Tesla Supply Chain Case Study + SWOT Analysis: Everything You Need to Know

Every time you mention out-of-box thinking, you think about Tesla. Each time you speak about doing things right, you speak about Tesla. And every time you seek a model for organization analysis…well, yes, you are welcome to consider Tesla. Here I will conduct the Tesla supply chain case study — as a bonus, there is also Apple SWOT analysis to aid MBA and management students.

Let’s get started!

Proud to Be Green

So, we are speaking about the world’s best-known manufacturer of electric vehicles, solar panels, and lithium battery energy storages. Tesla is an unprecedented attempt to transform the global automotive industry and to make it economical, environmentally friendly, and yeah, trendy. This attempt is deemed successful as since in 2016, the company’s CEO Elon Musk was ranked 21st in Forbes’ list of The World’s Most Powerful People.

How Everything Started

Tesla’s story started in 2003 when a group of engineers sets themselves an ambitious goal. They aimed at proving “that people didn’t need to compromise to drive electric – that electric vehicles can be better, quicker and more fun to drive than gasoline cars” (Tesla, 2018). But events started to develop much faster in 2005, when Elon Musk, an investor, manufacturer, and business magnate, joined the company. Elon Musk is, in fact, a business genius; and, hopefully, one of the future tutorials will be devoted to his leadership phenomenon. However controversial his figure is, the results are quite obvious — and supply chain management, together with operations planning, contributed to Musk’s success much more than his marketing talent.

SWOT Analysis of Tesla

In the meantime, it’s advisable to conduct a brief SWOT analysis of Tesla to get an understanding of the factors shaping the company’s performance.

Strengths

Organizational performance in Tesla SWOT is preconditioned by a number of internal factors that help to compete against other companies. These factors are:

1. Innovation: It’s hard to deny that Tesla outpaces its rivals in many respects. For instance, Model S was the best-selling plug-in electric vehicle in 2015 and 2016.
2. Strong brand: It seems like everyone knows Tesla, and wide public recognition is the most valuable asset any company can have.
3. Rigid control over the production process: Vertical integration of manufacturing processes minimizes the involvement of the third parties, hence, strengthens Tesla’s control over the entire process and improves the quality of the end product.

Weakness

Weaknesses are internal factors that hinder Tesla’s performance, but over which the company has some amount of influence. Therefore, Tesla should consider the following vulnerabilities:

1. Limited market presence: While electric vehicles are gaining momentum in the United States, Canada, China, and other countries, they are still less popular than gasoline cars.
2. High prices: Although engineers sought to design an affordable model for middle-class consumers, Tesla vehicles are still quite expensive. You should pay at least $76.000 to drive the new Model S.
3. Limited Supply Chain: This weakness will be examined in detail further in the tutorial.

Opportunities

Of course, a number of opportunities open up to the company:

1. Sales expansion: There are reasons to believe that more and more people will care about environmental problems and consider buying an electric vehicle.
2. Business diversification: In addition to electric vehicles, Tesla can sell solar panels and other products that are popular with environmentally conscious buyers.
3. Supply chain expansion: As the business develops, the company can expand its supply chain to middle-income countries.

Threats

Finally, Tesla should consider a bunch of external factors that can be potentially dangerous for its development.

1. Competition: Since electric vehicles are becoming quite popular with customers, more and more companies seek to compete with Tesla. Ford Motor Company, Toyota, and Honda have adopted quite aggressive competitive tactics.
2. Fluctuations in material prices: Recently, Tesla has faced with a significant increase in the cost of lithium, a material used in the energy storage product. It is logical to assume that fluctuations in material prices affect sales since the end product is getting more expensive.
3. Dealership regulations: Tesla’s strategy involves delivering products directly to customers to avoid increases in selling companies. But in some states (e.g., Texas), direct sales are prohibited, and the dealership is required. Naturally, the end product is getting expensive and a few customers buy it.

Once you have defined your vectors of Tesla SWOT analysis, it’s worth to select statistical methods to make your paper more professional. Chi-Squared Test Guide 👨‍👩‍👧‍👦  presents you with everything you need to validate your hypotheses. In turn, Sampling Strategies Discussion 🎲 will aid your selection of relevant Tesla cases. Below in this article, we will reach the depth of the Tesla business, competitors and supply chain.

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Tesla’s Supply Chain: Things to Admire and Issues to Improve

Overall, Tesla’s supply chain has a number of insights to offer. These things work effectively within Tesla’s supply chain:

1. Vertical integration: In business and management, vertical integration means that a company has an undivided control over its production process. While minimizing, or completely excluding, the involvement of third parties, Tesla guarantees a consistently high quality of its products.
2. Facilities: In an aspiration to gain undivided control over its business processes, Tesla engages in the construction of various facilities, including showrooms, Gigafactory, and Superchargers. Construction of these facilities is intended to make the use of Tesla’s products as easy as possible.
3. Growth: Swift growth is the distinctive feature of Tesla’s supply chain. At the moment, the company’s presence is on five continents. Likewise, in 2016, Tesla had a 100% growth when compared to 2015.

But we all know that every cloud has a silver lining; so, Tesla’s supply chain gets a number of issues to improve.

1. Scaling supercharging network: Although the company invests heavily in the expansion of its supercharging network, the number of Supercharges isn’t sufficient to meet the needs of electric cars’ owners.
2. Managing dealership issues: Selling products through dealers is a much undesirable option: the cost of the end product increases and customers become unhappy. Therefore, Tesla is faced with the task to promote direct sales wherever it’s possible.
3. Diversification: Whenever we speak about Tesla’s products, we commonly mean electric vehicles – very trendy, but too costly. Since a comparatively small percentage of potential customers can buy Tesla cars, the company could derive a substantial benefit from the diversification of its product line. Lithium-ion battery storages, solar panels, roof tiles, and related products are likely to become popular with consumers around the world.

Waiting for Tim Cook for Supply Chain Overhaul

Presently, Tesla is at the crossroads of its business development. On the one hand, the company has so many innovative ideas, and consequently an ambitious strategic vision. There’s no doubt that Musk is among the leaders who shoot for the moon. On the other hand, many of Musk’s strategic offers are left unrealized or are being realized long after the deadline claimed.

In his article Elon Musk Needs His Own Tim Cook to Take over Operations, American journalist Travis Hoium draws a parallel between Elon Musk and Steve Jobs. According to Hoium, Musk needs his own operations genius to match between the ambitious strategic vision and performance. It is crucial in resent business terrain, which is characterized by a complex interplay of numerous internal and external factors. In our Apple SWOT analysis post, we’ve explained the impact of Apple’s management on company’s success in detail — check it to be aware why Hoium insists on Cook’s necessity for Musk.

Lessons Learned from Tesla Case Study

Therefore, Tesla’s case study emphasizes the importance of ambitious strategic vision, ongoing innovation, vertical integration, and direct sales for business success. However, the takeaway message is that your company cannot be successful unless you have your own Tim Cook, a person who has a clear understanding of business realities and makes sure that these realities bring your vision to a new level rather than hinder your efforts.