Help write 40-45 pg minimum Business Capstone on Under Armour not including Title page  and reference pages.  Please make all corrections and editing within Capstone paper.  There are 5 topics that make up the Capstone please  transition from each topic.  I have supplied terms and concepts for each topic please  use 7-10 minimum for each topic. Bold terms and concept, define terms or concepts from primary  reference list.  Must be  in APA format.  Any questions please contact me. a sample of an A paper is also attached.

RunningHead: CAPSTONE PROPASL– BUSB 485-SD12 1

CAPSTONE PROPASL– BUSB 485-SD12 6

Executive Summary

James Greene

February 12, 2020

University of Redlands

BUSB-485-SD12

Undergraduate Capstone Paper

Instructor Richard Doyle

Executive summary

The purpose of this paper is to analyze Under Armour using a SWOT analysis. A SWOT analysis is “A business planning process various aspects of a business situation are analyzed and compared. SWOT is an acronym for Strengths, Weakness, Opportunities, and Threats.” (Marakas & O’Brien, 2013, p 701). We will analyze the Under Armour through five lenses of business courses and employing concepts from the following courses listed:

· Managing and Leading Organizations (BUSB 330)

· Principles of Marketing (BUSB 340)

· Sustainable Strategic Management (BUSB 481)

· International Business (BUSB 342)

· Financial Management (BUSB 361)

Under Armour was founded by Kevin Plank in 1996. Kevin Plank is a former football captain of the University of Maryland teams. Under Armour is an American clothing and accessories company. The company focuses on supplying casual apparel and sportswear. The company is known for its ability to design high-quality performance gear for athletes, which are light, fresh, and dry throughout the game, practice or workout. The company has diverse product assortment for women, youths and men. The program of getting the product benefits is comparatively more straightforward: wear ColdGear® when it is cold, HeatGear® when it is hot and AllSeasonGear® between the extremes. The continued success of Under Armour in the sports and apparel industry will entirely depend on its abilities to institute and execute the strategic game plan.

Company mission

Under Armour’s mission statement is to promote the athlete’s passion by providing technologically advanced products. The four pillars of the company mission are to make great products, provide excellent service, tell a great story, and build a great team. 

External and internal analysis of the company

Strengths of Under Armour are innovative technology, product diversity, strong brand recognition, athletics endorsement, and eco-friendly products. With innovation, the company has shown that they are exceptional in this field. Under Armour has continued to strive to meet the changing needs of the current market. The company recently introduced AllSeasonGear, HeatGear, and ColdGear as a means to diversify its products. The company has an advanced market network. To continue existing and become more powerful, the company must continue embracing research and development. The brand name is currently famous in North America. However, the company has to continued to expand on other markets to enable it to grow its global footprint. Under Armour is leading in selling high-quality eco-friendly products by putting more emphasis on its customer needs. Several sport-related companies have endorsed the company products because of their uniqueness: they are light, fresh, and dry.

The weaknesses of Under Armour Company include limited technology, stiff competition, limited top sellers, and inadequate footwear line. Under Armour must continue to expand its market area to maintain its plight against Nike and Adidas. The company must continue to grow its brand in many countries while continuing to sell high-quality products. The company must also prepare to address challenges that they are likely to experience in an attempt to expand its market, which includes limited production facilities, and resources. When the demand for the products increases, there will be a deficit in output facilities or workforce, which might end up affecting the quality of the products.

Under Armour have the following opportunities for future expansion. Such opportunities include international expansion, expansion of athletic footwear, development of the market to incorporate women campaigns and e-commerce. For the company to continue gaining the trust of potential customers in its quest for international expansion, it must introduce some new and catchy ideas into the business. Under Armour must maintain and make itself a presence market, no matter how the rival competitors are set-up. The company must also consider technological growth in its production for effective competition. Under Armour should also use an online shopping platform to capture the ever-growing population.

The threats to the Under Armour Company include high competition and product replacement. The company competitors are Adidas and Nike companies. There is a consistent increase in the cost of inputs required to produce goods that meet the demand, and therefore for Under Armour to remain competitive, it must identify strategic means to offset this increase. There is also a significant risk of substitute products. The use of technology has facilitated duplication of products that affect Under Armour. The company product line is innovative. However, without patents, it can lead to replication.

