Final Capstone Project Plan

Running head: FINAL CAPSTONE PROJECT PLAN 1

Student’s Name

[Institution Affiliation]

FINAL CAPSTONE PROJECT PLAN 2

EXECUTIVE SUMMARY

This is my final deliverable project plan where I will offer an explanation of my entire

project. In this case, I will merge the other 4 deliverables in this project plan and offer a detailed

explanation of the entire project. This project therefore, seeks to offer a detailed overview of the

project and also addresses Tesla Motors strategic development, analyzes the company’s

innovation and competitive aspect, exploitation innovation, and the company’s response to

change.

Tesla Motors strategy development

First, the project plan will address Tesla Motors strategy development. Notably, Tesla

Motors is a company that utilizes resources to manufacture sports cars which are cost effective

and power driven. The company was initiated in 2003, and until today the company has been

specializing in production, selling and distribution of electric vehicles as well as lithium-ion

storage batteries. Tesla motors CEO, Elon Musk, declared the company’s strategy in 2006. Tesla

Motor’s strategic plan involved utilizing its resources to build a sport car which is cost effective

and that offers zero emissions. In this case, the Tesla Motor plan was to build a sport car that is

electric powered to fit the current generation.

One of the Tesla Motor’s plans which have facilitated the company’s recent development

is the direct selling approach to its customers. Typically, the company produces their automobile,

sell and distribute these cars by themselves. In most cases, the company sells its products

utilizing its employees and through its website. On the other hand, Tesla motor company utilizes

a unique pricing strategy which minimizes the charges than those incurred in a typical U.S car.

FINAL CAPSTONE PROJECT PLAN 3

Besides, the pricing strategy lowers the total price of the car and the import and shipping

costs compared to prices offered by other automakers who usually add premium prices. Most

importantly, the company offers its clients a good value for money compared to their

competitors. In this case, the paper seeks to define strategy and how it fits in Tesla Motors

company, outlines the core strategies that Tesla Motor’s management took, defines the

company’s leading competitors and the strategies they use, and analyzes the company’s current

situation. On the same note, the paper will address Tesla motors performance goals over one year

and five years period.

Tesla Motors innovation and competitive analysis

Subsequently, the project plan will address Tesla Motors innovation and competitive

analysis. Tesla’s main competitors are some of the biggest global automobile companies which

include Ford motors, General Motors, Toyota as well as Nissan. Tesla has faced a significant

competition in this sector because many large automobile industries have increased their focus

on producing electric vehicles. Considering that Tesla has dominated this industry, its

competitors are implementing various strategies to ensure that they fit considerably in this

industry. Considering the increased focus on production of eco-friendly automobiles and

enduring goals of zero emission, a growing number of automobile industries are currently

investing profoundly on electric vehicles. Although most of these automobile industries have

ventures into this new business by implemented various strategies, currently these strategies are

not successful hence Tesla retains its competitive edge in the electric vehicle market. One of the

main reason why Tesla has gained a competitive advantage in this case is due to is innovation

strategy which has seen the company install numerous supercharge stations in most countries as

well as its direct selling strategy. Notably, this project plan will utilize the Porter’s Five Forces

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analysis method to perform Tesla Motors competitive analysis. Besides, the paper will address

the company’s innovation and technological trends over the years, Evaluate Tesla Motors

resources and capabilities and provide Tesla Motors organization structure.

Tesla Motors exploiting innovation

Another significant aspect that this project plan will address is Tesla Motors exploiting

innovation. Precisely, Tesla manufactures electric cars which are affordable but still fitted with

the current technology. For instance, the cars are in the same category as Mercedes Benz, BMW

and Audi. Currently, Tesla’s supercharger system hosts almost 3,000 supercharge stations in the

United States which offer suitable charging opportunities to Tesla cars users. This offers the

company a competitive edge due to the fact that there is no other company which has been able

to offer this kind of supercharger network currently. In this case, the project plan will show the

significance of innovation for continued survival of Tesla Motors company, Tesla’s anticipated

evolution within five years, and the main competitive advantage of the company over its

competitors. Likewise, the paper will provide the Strategies the company can utilize to exploit its

innovation development.

