Strategic Perspective and Ethics
Key Issue The key issue involving Tesla Motors is the organizations approach to marketing their product and social mission. The fundamental idea behind the company’s existence is to create vehicles that require sustainable energy as oppose to fossil fuel dependency. The demand for their products is built on the zoom out, bigger picture idea that consumers will eventually switch from the current fossil fuel powered cars to alternative energy powered cars in the future (Kanter, 114). The founder and current Chief Executive Officer, Elon Musk, created this organization based on his long term vision that the future of automobiles requires a less oil dependent vehicle. Tesla Motors has consistently reported losses since implementation but the growth and popularity of the organization is based on the future potential and not present success. Shareholders and those involved will eventually want to see real results for them to continue to support Musks bigger picture (Kanter, 114). By non-GAAP standards the company has reported an expectation to create positive earnings and cash flow by early 2016 but previously the company has failed to meet short term expectations (https://hbr.org/2015/05/teslas-not-as-disruptive-as-you-might-think). The lack of profit stems from a combination of dismal efforts to reach more consumers and generate awareness, the costs associated to purchase a vehicle and Teslas approach to marketing and generating sales. Tesla Motors marketing ploy is based on word of mouth by using a referral program for current owners. This program offers a $1000 credit off the purchase price for the consumer referred and a $1000 credit towards the referrer’s next purchase of a Tesla vehicle (http://www.cheatsheet.com/automobiles/will-teslas-referral-program-turn-model-s-buyers-into-sellers.html/?a=viewall). This discount is trivial in comparison to the actual cost of a Tesla vehicle that ranges closer to $100,000. Tesla is prohibited from selling to consumers directly in a majority of states and online sales require that vehicles be delivered in only select states. In addition, state law prohibits Tesla Motors from opening showrooms and directly competing with independent dealerships in most states (http://www.greencarreports.com/news/1095337_where-can-tesla-legally-sell-cars-directly-to-you-state-by-state-map). The inability to zoom in and successfully market these vehicles and overcome present barriers to reach a larger consumer base is a key issue in the current success of the organization. The bigger picture focus has created present issues that have not been addressed.

Recommendations Based on the findings illustrated in the first part of this paper Tesla Motors needs to implement alternative marketing strategies and zoom in on the present expectations. Tesla Motors is depending on word of mouth to market and sell vehicles by using a referral program that offers little incentive in comparison to the actual cost of the car and the current target audience may not view this as being rewarding in nature. I would recommend this credit be increased to 5% of the purchase price for a limited time. The direction of the company uses a zoom out vision that depends on future consumer preference changes and expected long term solutions but Elon Musk and Tesla Motors need to use a balance of zoom in and zoom out strategies for the sake of the company’s present success. Due to the limitations from state to state on vehicle sales Tesla needs to begin using television advertising to reach more of the untapped market. This would require current actors to begin advertising during national television primetime hours such as the super bowl. In addition to running advertisements, Tesla needs to allocate capital towards promoting the cause that the company is founded on which is reducing fossil fuel dependency and the negative effects that emissions have on the environment. Tesla has not been focusing on present expectations such as rewarding their shareholders with positive earnings or directly affecting the way consumers view Tesla Motors and their products. Vamping up advertising will allow Tesla to zoom in and address present situational needs while also zooming out to create a successful path to the bigger picture of creating sustainable energized vehicles (Kanter, 116).