Strategic implications

Competitive rivalry: The main company rivals are Nike and Adidas. Adidas and Nike companies are established and control enormous resources than Under Armour, which limits the accessibility of the company into the market. In the future, due to the company’s limited portfolio can be because it does not hold process patents.

Bargaining power of suppliers: a diverse supplier base limits the bargaining power of Under Armour. More than 27 manufactures produced Under Armour products across 12 countries in 2012. Out of this, the top ten accounted for 48% of the items made.

Bargaining power of customers: Under Armour, customers constitute wholesalers and end customers. The company wholesalers include Dick’s Sporting Goods and the Sports Authority. The two renowned wholesalers occupy a certain degree of bargaining leverage. In some scenarios, they could substitute Under Armour products with other competitors for better profit margins. The company enjoys strong brand recognition making end customers have low bargaining power.

Goals and long-term objectives

 Under Armour’s market is growing fast but not as those of its counterparts, which control more than 60% of the entire market revenue. For that matter, Under Armour expects its global sales to jump to 27% by 2022 through expanding its markets in North America and other parts of the world.

Widening the market and growing sales globally and becoming a competitor in the world market for performance products, athletic footwear and sports apparel. Ways under which Under Armour should achieve these expansion plans will be through the opening of its retail shops and online store.

Running head: FOUR FINANCIAL MANAGEMENT OF UNDER ARMOUR 1

FOUR FINANCIAL MANAGEMENT OF UNDER ARMOUR 2

Four

Financial Management

of Under Armour

Name

Institutional Affiliation

Financial Management

SWOT Analysis

Strengths
· Product innovation
· Automation of activities
· Strong dealer community
· Strong brand portfolio
· Strong free cash flow
· Good returns of capital expenditure
· Highly skilled workforce

Weaknesses
· Limited success outside the core business
· Inadequate investment in new technologies
· Poor marketing strategies
· Insufficient in research and development
· Disruptions in the supply chains
· Low current ratio

Opportunities
· New environment policies
· New customers from online channels
· Opening new markets
· Low rates of inflation
· Diversification of its production

Threats
· Irregular supply of innovative products
· Liability laws in some countries
· New technologies developed by competitors
· Low-quality products
· High levels of competition

Introduction

Business organizations operate in a highly competitive market that requires an effective strategic plan coupled with active financial management. The presence of many companies and organizations has led to a substantial increase in cash flow in the market. The money pumped into the market by big firms and proceeds of their products is responsible for the increased flow of capital in the market (Admin, 2019). The increased entry of new firms into the market, however, puts the lives of companies in danger due to the high level of competition over a few customers. To reduce such effects, companies must practice effective financial management. Under Armour, therefore, needs to establish sound financial management practices. Under Armour, Inc. is an American company that specializes in the production of sports, footwear, and casual apparel. The company’s headquarters is located in Baltimore, Maryland (Admin, 2019). The company uses new technology in its production resulting in the production of high quality products.

Over the years, Under Armour has diversified its production to cater to women, men, and children. Offering products for people across all ages has tremendously increased its sales volume. The company operates under the mission; “To make all athletes better through passion, design and the relentless pursuit of innovation” (McDonald, Christensen, West & Palmer, 2018) However, it was in 2006 when the company went public, thus making it possible to acquire stock value. Through the effective leadership and innovative nature of its employees, the company has experienced high levels of growth. Nevertheless, some factors such as; free entry into the market, high level of competition, the existence of substitute products in the market and high bargaining powers of both suppliers and consumers have led to inflation thereby prompting the need for effective financial management practices (McDonald, Christensen, West & Palmer, 2018).

Financial management can be defined as the process of planning, directing, organizing, as well as controlling all financial transactions and activities such as the use of funds within an organization and procurement (McDonald, Christensen, West & Palmer, 2018).  General management principles guide it to the financial resources of an enterprise. To have sufficient financial management in Under Armour Company, the organization requires effective policies supported by a mission. The company, therefore, needs to establish effective policies and a mission statement. Under Armour should also get local and international acceptance to guarantee a good market for the products. In sustainable strategy management, the company is supposed to follow the right steps that lead to competitive advantages.