Tesla Motors response to change

Tesla Motors response to change is a significant element in the management and

development of the organization. Today, the automobile industry is constantly developing, which

requires Tesla Motors to revise and change its management strategies to maintain its competitive

edge. On this note, the project depicts how Tesla motors CEO should position the company to be

responsive to change. Besides, the paper will evaluate whether Tesla Motors Company is

declining or maturing, evaluate the advantages and disadvantages of Vertical Integration versus

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Outsourcing for Tesla Motors company and analyze Tesla Motors’ Strategic Position using BCG

Matrix.

PROJECT PLAN

1. TESLA MOTORS STRATEGY DEVELOPMENT

Strategy definition and how it fits in Tesla Motors case study.

A strategy is defined as an overall set of plans projected to attain a particular objective,

specifically over a specified period. Notably, Tesla Motors CEO, Elon Musk, declared the

company’s strategy in 2006. Tesla Motor’s strategic plan involved utilizing its resources to build

a sports car which is cost effective and that offers zero emissions. In this case, the Tesla Motor

plan was to create a sports car that is electric powered to fit the current generation (Milosheska,

n.d., p. 67).

The core strategies that Tesla Motor’s management took

One of the Tesla Motor’s plans which have facilitated the company’s recent development

is the direct selling approach to its customers. Typically, the company produces their automobile,

sell and distribute these cars by themselves. In most cases, the company sells its products

utilizing its employees and through its website.

Tesla Motor company utilizes a franchise supply system. This strategy is essential since

many nations are available which the company can penetrate, however since the company has

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limited resources it utilizes the franchise which facilitates the company to distribute their

automobile to various countries.

Another primary business strategy embraced by Tesla motor company is targeting high

ended consumers and focusing on introducing eco-friendly automobiles in the global market.

Although initially this approach is perceived to have a high risk, over the years the company has

successfully generated high returns.

Tesla strategy supports the go green campaign through the production of eco-friendly

automobiles. With the increased global warming and other related climate change, many people

are concerned about the environment. For this reason, a lot of people have shifted to using

electric powered vehicles produced by Tesla Motor company.

Precisely, for the company to enhance the use of Tesla cars, the company has

implemented a strategy that offers installation of many supercharges systems in nations which

have Tesla cars available. For instance, the company has provided 65 supercharge stations in the

U.S as well as 14 channels in parts of European nations.

On the other hand, Tesla motor company utilizes a unique pricing strategy which

minimizes the charges than those incurred in a typical U.S car. Besides, the pricing strategy

lowers the total price of the car and the import and shipping costs compared to prices offered by

other automakers who usually add premium prices. Most importantly, the company offers its

clients a good value for money compared to their competitors. For instance, in China Tesla

automobiles were tagged a price value of $121,000 which makes these cars a great deal and

extremely affordable than the numerous fueled vehicles. This strategy has significantly led to

China considered one of the biggest Tesla’s market.

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Subsequently, Tesla strategy of producing advanced new types of cars which come with

modern technology and which are more developed than the previous models has facilitated its

recent development. The new advanced car models have driven most customers to select Tesla as

their preferred choice.

Tesla Motors leading competitors and the strategies they use

Tesla’s main competitors are some of the most significant global automobile companies

which include Ford Motors, General Motors, Toyota as well as Nissan. Tesla has faced a

significant competition in this sector because many large automobile industries have increased

their focus on producing electric vehicles. Considering that Tesla has dominated this industry, its

competitors are implementing various strategies to ensure that they fit considerably in this sector.

For instance, Ford Motors declared its plan recently that the company will invest an extra 4.5

billion dollars in the production of electric vehicles. (Jenkins & Australia Post, 1981, p. 55) On

the other hand, General motors one of the Tesla competitors has launched its battery driven

Chevrolet Bolt offering a considerable threat in the electric vehicle market. Besides, the

Chevrolet Bolt will have 200 miles range from one supercharge station to the next.

Considering the increased focus on production of eco-friendly automobiles and enduring

goals of zero emission, a growing number of automobile industries are currently investing

profoundly on electric vehicles. Although most of these automobile industries have ventured into

this new business by implemented various strategies, currently these approaches are not

successful hence Tesla retains its competitive edge in the electric vehicle market. One of the

main reason why Tesla has gained a competitive advantage, in this case, is due to its numerous

supercharge stations installed in most countries as well as its direct-selling strategy. Despite the

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fact that General Motors, Chevrolet Bolt which is a battery-driven vehicle seems to be a direct

competitor for Tesla’s Model 3, it is explicitly clear that the Model 3 received a greater

acceptance compared to Chevrolet Bolt.

