PH.D.

Program in Business and Management

Qualification Exam
For Advanced Management Theories

Student : Anu Kanwar

Student ID: DA81G207

Questions :
Please take Tesla as the focal case and apply theories discussed in the classroom to answer the
following sets of questions with an essay.

1.1 What are the values Tesla have created and captured? Why they are valuable ?
1.2 What are the resources that Tesla has exploited to create and capture those values and why
these resources can bring Tesla competitive advantage ?
1.3 How did Tesla organize its value creation and capturing process and why their process can
work effectively?

2. Looking forwards to the future of Tesla answer following questions :

2.1 What are the values that Tesla can create and capture in future ?Why are those values valuables?
2.2. To create and capture those values, what are the resources Tesla can exploit inside and outside
of the organizations?
2.3 What are the better organizing processes that Tesla can apply to manage new value creation
and capturing process along with Theories?
1. INTRODUCTION
Tesla is an automotive company headquartered in the United States that manufactures electric
vehicles and a wide variety of other energy goods that help individuals and companies minimize
their carbon emissions by using renewable energy sources. The CEO of Tesla is Elon Musk. Its
headquarters are located in Palo Alto, United States, California. Tesla experienced a sharp increase
in sales and revenue of vehicles in 2019. This happened after the introduction of model3, his most
affordable car model.

The organization is well known for its emphasis on creativity. Many smart technical features,
including autonomous driving technology and several other safety features, are loaded into Tesla
vehicles. The business aims to provide its customers with a luxurious driving experience while
remaining pollution-free and exclusive.

Tesla is an example of a successful disruptive company arising from an effective alignment

between business ("BIG DREAMS") and operating models ("EXECUTION").Tesla cars are
perceived as clean and green cars and as per the current scenario people are more concerned about
environment sustainability and are attracted towards those products that save earth and
environment .

TESLA’S MISSION : to accelerate the advent of sustainable transport by bringing compelling

mass market electric cars to market as soon as possible

Looking at this mission, the firm intends to create value by:

• Producing sustainable product that address issue of global warming and depletion of fuel
resources
• Product and sell product that Is accessible to mass market (re: Cheap enough)
• Innovate as soon as possible and try to address sustainability issue “Now” vs. in the “Future”

Tesla also tries to capture value by:

• Becoming the “first-mover”
• Build competitiveness of product against fuel-based car through continuous innovation

2. TESLA SWOT ANALYSIS

STRENGTHS

A. Top employer company

Any company is as successful as it recruits. In the case of Tesla Inc., this is one of the key factors
in the phenomenal success of the company. The Wall Street Journal notes that because of its
diversity and innovation-encouraging community, Tesla has emerged as an ideal business for
employees.

B. Leading automotive company

In spite of its challenges, Tesla's revenue has only improved. It has become a leading automotive
brand with 367,500 vehicles produced in 2019. The company has left behind some very exclusive
car brands, such as Mercedes and BMW, due to its unprecedented development in creativity and
luxury at the same time.

C. Best in-class Electric cars

In the quest for the finest electric vehicles, Tesla has left every other brand behind. Tesla's electric
cars have proved to be the best to cover full distances as compared to their range. The latest
comparison shows that, in terms of range, Tesla occupies the top three positions. The Tesla Model
S will get you the farthest, travelling on a single battery charge for up to 600 kilometers. Another
brand closest to you is the Opel Ampera, with a range of 520 kilometers.

D. Innovative Company
(Not to mention the latest inventions of the world's first fully electric semi-truck and modern sports
car), Tesla has a very high rate of innovation. The market therefore trusts and expects the business
to produce competitive and profitable goods that, of course, lead to significant financial gains.

TESLA’S WEAKNESS
A. Manufacturing Complications
The higher the standard of innovation, the greater the risk factor for technical complications and
manufacturing. During the launch of its new vehicles and other products, Tesla faces continuous
launch, manufacturing and production ramp delays. For example, when they were about to launch
Model X, Tesla faced endless manufacturing difficulties, which led to constant shipment delays.
Similarly, during the construction of the Model X battery module assembly line at Gigafactory1,
the company went through extreme problems.

B. Unable to meet demand might affect brand value

Tesla 'will face an unbalanced supply and demand due to highly unconventional and complicated
methods, unable to fulfill the production requirement. Their delivery rate is, in reality, very
concerning in the first quarter of 2019. In the first quarter of2019, the company shipped 63,000
vehicles, which is a 31 percent decline from the last quarter of 2018.

C. Lack of high volume production

There is no denying that Tesla is the leader of real vehicles that save electricity. But for any of its
models, it has struggled to deliver high volumes of automobiles. Even now, as the company
prepares to produce high-volume Model 3 vehicles, it faces problems in Gigafactory 1 in terms of
production cost and management capital and space expansion.

D. Shortage of Batteries
CEO Elon Musk acknowledged that their production rate has declined due to the insufficient
availability of batteries at the annual shareholder meetings. Sales of electric vehicles and energy
storage systems were directly impacted by the shortage.

TESLA’S OPPORTUNITIES
A. Sales expansion in untapped market
For the business, the Asian market, which is still unsaturated in the automotive and renewable
energy sectors, is the most important opportunity right now. In particular, in order to increase its
financial stability and improve its market position, Tesla needs to broaden its global market.
B. Less expensive cars
Due to its unorthodox dependence on creativity, which demands full financial support for
emerging technology entertainment, Tesla is costly. Model3, which is a more affordable version
of Model S with less range, power, and fewer features, has been released recently by Tesla. It is,
however, an excellent opportunity for Tesla to increase the scale of the market for its audience.

C. Bringing batter production technology in-house

Tesla plans to produce battery cells of its own. The transition can be a huge game-changer as it
allows the business to raise its production rate while reducing its cost of production. Panasonic is
now their main battery supplier.

D. Market confidence in Tesla

After seeing two consecutive profitable quarters, the stock market has shown confidence in Tesla.
Since the beginning of this year, the price of Tesla stock has doubled.

