Answers to End-of-Chapter 1 Mini-Case Questions
 
Mini-Case on TESLA, INC. (TSLA)
What American Company Does the Best Job of Strategic Planning, AND HOW IS IT DONE?
 
 
Questions Posed:
 
1.  Identify several external opportunities and threats that face Tesla.
2.  Identify several internal strengths and weaknesses that face Tesla.
3.  Match several of your external and internal factors to formulate several strategies that Tesla is (or could) use going forward.
4.  What is Tesla’s competitive advantage in the automobile industry?
 
Answer:

External Factor Evaluation (EFE) Matrix

	Opportunities
1	Nations worldwide comply with new climate and energy policies under the "Paris Agreement."
2	Electric cars sales reached 36%, 53%, and 13% growth in USA, China, and Europe from 2015 to 2016, respectively.
3	Electric vehicles benefit from tax incentives for renewable energy all around the world, including a federal income tax credit of $7,500 in the USA.
4	Lower unemployment rate (4.1% in USA and 3.95% in China) increases the standard of living for American and Chinese citizens and their willingness to invest.
5	As of August 2017, the consumer confidence index was at 122.9, increase by 12.6% over the five years to 2017, which is a 16-year high.
6	Automakers, telecommunications giants, software companies, and app developers are seeing huge potential and are willing to invest billions in electric car infrastructure.
7	Millennials are willing to spend extra money for sustainable offerings and technological capability; 85% seek out responsible products when possible.
8	The world price of steel has fallen at an annualized rate of 2.2% during the period which are beneficial to profit margin.
9	An increase in average miles driven since 2014, including an acceleration to 3.5% growth in 2015 and a 2.8% increase in 2016, leads to parts wearing out and simulates demand for new vehicles.
10	Gas is extremely volatile and is expected to increase in price in 2018.

 

	Threats
1	Since Tesla is a cyclical company, investors might hesitate to invest in it in case of a recession after nine years of a stable economy.
2	Industry revenue declined at an annualized rate of 4.2% over the five years to 2017 to reach $94.8 billion, including a 15.8% decrease in 2017.
3	Ford and GM, among other competitors, will invest more than $11 billion in fully electric vehicles by 2023.
4	Trade-weighted index (TWI) is expected to have risen at an annualized rate of 3.2% over the five years to 2017, which makes the U.S. dollar less appealing and slows export trade in 2017.
5	U.S. auto sales expected to fall 3% in 2017 due to rising interest rate of 25 basis point in 2017 after initial rise in March.
6	Republicans curtailed solar and wind power subsidies and instead showed the support of preserving billions in subsidies for fossil fuels.
7	Connecticut, Utah, Arizona, West Virginia, Michigan, and Texas prohibited sales of Tesla vehicles to consumers that would bypass dealerships.
8	In U.S., Tesla buyers’ $7500 tax credit will phase out once the total sales volume of electric vehicles reach 200,000 while buyers of other competitors will still receive the benefit.
9	China implemented 50% purchase tax reduction on purchase of locally manufactured cars.
10	Wages have risen at an annualized rate of 6.7% over the five years to 2017.
	Total EFE Score