Tesla Motors analysis and the company’s current situation

Notably, Tesla manufactures electric cars which are affordable but still intended for high

ended users. For instance, the vehicles are in the same category as Mercedes Benz, BMW, and

Audi. By lowering the price to a specific level would motivate more people to buy Tesla

automobiles at an affordable price. Besides, the company needs to expand its service are, for

example, stores and charging stations. This will enable the company to sell more Tesla cars in

different countries.

Currently, Tesla’s supercharger system hosts almost 3,000 supercharge stations in the

United States which offer suitable charging opportunities to Tesla cars users. This provides the

company a competitive edge because there is no other company which has been able to offer this

kind of supercharger network currently (Jenkins & Australia Post, 1981, p. 53). Ford Motors

announced that it intends to start production of electric vehicles that will supply 80% charge

within 30 minutes similarly to Tesla’s Model S. However, Ford competing with Tesla on

supercharging networks will be challenging due to its first moving advantage.

Tesla motors performance goals

One-year performance goals

• Increase Tesla car production

• Produce more battery cells at the Giga factory

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• Launch one complete new car

Five-year performance goals

• Launch self-driven vehicles

• Reduce the price of batteries by more than 30%

• Produce not less than 50,000 vehicles

2. TESLA MOTORS INNOVATION AND COMPETITIVE ANALYSIS

Using Porter’s Five Forces analysis to perform Tesla Motors competitive analysis

To perform a competitive evaluation of Tesla Motors company, I utilized Porter’s Five

Forces competition analysis framework. Notably, Porter’s five forces analysis framework is a

device used for analyzing the business competition. In this case, this framework derives five

forces which determine the competitive power of business as well as the attractiveness of the

business in terms of its overall productivity. Precisely, the five forces include the threat of new

competitors, a threat of substitutes products, the bargaining power of consumers, the bargaining

power of suppliers, and company rivalry (Jussani, Heer, Ibusuki, & De Moura Côrtes, 2015, p.

69).

Tesla motors threats to new entrants

Tesla Motors has faced a considerable threat from new companies which are focusing on

the production of electric powered vehicles. Some of the companies which have recently entered

in this business include Ford Motors, General Motors, Toyota as well as Nissan. Given that the

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automobile industries have focused on producing electric cars, Tesla Motors have faced a severe

threat from these companies. Consequently, these companies have implemented new strategies to

ensure that they compete favorably in this sector. However, Tesla Motors still retains its

competitive edge in this business since the company has managed to secure the market by

producing electric vehicles with new technology. Besides, the company has installed numerous

supercharging stations in most nations across the globe hence improving its customer's loyalty.

The bargaining power of consumers

Tesla Motors considers its customer's bargaining power in that the company offers its

clients a good value for money compared to their competitors. For instance, in China Tesla

automobiles were tagged a price value of $121,000 which makes these cars a great deal and

extremely affordable than the numerous fueled vehicles. This strategy has significantly led to

China considered one of the biggest Tesla’s market. On the other hand, Tesla motor company

utilizes a unique pricing strategy which minimizes the charges than those incurred in a typical

U.S car. Besides, the pricing strategy lowers the total price of the car and the import and shipping

costs compared to prices offered by other automakers who usually add premium prices.

Threat of Substitutes Products

Commonly, substitutes products utilize a different technology aimed at solving the same

market need. For instance, General motors one of the Tesla competitors has launched its battery

driven Chevrolet Bolt which will have 200 miles range from one supercharge station to the next.

Despite the fact that General Motors, Chevrolet Bolt which is a battery-driven vehicle seems to

be a direct competitor for Tesla’s Model 3, it is explicitly clear that the Model 3 received a

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greater acceptance compared to Chevrolet Bolt due to its unique features which comprise of

advanced technology.

The Bargaining power of suppliers

One of the primary reason why Tesla Motors has gained a significant edge in this

business is that it the company utilizes its resources to make sports cars that are electrically

driven. In fact, the company has produces its own battery cells at the Giga factory which means

the bargaining power of suppliers is low, and there is no one time the company will lack raw

materials to produce their products.