TESLA’S THREATS
A. Product liability claims
The car industry, in particular, is accustomed to facing substantial product liability lawsuits that
the company fears to be one of the greatest financial blows, despite Tesla's premium quality
assurance and high production standards. Many autopilot vehicles have been deployed by Tesla,
and not all of them have been successful in the event of an accident. The organization has faced
litigation and charges related to the lack of technology in their goods. If these liability claims
persist, greater financial setbacks will be imposed on Tesla.

B. Extensive Competition
Both alternative fuel vehicles (hybrid, plug-in hybrid, fully electric car) and self-driving
technology are facing aggressive competition from Tesla, Inc. In the luxury segment, several
automotive brands such as Mercedes, BMW, Audi, Lexus and in the economy segment such as
Toyota, Ford, Volvo, General Motors are getting ready for a tough competition. Not only are
several brands launching or preparing to launch their environmentally friendly/self-driving
technology, but they often sell it at a comparably lower price. For a business like Tesla, which
thrives on its unique value for revolutionary cars that are incredibly costly and unaffordable for
many, it is a definite hazard.

3. Product defects
In certain instances, Tesla's cars and other energy goods have exhibited significant shortcomings
due to highly complex engineering for innovative vehicles. Defective goods also have defects in
design, production, and other characteristics that can permanently damage the reputation of the
brand.

4. Long term confidence

The assurance of long-term sustainability is necessary for every business to retain the public image
and the morale of the company. Tesla suffers from unbelief among the public about its long-term
survival due to its unreliable production conditions, which can lead to a deficiency in further
business growth.
5. Consumer adaptation
Any company operates along the lines of acceptance by customers. Companies benefit from a
creative variety of goods as the public is able to respond to change. It can, however, be a long,
unforgiving operation, creating new challenges for businesses such as Tesla. The company relies
heavily on the ability of clients to embrace electric vehicles.

6. Self- driving cars are still concern for pedestrians

US adults still feel vulnerable in a YouGov poll, walking around self-driving vehicles. In particular,
individuals over the age of 55 are most afraid of self-driving cars.

7. Disruption of supple due to shortage of materials

Due to the increased prices, Tesla could face substantial suspensions in the supply of production
materials. The business utilizes suppliers of aluminum, steel, lithium, nickel, copper, and cobalt,
as well as lithium-ion cells. All these goods have unpredictable costs, which can seriously impact
the production line of the business in the future.

8. High risk factor due to usage of Lithium-ion

Lithium-ion cells are used by Tesla in their battery packs. Lithium, which raises the risk factor of
our goods, is a highly reactive and explosive material. Tesla has experienced a few incidents in
which their vehicles have caught fire and vented smoke, which has defamed the organization on a
substantial level.

3. THE VALUE CHAIN ANLAYSIS OF TESLA

The idea of the value chain was introduced by Michael E. Porter of Harvard Business School. This
model encompasses the entire spectrum of operations, from raw material sourcing to
manufacturing, marketing, distribution and after-sales services. The final product adds value to
each of these levels. Analyzing and optimizing the supply chain helps produce superior outcomes.

Companies can improve their operating efficiency by improving their value chains, as well as
creating new sources of competitive advantage. Two kinds of operations are included in the value
chain: main activities and activities for assistance.

Primary Activities
The key operations in the supply chain of Porter are directly linked to the production of goods or
services.

Inbound Logistics
Inbound logistics refers to the inward movement of goods into the business, including
transportation, storage and distribution. Tesla has a great number of warehouses (one in Taiwan)
located in the United States, most of which are leased facilities. Tesla's main production plant,
which is owned by the company, is located in Fremont, California, USA. This facility is used both
for warehousing and production. In addition to the other facilities that the company uses for storage
and distribution, the total size of this plant is 5.5 million square feet at the following locations:

• Lathrop, California
• Sparks Nevada
 • Taipei City, Taiwan.
• Elkridge, Maryland and
• Bethlehem, Pennsylvania.

The warehouse is used for storage as well as administration and operation in Taipei City, Taiwan.
In other corners of the globe, including North America, Asia, and Europe, the organization has
also leased many other facilities and warehouses.

Operations:
In2003, Tesla was founded by a group of engineers who dreamed of making electrical mobility
possible for all. Tesla introduced its Roadster and later Model S in2008. The company is
headquartered in Palo Alto, California, United States. The company has, however, extended its
activities to different corners of the globe as well as its production, distribution, and supply chain
network. It has its European headquarters in Amsterdam, Netherlands, Europe.

Tesla also has a production facility in Tilburg, where final assembly testing and quality control for
the Model S and Model X shipped to the European Union are part of its operations. Outside Reno,
Nevada, Tesla's Gigafactory 1 is located. In its vehicles and energy storage devices, the company
uses battery packs manufactured at Giga factory 1. Type 3 drive units are also manufactured at
Gigafactory 1. In Buffalo, New York, Gigafactory 2 is a 1.2 million square foot building. In
Shanghai, China, Giga Factory 3 is located. In other corners of the globe, including North America,
Europe and Asia, Tesla also has administrative offices.

Outbound Logistics
Gigafactory one is a leading production facility in Tesla's manufacturing network outside of Reno,
Nevada. Tesla Motors' plant in Fremont, California, comprises many manufacturing activities,
including final assembly of vehicles and end of line inspection. The Tilburg operation involves a
distribution house for parts of the company's European service centers.

In the United States, the company has many warehouses, several of which are leased facilities from
which the company stores or ships components and finished vehicles. Development began at
Gigafactory 3 in Shanghai, China, and Tesla ships completed Model 3 cars to their Chinese
customers from there.

Marketing and Sales

The automotive industry is characterized by intense competition. For the promotion of their goods
and brands, most businesses use multiple marketing platforms, including both conventional and
digital marketing channels. However, Tesla spends a lot less in ads relative to the other leading car
brands in the industry. For marketing and promotion, the organization uses its website as well as
other digital platforms. In order to engage Tesla fans and followers from all over the world, Elon
Musk also uses social media (Twitter).

A broad network of company-owned stores and galleries has been developed by Tesla. These shops,
as well as sales and service, are used for marketing. While these stores enable the company to
promote and improve the Tesla brand on the one side, they allow it to gain customer reviews more
quickly on the other. These shops and galleries are luxury stores in major metropolitan markets
where greater exposure is enjoyed. Several of the stores integrate after-sales operation with retail
sales.

