Presented to: Dr. Saneya El.

Galaly
Presented By:

Karim Amir El Deeb

Omar Rashed Omar
Nadine Khattab

Table of Contents
History of Tesla Motors
Current situation
Board of Directors
Organization

3
4

Stock market information 5

Financial situation

BCG 6
Environmental Scanning
Internal factor analysis

External factor analysis

Internal Factor Analysis Summary (IFAS)

10

External Factor Analysis Summary (EFAS)

TOWS Matrix

12

13

Corporate Strategies

14

Cascading Business Functions among departments

Evaluation and KPIs measurements

18

20

History
Tesla Motors, Inc. is an American company that designs, manufactures and sells
electric cars and electric vehicle powertrain components. Named after the
scientist Nikola Tesla, Tesla Motors ($TSLA) was founded in 2003. Exactly who
founded Tesla Motors can be discussed, but it was probably by a group of intrepid
Silicon Valley engineers Martin Eberhard, Marc Tarpenning, and Ian Wright. Their
goal was to build an electric vehicle with the same performance as a Porsche and
more environmental friendly than a Toyota Prius. The problem was that the founders
didn't have the money needed to realize their idea, so they contacted Elon Musk,
who decided to invest in the company. Elon Musk had earlier founded the
companies Zip2, PayPal, and SpaceX. The difference between Elon Musk and the
founders was that Elon Musk wanted Tesla Motors to become an improved General
Motors with several car models, while the original founders wanted to design only a
sports car. Elon Musk became interested in electric cars because he is well aware
of peak oil. The idea behind peak oil is that oil is a finite resource we will run out of.
Elon Musk believes the production of oil will begin to decrease after year 2020. As
the production of oil decreases, the price of oil will increase and more people will
buy electric cars.

Current Situation
Tesla Motors headquarters is in Palo Alto, California. Its goal is to speed up this
transition from gasoline cars to electric cars, thus their vision is

"Create the most compelling car company of the 21st century by driving the
world's transition to electric vehicles."

To create this improved car, they couldn't begin with an inexpensive electric car - it
would have been too expensive. So they had to begin with an expensive sports car:
the Roadster. The idea behind this decision was that the profits from the Roadster
would pay for a less expensive car: the Model S, and profits from the Model S would
pay for an even cheaper car. Tesla Motors had produced the Roadster, only 2500
were sold and you can no longer purchase a new one. Afterwards they produced the
model S, About 2,650 Model S cars were sold in the U.S. during 2012, and 4,900
units during the first quarter of 2013, allowing the Model S to become the top
selling plug-in electric car in North America during the first quarter of 2013, ahead
of the Chevrolet Volt with 4,421 units, and the Nissan Leaf with 3,695. Among other
awards, the Model S won the 2013 "Motor Trend Car of the Year", the 2013 "World
Green Car", Automobile Magazine's 2013 "Car of the Year" and Time Magazine Best
25 Inventions of the Year 2012 award.
Tesla Motors has over than 2,000 employees

Current Mission:

Tesla Motors designs and sells high-performance; highly efficient electric sports cars
with no compromises. Tesla Motors cars combine style, acceleration, and
handling with advanced technologies that make them among the quickest and the
most energy-efficient cars on the road.

Board of Directors
ELON MUSK Chairman, Product Architect and CEO
Brad W.Buus Director
IRA Ethrenpreis Director
Antonio J. Gracias Director
Steve Jurveston Director
Harald Kroeger Director
Kimbel Musk Director

Organization
ELON MUSK CEO
JB STRAUBEL Chief Technical Officer
DEEBAK AHUJA Chief Financial Officer
FRANZ VON HOLZAUSEN Chief Designer
JAY VIJAYAN Chief Information Officer

 JEROME GUILLEN Vice President, World Wide Sales and Services

GILBERT PASSIN Vice President, Manufacturing
DIARMUID O CONNEL Vice President, Business Development

ARNNON GESHURI Vice President, Human Resources

PETER CARLSSON Vice President, Supply Chain.

