FUNDAMENTAL PRINCIPLES

OF STRATEGY AND
BUSINESS POLICY

STRATEGIC MANAGEMENT PROJECT

AMIT GROVER
A3221515130
BBA LL.B(H)
SECTION B
SEMESTER 6
PROJECT 1
 TESLA, INC.

OVERVIEW
Tesla, Inc. (previously known as Tesla Motors) is a company whose main specialisation lies
in electronic automobiles, and solar panel manufacturing. The company is based in Palo Alto
in the state of California, United States and was founded in 2003 by Martin Eberhard and
Marc Tarpenning - Electrical Engineers and entrepreneurs by profession.
The company, Tesla Inc., also sells solar panels, solar roof tiles, and batteries.
Tesla Inc. is named after Serbian-American Physicist and Engineer, Nikola Tesla.

Established in the year 2003, the entity became profitable in 2013, focuses primarily in the
production of electric powered vehicles.
Under the leadership of its Chief Executive Officer, Elon Musk, an American entrepreneur,
investor, and an engineer, the company has reached great heights and is a market leader in the
said industry of electric powered vehicles.
This company works at par with the latest technology, and innovative ideas of the CEO who
is also the Product Architect.
Along with designing and manufacturing of electric powered vehicles, the company also
focuses on development of sustainable and renewable energy resources. The company also
manufactures battery which are renewable in composition, as it helps towards its major goal
of sustainable energy.

In 2016, the company was a topper in Consumer Reports' Annual Owner Satisfaction Survey
at 91%
In February 2017, Consumer Reports named Tesla Inc. as the top American car brand and
ranked it as 8th in the list of global car makers.
 MISSION STATEMENT
Tesla's mission statement was initially "to accelerate the world's transition to sustainable
transport". But, it was later changed under Elon Musk's leadership in mid 2016 to "to
accelerate the world's transition to sustainable energy"

This statement shows slight yet significant shift in the company's business, which addresses
market's new options towards renewable energy.
In a certain way, the new corporate mission identifies the relevance of the company's battery
and renewable energy storage product in market, along with electric powered vehicles.

The mission statement has three notable components - to accelerate; the world's transition; to
sustainable energy.

To Accelerate - this component talks about the company's role in pushing the industry to
advancement in technologies for products that rely on sustainable and renewable energy.
The World's Transition - indicates the expectations of dominance in the markets worldwide.
It relates to the statement's emphasis on the global market.
To Sustainable Energy - this element was changed from "to sustainable transport" which
shows that it has changed it's statement to adapt to the strategic objectives of the entity.

VISION STATEMENT
Tesla Incorporated's vision statement clearly states "to create the most compelling car
company of the 21st century by driving the world's transition to electric vehicles"

This vision puts focus on renewable energy. Specially, the company addresses the electric
powered vehicle market as a major route for facilitating expansion of the renewable energy
market worldwide.

It has four notable components- Most compelling; car company; 21st century; world's
transition to electric vehicle.

Most Compelling - Tesla has set out it's goals to be the most compelling company in the
industry, it shows leadership values and excellence in business. The company approaches to
this goal by using new and advanced technology in it's electric powered vehicles and other
products.
Car Company and 21st Century- this component talks about the company's extensive efforts
on manufacturing vehicles which complies with 21st century designs.
The fourth component tells us about the company's efforts towards worldwide growtu goals
by expansion and setting up manufacturing plants in developing countries' of Aisa. This
expansion would challenge companies such as Toyota, Honda, Nissan, and General Motors.

GOALS
Tesla motors Inc. wants tesla not only to be a leader in car making industry but more widely a
sustainable lifestyle provider. Elon musk’s goal is to produce a large range of sustainable car
models, counting more affordable cars although keep producing luxury ones. The main
emphasis of Tesla motors Inc. is to move towards ecological solutions using solar energy,
which is currently the most reachable sustainable solution. Testla will continue to produce
electric and sustainable cars as it had done in the past and also plans to be able to produce a
sustainable package including cars, smart batteries and various other solar technologies.