Moreover, because it was found that opening a new one in a new geographical area could increase
demand, the company is increasing its network of service centers. A major network of
superchargers and destination-chargers has also been developed by Tesla. The business has
maintained a good profile in the global market by concentrating on product innovation and after-
sales support. The emphasis on creating the reputation of a customer-oriented and creative brand
that sells high-quality goods and invests in optimizing customer satisfaction has always been heavy.

Products and Services

In2008, Tesla released its first Roadster product, which was followed by the launch of Model S.
In2015, the company launched Model X and then Model 3 in 2016. Tesla's range of goods and
services contains the following products-Model S, Model3, Model X, Model Y, Cyber Truck and
Roadster, as well as energy products. The Cybertruck is a newly released Tesla-house truck model
that looks a lot like a Sci-Fi vehicle. The truck is strong, safe for the climate, and built for a better
driving experience.

SUPPORT ACTIVITIES
In the value chain of Porter, primary activities are related to support activities. Help tasks increase
the productivity or efficacy of the primary activities.

Technology
The car industry has undergone intense competition worldwide. The alternative fuel vehicle
industry has grown a lot, too. Many of Tesla's rivals, including BMW, have introduced fully
electric vehicles to the market and continue to extend the range of fully electric and hybrid vehicles.

The key source of differentiation in the global automotive industry is technology. The hottest
technical fields in the auto industry are currently autonomous driving technology and electric
mobility. In all these fields, Tesla is one of the leading companies at the helm of research and
development. The firm spent $1.46 billion in research and development in fiscal 2018. Tesla's
R&D costs rose by $82.3 billion, or six percent, compared to the previous year.

INFRASTRUCTURE
Based on product categories, Tesla is organized into two major divisions. They are the automotive
segment and the commodity segment for energy. Tesla's administrative structure is distinct. As the
leading decision-maker, Elon Musk is at the top. Zachary J Kirkhorn, who oversees accounting,
finance, and other related areas, is Tesla's Chief Financial Officer (CFO). Tesla also has vice-
presidents to head many other divisions, such as manufacturing, engineering, distribution, finance,
etc.

HRM
As of 2018, 48,817 people were working full time by Tesla. To run the organization and maintain
high operating performance, the business relies on thousands of its skilled employees. For most
technology companies, HR management has emerged as an important field of emphasis because it
is important to recruit and retain talented workers to remain competitive. To find faster growth and
to improve its competitive position, Tesla is now putting a greater emphasis on HR management.

PROCUREMENT
Tesla's assembled vehicles use thousands of parts supplied by the company from thousands of
suppliers worldwide. With many key suppliers, Tesla has established good relationships. There are
some essential components, such as cells and other main device components, for which the
organization has established close relationships with its suppliers for procurement. Although Tesla
has many suppliers of some raw materials, it relies on single sources for many others. One of the
main Tesla suppliers is Panasonic. It has been a long time supplier of Tesla vehicle battery cells.

Figure 1: The essence of Value- Chain Analysis

Triggers for customer preferences and the value Tesla created and captured are as follows :

SUSTAINABILITY
The new generation of consumers believe strongly in sustainability, but are often at a loss as to
how they can participate in events to help this cause. So they vote with their wallets for it when
they come across a brand that supports this cause. The carbon footprint of their preferred means
of transport is of interest to these clients. This implies that value has moved to clean transport from
mere transportation.

Traditional automotive companies, led by General Motors, Ford, Toyota and others, are still
mainly involved in the previous value zone, although many offer electric vehicles. Whereas in the
new value zone (clean transport), Tesla operates because it generates only EVs. To clock up
bookings, Tesla does not rely on this understanding alone. It brings into play other persuasive
variables.
SOFTWARE -BACKED DESIGN
A Tesla car is not a car by design; it is an iPhone on wheels. It is software-powered, so it does not
have heavy equipment or too many moving parts, which makes it lighter and less likely to break
down. It does not have to be taken to a garage in case of a breakdown. The problem can be remotely
diagnosed and a software fix can be submitted to rectify it over the Phone. This brings down the
cost of repair.

BRAND MARKETING STRATEGY

Then there is the manner in which it markets itself. Its showrooms, called Tesla Stores, are built
to create a brand, not to sell cars on the spot. By presenting them with interactive screens dedicated
to four main themes, Tesla engages people who walk into the stores and introduces them to the
wonders of its technology:
• Safety
• Auto-pilot features
• The company’s battery charging network
• Technology which powers Tesla
The market intuition behind this approach is that it is possible that a well-informed customer will
take decisions in favor of the company.

How green is Tesla—and EVs in general?

It's powered by batteries rather than fossil fuels. It does not, therefore, spew carbon dioxide and
other contaminants. But the picture turns grey if you look at Tesla's Product Life Cycle Evaluation.
(Product Life Cycle Evaluation assesses the environmental effect of raw material extraction,
processing, its usage and maintenance, and its disposal at the end of its useful life at all stages of
a product's life.)

BOTTOM LINE
As an environment-friendly alternative, the Model 3 still scores. It can be counted among the
cleanest and greenest choices among the currently available vehicles, despite the upstream
(sourcing of raw materials and manufacturing) and downstream carbon footprints being produced.
If the power plant uses renewable energy, of course, Tesla will live up to the reputation it has
generated among its brand advocates much better.

Tesla, however, is not leaving it to chance. It launched Powerwall last year, a home battery
that charges using electricity generated from solar panels on the rooftop. This would mean that her
car could be charged by a Tesla owner in her garage. Tesla also partners with government agencies
and organizations to build public charging stations, including those in Europe and China.
If this plan can be effectively pursued by Tesla, it will step closer to fulfilling its pledge to
provide clean transport.
 INNOVATION INNOVATION INNOVATION
TOWARDS TOWARDS TOWARDS
VEHICLE BATTERY INFRASTRUCTURE
SYSTEM
VALUE High performance
Innovative High performance
PROPOSITION regarding to range and
management of recharging station
vehicle performance;battery packs enables with highly developed
innovative connective
high capacity and low recharging station
services and
cost; connective network; connective
intelligent servicesservice enable interact service enable interact
with user; new with user
product towards
stationary battery
market
CUSTOMER Innovatively starting Corresponding to the Corresponding to the
SEGMENT with high-end market; vehicle vehicle
and moving to mass
market
DISTRIBUTION Innovative multi- Together with Public network
CHANNEL channel model, vehicle, replace deployed by Tesla
involving high possible Motor only
integration of IT;
vertical Integration on
selling
REVENUE MODEL Ownership-as-usually Purchase with vehicle Free to Tesla user
or separate purchase
when update
Table 1: Business model of Tesla Motor from Value- related perspective

INTEGRATION OF INFORMATION TECHNOLOGY

Tesla demonstrates that information technology has a very high degree of incorporation into many
facets of the EV business model. Innovatively, Tesla has enhanced communication between users
and the environment, such as the battery and charging station. In addition, a high proportion of
information technology is involved in Tesla’s online and retail delivery networks.