Stages Followed In Financial Management

Determining the current financial situation

At this stage of financial management, company leaders should establish the current financial position of the company with regards to; debts, incomes, living expenses, and savings. The company can get the exact current economic situation of the company by preparing a list of existing liabilities and asset balances, as well as the amounts of money spent on various items (McDonald, Christensen, West & Palmer, 2018). Liabilities are an organization’s legal monetary debts that arise from business operations. A business assets are an items of value owned by a business company.

Developing financial goals

The second step in financial management involves conducting analysis aimed at differentiating needs from wants. Setting specific financial goals is imperative in financial management since the business will make its budget depending on the set financial goals besides channeling resources towards the achievement of such goals (Matthew, 2017). The company’s shareholders must be involved in this process. Shareholders are owners of shares in a company. The process further helps the organization in prioritizing the objectives at the expense of other activities hence increasing its working capital. Working capital is the capital of a business which is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

Identifying alternative courses of action

The creation of an alternative course of action is essential in financial management. Several factors, however, influence the alternative course of action. Nevertheless, probable courses of action fall under the following categories; changing the current situation, expanding the current session, taking a new course of action, or continuing the same course of action (Matthew, 2017). Developing alternative courses of action helps a company by ensuring that options to a problem are always available. The board of directors and other stakeholders must be highly involved in this process. Board of directors group of qualified people who jointly oversee the activities of an organization. Stakeholders are persons with interest and concern in something, especially a business.

Evaluating alternatives

Upon developing the alternative course of action, the shareholders must jointly evaluate the alternative when taking into consideration the company’s current ratio, acid test, financial situation as well as current economic situations (Admin, 2019). Acid test is a conclusive test of the success or value of something. Current ration on the other hand a liquidity quotient that measures a firm’s capability to pay short-term debts. The alternatives must have the capacity of improving shareholders’ dividends. Dividend refers to a sum of money paid annually by a company to its shareholders out of its profits (Matthew, 2017). Decision making will, however, be an ongoing process to ensure mistakes are not made. Additionally, the management body must conduct a risk evaluation.

Creating and implementing a financial action plan

At this stage, the organization develops an action plan that requires making a choice on how to achieve the goals. The actions taken must be able to achieve both short and long-term plans. Implementing a financial action plan, however, requires a joint effort from all personnel in a company (Admin, 2019). Comprehensive consultation must thus be made before decisions are made.

Reevaluating and revising the plan

Financial management is a process that does not end when a particular action is taken. The administration must, therefore, be committed to revising the plan to ensure corrections are made to include current events in the market (Matthew, 2017).The reevaluation process might prompt the changing of social, economic, and political factors to aid in achieving the company’s goals.

Recommendations

In the bid to improve on its services, the company should increase its working capital and consequently invest in new technology. It should thus take full advantage of e-commerce by using different internet aided services. The use of social media will increase the company floor of operations hence growing its profit margin (Kraft & Lee, 2009). Improving the level of interaction with the customers is one main advantage that will accrue to the company when it uses social media, and interned aided platform. Introduction and subsequent use of different social media outlets are aimed at introducing the company’s products and services to its new and prospective customers, thereby enabling it quickly access the market (Matthew, 2017).

Through social media, customers will easily access the company hence faster communication and customer service delivery. The social media platforms will further increase the company’s sales volume. Customers can make inquiries about products and services and consequently making payments through online payment services. After making online purchases, the goods can then be delivered at customers’ premises (Kraft & Lee, 2009). The use of social media offers an important opportunity for the company to promote its products and services as well as acquiring more customers. The company must therefore evaluate the success of social media’s use in its activities during the annual report. An annual report is an inclusive report on a firm’s activities through the preceding year.