Company rivalry

Company rivalry is the main determinant of the company’s competitiveness. In this case,

there are various factors that influence Tesla Motors competitiveness. First, the company utilizes

a sustainable competitive strategy through producing innovative products. Besides, the company

sales its products both through its website and through its brick and mortar stores spread all over

the world.

Tesla Motors technology and innovative trends

One of the innovative and technological trends that Tesla Motors have initiated involves

producing advanced new types of cars which come with modern technology and which are more

developed than the previous models (Fleming, 2013, p. 45). This has significantly facilitated its

recent development. The innovative sports cars that are electrically powered to fit the current

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generation have driven most customers to select Tesla cars as their preferred choice. Besides,

Tesla Model 3’s ridiculous abilities such as accelerating from 0 to 60 in 3 or fewer seconds have

made this middle-sized car one of the most affordable supercar for many people now and in the

future. Considering these two innovative and technological trends its explicitly clear that Tesla

company will effectively retain its competitive edge in this business and also capture a huge

market share in different major automobile segments.

Evaluating Tesla Motors resources and capabilities

Currently, Tesla Motors has developed a supercharger system that hosts almost 3,000

supercharge stations in the United States which offer suitable charging opportunities to Tesla

cars users. This provides the company a competitive edge because there is no other company

which has been able to provide this kind of supercharger network currently. The company has

also established a Giga factory which produces battery cells. The company sells these battery

cells to other consumers and as well uses them to make their own products. Notably, Tesla

manufactures electric cars which are affordable but still intended for high ended users. For

instance, the vehicles are in the same category as Mercedes Benz, BMW, and Audi. This has

facilitated the company to enter the global market depicted by the increased product deliveries

the company makes over the years. Subsequently, the company can distribute around 500,000

different car models by 2020. On the other hand, the company intends to launch its first self-

driven car (Fleming, 2013, p. 33).

Tesla Motors Organization Structure

Tesla Motor’s organization structure supports the company’s capability to innovate and

be successful. Notably, the company’s policies involve utilizing its resources to build a sports car

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which is cost effective and that offers zero emissions. In this case, the Tesla Motor intends to

create innovative sports cars that are electrically powered to fit the current generation. With the

increased global warming and other related climate change, many people are concerned about the

environment. Hence, a lot of people have shifted to using electric powered vehicles produced by

Tesla company leading to its success over the years (Milosheska, n.d., p. 62).

Tesla organizational strategy is to sell its products in company-owned showrooms

utilizing its employees and through its website instead of using conventional dealers. Precisely,

the company’s approach to selling its products through its website is a sustainable strategy given

that the world is increasingly becoming globalized and technology is playing a significant impact

in any business.

Tesla motor company pricing policy contributes to its overall success. Specifically, the

company utilizes a unique pricing strategy which minimizes the charges than those incurred in a

typical U.S car. Besides, the pricing strategy lowers the total price of the car and the import and

shipping costs compared to prices offered by other automakers who usually add premium prices.

Most importantly, the company offers its clients a good value for money compared to their

competitors.

3. TESLA MOTORS EXPLOITING INNOVATION

Notably, exploiting innovation is regarded as the process of implementing new

innovative ideas in the establishment of a new practice, product or service. Currently, innovation

is the key strategy for exploitation of any business plan. For this reason, innovation is an

essential tool for growth and development of any company. In most cases, the growth of a

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company from a specific business idea, its establishment, advancement to maturity, as well as

technological growth in every process maximizes the company’s opportunities achieving its

business objectives and gaining a competitive edge in the global market (Burns, 2013, p. 34). In

fact, innovation plan can become a successful strategy within five years specifically because

today, many companies have developed and implemented new technologies such as developing

electric vehicles which offer zero emissions. Today, the automobile industry is facing a

significant technological development depicted by the current increase of electric powered

vehicles that are entering the automobile industry hence challenging the fuel driven cars. One of

the motivating factors that have facilitated the development of automobile industry is the

growing environmental concern (Burns, 2013, p. 52). The strategy to produce cost-effective cars

that provide zero emissions have significantly contributed to the growth of this sector. Besides,

the industry focuses on producing innovative vehicles that are electrically driven to suit the

preference of the current generation. Notably, this paper focuses on evaluating the importance of

innovation for the survival of Tesla Motors company and the anticipated evolution within five

years.