NEW VALUE CONFIGRATION WITH MORE INTEGRATION

A new value configuration for Tesla Motor requires a high degree of vertical integration into the
battery and recharging network. The integration plan would reduce the expense of communicating
between the OEM and its supplier and reduce the risk caused by the lack of infrastructure support,
but it will also entail high investment and risk from the EV industry's instability. In its evolving
process, EV is a relatively new industry, OEMs need to value the trade-off and the transaction cost
for the value configuration and company organization they have.

4. RESOURCE UTILIZATION AND PESTLE ANALYSIS OF TESLA

According to the company's (RBV) resource-based view scholars, the resources and capabilities
of companies that are valuable, uncommon, and difficult to imitate are important for achieving
competitive advantage in the sector. On the other hand, the RBV model also emphasizes the need
to strike a balance between the utilization of existing resources and/or new development capacities,
and to drive growth in existing diversified markets after this cycle.
Starting as a start-up business with a complex value chain in a very capital-intensive industry,
Tesla practiced this model very well by recognizing and relying on its only important, uncommon
and difficult to replicate capability (technological lead in EV powertrain design) to develop other
valuable resources and capabilities and to boost the expansion and diversification of its market.

1. Innovative Operating Model

Tesla is the first vertically integrated energy company to propose value in all energy generation,
storage and consumption markets, implementing an unorthodox operating model that increases
prices, consumer service and exploits market feedback data for further changes, including in-house
marketing, sales and distribution.

2. Technological Leads
In addition to generating a company return, a creative idea, invention patent, expertise or know-
how will generate a resource position advantage over other roll-players in a particular market. In
addition, in a technology, the resource advantage can be exploited in many items, each generating
part of the resulting return.
By leveraging its expertise in electric powertrain design and engineering for EVs, it has not only
positioned itself as a capable premium EV maker, but has also financed its additional R&D projects
in battery packaging, battery cells, and renewable energy storage and management technologies to
sustain its technical resource advantage and even grow vertically in the OEM and clean energy
markets. The many investments in battery pack and battery cell technology, for example, not only
led to low-cost, safe, robust and high-energy density batteries for EVs, but also became the step
stone for the further technological leads of the company in energy management and storage
systems such as Powerwall.

3. Strategic Alliances
Strategic alliances played an implicit role in Tesla's development model, largely because of its
responsibility for novelty. It has enabled Tesla to gain non-marketable capital, such as production
capability, diverse automotive manufacturing capabilities, and many developments in innovation
and technology. In addition, collaborations can be used effectively as a tool for company learning,
according to some researchers; more specifically when radical innovations with complexity take
place and a lot of different systems and subsystems need to be aligned with each other

Tesla has engaged in three major strategic alliance types to facilitate its growth:
• supplier alliances
• R&D alliances
• OEM alliances with other automobile manufacturers.

4. AGILITY
Tesla has the ability to move rapidly between different markets and adapt to changes and needs of
markets and a quicker pace due to its small unique operating model, small size relative to other
automotive companies and strategic mentality, which enables Tesla to be the first to move into
new markets such as EV or home energy management.
COMPETITIVE ADVANTAGE OF TESLA(PESTLE ANALYSIS)
Market structure can affect the competitive advantage of a business and, thus, its growth model.
Although a company may not be able to alter the structure of the market, according to strategy
analysts, it is still an important consideration for a company's strategic decisions.

Macro-environmental factors
1. Political and Legal factors:
As many supportive and incentive policies are considered for the growth of low or zero emission
car manufacturers, political winds appear to favor Tesla and other EV manufacturers a lot. Few
countries like Norway, Germany, and China have adopted policies of paying subsidies and
finances on purchase of EVs.

2. Economic factors:
Global production and trade have been firmly established, funding conditions remain benign, and
prices for commodities have generally stabilized. The overall GDP value in the US is also rising
(World Bank Group,2017), and BRIC countries are building a lucrative market for high-end goods
such as Tesla's.

3. Social factors:
In support of green transportation options, social variables are rising more. In today's diverse
markets, being a responsible customer is now a buzzword and a value. This can also be boosted
by developments in IT& Social Media and also by the emergence in BRIC and other developing
countries of educated middle class society in particular.

4. Technological factors:
The exponential development of cross-science technology encourages the process of innovation in
businesses. Companies are more likely to incorporate new values into their product/service to
consumers by leveraging these innovations.
Many of the technologies used in Tesla EVs are also rooted in these cross-science technologies,
particularly IT and computer technologies, which not only helped Tesla increase customer value,
but also created a gap between Tesla and other car manufacturers that are not historically experts
in these areas.

Micro-Environmental Factors
1. Competitors
• Relatively large number of competitions
• Competitors strong position in terms of resources and capabilities
• Competitors liability of newness in EV’s manufacturing and IT capabilities
• Competitors low-cost leadership strategy for small and cheap city AV’s

2. Consumers
• Buyers multiple concerns about switching to EVs
• Existence of vast substitutes products like: Hybrids, Gasoline based cars
• Low backward switch costs
• Low price sensitivity in early adopters and affluent buyers
3.Suppliers and Distribution Channels
• Mostly high differentiated inputs with few substitutes
• Majority single source suppliers
• Many foreign suppliers increase the risk of exchange rate fluctuations
• Strong and traditional dealership distribution channel

4. Industry specifications (Barriers and attractiveness)

• High technology/knowledge intensive market
• High political push and incentives
• Production capabilities and economies of scale
• Capital intensive

5. HOW TESLA ORGANIZE ITS VALUE CREATION AND CAPTURING PROCESS

The organizational culture of Tesla, Inc. (formerly Tesla Motors, Inc.) provides the human
resource competence required for creative products in the global automotive industry. The
organizational or corporate culture of a company reflects the customs and values that characterize
the attitudes and decisions of employees. The organizational culture of Tesla empowers its workers
to strive for ideal solutions that make the company stand out in the automotive industry and in the
energy generation and storage industry.

