Sample Business Studies Paper Case Study on Tesla Motors

Tesla Motors is an electric car manufacturer based in the United States. Marc Tarpenning and Martin Eberhard originally formed the company in 2003 to develop an electric sports vehicle. They obtained funding from various sources, but Elon Musk contributed over $30 million to the new venture and served as its chairman (The Street, 2020, n.p). Since its inception, Tesla’s mission is “to accelerate the world’s transition to sustainable transport” (The Street, 2020, n.p). Tesla released its first car in 2008, The Roadster. In 2013, Tesla’s release of the flagship vehicle, Model S, catapulted the company into media spotlight. The Model S was a completely electric luxury sedan, which sparked an electric revolution by eliminating the stigma of electric cars as second-class vehicles. From changing the company’s name to introducing a completely new product line, the company has evolved since the era of the 40 kW battery pack (Berdichevsky, Kelty, Straubel, & Toomre, 2006, p.2). After releasing the Model S, Tesla innovated and progressed more than any other carmaker, pioneering first-charging technology, leading battery development, and experienced growth on multiple factors.


Microenvironment Analysis


Tesla boasts of a cult-like consumer following. In 2015, Tesla established a marketing plan, outlining the current target consumer as “business executives and entrepreneurs who are city dwellers, tech-savvy, and green friendly (Schilling, 2014, n.p). Most of its customers comprise males looking for a premium luxury vehicle (Aybaly, Guerquin-Kern, Manière, Madacova, & van Holt, 2017, p. 541). However, this market segment mostly comprises of individuals champion for sustainability practices from the companies they interact with, hence their preference for Tesla cars.


Tesla directly competes with other automakers like Honda Motors, General Motors, and Toyota just to mention a few. These car manufacturers are continuously innovating new product offerings such as pure electric cars and hybrid gas-electric cars such as the Chevy Volt and Nisan Leas. Many of these companies have started developing and producing electric cars, such as Ford, Fiat Chrysler, and BMW, among others. Tesla feels intimidated and fears that these competitors may offer consumers with an alternative to its electric car products.


Unlike other electric car-makers that sell theory-franchised dealerships, Tesla uses direct sales through its Tesla-branded stores (Dyer & Furr, 2020, n.p). The firm has established a global network of company-owned galleries and showrooms, particularly in prominent urban centers worldwide. Tesla believes that by following the direct sales model, it can obtain an advantage in the speed of product development and an improved consumer purchasing experience.


The current number of employees at Tesla is 45,000, despite the 9% layoff earlier last year (Helmold & Samara, 2019, p.135). When the firm introduced firm restrictions on its terms of contract with employees and contractors, it had approximately 40,000 employees. It is observed that immediately after the layoff, the firm entered into a hiring spree. Though Tesla currently reviewed its list of contractors and discontinued contracts with many of them, the company immediately embarked on a hiring spree of temporary workers to conduct test drives and schedule product deliveries. The inclusion of contractors and temporary workers into the 45,000 headcount explains the high figure. Tesla has an impressive employee growth rate.


Tesla’s suppliers are spread across Europe, the U.S., and Asia. The key suppliers for the company’s productions include Stabilus, Sika, Modine Manufacturing Co, AGC Automotive, and Fisher Dynamics (Helmold & Samara, 2019, p.145). These companies provide Tesla with various components, such as windshields, battery chillers, and acoustic dampers, among others.


Macro-environment Analysis

Technological Factors

Rapid technological changes present a key opportunity for Tesla. The company can maintain its competitive position in the market by effectively leveraging on technology to improve its product portfolio. Tesla’s business model is equipped with fully-driverless car technology, which shows how the firm has commercialized new technologies (Dyer & Furr, 2020, n.p). Notably, car technology presents the main competitive advantage for Tesla over its rivals.

Environmental Factors

The environment is another key opportunity for Tesla because its vehicles use electricity and are environment-friendly. Also, the company’s cars produce fewer carbon emissions and are, therefore, environment-friendly. From energy-saving to electronic cars, the company strictly focuses on sustainability and saving energy. Tesla boasts of a favorable brand image, and it is currently on a journey to make its supply chain more energy-efficient.