Stock Market Information

Tesla's initial public offering was on June 29, 2010. The IPO was priced at $17 per
share

 Financial Situation
Income Statement
(Q1-Q3) 2013

2012

2011

2010

2009

Total revenues

1,398,277

413,256

204,242

116,744

111,943

Cost of Selling
Gross profit

1,098,604

383,189

142,647

86,013

102,408

299,673

30,067

61,595

30,731

9,535

163,523

273,978

208,981

92,996

19,282

184,080

150,372

104,102

84,573

42,150

Total operating expenses

347,603

424,350

313,083

177,569

61,432

Loss from operations

(47,930)

(394,283)

(251,488)

(146,838)

(51,897)

Interest income

97

288

255

258

159

Interest expense

(26,705)

(254)

(43)

(992)

(2,531)

Other expense

18,018

(1,828)

(2,646)

(6,583)

(1,445)

Item

Details

Research and
development
administrative

Loss before income taxes

(56,520)

(396,077)

(253,922)

(154,155)

(55,714)

Provision for income taxes

1,230

136

489

173

26

Net loss

(57,750)

(396,213)

(254,411)

(154,328)

(55,740)

BCG
BCG matrix is a framework created by and named after Boston Consulting Group to
evaluate the strategic position of the business brand portfolio and its potential. It
classifies business portfolio into four categories based on industry attractiveness
(growth rate of that industry) and competitive position (relative market share).
These two dimensions reveal likely profitability of the business portfolio in terms of
cash needed to support that unit and cash generated by it. The general purpose of
the analysis is to help understand, which brands the firm should invest in and which
ones should be divested.
The four main categories are as follows:

In our case Tesla Company current case is Question Marks as the earning and
profits are growing but the cash flow is currently negative and its strategy is to
invest.

Environmental Scanning

Internal Factors Analysis

Strengths:

Very Good Calibers, Strong R&D department, Innovation According to the CEO
Elon Musk, Tesla Motors is like the Special Forces, such as the Navy Seals.
Since the Special Forces are only recruiting the best, so does Tesla Motors.

Strong technological expertise in the area of electric transmissions & drive

train

Experienced CEO, Strong management team; The CEO Elon Musk has earlier
founded companies like PayPal and SpaceX, so he has a good track record.

Tesla Motors can design really good cars. The Model S won the 2013 Motor
Trend's Car of the Year award, which is a competition that began in 1949, and
the Model S might be the safest car ever according to crash tests.

Great Location near the best talents. They are building their cars in California
- not in Detroit. An electric vehicle is like a hybrid between a computer and a
gasoline car, so they can find many computer- and electrical engineers in
California. The area is also more innovative than Detroit.

Large Production Capacity; Only 20 percent of Tesla Motors factory is used to

produce Model S, so as new models from Tesla Motors arrives, the company
doesn't need to build a new factory. Ability to develop vehicles completely in
house including the sub-assemblies required

The Tesla Stores are similar to the Apple Stores and are an innovative way to
market the Tesla cars. (Innovative Marketing idea, stores) Innovative Sales
Channel Model.

Unlike combustible engines, electric engines have less moving parts and are
much cleaner to work with.

Weaknesses:

Tesla Motors are only selling electric cars, and people are still suspicious of
electric cars.

Few Supercharges. The infrastructure around electric cars does not exist.
Tesla Motors are doing their best to change this by building Superchargers,
which are like gas stations but for electric vehicles only.
8

Low battery range. The batteries have to improve. Historically, the batteries
have improved by eight percent a year, but there's no guarantee that they
will improve in the future.

Limited operating history - the company is just ten years old.

Lack of Brand Name Recognition: Compared to most of its competitors, Tesla

is a not a well-known brand in the auto industry.

External Factors Analysis

o

Opportunities:

The world is running out of oil. As the price of oil increases because of the
limited supply, more people will buy electric cars. Resources are renewable
and more available, most efficient vehicle.

People care more and more about environmental issues.

Can use their battery technology in other areas, such as storing power from
solar panels.

Large International Market Potential, Sales outside of the U.S., particularly

Europe, Asia, and Canada: Tesla has been very successful in European
markets, particularly Germany, and the company sees great potential in
Asian and Canadian markets.

The growing support by governments across the globe for environmentally

friendly vehicles in form of exemptions from duties & other support.
Government regulations and economic incentives: Since 2008, the DOE has
invested $5B in EV/PHEV technologies. The DOE objectives include reducing
battery pack costs 70% by 2015 (this estimate assumes average battery pack
cost of $600 - $700/kWh around 2008/2009), improving the public charging
infrastructure from 550 level 2 or level 3 charging stations (of which 426 are
in California) to 20,550 nationwide by December 2011, and reducing the
retail price to consumers by offering a $7,500 subsidy to consumers

purchasing EV/PHEV s. The government intends to accelerate consumer

adoption of EVs/PHEVs by reducing prices and making owning EVs/PHEVs
more convenient to consumers.

