It is easy to start a business but it is not an easy task to make it successful. To maintain the strong position in the market, every company must learn the art of formulating, evaluating, and implementing the new strategies to keep the organization running. One of the fastest growing industries is Automobile industry in the market. There is the trend of hybrid cars and electric cars these days. Along with this, there is the requirement for electric vehicles provided by the Tesla Motors (CSR Hub, 2016). Tesla motors are the award winning company which was founded in 2003. Headquarter of the company is in Palo Alto, California. It is a famous American company which deals in the designing, manufacturing, and wholesaling electric cars and vehicle power train components. This report is focused on the strategy formulation of Tesla motors to improve the financial performance of the company (Zucchi, 2015).
Mission statement of the company can be considered as the function or commitment by which an organization wishes to meet the expectations of the stakeholders. The mission statement basically describes how the organizations are running their businesses, identify the range of products or services, identify the customers and serve the customers with theproducts and the services. The missions of Tesla Motors that inform strategic planning are:
Vision-
Vision statement of the company basically describes the overall outlook of the company for the future. It shows the growth potential advantage of the company to the investors and the stakeholders. The vision statement of Tesla Motors is:
Goals and objectives-
Goals and objectives are the important part of the business strategy of any company. Those are the specific results that a company wants to achieve in a specific period of time. Objectives can be considered as the stages to achieve the goals so, objectives can be proposed for the short-term plan which expresses more details. On the other hand, goals can be proposed for long-term plan which have general expression (Kachaner, Lindgardt & Michael, 2011). The goals and objectives of Tesla Motors are as follows:
Goals of the Tesla motors are very simple. The objective of the company is to make electric vehicles desirable, for the consumers. The concept of oil and gas will become very expensive in future so, electric motors will be in maximum demand (Miller, 2012).
Core competencies-
Core competencies are the important part of the company which makesthe company outstanding among the competitions. There can be various core competencies in a company such as skills, specific products, reputation and quality. Along with this, core competencies help the business to maintain the trust in the mind of customers and make the company famous in the market. The core competencies of Tesla Motors are simple application updates, personalization, quality products and R&D, open source technology and affordable prices (Hill, Jones & Schilling, 2014).
Strategic planning is the important process for the company by which the company can define the strategy for the future business. By the strategic planning, the company is able to make the decisions to allocate the resources to pursue the strategy. Strategic planning provides the guidelines to the company for implementing the strategy. There are some factors which must be considered by the company while formulating strategic planning (Schilling, 2010). Those factors are as follows:
The industry-
In case of strategic planning, it is important to evaluate overall industry. The past and potential growth, the market size, new market entrance, future threats and profitability must be considered while evaluating the industry (Clausen et al, 2012).
The competition-
It is essential to analyze the position of competitors in the market while creating strategic planning. A company cannot get achievement without identifying the nature of entrants in the market. The company should be able analyze the strengths and weaknesses of the competitors (Hitt et al, 2009).
Strengths and weaknesses-
SWOT analysis is important to formulate strategic planning for the company. In this, strengths and weaknesses of the company are the inner factors and the opportunities and threats are the outer factors of the company. The company must determine the internal strengths of the business and try to improve those strengths. Along with this, it is also important for the company to identify the weaknesses to reduce the risks (Olsen, 2012).
For Tesla Motors, there are two techniques which can be considered for developing strategic plans.
BCG growth share matrix:
There are four types of situations which are presented by the BCG matrix. Those four situations may be faced by the company during the business. According to the BCG matrix, Tesla would face four types of situations in the business process.
Advantage of BCG matrix-
BCG growth matrix helps the company to understand important factors for the business such as:
Disadvantage of BCG matrix-
Having many advantages, there are some disadvantages of this matrix. Those are as follows:
SWOT analysis:
SWOT analysis is a crucial model to analyze and research the position and status of the business. So, companies implement the SWOT analysis for the business strategy to identify the strengths, weaknesses, opportunities and threats. By all these four factors, the company is able to create four strategies for the business i.e. strengths and opportunities, strengths and threats, Weakness and Opportunities and weaknesses and threats in the business (Eccles & Serafeim, 2013).