The significance of innovation for continued survival of Tesla Motors company

Over the years, innovation has played a critical role in the development of Tesla Motors

company.Most importantly, the application of innovative skills has not only seen the company

gain a competitive edge but also made the company achieve its financial objective as depicted by

increased distribution and sales of electric vehicles across the globe (Milosheska, n.d., p. 71).

Therefore, the following are some of the importance of innovation for long-term survival of

Tesla Motors company.

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 The development of innovative electric vehicles supports the go green campaign through

the production of eco-friendly vehicles. For this reason, since many people are concerned

about the environment they will support the company’s strategy by buying these electric

vehicles.

 Through the implementation of innovative and new business ideas in Tesla, Motors

company will result in increased investment that will lead to a sound financial growth.

Precisely, innovation leads to increased wealth for the company.

 With the increased global warming and other related climate change, many people are

concerned about the environment. For this reason, a lot of people have shifted to using

electric powered vehicles produced by the automobile industry.

 Currently, globalization and technology advancement in the automobile industry has

encouraged many companies to implement innovative strategies to gain a competitive

edge in the automobile market.

 Innovation plays a critical role in creating employment and business opportunities for the

company. This is because innovation leads to the development of new products which

requires new workforce input. On the other hand, the production of new products and

services creates space for suppliers and investors as well as sales departments.

 Subsequently, innovation enhances market stability and meets customers demands

through the innovative production of goods and services. For instances, using innovative

strategies, Tesla Motors can produce cars that come with the current technology which

suits the current generation.

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Tesla’s anticipated evolution within five years

Tesla Motors has invested a lot in innovation and new technology in all its operations. In

this case, therefore, this depicts that in five years time the company will be considered as the

leading company in the production of electric powered vehicles across the globe. Currently, the

company’s CEO stated that the company is planning to launch its first self-driven electric car

within a few years time (Milosheska, n.d., p. 32). Besides, since the company has significantly

applied innovative technology in its production, the number of produced cars per annual will

increase considerably over the years. Most importantly, the company also intends to expand its

supercharging network across the globe. This will ensure that most people who buy these electric

vehicles have easy access to a charging station. In fact, this innovative strategy will ensure that

the company maintains its position in the automobile market even in the next ten years.

The main competitive advantage of the company over its competitors.

The main advantage the company has over its competitors is its innovative strategy in

terms of technology and globalization. Normally Tesla Motors company makes effective use of

technology in all its production processes globally (Abdulsater et al., 2013, p. 27). Tesla Motors

has developed a supercharger system that hosts almost 3,000 supercharge stations in the United

States which offer suitable charging opportunities to Tesla cars users. This provides the company

a competitive edge because there is no other company which has been able to provide this kind

of supercharger network currently. Besides, Tesla manufactures electric cars which are

affordable but still intended for high ended users. For instance, the vehicles are in the same

category as Mercedes Benz, BMW, and Audi. This has facilitated the company to enter the

global market depicted by the increased product deliveries the company makes over the years.

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The Strategies the company can utilize to exploit its innovation development

One of the innovative and technological trends that Tesla Motors can initiate involves

producing advanced new types of cars which come with modern technology and which are more

developed than the previous models (Abdulsater et al., 2013, p. 44). This can significantly

facilitate its growth and development. Precisely, producing innovative sports cars that are

electrically powered to fit the current generation can drive most customers to select Tesla cars as

their preferred choice. Besides, Tesla should focus on producing cars with abilities such as

accelerating from 0 to 60 in 3 or fewer seconds. Considering these two innovative and

technological trends its explicitly clear that Tesla company will effectively retain its competitive

edge in this business and also capture a huge market share in different major automobile

segments.

4. TESLA MOTORS RESPONSE TO CHANGE

Notably, an organization reaction to change is a significant element in the management of

the organization. In this case, organization responsiveness to change implies putting together the

essential processes, strategies, techniques, as well as resources that will guide the company and

its employees to successfully implement and embrace organization change as a driver for the

company’s success (Waddington, 1994, p. 45). Considering that organizational change is

exceptional to an individual employee and the organization as a whole, research indicates that

there are various actions which can be carried out to attain high levels of organizational

responsiveness to change. On this note, therefore, this paper seeks to examine how best Tesla

Motors Company CEO will position the company to effectively respond to change and yield

maximum benefits from the strategies recommended in deliverable 1 to 3.