The organization encourages workers to innovate to facilitate continuous business growth. Tesla,
for example, retains valuable human resource resources through its corporate culture in its ongoing
development in the global market for electric vehicles, batteries, solar panels, and related goods.
In this way, the cultural characteristics of the organization serve as a medium to increase strategic
effectiveness in improving the business. The leadership of Tesla Inc. optimizes workers to achieve
creative and innovative behaviors through the organizational culture. In order to sustain the
technical advancement that forms part of the cornerstone of the organization, these habits are
necessary.

Tesla, Inc. has a creative corporate philosophy of problem-solving. Employees are inspired by this
form of corporate culture to find profitable solutions to existing and emerging target market issues.
For example, in designing advanced electric vehicles, the company uses its corporate culture as a
solution to environmental problems affecting cars that have internal combustion engines. The
willingness of the company to continue developing advanced electric vehicles represents the
advantages of its corporate culture. Six key characteristics of its organizational culture are defined
by Tesla Inc:

• Move Fast
• Do the Impossible
• Constantly Innovate
• Reason from “First Principles”
• Think Like Owners
• We are ALL IN
MOVE FAST
Speed determines the competitive advantage of Tesla Inc. This aspect of organizational culture
illustrates the importance of the willingness of employees to adapt quickly to foreign business
developments and changes. The company's human resources, for example, have the opportunity to
produce cutting-edge technologies that equal or surpass those of competing automotive companies.
Via speedy responses to current problems and challenges in the global automotive industry, Tesla's
corporate culture thus promotes company resilience.

DO THE IMPOSSIBLE
Tesla must ensure that its organizational culture allows workers to think beyond the box while
designing cutting-edge goods. The importance of innovative concepts and solutions is recognized
by this cultural trait, but it also stresses the advantages of considering unconventional forms.

Human resource managers, for example, train staff to go beyond the traditional limits of vehicle
design efficiency and innovation, contributing to the creation of innovative solutions to energy and
transport needs. This situation opens up fresh possibilities for Tesla Inc. to boost its market
efficiency strategically. In the international automotive and energy solutions market, this cultural
situation also makes the organization an important agency in spreading progressive ideas.

CONSTANTLY INNOVATE
At the heart of Tesla, Inc. is creativity. The continuous essence of creativity in the business focuses
on this aspect of the organizational culture. The company, for instance, constantly researches and
develops solutions that enhance existing product designs for energy storage. Constant innovation
helps to grow cutting-edge electric cars and related goods in this market research sense. Via a
corporate culture that encourages relentless creativity, the firm meets this need. In business
processes and production, managers inspire workers to contribute to continuous creativity.

REASON FROM “ FIRST PRINCIPLES”

From first principles, CEO Elon Musk supports reasoning. In order to understand and solve
challenges in the real world, these concepts revolve around finding root causes. For instance,
energy storage products from Tesla Inc. are one of the solutions to the challenges of using
renewable energy and the challenges of improving the quality of the use of energy. Employees use
first principles in fulfilling their work through the organizational culture of the business.

THINK LIKE OWNERS

Tesla uses its corporate culture as a tool to sustain a mentality that facilitates the growth of business.
The corporation motivates its staff, for instance, to think like they own the business. The mentality
of ownership is a strong behavioral factor that helps grow and reinforce the integrity of companies
in different industries. This corporate cultural characteristic aligns employees with the strategic
priorities of the organization, thereby enhancing strategic productivity.

WE ARE ALL IN
The organizational culture of Tesla, Inc. unifies workers into a team that works to develop the
company. For instance, through teamwork, this cultural trait helps reduce conflicts. Synergy in the
human resources of the organization also creates such teamwork. As a result, organizational culture
maximizes the advantages of the skills and abilities of workers. In the international automotive
industry, synergistic cooperation leads to Tesla's competitiveness. This unifying cultural approach
also promotes the organization-wide application of organizational management and strategy.

When a business structure is marked by high competition, a dynamic supply chain and poor profit
margins, a reconstructionist approach should be embraced by a company and a plan should be
developed to reshape the market structure. This can be accomplished by differentiating the
components of the business model of a company.

1. Value propositions
Tesla has distinguished its target segment and value proposition from other automotive/EV market
leaders in terms of its capital and skills and structural factors. Through this, with many old, large,
and well placed rivals, it not only skipped direct competition, but also curved its own market niche.
This study utilizes the value proposition canvas structure and the fit between its two key parts to
explain this strategy:
• Costumer profile/Segment, Containing costumer characteristics of target segment, it wants,
needs, and concerns.
• Product/Service Offering, Consist of products and services to best fit costumer profile.

2. Operating Model
Tesla also decided to implement low-cost and differentiated tactics at the same time in order to
reshape the market structure. In order to do so, Tesla has altered portions of its supply chain in
order to profitably produce its distinct offerings.

A. Production:
The battery pack and powertrain system form the bulk of the EV cost structure. Tesla has been
vertically integrated into its supply chain in order to domesticate the design and manufacture of
these main components, unlike other conventional producers. Tesla has achieved in-house capacity
to produce low-cost and powerful battery packs and powertrain systems through heavy investment
in R&D and strategic alliances, which not only optimized its cost and made it competitive, but also
placed the company as a strong OEM for other manufacturers and opened up a new revenue stream
for it.

3. Sales & Distribution:

The marketing, sales and distribution processes of its goods have been internalized by Tesla. Tesla
has traditionally relied heavily on existing social network channels such as Twitter as a word-of-
mouth marketing model to build consumer pull and increase sales, refusing to spend any money
on ads yet. In addition, it paved the way for a value-pricing approach for its Model S and Model
X premium goods by replacing the conventional dealer network and utilizing an online distribution
channel.