Threats:

Very Strong Competition. More and more auto manufacturers are releasing
their own environmental friendly cars. Since these companies are larger than
Tesla Motors, they (not all) have more financial resources, thus they can
survive longer if the price of oil doesn't increase in the near future. Lower
cost competitors or imports. Competition in the field; established luxury auto
heavyweights like BMW, Mercedes, and Lexus expected to join the fray soon.

Electric vehicle related accidents may scare away customers. For example, a
fire in one of the batteries is generally front-page news. On the other hand,
there are more than 750 accidents per day related to combustion engines and that's not front-page news.

Economic slowdown. Electric cars are still expensive and a new recession, like
the one in 2008, may limit the demand.

Consumer behavior changes required for EV purchase: EVs require greater

consumer behavior changes than hybrid or plug-in hybrid vehicles. For
instance, it can take several hours to recharge an EV battery, whereas it only
takes a few minutes to fill a car with gas.

Limited supply for raw materials

Limited Experienced resource pool

Awareness of importance of EV is not well propagated

10

Internal Factor Analysis Summary

(IFAS)

Strengths (3.7)
Internal Factors
Strong R&D
department
Calibers

Wg
t.

Rati
ng

0.4
5

Wgt.
Scor
e

Comment

1.8

Strong
Management Team

0.3

1.2

The CEO Elon Musk has earlier

founded companies like PayPal and
SpaceX, so he has a good track
record

Excellent Designs

0.1

0.3

The Model S won the 2013 Motor

Trend's Car of the Year award

Great Location,
close to best
calibers in the US

0.0
5

0.1

They are building their cars in

California . They can find many
computer- and electrical engineers
in California

Large Production
Capacity

0.1

0.3

Ability to develop vehicles

completely in house including the
sub-assemblies required

11

Weaknesses (2.2)
Internal Factors

Wg
t.

Rati
ng

Wgt.
Scor
e

Relatively High
Priced compared
to fuel cars

0.2
5

0.75

Few Charging
stations

0.2

0.4

Low Battery
Range

0.3

0.6

Slow Charging
Process

0.3

0.3

Lack of Brand
Recognition
&Limited
operating history

0.0
5

0.15

Comment

Tesla Motors are doing their best to

change this by building
Superchargers, which are like gas
stations but for electric vehicles only.

Battery Charging could take around

30 mins/170 mile
The company is just ten years old
,Compared to fuel cars
manufacturers

12

External Factor Analysis Summary

(EFAS):
Opportunities (4.1)
External Factors

Wgt
.

Rati
ng

Wgt.
Score

The world is running out of oil.

Electricity is a renewable
energy.

0.35

People care more about

environmental issues.

0.05

0.2

Can use their battery

technology in other areas,
such as storing power from
solar panels.

0.1

0.6

The growing support by

governments across the globe
for environmentally friendly
vehicles

0.1

0.3

Large International Market

Potential Particularly Europe,
Asia, and Canada.

0.2

Comment

Threats (2.4)
External Factors

Wg
t.

Rati
ng

Wgt.
Score

Very Strong competition

with less operating
Costs

0.3

0.6

Like BMW, Mercedes, and

Lexus expected to join the
market soon
Electric cars are still
expensive and a new
recession, like the one in
2008, may limit the demand