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How Tesla motors CEO should position the company to be responsive to change

Today, the automobile industry is facing a significant technological development

depicted by the current increase of electric powered vehicles that are entering the automobile

industry hence challenging the fuel driven cars. One of the motivating factors that have

facilitated the development of automobile industry is the growing environmental concern. The

strategy to produce cost-effective cars that provide zero emissions have significantly contributed

to the growth of this sector. Besides, the industry focuses on producing innovative vehicles that

are electrically driven to suit the preference of the current generation. Consequently, Tesla

Motors CEO, Elon Musk, declared the company’s strategy in 2006 (Dood, Anderson, & Kline,

1989, p. 57). Tesla Motor’s strategic plan involved utilizing its resources to build a sports car

which is cost effective and that offers zero emissions. In this case, the Tesla Motor produces

sports cars which are cheap and electric power not only to fit the current generation but which

are likewise affordable to many people.

Over the years, considering the increased growth in the Go Green campaigns being

carried out globally, the automobile industry especially that deals with production and

manufacture of electric vehicles such as Tesla Company has faced extreme competition. In this

case, different internal and external forces dictate the need for the company to embrace

responsiveness to change. Therefore, to position Tesla Motors company, it is important for the

CEO to critically appreciate that change is a multifaceted component and which its success is

impacted by different factors. Most importantly, one of the essential steps which the CEO should

embrace in order to remain responsive to organization change is to determine and address all

hard and soft aspects of the change. By description, hard aspects of change involve the various

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components of organizational management which are vital to the successful application and

implementation of the change. Specifically, hard aspects of change yield three significant

features. First, hard aspects can be measured using various means. Secondly, these aspects can be

communicated effectively to all company’s shareholders. And thirdly, many companies are in a

position to influence the hard aspects of change to attain the desired goals. In this case, the most

critical hard aspects which the Tesla Motors Company CEO will have to consider to make the

company more responsive to change include employee training and financial resources

management.

On the other hand, soft aspects of change are the various factors which influence the

change processes. However, the aspects alone are not adequate to guarantee an effective

response to change. This, therefore, implies that soft components of change do not have any

direct impact on the organizational change process and must hence be addressed together with

the hard aspects. On this note, the major soft aspect which Tesla Motors CEO must address to

make the company more responsive to change consist of cultural diversity, staff motivation, as

well as leadership.

Training employees will play a significant role in this case, in that it will assist the

employees to acquire more skills and knowledge concerning various way of supporting

organizational change processes. In fact, skilled workers and knowledgeable about the

importance of organizational change are more likely to respond to change. Similarly, training

employees will considerably help in reducing resistance to change since the employees

understand that the change is not aimed at going against their wishes. In conjunction with

employee training, it is essential that employees get involved in decision-making processes about

change. Employee involvement and participation in decision-making process offers a good

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opportunity for the employees to have their contributions and opinions considered with regards

to the implementation of the organization change.

Consequently, availability of funds is also a critical aspect especially for an organization

or business which want to be responsive to change. In most cases, change processes in an

organization involve modification and adjustment of the existing organization processes,

structures, and models (Brazzel, 2014, p. 73). For Tesla Motors, change will involve various

components including reviewing the physical developments and examining how different

systems interrelate. For this to be achieved, substantial financial resources will be needed. For

this reason, it is important for Tesla Motors CEO to have a strong change management plan in

position. The change management plan will ensure that the funds budgeted for the change

process accomplish the projected objective through the realization of the anticipated outcomes.

Subsequently, culture is another important element of effective responsiveness to change

in an organization. Precisely, culture refers to the ideologies, values, as well as assumptions

which are mutually shared by people with Tesla Motors company. It is essential that the CEO

encourages a supportive and robust culture to ensure that employees work in harmony for the

company to endure more responsiveness to change. Certainly, an effective organizational culture

motivates employees to uphold and support the change process. On the same note, a supportive

culture in the organization helps in developing an enabling working environment where every

employee works towards the anticipated organizational change.

Nearly related to organizational culture is leadership. Leadership in simpler terms

involves the actions of issuing directions to workers to enable them to accomplish the common

goals of the organization. In regards to Tesla Motors Company’s desire to be responsive to

change, the CEO has to play a critical role of inspiring the employees to grow a sense of

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seriousness and draw their focus on the change process. Given that the CEO is the topmost

leader in the company, he should champion change responsiveness through effective

communication of the change strategies and policies to the employees.