Political Factors

Tesla has an opportunity to strengthen its industry presence and financial performance via government incentives. The company is already capitalizing on this opportunity through minimal carbon footprints of its operations and activities, to build a strong brand image. Besides, expansions of global free trade agreements have opened up lucrative opportunities for Tesla to spread its geographic presence.

Economic Factors

Tesla’s financial performance benefits significantly from lower battery costs, which translates to affordability of its electric car products. Battery life is a vital cost feature in the total cost of any electric automobile. The company’s Powerwall batteries development is a huge source of business opportunity due to its affordability. This economic factor makes Tesla’s products more attractive to consumers and it will help in producing more affordable electric cars.

Sources of Finance

Tesla relies on internal sources of finance. It raises funds from its core business activities of manufacturing and selling electric cars. The cash generated from its core business operations is sufficient to cover the company’s future capital expenditure, as well as enables the payment of its near-term debt obligations. Currently, the company aims at increasing the cash generated from its regular business activities to strengthen its financial position. The company can also obtain finance from selling its fixed assets. For example, they can sell older assets, which are no longer needed for operations or have been replaced by others. The profits accrued from selling these assets can be added to the company’s bottom line.

The Operations Management Department

Key Operational Objectives

Tesla has two key operational objectives that contribute to its current business success. Ensuring customer’s quality expectations are satisfied is one of the main objectives in the area of operations management. Tesla follows various steps to address this objective including research and development (R&D), quality improvement activities and regular quality checks. Additionally, responding to quality problems with suppliers, Tesla shifted from sourcing its parts to manufacturing most of its car components. Adequate, effective human resources is another critical operational objective for Tesla. To achieve this objective, the company follows a competitive compensation approach to attract and retain the best talents. This strategy is particularly important in Tesla’s industry because many companies are competing for top-notch quality human capital.

Network Analysis. I would use network analysis to identify emerging leaders and retain the best talents. Traditionally, many organizations identified emerging leaders based on qualifications and work experience. This top-down technique is skewed and can cause a company to promote unproductive or incompetent individuals. Applying a network analysis involves asking other employees who they turn to during decision-making processes. From these responses, I can identify reliable individuals and emerging leaders who have the potential to solve problems and motivate others. Also, I will deploy a network analysis whenever I want to retain the best human resources. The unappreciated and disengaged workforce is a key recipe for high turnover (Ujwary-Gil, 2020, p.120). I will determine employees’ involvement in the decision-making process and their relationship with supervisors within the more extensive network. The presence of poor employee/supervisor relationships, employee disengagement, and lack of employee support would warrant appropriate corrective measures to prevent any chances of employee departure. For Tesla, the network analysis can help drive organizational change and behavior modification.  An example of such a significant change may be the firm’s integration of a new acquisition, which necessitates a culture change. Through network analysis, Tesla can detect boundary spanners who understand various cultures, thus engaging them as agents for the transition.


Marketing Strategy

Tesla’s Market Share

Figure 1: Projected Growth of the Electric Car Market

Source: (Allied Market Research. 2020)

As evident in Figure 1, the electric car market will grow by 21% to reach 26,951 units by 2030 from 3269 units in 2019 (Allied Market Research. 2020, n.p). The base year for this forecast is 2018, while the forecasted period is from 2019 to 2030. The industry cotninues to expereince rapid evolution with constant development in the auto-segment. Favorable political environment including government policies and support in the form of tax rebates, grants, subisidies, and other non-financial incentives (new car registration and car pool lane access), the increased vehicle range and better availability of charing infrastructure drive the U.S. electric car sales. These incentives can motivate Tesla to reduce its prices hence sell more cars to increase profits (Mangram, 2012, p.289). Graph 1 illustrates that Tesla owns over 50% of the United States market, and this figure is projected to continue growing (Allied Market Research. 2020, n.p). Notably, without Tesla, the electric car market would easily become irrelevant.