Economic slowdown

Limited supply for raw

materials
Limited Experienced

0.15

0.3

0.3

0.6

0.15

0.6

Comment

13

resource pool
Awareness of
importance of EV is not
well propagated

0.1

0.3

Large Segment of the

market is not aware of the
importance of the EV

Strengths
Weaknesses
S1: Strong R&D
W1:Relatively High Priced
Extern department Calibers
compared to fuel cars
al Factors EFAS
S2: Strong Management
W2: Few Charging stations
Team
W3: Low Battery Range
S3: Excellent Designs
W4: Slow Charging Process
Internal Factors IFAS
S4: Great Location, close W5: Limited operating
to best calibers in the US history
S5: Large Production
Capacity
Opportunities
SO Strategies:
WO
-Focus on new product Strategies:
O1: The world is running out of oil.
development with new
Electricity is a renewable energy.
technologies
and be ahead
-Outsourcing some
O2: People care more about
of the market
operational activities to a
environmental issues
(S1,3,5+O1,2)
low Cost (O5,W1)
O3: Can use their battery technology in
-Expand in new
other areas, such as storing power from
markets(S1,3,5+O5)
-Promote the awareness of
solar panels.
-Develop
new
products
in
environmental friendly
O4: The growing support by governments
an industry different than
cars(O1,O4,W1)
across the globe for environmentally
the company's core
friendly vehicles
operation (S1,S5+O3)
O5: Large International Market Potential.
Particularly Europe, Asia, and Canada.
Threats
ST Strategies:
WT Strategies:
-Develop
new
products
-Follow
Cost reduction
T1: Very Strong competition with less
attracting the different
strategy to decrease
operating Costs
segments (S1,5+T5)
costs(T1,W3)
T2: Economic slowdown
-Develop new
-Sell the company with a
T3: Limited supply for raw materials
technologies to decrease
good bargain
T4: Limited Experienced resource pool
overall
operating
costs
(T1,T2+W3,W2,W1)
T5: Awareness of importance of EV is not
(S1,5+T1)
well propagated

TOWS Matrix

14

Corporate Strategies
1- Growth Strategy: Market Development (Horizontal
Growth):
An effective idea for growth is entering new markets. If you have access to more
customers, you can sell more products and at the same time concentrating on its
primary line of business. You can target new markets by opening additional retail
locations, adding an online presence, selling internationally or reaching new types
of customers.
Tesla should keep focusing on its Niche segment as the current status but expand in
different markets such as Europe & Asia in order to increase revenues. Expansion in
new markets avoids the fierce competition in USA.
As an example, in 2012, the Chinese bought over 19 million vehicles, while the U.S.
market only bought 14 million. China is already the world's largest auto market and
it's set to grow even bigger in coming years. Chinese central planners have said
that they want to have 5 million electric cars on the road there by 2020. That's only
seven years away.
It currently has facilities in the United States and throughout Europe where parts are
being manufactured and assembled. Since they have limited resources, you must
be very selective of the location for its expansion
o

Advantages

Organization becomes pioneer at its specialization

Build Brand Name Globally

15

This not only affects sales through name recognition, but also helps recruit
local employees, sign on new distributors and work with media in each

country as part of the overall marketing efforts.

Increase sales and thus revenues.
Risk diversification.

Disadvantages

Organization is vulnerable to industry and other external environmental

shifts
Needs good monitoring globally to efficiently manage crises.
Large capital needed to start the expansion.

2- Growth Strategy: Product Development (Horizontal

Growth):
Tesla could benefit from its strong R&D department and focus on innovating new
cars to target a wider range of customers. If the strategy is properly implemented,
Tesla can gain a reputation as a company that is on the leading edge of EV industry.
This can help capture more market share and create an expectation of exciting
ideas among its customers.
In details, tesla motors should produce different types of electric cars like 4x4, hutch
back or sports cars not only the existing type, as tesla is currently suffering from
number of units sold and sales so we have to diversify the products just to increase
the sales and brand recognition as it will get to more customers which have
different tastes. So it can be named with different names like model X which will be
introduced in late 2014.
Advantages:

Creates Value. When a company uses a differentiation strategy that

focuses on the cost value of the product versus other similar products on
the market, it creates a perceived value among consumers and potential

customers.
Increase Brand Awareness.
16

Increase number of customers and accordingly Consumer Loyalty.

Provide a competitive advantage especially in the automotive market

which dominated by larger companies.

Having multiple product lines may allow a growing business to diversify

risk and capitalize on its established reputation

can attract buyers with different preferences, increase profitability thanks
to market segmentation and, for some businesses, even out seasonal

sales patterns
Compete more broadly in your industry.

Disadvantages:

Different Competitors will be added to current competition.

Companys focus might be dispersed after adding new products.
Risk of changing consumer tastes or preferences
resources may be disproportionately siphoned off for slower-moving

products
Older models with fewer features become less desirable and eventually
obsolete.