Tesla Motors Company CEO should also consider the aspect of employee motivation in

the company. In this case, employee motivation depicts the level of energy, motivation, as well

as creativity which the employees of Tesla Motors bring to the organizational change processes

and which will support the company attain a more responsiveness to change. In some cases, there

are likelihoods that workers may resist the change process particularly is the change focuses on

restructuring the jobs. Alternatively, if the proposed change needs re-education, workers may

likewise resist the change process. For this reason, it is essential that the CEO initiate a program

that will motivate the employees to embrace the change process. Most importantly, is the need to

offer the employees the required resources, devices, and equipment to help them realize the

importance of the change and hence be responsive to the change.

Evaluating whether Tesla Motors Company is declining or maturing

The automobile industry plays a significant role in the global economy. In fact, the

industry not only contributes considerably to the global GDP but also accounts for a great

number of job opportunities globally. Over the years, the automobile industry has developed

significantly depicted by the production of electric powered vehicles that are not the only

emission free but also cost-effective. In this sector, Tesla Motors is the leading company in the

production of the electric powered vehicle.

One of the factors that have enabled Tesla Motors maturity is that the company targets

high ended users and focuses on producing eco-friendly vehicles in the global market. For

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instance, the vehicles produced by Tesla such as Model S are in the same category as Mercedes

Benz, BMW, and Audi. Since the company offers its cars at a low price, many people are

motivated to buy hence increasing the sale of their products.

On the other hand, Tesla motor company utilizes a unique pricing strategy which

minimizes the charges than those incurred in a typical U.S car. Besides, the pricing strategy

lowers the total price of the car and the import and shipping costs compared to prices offered by

other automakers who usually add premium prices. Most importantly, the company offers its

clients a good value for money compared to their competitors. For instance, in China Tesla

automobiles were tagged a price value of $121,000 which makes these cars a great deal and

extremely affordable than the numerous fueled vehicles (Herrmann & Rothfuss, 2015, p. 88).

This strategy has significantly led to China considered one of the biggest Tesla’s market.

Tesla Motor company utilizes a franchise supply system. This strategy is essential since

many nations are available which the company can penetrate, however since the company has

limited resources it utilizes the franchise which facilitates the company to distribute their

automobile to various countries. For this reason, the company has been able to enter the global

marketing depicted by the increased product deliveries the company makes over the years. Most

importantly, the distributions for different car models produced by Tesla company are projected

to increase up to 500,000 by 2020 as depicted in the graph below.

Tesla Motor’s strategic plan involved utilizing its resources to build a sports car which is

cost effective and that offers zero emissions. In this case, the Tesla Motor intends to create

innovative sports cars that are electrically powered to fit the current generation. With the

increased global warming and other related climate change, many people are concerned about the

FINAL CAPSTONE PROJECT PLAN 23

environment. Hence, a lot of people have shifted to using electric powered vehicles produced by

Tesla company leading to its success over the years

Examining the Advantages and Disadvantages of Vertical Integration versus Outsourcing

for Tesla Motors company

Notably, Porter’s National Diamond offers a platform for examining the relative

disadvantages and advantages of vertical integration against outsourcing. Normally, vertical

integration is considered an organization expansion strategy which consists of merging two or

more companies which are at different production levels. For instance, Tesla Motors can merge

with its distributors and suppliers to improve their financial scale. The primary advantage of

vertical integration in Tesla Motors is that it results in increased production capacity due to the

controlled accessibility of vital resources.

On the other hand, the main disadvantage of vertical integration in the company is the

high cost of integration. This is particularly faced when the organization is too large, which

requires a substantial investment of capitals. In this case, vertical integration might be extremely

costly for Tesla Motors since most of its distributors and suppliers are big companies with

developed market existence. Indeed, Tesla Motors will need to sacrifice some of its major plans

such as expanding its supercharging networks to integrate with such companies, which in this

case is not a good business plan.

Essentially, outsourcing includes contracting of company’s activities to a third-party

individual or organization that specializes in the anticipated business activities. In most cases,

outsourcing is embraced to save cost for activities which the company needs but does not depend

FINAL CAPSTONE PROJECT PLAN 24

on them to gain a competitive edge in the market. Some of the task that Tesla Motors can

outsource include human resource services and accounting.