Porter’s Five Forces Model

After conducting a SWOT analysis, the company needs to deploy the use of Porter’s five forces model. Porter’s Five Forces Model offers an organization the freedom to consider critical forces affecting them. Through this tool, the company will get an opportunity to highlight strengths promoting its success as well as those limiting the chances of the company’s progress. Through the model, the company will get a chance to identify the forces to deal with before getting into the market (Kraft & Lee, 2009). Forces such as competitors, the risks associated with the introduction of new products into the market, buyers buying power as well as their bargaining power will be determined; hence the company will be able to project the quantity of purchase it is likely to make. The model will also help the company in establishing the bargaining power of suppliers based on their uniqueness, prices, and quality of their products improving on its Net working capital. Net working capital is the difference between a company’s current assets and current liabilities (Kraft & Lee, 2009). Porter’s five forces model will guarantee that the company offers similar products that cannot be imitated by rivals. That ensures the company maintains its brand and serve loyal customers.

Technological Advancements

In recent years, Under Armour has introduced different better designs, shoes, as well as other products thanks to its use of advanced technology. Through the adoption of advanced technology, the company has increased the quality of its products, which allowed the company to maintain its flexibility as demand increases, taste, and preference of the customers’ change. Under Armour can use this chance to create inventions that will be more attractive to the customers and ensure a broader market (Kraft & Lee, 2009). The old designs can be improved to cope with the competition hence improving the Net operating working capital. Net operating working capital is the excess of operating current assets over operating current liabilities (Kraft & Lee, 2009).

Access to new markets

Getting entry into new markets is often the priority of every organization. Entry into new markets often increases the floor of operations there adding more customers. Under Armour’s management should, therefore, establish a strong and workable strategic plan that would help it gain access to new markets. Despite being dominant in the United States, the company should venture into other countries by opening up offices in such countries. Through entering into new countries, the company will be able to make more profits, thus increasing its financial strength. Moreover, expanding the floor of operations aid in reducing the intensity of competition since it will acquire more customers than it loses to the competitors should, therefore, expand the scope of its operations (Rose, Westerfield & Jardon, 2017). Results of entry into new markets should be evaluated through the company’s financial statements. Financial statements are an assortment of summary-level reports on an organization’s economic outcomes, financial 

situation, and cash flows (Rose, Westerfield & Jardon, 2017).

Conclusion

In conclusion, financial management plays a fundamental role in instituting ways through which Under Armours Company can compete efficiently in the market. Consequently, Under Armour should observe the central competencies to increase the sales volume, thereby winning over more customers. The organization has more strengths and opportunities that it can use to compote favorably. The benefits of the company’s disposals should be used to its competitive advantage to counterbalance threats and faults posed by other business firms. The business should further have affective strategic plans that will guarantee more success in the coming years. A proper leadership style should also be adopted to warrant the smooth running of operation and quality products. However, the company should embrace the use of new technology in its production. Adoption and subsequent use of social media provide an important opportunity for the company to reach more customers.

References

Admin-J.-L.M.W. (2019, December). The History of Under Armour and their Logo. Retrieved from

Under Armour Logo and Its History

Kraft, P., & Lee, J. W. (2009). Protecting the house of Under Armour. Sport Marketing Quarterly, 18(2), 112.

Matthew, B. T. (2017). Financial management in the sport industry. Routledge.

McDonald, R., Christensen, C. M., West, D., & Palmer, J. E. (2018). Under Armour.

Rose, S.A, Westerfield, R.W, & Jardon, B.D. (2017). Essentials of Corporate finance. (9th Ed). McGraw-Hill/Irwin

Primary Reference for Terms and Concepts

Marketing. (13th ed.) by 

Roger A. Kerin

 (Author),‎ 

Steven W. Hartley

 (Author) New York:  McGraw-Hill/Irwin.  ISBN:9781259573545

Five Environmental Forces;

Social, Economic, Technological, Competitive, Regulatory

Four P’s of Marketing;

Price, Product, Place, Promotion

SWOT Analysis;

Strengths, Weaknesses, Opportunities, Threats

Brand Equity;

Resides in the minds of the consumers and results from what they have felt, seen, and heard about a brand overtime

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. Marketing’s two primary goals are a) discovering the needs of prospective customers and b) satisfying them. Achieving these two goals also involves the four marketing mix factors largely controlled by the organization and the five environmental forces that are general outside its control. Marketing affects all individuals, all organizations, all industries and all countries.