Tesla has also expanded its own network of attractive showrooms and galleries in glamorous
shopping malls and fashion streets, building an excellent customer experience that has been further
used to improve its sales, customer knowledge, and also the word-of-mouth advertisement strategy
chain.
4. Product
In order to distinguish its products from other rivals in the industry, Tesla has relied on its technical
leadership in the design of powertrain systems for consumer technologies and IT. In addition, it
has taken advantage of strategic collaborations with battery designers such as Panasonic to produce
battery packs with excellent efficiency ahead of other EV manufacturers.

In addition, it has invested in power storage systems and battery cell technology to build a network
of high-performance superchargers and destination charging stations to surpass the usual consumer
product value proposition. This indirect approach expands the travel range.

5.Pricing Value
Pricing is popular among emerging technology and high-end products, allowing the business to
recover from high costs of R&D and product growth. In addition, this would help to develop the
perceived value of the product and brand for consumers. However, in order to make the transition
to the fully EV market more valuable for buyers, Tesla has also planned to retain competitive
prices against other luxury cars in the gasoline and hybrid market.

6. Place
Tesla is the first automobile company to plan to sell its goods directly through its company-owned
showrooms or online in order to make its products accessible to its costumes effectively and
minimize dealer costs. Most significantly, this approach shifts the delivery function's touchpoint
perspective and provides a uniquely engineered journey to build customer engagement and a 360
business view.

7. Promotion
Tesla has stressed direct contact through social media channels, flashy sales events and specialized
media such as magazines to its targeted audience. Tesla is separate from conventional distributor
networks by the introduction of a referral marketing program.

All in all, Tesla has dramatically selected its business segment, identified its features, and
overshadowed numerous threats and opportunities. In order to create a personalized view of the
organization distinct from those on the market, it has marshaled its resources and skills. It has
managed to build a win-win relationship by focusing its key marketing variables towards consumer
segment characteristics, which not only does not end with sales transactions, but actually begins a
new process of two ways of generating value where both business and customer create long-term
value for each other.

6. FUTURE VALUES OF TESLA

The vision of a renewable energy future with substantial resources is supported by Tesla becoming
the world's most profitable car maker. As hundreds of thousands of customers make the transition
to electric vehicles, Tesla's effect on the atmosphere over the next few decades may be
astronomical. This comes from the ideology of Tesla to prove that renewable energy is not only
good for the atmosphere, but is important for better cars to be made.
As the world is witnessing the revolution in technology and sustainable green environment looking
forward to the future of Tesla Motors the value that Tesla can create and capture are discussed as
follow:

1. Robotaxis
The self-driving taxi could ultimately take the global auto industry on a wild ride. With the
introduction of ride hailing apps such as Uber and Lyft, the world saw a revolution in the taxi
market. Established businesses have been forced to modernize their offerings-for example, adding
apps-and make the process more open. A new disruptive force in the industry is now giving rise
to advanced artificial intelligence: robotaxis.

• The amount of car data obtained from fleets is increased by modern technology. Cities that
collaborate with managers of the robo-taxi fleet to enable them to operate in their
communities They'll have a lot of data to use. The robo-taxi would also, by freeing the user
from driving, Increasing his or her contact with connected-car characteristics, increasing
demand for these characteristics
• Autonomous driving also promises to sow disruptions beyond the automotive sector. In the
insurance industry, for instance, it might increase fleet management and reduced risk of
accidents, and among airlines, customers Instead of taking a flight, they may choose to
relax in an AV for four to five hours.

2. Sustainable Energy Powerhouse

Tesla is not just building cars; by developing a self-dependent product ecosystem, it's
democratizing green energy. This way, homeowners can ensure that renewable energy runs off
their appliances and vehicles, and even sell it back to the grid if they want.

3. Manufacturing Ultra Low-Cost Model

In order to compete against much wider segment of auto market and creating future value this can
help Tesla to maintain a competitive advantage in order to compete with its competitors.

• Model Y: This will be a Model 3 platform-built crossover vehicle. It will round out Tesla's
first four post-Roadster vehicles' "S3 XY" product line.
• Pickup Truck: After the Model Y, this will be Tesla's focus, and Musk says that he is "dying
to build it." Musk says that to account for a "game-changing" feature he wants to introduce,
but has not yet announced, it will be the same size of a Ford F-150 (or larger).

4. Geographic Expansion
The domestic market of the company has renewed efforts to expand internationally to tap the
increasing transnational demand for electric vehicles.

5. Multiple Gigafactory’s
Tesla already has two: Reno Gigafactory I, NV (Batteries), and Buffalo Gigafactory II, NY. The
Gigafactory I started battery cell production in 2017. Eventually, it can generate enough batteries
to fuel 500,000 cars each year. Meanwhile, Tesla's SolarCity subsidiary operates the second
facility, manufacturing solar panel photovoltaic modules and solar shingles for the Tesla solar roof
product.
In 2017, Tesla said there will be "probably four" additional Gigafactory batteries in locations that
would "address a global market," including one in Europe. Since the need for lithium-ion batteries
to power these EVs is exploding, this makes sense. The raw materials required for these giga
factories, such as cobalt, lithium, graphite, and nickel, will also be an essential component of
Tesla's future.

6. Automation and sharing Economy

Tesla aims to be fully autonomous in its cars and to have shared fleets driving around to transport
people.
• Autonomous: Through massive fleet learning, Tesla aims to build a self-driving capacity
that is 10X safer than manual.
• Shared: Most cars only use their owner for 5% of the day. For self-driving vehicles, by
being shared between many users, a vehicle can achieve its true potential utility.

Constant product improvement: "I think people should get much more focused on the product itself
– how do you make the product incredibly compelling to a customer – just become maniacally
focused on building it better."