The benefit of outsourcing is that it saves cost and time. Alternatively, the contracting

organization can focus on essential activities which are significant for the company’s

development and survival. However, the main disadvantage of outsourcing is that it results in

loss of business management and control.

Analyzing Tesla Motors’ Strategic Position using BCG Matrix

The BCG matrix classifies opportunities in a company as stars, cash cow, dogs as well as

question marks. Stars are regarded as organizations which produce large cash flows since they

have a strong market stake and high development rate. Even though cash cows are considered

well-developed organizations, these companies operate in slow developing industries. Dogs

categorize the low development rate and low market stake. Eventually, question marks denote

organizations that have a weak market stake but a high potential for development.

The Analysis of Tesla Motors company depicts that the company is the leading

manufacturer of electric vehicles hence the company is flourishing as a star. Notably, Tesla

Motors produces and distributes a large number of electric vehicles globally. Therefore, the

company attains high sales compared to its competitors. Specifically, Tesla Motors company

attains its competitive advantage through production, distribution, and sale of electric vehicles

which have made the company even more competitive in the automobile industry. Most

importantly, the organization is constantly introducing innovative techniques to ensure that they

produce high-quality products that suit the current customers. This innovative strategy together

FINAL CAPSTONE PROJECT PLAN 25

with their pricing strategy has placed the company in the leadership position in the industry

despite the huge competition from other companies such as Toyota and Ford Motors.

Conclusion

In conclusion, the automobile industry is constantly developing, which requires Tesla

Motors to revise and change its management strategies to maintain its competitive edge. For the

company to implement the recommended changes, the CEO should focus on the leadership style.

In this case, the CEO should maintain transformational leadership in the company. This is

because this leadership style focuses on motivating employees to be effective managers of

change.

FINAL CAPSTONE PROJECT PLAN 26

References

Jenkins, V., & Australia Post. (1981). Strategy development. Melbourne: Australia Post.

Milosheska, D. (n.d.). TESLA MOTORS, THE REINVENTION OF THE LUXURY SPORTS

CAR INDUSTRY. Global Luxury Trends. doi:10.1057/9781137287397.0019

Tesla Motors expands its battery technology to solar power storage. (2015). Physics Today.

doi:10.1063/pt.5.028843

Fleming, B. (2013). Electric Vehicle Collaboration-Toyota Motor Corporation and Tesla Motors

[Automotive Electronics]. IEEE Vehicular Technology Magazine, 8(1), 4-9.

doi:10.1109/mvt.2012.2233933

Jussani, A. C., Heer, A., Ibusuki, U., & De Moura Côrtes, C. (2015). Electric car and Porter’s

five Forces: Marketing Positioning in the Automotive Industry. SAE Technical Paper

Series. doi:10.4271/2015-36-0486

Milosheska, D. (n.d.). TESLA MOTORS, THE REINVENTION OF THE LUXURY SPORTS

CAR INDUSTRY. Global Luxury Trends. doi:10.1057/9781137287397.0019

Abdulsater, A., Balasubramanian, A., Wang, B., Madani, F., Mansour, M., & Talla, R.

(2013). Technology Road Map for Tesla Motors Sedan EV. Planning and

Roadmapping Technological Innovations, 215-238. doi:10.1007/978-3-319-02973-

3_9

Burns, P. (2013). Exploiting Innovation. Corporate Entrepreneurship, 381-421.

doi:10.1007/978-1-137-29259-9_12

FINAL CAPSTONE PROJECT PLAN 27

Milosheska, D. (n.d.). TESLA MOTORS, THE REINVENTION OF THE LUXURY

SPORTS CAR INDUSTRY. Global Luxury Trends.

doi:10.1057/9781137287397.0019

Brazzel, M. (2014). Organization Change Theories and Models. The NTL Handbook of

Organization Development and Change, 255-281. doi:10.1002/9781118836170.ch13

Dood, K. J., Anderson, L. I., & Kline, R. R. (1989). Tesla and the Induction Motor.

Technology and Culture, 30(4), 1013. doi:10.2307/3106202

Waddington, J. (1994). Response to Change. Organization, 1(2), 453-455.

doi:10.1177/135050849412015

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