Tesla Motors Strategic Analysis

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Strategic and Financial Planning Tesla Motors Kirk Hodges Name of the University Name of the Lecturer Date Preface: Strategic planning can be best defined as the process by which a business evaluates its present situation in comparison with the envisioned goals of the company. Then this is followed by estimation of cost and resources that would be required for fulfilling the goals of the company. The process of strategic planning is deeply related to financial planning in the sense that accumulation and allocation of resources is primary in attainment of the objectives. This paper is based on the analysis of the strategic initiatives by M/s. Tesla Motors, its relationship with the company’s financial planning and other…show more content…
This would be the cost at which the company is borrowing to fund its activities. The Weighted Average Cost of Capital of Tesla is calculated as follows: (Data base reference, results of the company for quarter ended 31.03.2016) In case of debt the two years average short term and long term debt is taken. Which is $ 2551.71 Mil.The market capitalisation of equity is at $29328 Mil. The cost of equity will be 10 year constant treasury rate as risk free rate multiplied by the beta risk factor which is excess returns for the excess risk accepted by the investor. Tesla’s Beta is 0.99. Expected Market return is 7.5%. Therefor cost of capital would be: 1.84%+ 0.99x7.5% =…show more content…
As of 2015 this would be 118.85 / 2551.71 ie., 4.66% Hence WACC would be as follows: 1. As a team we can after careful analysis observe that Tesla’s present business strategy is concentrating upon the upper middle and the affluent class of the society. A huge market that lies untapped is the developing countries wherein an economic version of the battery cars with few modifications to create economy can benefit the company with a huge market share. This may in turn result in the increase in volume and hence gross revenue of the company. 2. Also in case of manufacturing facilitates , the company should plan to set up and operate facilitates in developing countries wherein the procurement of raw materials as well as labour would be sizably lower as compared to manufacturing in the US. 3. The company can also venture into unearthing ground breaking technologies to extend its qualitative services into converting the traditional exhaustible fuel based cars into electric cars at a reasonable cost so as to foray into newer areas of

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