STRATEGY
Tesla motors is a very high-profile company in a high-profile industry. Tesla Inc. is not only
a leading manufacturer of electric cars but it also provides energy management services. The
company aims to market its products in the leading car market. As tesla motors Inc. is a
young company which was established in 2003, the growth of the company is in fragile
condition due to many variables like legal decisions, technological issues etc. In spite of the
challenges, Tesla as a company has successfully employed various business level strategies.
The generic strategy used by Tesla is that of differentiation. Product differentiation is a
strategy where the firms attempt to gain competitive advantage by increasing the willingness
of the customers to pay for the product or service which they provide. Tesla Motors Inc. has
focused on narrow group consisting of delighting wealthy customers in order to avoid
competition with large car manufacturers and targeted a demographic where they can
compete on performance and social sciences. By having a differentiation strategy Tesla has
succeeded in avoiding direct competition with Gm, VW, and Ford. If they would have
competed with the other large car manufacturers, it would have been almost impossible for
them to make profit margins. There are very few car brands which provide a range of electric
vehicles, Tesla being one of them have differentiated its product by adding luxury to its cars.
Tesla motors have a very limited range of products and the major cause for that is hidden in
its mission statement. They don’t want to be the market leaders as of now due to lack of
advance production technology. The cars launched by Tesla are outstanding in terms of utility
and luxury. Tesla’s Model S in an electric sedan having a unique combination of
functionality, convenience and styling whereas the other one is pure luxury. Tesla is also
trying to build a third generation of electric cars pricing a bit low compared to others to
capture larger segments of buyers. Apart from differentiating its product through combination
of utility and luxury, Tesla has also played differentiation game by focusing on providing
unique consumer experience by eliminating the middle men chain. Unlike other brands Tesla
lets the consumer customize the car before purchasing online. Tesla is of a view that
transferring the ownership to the dealers would restrain it from maintaining the control of the
service level, hence Tesla has 50 stores worldwide ensuring full operations and maintaining
optimum consumer service at these locations. Recently Tesla has planned to launch a
GIGAFACTORY by the end of 2017 to reduce the cost of manufacturing the products which
will enable them to make the products more mass market.

Tesla motors CEO is a brilliant entrepreneur involved in many tech companies. He devised
new strategy where he transformed competitors into collaborators. Tesla motors opened its
patent to all and revoked suits against anybody who used the technology in good faith. The
decision by Tesla motors was taken up to promote standardization as it would imply that
Tesla would be setting up the standards and other electric vehicles would be adopting the
same which would further lead to cementing Tesla’s position as the market leader. Moreover,
Tesla was of view that if the technology would be known to every competitor it would lead to
economies of scale as putting the car parts and setting up the ecosystem would be simpler and
more profitable

Testla has also successfully employed intensive strategies as well which include the
development of the market by introducing the product into new market and geographical
regions. Tesla was initially in North America but now it has expanded to Asia and Europe.
Another key used by Tesla to grow its range of products was development of the product.
Tesla motors who were initially into luxury electric vehicles have now planned to launch new
range of products which are less expensive. this introduction of new range of products have
helped Tesla to differentiate its brand as well as reduce the competitive threat

In addition, Tesla motors have, over the years entered into various strategic partnerships. In
order to accelerate its development of the EV cells and battery pack performance, Tesla
entered into an agreement with Panasonic in 2010. Tesla uses Panasonic’s technology for
light weight and durable battery packs which reduce the cost of production. Moreover, in the
same year Tesla partnered with Toyota also. This deal was aimed at increasing Tesla’s
engineering, manufacturing and production expertise. In addition, joint venture of Toyota and
Tesla allows Tesla to share branding space with highly respected market leader in car
industry.
PROJECT 2
 THERMAX LIMITED

OVERVIEW
Thermax Limited is a company operating in the engineering sector of energy and
environment
The company was initially started as a family business in 1966 by AS Bhathena which was
later acquired by RD Aga, his son in law, who was the company's chairman and Managing
Director.
After the death of RD Aga, his wife Anu Aga who headed the Human Resources branch of
the company became the Chairperson. She was the Chairperson from 1996 to 2004 after
which her daughter, Meher Pudumjee took the charge.
The company offered its IPO in the year 1995.
M. S. Unnikrishnan is the current Managing Director and Chief Executive Officer of the
company.

HISTORY
Thermax initially started out as a company which harnessed the steam power produced by
boilers. The company started by producing small boilers to harness steam as required for
hospitals at that time. The company was established in 1966 by AS Bhathena, the founder,
who at time joined hands with Wanson, a Belgian Company, and commenced operations
under the name and style of Wanson India Limited and produced small boilers at a factory at
Dadar in Mumbai.

Later, the company was renamed as Thermax Limited in the year 1980.

In 1970, Thermax introduced a boiler which produced instant steam under the brand name of
Vaporax. The company continued to manufacture water treatment systems for boilers and
chemicals to support them and further went on to manufacture air pollution control systems

In the 1980's and 1990's also ventured into waste heat recovery, absorption, and power
generation.
The company played a major role in country's energy shift from oil to coal and biomass.
In 1987, the company in collaboration with Sanyo from Japan started manufacturing Vapour
Absorption Machines.
In 1988, it formed a joint venture with Babcock & WIlcox, an American company based out
of North Carolina, who manufactured boilers, to produce steam generation units for heat
recovery steam generators.
In 1995, it became a publically listed company on the Bombay Stock Exchange (BSE)
In 2009, it signed a joint venture with SPX Corporation, a firm based in United States for
51:49 equity to provide hardware and services for the Indian Power Sector
In 2010, it signed an agreement for joint venture with Babcock & Wilcox to produce critical
boilers
In 2017, Thermax acquired Weiss Sp z.o.o, a Polish boiler manufacturing company

VISION
"To be a globally respected, high performance organization, offering sustainable solutions in
energy and environment"
The company's vision statement states that it has a long-term goal to attain a stature globally
as a high performing entity which offers sustainable development of energy and environment
based products and services.