7.TESLA’S INTERNAL STRATEGIC FACTORS TO TAP FUTURE RESOURCES TO

CREATE VALUE:
Business strengths are internal factors that empower the company to compete against other
companies and, especially in the long term, ensure profitability. The strong brand of the company,
for example, will help strategic expansion in the global market. The following strengths form the
capabilities of the group as a strategic player in the automotive industry in this Tesla market
analysis case:
• Highly innovative processes
• Strong brand
• Strong control on production processes

Tesla’s External Strategic factors to tap future resources to create value:

These external variables are opportunities that, among other things, Tesla can use to enhance its
business efficiency, management effectiveness, and strategic development. For example, to help
more business growth, the company may expand in the global automotive market. In the global
automotive and energy markets, Tesla, Inc. has significant opportunities to boost its financial
position and competitiveness, as follows:

• Global sales expansion

• Global supply chain expansion
• Business diversification

Tesla must consider the potential for global sales growth in relation to its vulnerabilities. This
potential is focused on the rapid economic growth of countries where the company's market
presence is negligible. For example, through expansion in the Asian automotive and renewable
energy markets, the company will increase its revenues. Another potential is to extend the supply
chain of Tesla to facilitate the global expansion of production and distribution operations in this
SWOT review. Compared to larger businesses like General Motors, this external aspect places
emphasis on the comparatively limited extent of the company's operations.

Also, through diversification, the business can boost its profitability. In order to minimize
business exposure to risks in the automotive industry, this external strategic consideration entails
developing or acquiring new enterprises. This element of the SWOT study of Tesla points to the
advantages of international expansion.

Tesla needs to boost its multinational footprint. In high-potential developing countries, for instance,
new facilities and sales operations will accelerate business growth, fulfilling Tesla's corporate
mission and vision statements. In order to manufacture technologically innovative goods that are
competitive, the company must also continue its substantial investment in research and
development (R&D).

8.BETTER ORGANIZING PROCESS

In order to manufacture technologically innovative goods that are competitive, the company must
also continue its major investment in research and development (R&D). There is no question that
fostering a loose cultural climate gave Tesla a disruptive edge in the auto industry. But Tesla needs
tightness to help manufacturing efficiency and quality at this point in its growth.

Today, many companies need to balance a close and loose culture. They need to adapt and innovate,
but they need to be tightly organized in order to produce high-quality goods. The definition is not
for businesses to "remake" themselves, but to strive for a blend between loose and tight cultures.
Loose organizations should take realistic measures to provide their organizations with more
tightness, which we call organized looseness. Standardized rules can be applied through industry
activities.

For example, Tesla should introduce tightness by adopting organizational principles that have
helped produce quality vehicles on a massive scale for Toyota and other leading brands. Leaders
such as Musk need to inspire workers to showcase professionalism, efficacy, and reliability,
whether through public appreciation, promotions, or pay increases.

Leaders such as Musk need to inspire workers to showcase professionalism, efficacy, and
reliability, whether through public appreciation, promotions, or pay increases. They can also
centralize structures for details. Above all, the organization needs to track activities and express
the significance of following through on rules and standards. Meanwhile, tight organizations, such
as Toyota, will tolerate more versatility, which we call flexible tightness. They will reach a more
balanced cultural state by doing so, which staves off unnecessary rigidity or disarray. They will
reach a more balanced cultural state by doing so, which staves off unnecessary rigidity or disarray.

At the same time, they can harness the ingenuity of their teams and bring in the clear standards
needed for effective implementation. They will minimize the number of non-essential rules that
guide the actions of employees (dress codes, communication, meetings, etc.) and they support (or
at least tolerate) non-conformity. They will give more voice to staff and facilitate cross-level
collaboration. Great businesses, above all, must also employ leaders who excel at a combination
of close and loose culture. Such leaders understand that even the most innovative and creative
workplaces need structure to produce results, and that freedom is required for the most routine and
structured workplaces.

Figure 2 :Organization Structure : Tesla Motors

CONCLUSION

Question Arguments Theoretical Highlights Evidence, examples

background
1.1 Values The Value the firm intends The new generation
Tesla have organization is Creation(The to create value by: of consumers believe
created and well known for elements of • Producing strongly in
captured its emphasis value) sustainable sustainability, but are
and how on creativity. product that often at a loss as to
they are Many smart address issue of how they can
valuable? technical global warming participate in events
features, and depletion of to help this cause. So
including fuel resources they vote with their
autonomous • Product and sell wallets for it when
driving product that Is they come across a
technology accessible to brand that supports
and several mass market this cause. The carbon
other safety (re: Cheap footprint of their
features, are enough) preferred means of
loaded into • Innovate as transport is of interest
Tesla vehicles. soon as possible to these clients. This
The business and try to implies that value has
aims to address moved to clean
provide its sustainability transport from mere
customers issue “Now” vs. transportation.
with a in the “Future”
luxurious • Becoming the A Tesla car is not a
driving “first-mover” car by design; it is an
experience • Build iPhone on wheels. It
while competitiveness is software-powered,
remaining of product so it does not have
pollution-free against fuel- heavy equipment or
and exclusive. based car too many moving
through parts, which makes it
continuous lighter and less likely
innovation. to break down. It does
not have to be taken to
a garage in case of a
breakdown. The
problem can be
remotely diagnosed
and a software fix can
be submitted to
rectify it over the
Phone. This brings
 down the cost of
repair.

1.2 According to Value-Chain Tesla's assembled In addition to

Resources the company's & Resource vehicles use thousands generating a company
Tesla (RBV) Based view of parts supplied by the return, a creative idea,
exploited to resource-based company from invention patent,
create view scholars, thousands of suppliers expertise or know-
values and the resources worldwide. With many how will generate a
how it can and key suppliers, Tesla has resource position
bring capabilities of established good advantage over other
competitive companies that relationships. There are roll-players in a
advantage? are valuable, some essential particular market. In
uncommon, components, such as addition, in a
and difficult to cells and other main technology, the
imitate are device components, for resource advantage
important for which the organization can be exploited in
achieving has established close many items, each
competitive relationships with its generating part of the
advantage in suppliers for resulting return.
the sector. procurement. Although
Tesla has many By leveraging its
Starting as a suppliers of some raw expertise in electric
start-up materials, it relies on powertrain design and
business with a single sources for many engineering for EVs,
complex value others. One of the main it has not only
chain in a very Tesla suppliers is positioned itself as a
capital- Panasonic. capable premium EV
intensive maker, but has also
industry, Tesla financed its additional
practiced this R&D projects in
model very battery packaging,
well by battery cells, and
recognizing renewable energy
and relying on storage and
its only management
important, technologies to
uncommon sustain its technical
and difficult to resource advantage
replicate and even grow
capability vertically in the OEM
(technological and clean energy
lead in EV markets.
powertrain
design) to
 develop other
valuable
resources and
capabilities
and to boost
the expansion
and
diversification
of its market.

