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Tesla Motors Company’s Stability, Growth, Retrenchment Case Study


Tesla Motors is one of the contributors to the global automotive industry through the invention of best known electric motors. It gets its name from an engineer named Nikola Tesla who laid a foundation for the designing of electrically powered automobiles (Durney par. 7). The growth and development of this organization are accredited to various stockholders, investing their resources in stages. The company is the first car corporation in America to offer its shares to the public in 2010, after Ford Motor Company that did the same in 1956.

The main issues affecting the organization include the high production cost that gets out-of-control due to the excessive R&D expenditures as well as several product design changes (Roy, Souchoroukov, and Shehab 694). These massive costs substantially diminish the company’s investment capital, thus, requiring more stockholders to raise extra funds. Also, the company is facing the problem of delays in the production of a reliable and well-tested transmission to last for many miles.

Analysis of Tesla Motors’ external environment is achievable by looking at various factors surrounding the company. First, there is a five-year loss-making period. This stage significantly hurt the company’s sales until 2013 when it first sold its Model S vehicle to customers. Secondly, it is the issue of competition. It is quite evident that the organization has been able to rise above its competitors, by providing its clientele with electric vehicles that encourage cleaner surroundings, unlike their counterparts that are carbon-producing and gasoline-powered motors. Thirdly, the issue of customers comes out clearly. According to the report of the company, the organization has been able to attract more consumers in a short period which encourages an increase in sales especially through word of mouth (Jullien and Pardi 96).

The analysis of the organization’s internal environment is possible by examining some aspects within the company. The first aspect is the change in management. Due to the delays in the production of the company’s vehicles, the board of directors changes the CEO personnel. The new CEO is in charge of enhancing production and initiating deliveries of vehicles to their clients. The other issue is to lay off a certain percent of unproductive employees. The new management succeeds in raising production and sales through ensuring that only the active workers remain in the company (Donnelly, Collis, and Begley 289).

This corporation follows three levels of strategy. The stability strategy is developed through the acquisition of capital investment from different stockholders. This investment assists in the stabilization of production and deliveries of more automobiles to customers. The company also uses a growth strategy. Growth strategy is an approach achieved via selling its shares to the public. It increases the capital investment of the company. On the other hand, the retrenchment strategy is accomplished by firing more than two hundred and fifty workers including some executive members. This action reduces the organization’s expenses by paying fewer productive employees to work for the company (Kompalla, Kopia, and Tigu 2016).

SWOT Analysis

SWOT Analysis

TOWS matrix

TOWS matrix

I would recommend that the firm invests in machines that work faster and longer to reduce the number of workers. On the second issue, I would recommend the creation of a production department that only deals with manufacturing cars to reduce the delays.

In a bid to curb the problem of high expenditures, the management lays off ten percent of the employees including some of the high positions leading to reduced expenses. On the issue of delayed production, a knowledgeable C.E.O with engineering skills is employed to enhance production and deliveries (Gobetto 2).

Works Cited

Donnelly, Tom, Clive Collis, and Jason Begley. “Towards Sustainable Growth in the Chinese Automotive Industry: Internal and External Obstacles and Comparative Lessons.” IJATM International Journal of Automotive Technology and Management 10.2/3 (2010): 289. Web.

Durney, Edward Gordon. “Re-inventing Carmaking with Truly Electric Cars: Using a Modular Car Architecture to Build New Cars and a New Carmaking Industry.” 2012 IEEE International Electric Vehicle Conference (2012): n. pag. Web.

Gobetto, Marco. “Historical Outlines and Industrial Strategies for Automotive Industries.” Springer Series in Advanced Manufacturing Operations Management in Automotive Industries (2013): 1-43. Web.

Jullien, Bernard, and Tommaso Pardi. “Structuring New Automotive Industries, Restructuring Old Automotive Industries and the New Geopolitics of the Global Automotive Sector.” IJATM International Journal of Automotive Technology and Management 13.2 (2013): 96. Web.

Kompalla, Andreas, Jan Kopia, and Gabriela Tigu. “Limitations Of Business Strategies And Management Systems Within Automotive Industry.” INTED2016 Proceedings (2016): n. pag. Web.

Roy, R., P. Souchoroukov, and E. Shehab. “Detailed Cost Estimating in the Automotive Industry: Data and Information Requirements.” International Journal of Production Economics 133.2 (2011): 694-707. Web.

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IvyPanda. (2020, September 2). Tesla Motors Company's Stability, Growth, Retrenchment. Retrieved from https://ivypanda.com/essays/tesla-motors-companys-stability-growth-retrenchment/

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"Tesla Motors Company's Stability, Growth, Retrenchment." IvyPanda, 2 Sept. 2020, ivypanda.com/essays/tesla-motors-companys-stability-growth-retrenchment/.

1. IvyPanda. "Tesla Motors Company's Stability, Growth, Retrenchment." September 2, 2020. https://ivypanda.com/essays/tesla-motors-companys-stability-growth-retrenchment/.


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IvyPanda. "Tesla Motors Company's Stability, Growth, Retrenchment." September 2, 2020. https://ivypanda.com/essays/tesla-motors-companys-stability-growth-retrenchment/.

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IvyPanda. 2020. "Tesla Motors Company's Stability, Growth, Retrenchment." September 2, 2020. https://ivypanda.com/essays/tesla-motors-companys-stability-growth-retrenchment/.

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IvyPanda. (2020) 'Tesla Motors Company's Stability, Growth, Retrenchment'. 2 September.

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