adapt its strategies proactively.

o Frequency: Annual review, with updates as significant changes in the market

occur.

8. Adjustments and Realignments

o Action: Based on the outcomes of reviews, make necessary adjustments to

strategies, reallocating resources or changing priorities as needed.

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 o Process: Document the rationale for changes and communicate them effectively
across the organization.

9. Board of Directors Involvement

o Action: Present strategy reviews and evaluations to the Board of Directors on a

semi-annual basis.

o Purpose: Ensure alignment with overall corporate governance and strategic

direction.

o Feedback: Incorporate board insights and recommendations into strategy

adjustments.

10. Performance Reporting

o Action: Create a centralized dashboard to track and report progress on KPIs and
strategic initiatives.

o Frequency: Update the dashboard monthly for internal stakeholders and quarterly
for external stakeholders (investors, analysts).

o Access: Ensure transparency and accessibility of the dashboard to relevant teams

for continuous monitoring.

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