Tesla motors evaluation

Document Type:Case Study

Subject Area:English

Document 1

S Securities and Exchange Commission since 2010. Incorporated in July 2003, Tesla has had to deal with stakeholder concerns over the years since it went public. Investors and other stakeholders are concerned about the long-term viability of the company which arise its limited from a long history of losses, unreliable consumer demand, a limited operating history, expensive battery technology, liquidity issues, and competition in the automakers industry especially the traditional automakers. Its first day in the stock market was a success in the sense that its stock price increased by over 40 percent. However, the secondary market was not convinced about the stock unlike the primary market that registered strong enthusiasm. The superchargers allow customers to recharge their cars within a very short period of time and continue with their journey.

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The business model has plunged the business into expenses especially through the aftersales services to customer thus compromising its profitability. At the time of the case, the business has had a long history of losses that could be avoided in various ways; especially through cash flow management strategies. b. The Key Issue Facing Tesla The key issue facing Tesla is the long history of losses in the company. As indicated in the case, Tesla either limited or undedicated market research procedures. The company has some information about the electric car market. However, there are gaps as to how to satisfy the expansive market. b) Alternative Solution B: Cash Flow Management The second alternative would be proper management of cash flow within the business.

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Cash flow management is an essential aspect in every business as it helps to minimise expenses while meeting market demands. Market research is a workable solution as it needs a few persons to gather information. Also, the company can outsource the service as it may be cheaper and more specialised compared to in-house program. ii. Cons The feasibility of market may not be clearly described as investment into market research does not have direct monetary returns and therefore may become one of the unnecessary expenses if it is not managed well. The business has to manage the number of employees handling the process as well as the expenses incurred in their day to day activities. It is a feasible idea as it will not incur any costs.

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The company in this case can recover some costs by auctioning some of the assets including the service stations and the supercharger networks. ii. Cons Cash flow management activities may require a lot of time to accomplish. For example, finding a willing buyer of some of the assets may not be easy. The management will also determine which parts of the business requires more input in order to improve production rate to meet the high market demand. The company will involve some costs in process of selecting the partners but should be kept within the necessary limits. References Graduate School of Stanford Business. (2013, May 17).  Tesla Motors - Evaluating a growth company [pdf]. Bargaining Power of Buyers The electric car market is still young compared to that of the traditional cars.

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Moreover, Tesla cars are priced in the range of luxury vehicles and therefore, only a few people can afford them. This indicates that the target market does not have the power to influence significantly the operations of the business. The number of electric car users is also small and therefore there is little they can do to influence the operations of the company. d. For instance, the loss margin grew by 56 percent in 2012 to $396 million net loss. The margin is not constant throughout its operations period. Operating cash flow/sales ratios The company’s operating finances are more than the sale. This leaves the company at a loss. The company keeps adding more capital while making more losses. The technology used in the final product is not so difficult to imitate by other producers.

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