Advantage of SWOT analysis-
Disadvantage of SWOT-
Having many advantages, there are some disadvantages also in the SWOT analysis. The disadvantages are as follows:
Profit impact of market strategy:
This strategy assists the company to get competitive advantage in the market. Profit impact of market strategy provides evidence to the company to assist plan and actions. So, Tesla Motors would be capable implement policies and procedures with the effective business strategy. The PIMS strategy includes some facts i.e. nature of the business environment, production process structure, operating activities, strategic development, budget allocation, and business competitive position (Dyer & Bryce, 2014).
The appropriateness of alternative strategies relating to market entry, substantive growth, limited growth, or retrenchment is as follows:
Market entry:
The aim of the Tesla motors is to be the best car manufacturing company in the world. To achieve the goals, it is important for the company in the new market. For entering in new market, there are some factors which must be considered by Tesla motors:
Substantive growth:
Like entering in the new market, there are some factors that must be considered by Tesla motors for the growth and success in the market. Those factors are as follows:
Limited growth:
The factors in the limited growth are as follows:
Retrenchment:
The factors under retrenchment are as follows:
The main aim of the Tesla Motors is to be the successful care manufacturing company in the market. To fulfill the objectives of the company, Tesla Motors should accept the market growth strategy. By this strategy, Tesla will be able to begin its production activities in various countries by providing electric cars as per the demand of the consumers. Along with this, Tesla can also join other companies and strategic alliances in the other countries by adopting this strategy. This strategy will also be helpful for the Tesla Motors to expand further strategies for increasing revenue in the market. Further, Tesla can adopt new product development strategy to differentiate the products from the competitors’ whole entering in new market (Lorenzen, 2006).
There is the requirement of a person in the strategy implementation who can manage over other personnel. The persona can be able to divide the work among the employees based on their function and stage of the company. The employees of the Tesla Motors are charged to execute the strategy so; they must have some roles and responsibilities. To implement the strategy successfully, the roles and responsibilities of those employees should be clear. Along with this, CEO of the Tesla Motors must have the responsibility to talk about the information related to the strategy to the employees in the company. He must also be responsible to guide the employees for strategic planning in the company (Allison & Kaye, 2005).
In case of strategic planning, the personnel of the Tesla Motors should have the responsibility to maintain proper record while implementing strategy in the company. It is very important for the strategic planning as it helps in avoiding the legal responsibilities. For maintaining legal and ethical standards in the company, person should also be responsible in the strategic management process. Further, proper monitoring is also required for successful strategy implementation in the company. Controlling and monitoring is crucial to take a periodic overview of the business activities. Monitoring is helpful to identify to proper and actual steps which must be taken by the employees to implement the strategy in the business. It also allows the company to take corrective actions if requires. Along with this, it also encourages the performance of the employees during the strategic planning (Mun, 2010).
For the strategy implementation, there are three types of resources required while implementing new strategy in the business of Tesla Motors. Those resources are financial resources, human resources and time and material resources.
Financial resources:
The meaning of financial resources is to maintain the financials of the company during the strategy implementations. It means how Tesla finances its strategy to make it more effective for its business. Finance of the strategy can be done by two ways i.e. debt or equity. Equity will be more preferable for the company as there is no interest bearing cost on principle.
Human resource:
To implement the strategy successfully, human resources must have to be considered by Tesla motors. Human resource is the important part to implement the strategy in business process as it will improve the performance of the company. For the Tesla motors, HR must have technical knowledge and skills of productivity for implementing the strategy (Thompson & Martin, 2005).
Time and material resource:
For implementing any strategy, there are the requirements of specific time limit. Along with this, there is the requirement of some substance also for executing the project. Tesla should use high capable equipments, skills, to accomplish the accepted growth strategy (Witcher & Chau, 2010).
SMART target can be considered as the targets and the goals which are set by the Tesla. The goals must be precise in nature attainable in time, assessable with the established criteria and must also be practical.
Significance of SMART goals:
Conclusion
The main business aim of the Tesla Motors is to provide electric cars in the future. The company wants to be best car manufacturing company in the world. So, it is recommended that Tesla can develop its business operations in new countries. For this manner, more deep analysis must be essential. Tesla can use product development strategy for the target market for operating the business in the market. Effective execution of the business strategy depends upon the existing condition of target market. So, Tesla should have awareness of those conditions
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