MISSION
 Aspire to become a leading technology company with a global outlook delivering
world-class products and services to its clients.
 Fulfilling the needs of their customers which is best understood through an
enlightened partnership with the company
 To expand and define new markets by expanding the frontiers of research,
engineering, and customer applications in our chosen field of business
 To contribute substantially towards the global priority areas of energy conservation,
environment protection, and the enrichment of the society

STRATEGY
It is nearly impossible for any organization to survive in the dynamic business environment by
adopting a single strategy. The complexity of the business environment demands different strategies
to be adopted in different situations for the proper functioning of the organization. Different strategies
can be adopted simultaneously or sequentially as per the situation. Just like any other organization, it
was literally impossible for Thermax ltd (formerly Wanson India private ltd) to survive in the market
using one single strategy. Thermax ltd used a combination of various strategies for competing in the
market of their product which was initially limited to the production of small boilers and later on
building their business definition around the basic consumer function of steam generation.
Combination strategy is when an organization adopts a mixture of stability, expansion, and
retrenchment strategies either at the same time in different businesses or at different times in one of its
businesses with an aim of improving its performance.
In the initial years, nearly late 1960s when Thermax limited was formed, the basic purpose of the
organization was to make small boilers and thermic fluid heaters. As there were not many companies
producing boilers and thermic fluid heater hence the basic aim of the Thermax ltd was to expand
rather than survive in the market. In 1970, Thermax as a company has successfully employed various
business level strategies. The strategy which was initially adopted was for expansion. it saw an
opportunity due to oil crisis in the country which led to the generation of energy from alternative fuel
known as coal. they exploited the opportunity by diversifying its product line. They introduced new
product line consisting of packaged tube boiler for Indian coal and other solid fuels. The introduction
of the new product led the shift of the Indian industrial market to solid fuel fire boilers. In addition to
the coal fired boilers, they made many other concentrated diversifications which included diversifying
into water treatment plants which required energy which they were producing. They also introduced
large field-erected boiler. The basic aim of this organization was to expand as much as they can. They
never wasted even a single chance to exploit any business opportunity. Thermax, In1970, not only
diversified in related products but also, they opted conglomerate diversification strategy. In mid
1970s, Thermax took over ‘TULSI FINE CHEMICALS’ and established a chemical division. The
chemical division was introduced for the purpose of entering into surface coating as well as pollution
control equipment business.

The diversification strategies used by Thermax resulted favorably. In 1980s, the organization decided
to continue with the diversification strategy. The started producing energy conservation equipment
with a view that the cost of producing the product won’t be huge as they are into similar business and
they can use the existing raw material. They also made conglomerate diversification into software,
financial engineering, electronics and concentrated diversification in oil field equipment products.
Also, Thermax in order to diversify its product line entered into joint ventures with Babcock & wilcox
in order to satisfy the need for very large boilers within India and Asian sub-continent

In 1990s, Thermax limited made changes in their strategy, for the first time the opted the
internationalization strategy by setting up a plant in The United States of America. In America, they
entered into joint venture with various US based EPS for energy based services also with Culligan
international for water treatment. Cogeneration business was also taken up by the organization. For
the first time in the history of Thermax ltd retrenchment strategy was used. It was because of the
changing business environment which forced the company to make divestment in one of its business
as it became very difficult for them to manage all of the business at one provided they entered into the
international boundaries for the first time. Due to internationalization, the main focus of Thermax ltd
shifted to capturing the international market. This led to divestment in the construction business.

2001 was the crucial year in the history of company as for the first time the company incurred losses.
The losses became the sole reason for the changes in the business strategies which were adopted by
the thermal private ltd. Losses made the entire board of directors step down. In order to consolidate its
position and absorb the impact of the sudden changes the management devised strategies of
restructuring and turnaround. The most affected sectors were the non-core sectors of the company
which were electronics and softwares. The company divested in the non-core sectors in order to
absorb the impact of losses and started focusing on the core activities which were purpose for which
the Thermax ltd was formed. The focus from expansion was shifted toward the survival of the
company. Retrenchment strategies were adopted in order to focus on the various sectors of its
businesses like energy generation, power and chemical. Though the company was incurring losses in
this phase but the attempts to increase its international presence were being made continuously in
order to compensate for the domestic losses incurred.

Thermax ltd survived the losses only through the mixture of the various strategies which were
expansion as well as retrenchment. Both the strategies were optimally used simultaneously. Even
though retrenchment strategy was being adopted for divestment at the same time attempts were being
made for expanding the business in the international market.