1.3 How The Value -Chain Tesla, Inc. has a Tesla has
Tesla organizational Analysis creative corporate distinguished its
organize its culture of philosophy of problem- target segment and
value Tesla, Inc. solving. Employees are value proposition
creation (formerly inspired by this form of from other
and Tesla Motors, corporate culture to automotive/EV
capturing Inc.) provides find profitable market leaders in
process? the human solutions to existing terms of its capital
resource and emerging target and skills and
competence market issues. For structural factors.
required for example, in designing Through this, with
creative advanced electric many old, large, and
products in the vehicles, the company well placed rivals, it
global uses its corporate not only skipped
automotive culture as a solution to direct competition,
industry. The environmental but also curved its
organizational problems affecting cars own market niche.
or corporate that have internal
culture of a combustion engines. The battery pack and
company The willingness of the powertrain system
reflects the company to continue form the bulk of the
customs and developing advanced EV cost structure.
values that electric vehicles Tesla has been
characterize represents the vertically integrated
the attitudes advantages of its into its supply chain
and decisions corporate culture. in order to
of employees. domesticate the
The design and
organizational manufacture of these
culture of main components,
Tesla unlike other
empowers its conventional
workers to producers.
strive for ideal
solutions that Tesla has
make the dramatically selected
 company stand its business segment,
out in the identified its features,
automotive and overshadowed
industry and in numerous threats and
the energy opportunities. In
generation and order to create a
storage personalized view of
industry the organization
distinct from those on
the market, it has
marshaled its
resources and skills. It
has managed to build
a win-win
relationship by
focusing its key
marketing variables
towards consumer
segment
characteristics, which
not only does not end
with sales
transactions, but
actually begins a new
process of two ways
of generating value
where both business
and customer create
long-term value for
each other.

2.1 Values The vision of a Value Robotaxis Constant product

that Tesla renewable Creation The self-driving taxi
improvement: "I
can create energy future ( The could ultimately take
think people should
and capture with elements of the global auto industry
get much more
in future? substantial value ) on a wild ride. With the
focused on the
resources is introduction of rideproduct itself – how
supported by hailing apps such asdo you make the
Tesla Uber and Lyft, the product incredibly
becoming the world saw a revolution
compelling to a
world's most in the taxi market. customer – just
profitable car become maniacally
maker. As Sustainable Energy focused on building it
hundreds of Powerhouse better."
thousands of Tesla is not just
customers building cars; by
 make the developing a self- The domestic market
transition to dependent product of the company has
electric ecosystem, it's renewed efforts to
vehicles, democratizing green expand
Tesla's effect energy. internationally to tap
on the the increasing
atmosphere Manufacturing Ultra transnational demand
over the next Low-Cost Model for electric vehicles.
few decades In order to compete
may be against much wider
astronomical. segment of auto market
This comes and creating future
from the value this can help
ideology of Tesla to maintain a
Tesla to prove competitive advantage
that renewable in order to compete
energy is not with its competitors.
only good for
the
atmosphere,
but is
important for
better cars to
be made.

2.2 Tesla must Value Business strengths are The following

Resources consider the Creation internal factors that strengths form the
that Tesla potential for empower the company capabilities of the
need to tap global sales Resource- to compete against group as a strategic
to create growth in Based View other companies and, player in the
those relation to its especially in the long automotive industry
values? vulnerabilities. term, ensure in this Tesla market
This potential profitability. The analysis case:
is focused on strong brand of the • Highly
the rapid company, for example, innovative
economic will help strategic processes
growth of expansion in the global • Strong brand
countries market. • Strong control
where the on production
company's external variables are processes
market opportunities that,
presence is among other things, For example, to help
negligible. For Tesla can use to more business
example, enhance its business growth, the company
through efficiency, may expand in the
expansion in management global automotive
 the Asian effectiveness, and market. In the global
automotive strategic development. automotive and
and renewable energy markets,
energy Tesla, Inc. has
markets, the significant
company will opportunities to boost
increase its its financial position
revenues. and competitiveness,
Another as follows:
potential is to
extend the
supply chain • Global sales
of Tesla to expansion
facilitate the • Global supply
global chain
expansion of expansion
production and • Business
distribution diversification
operations in
this SWOT
review.
Compared to
larger
businesses like
General
Motors, this
external aspect
places
emphasis on
the
comparatively
limited extent
of the
company's
operations.

2.3 Better many Agency They will minimize the For example, Tesla
organizing companies Theory number of non- should introduce
process that need to essential rules that tightness by adopting
Tesla can balance a close Transaction guide the actions of organizational
apply to and loose Cost Theory employees (dress principles that have
manage culture. They codes, communication, helped produce
value need to adapt meetings, etc.) and they quality vehicles on a
creation and innovate, support (or at least massive scale for
and theories but they need tolerate) non- Toyota and other
based ? to be tightly conformity. They will leading brands.
organized in give more voice to staff Leaders such as Musk
order to and facilitate cross- need to inspire
produce high- level collaboration. workers to showcase
quality goods. Great businesses, professionalism,
The definition above all, must also efficacy, and
is not for employ leaders who reliability, whether
businesses to excel at a combination through public
"remake" of close and loose appreciation,
themselves, culture. Such leaders promotions, or pay
but to strive for understand that even increases.
a blend the most innovative and
between loose creative workplaces many companies need
and tight need structure to to balance a close and
cultures. produce results, and loose culture. They
Loose that freedom is required need to adapt and
organizations for the most routine and innovate, but they
should take structured workplaces. need to be tightly
realistic organized in order to
measures to produce high-quality
provide their goods. The definition
organizations is not for businesses
with more to "remake"
tightness, themselves, but to
which we call strive for a blend
organized between loose and
looseness. tight cultures. Loose
Standardized organizations should
rules can be take realistic
applied measures to provide
through their organizations
industry with more tightness,
activities. which we call
organized looseness.
Standardized rules
can be applied
through industry
activities
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