3- Stability strategy: Pause/Proceed with caution

Tesla is now doing fine by introducing the Model S by end of 2012, to introduce and
develop new products we will need a huge investment in R&D but instead we could
test the ground before moving ahead with a full-fledged grand strategy, trying to
overcome previous losses as a result Tesla will be able to move on with growth
strategies. So it is just a temporary strategy.
o

Advantages:
Enables the company to focus on its new product the Model S
Gain Some Profit to overcome previous losses
Focus on internal issues and enhancing internal processes

Disadvantages
Possible loss of market share
Loose opportunity for potential investments for a growing industry
Delayed to cope with the rapid technology changes

17

4- Growth diversification strategy (Conglomerate

growth)
Diversifying into a different industry that the current companys operation;
producing EV cars. Use its battery technology for other uses such as storing power
from solar panels. Leveraging the use of common brand name and combining
resources to create new competitive strengths and capabilities.

Advantages
Transferring skills & capabilities from one business to another
Sharing facilities or resources to reduce costs
Opportunities to achieve economies of scale and scope through skill
transfers, lower costs, common brand name, technology, etc.
Opportunities to expand product or service offerings and preserve unity in
businesses
fully utilize existing resources and capabilities like the Skills in sales &
marketing, general management skills & knowledge, distribution channels,
etc

Disadvantages
Complexity and difficulty of coordinating different, but related businesses
(e.g. Philip Morris General Food and Kraft subsidiaries)

Choosing the appropriate strategy

According to the above corporate strategies we will go with the Product

development strategy as our main goal is to increase profits to recover
from the negative balance since the company started until last quarter &
increase brand awareness for Tesla Motors in order to be able to compete
against strong and well known competitors like Ford & as Tesla Motors is
relatively a new company in the business and started with electric cars
directly unlike its competitors whom started with cars running on gas and a
long time ago building brand name and recognition through these years.
These goals can only be reached if all the departments work together as a
18

one team to achieve this goal, so below is how are we going to cascade the
business functions among all the departments.

New Mission:

Tesla Motors designs and sells high-performance, highly efficient electric all kind of
cars with no compromises. Tesla Motors cars combine style, acceleration, and
handling with advanced technologies that make them among the quickest and the
most energy-efficient cars on the road.

Cascading Business Functions among

departments

Marketing:
Follow product development marketing strategy by:

Dividing market into segments and target each segment separately, different
distribution channels.
Doing marketing researches to identify customers needs and best areas to
penetrate.
Building brand equity.
Promotions.
Broad Price ranges.

19

 Research & Development:

Pioneer new products that increase buyer value.

Human Resources:

Recruit new talents with diverse backgrounds with low pay.

Provide sufficient trainings

Information Systems:

Implement strong information system connected globally to create

connection with suppliers, retailers and customers.

Logistics:

Create & maintain strong, reliable & fast supply chain to react conveniently to
customers demand

Finance:

Prepare sufficient cash and assets needed for investments

Purchasing:

Hold good deals with new suppliers needed for the new products providing

20

Evaluation and KPIs measurements

Evaluate the R&D performance

Peer benchmarking

Compare your own intelligence function against industry peers using GIA (Global
Market Intelligence) Survey results in terms of

Annual budget
Level of development
Number of employees within the intelligence team

An example is from an industrial company that invited GIA to help run a megatrends
workshop to identify new business opportunities from trends that were identified
beforehand. The workshop resulted in 41 new business ideas, which was later
counted as part of their KPIs for their market intelligence activities. So the business
opportunities or new ideas generated can be one set of KPIs, even if they will not
show up as revenues immediately.

Evaluate the Marketing performance:

Social Media fan growth rates, engagement rates, and response rates
Having a large number of fans is a solid measurement of your companys social
marketing success. Fan growth helps track the increase in the number of fans
or followers of your page, but it does not necessarily determine whether your
social efforts are effectively engaging your target audience
The engagement rate for Facebook is calculated as the sum of likes,
comments, and shares on a given day divided by the number of posts that a
page made on that day. That number is then divided by the total number of
fans that like that page
The Response Rate is a percentage calculated as the number of times the page
responds to user posts or questions on their page, divided by the total number
of posts or questions. Your goal is to have a high RR in order to show customers
that you are actively listening and responding
Onsite market interviews

21

 Evaluate the Operating & Financial performance:

Speed-to-marketputting the right product in the right market segment faster

than a competitor, measuring time from idea formulation to delivering product
in market
Gross Profit Margin = (Sales-COGS) / Sales
Product margin
Product adoptiondriving the uptake rate in a market at a lower cost and
shorter time than a competitor
Product launchimproving the response rate from target buyers with fewer
impressions

Operational
Drive

Financial
Outcome

Speed-tomarket

Increase
product revenue

Product
adoption

Increase
product margin

Product
launch

Lower cost of
sales

22