Graph 1: Tesla’s market share

Source: (Allied Market Research. 2020)

Market Segmentation

Tesla uses demographic and behavioural market segmentation strategies. The company takes into account diverse variables, such as income level, age, and gender, when choosing its target audience. Initially, Tesla focused on affluent and high-end consumers that were seeking for a car that was not only eco-friendly and efficient, but also drove like a real luxury sports vehicle. However, the company recently launched its latest model, the Model 3. This addition to its product offering targets a new consumer segment, that is, middle and low-income earners. This new target segment, although not affluent, can still afford Tesla’s entry-level luxury model. Regarding behavioural segmentation, Tesla groups its consumers based on factors like product knowledge, attitude, and benefits sought. For instance, Tesla’s Model S targets affluent consumers seeking for environmentally friendly vehicles. The company differentiates its customers based on the benefits they are seeking from the products.

HR Strategy

Recruitment Methods

Tesla uses both the internal and external recruitment methods. In case of a vacancy, the company sources for in-house employees to fill the position. The advantages of this approach are that the company already knows its current employees including their strengths and weaknesses. This gives Tesla a better edge in deciding whether or not the individual will be a good fit for the position. On the other hand, however, through this recruitment method, an internal candidate may not bring any new perspective or change to the workplace. They may be content to continue with business as usual hence deprive the company of new and fresh ideas. When internal employees fail to meet the job requirements, Tesla resorts to searching outside the organization to fill the vacant position. Sourcing externally accords the company an opportunity for a fresh outlook on the macro and microenvironment factors that Tesla may need to stay competitive.

Selection Methods

Tesla’s selection method involves five major steps. The applicants send an application letter, which must be accompanied by an updated curriculum vitae to the relevant position. The next step is a phone interview. The company’s human resource manager reviews all the applications and then invites the most suitable candidates. He/she asks questions about the individual’s basic skills and interests in the firm, and if all goes well, they schedule a face-to-face interview. Professional managers and other relevant interviewers conduct the interview session. Each candidate is asked information relevant to the company, their educational background, as well as work experience. The aim of this interview is to determine whether the individual is the best fit for the vacant position. Those who pass the interview proceed to the next stage, which is a Hogan Personality test. Tesla uses this tool to assess an individual’s personality in the workplace in order to predict their potential performance based on communication skills, strengths, weaknesses, and problem-solving ability. Identifying of top candidate is the final step of Tesla’s hiring process. The hiring team shortlists the most qualified candidates and makes the final hiring decision.

Employee Training 

Tesla adopts a computer-based training method. The company delivers instructional materials to groups of employees through its corporate or educational intranet (Rao, 2008, p.97). In the car sector, the complexity of the manufacturing process and the different technologies deployed create multiple learning groups among workers within a single factory, thus enabling Tesla to deliver instructions to a large group at once.

Reference List

Allied Market Research. 2020. Electric Vehicle Market. Accessed on 27th June 2020 from

Aybaly, R., Guerquin-Kern, L., Manière, I.C., Madacova, D. and van Holt, J., 2017. Sustainability practices in the luxury industry: How can one be sustainable in an over-consumptive environment?: Sustainability in the automotive world: The case of Tesla. Procedia computer science122, pp.541-547.

Berdichevsky, G., Kelty, K., Straubel, J.B. and Toomre, E., 2006. The tesla roadster battery system. Tesla Motors1(5), pp.1-5.

Dyer, J., & Furr, N. 2020. Lessons from Tesla’s Approach to Innovation. Harvard Business Review.

Helmold, M., & Samara, W. 2019. Progress in performance management: Industry insights and case studies on principles, application tools, and practice. Cham, Switzerland: Springer

Mangram, M.E., 2012. The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing20(4), pp.289-312.

Rao, P. L. 2008. Enriching human capital through training and development. New Delhi: Excel.

Schilling, S., D. 2014. The Story Behind Tesla Motors’ Mission As Auto Industry Trailblazer. Accessed on 27th June 2020 from

The Street. 2020. History of Tesla: Timeline and Facts.


Ujwary-Gil, A. 2020. Organizational network analysis: Auditing intangible resources. New York : Routledge.