Target Market – a particular group of consumers at which a product or service is aimed.

Points of difference in a product – superior characteristics that deliver unique benefits sufficient enough to motivate a change in consumption behavior.

Intangibility of services – services can’t be held, touched or seen before the purchase decision.

Types of pricing –

1. Prestige pricing – for consumers who perceive price as an indication of quality or prestige; price Different types of advertising –

a. Product advertising –

i. Comparative – shows one brand’s strengths relative to those of competitors; requires market research to back up legal support for claims.

ii. Competitive (or persuasive) – promotes a specific brand’s features and benefits in a effort to persuade the target market to select the target market to select a firm’s brand rather than a competitor

BUSB342 – International Business

Core Concepts

· International Business

· International Strategy

· Corporate Social Responsibility (CSR)

· Sustainable strategies

· International Market research

· Cultures

· Brick-and-mortar

· Pull Strategy

· Entrepreneurs

· Creating Value

· Profit Growth

· Common Laws

· Political Risk

· Supply Chain Management

Terms and Concepts For Strategic Management BUSB 481

Strategic Planning 

Sustainable Strategic Management (SSM)

Strategic Vision 

Strategies Core Competencies 

Triple Bottom Line    

Chief Executive Officer (CEO) 

Michael Porter’s Five Forces Model 

Cost Leadership Strategy  

 Late Mover

  Leadership Theories

Terms for Financial Management

Working capital

Net working capital

Net operating working capital

quick ratio, or acid test,

current ratio,

annual report

Financial statements

liquid asset

asset management ratios

pro forma, or projected, financial statements

CORPORATE PURPOSE

Board of Directors

Stakeholders

Shareholders

Dividends

Assets

Liabilities

SWOT

STRENGTHS

WEAKNESSES

· Innovative technology
· Diversity of its Product
· Strong Brand recognition
· Athlete Endorsements
· Eco-friendly/ Green products

· Limited Material/Technology
· Stiff Competition
· Lacks a Top Seller
· Limited Footwear Line

OPPORTUNITIES

THREATS

· International Expansion
· Expansion of athletic footwear
· Development of markets to incorporate women campaigns
· E-commerce

· High competition (Adidas, Nike, Reebok)
· Product Replacement

Primary References for Capstone and Executive

1. Financial Management BUSB 361

https://learn.redlands.edu/pluginfile.php?file=%2F666124%2Fmod_forum%2Fattachment%2F296087%2FFundamentals%20of%20Financial%20Management%20%2810th%20Edition%29

Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2017). Essentials of corporate finance.(9th ed.). McGraw-Hill/Irwin. ISBN 978-1-259-27721-4. 

https://last10k.com/sec-filings/ua

2. Managing and Leading Organization BUSB 330

3. International Business BUSB 342

https://learn.redlands.edu/pluginfile.php?file=%2F666124%2Fmod_forum%2Fattachment%2F296087%2FFundamentals%20of%20Financial%20Management%20%2810th%20Edition%29

Login:

james.a.greene@redlands.edu

PW: Flexible1964

Principles of Marketing BUSB 340

4. Marketing. (13th ed.) by Roger A. Kerin (Author),‎ Steven W. Hartley (Author) New York:  McGraw-Hill/Irwin.  ISBN:9781259573545

5. Strategic Management BUSB 481

Stead, J.G. and Stead, W.E. (2014) Sustainable Strategic Management, 2nd Edition. Armonk, NY: M.E. Sharpe. ISBN 9780765635457

Running Head: SUSTAINABLE STRATEGIC MANAGEMENT (UNDER ARMOUR) 1

SUSTAINABLE STRATEGIC MANAGEMENT (UNDER ARMOUR) 9

Sustainable strategic management

(Under Armour)

Name

Institution

Date

Sustainable strategic management

SWOT Analysis

Strengths
· Brand recognition
· Availability of raw materials
· Good distribution network
· Advanced technology

Weaknesses
· High employee turnover rates
· Low current ratio
· Centralization of leadership

Opportunities
· Low inflation rates
· Subsidies on environmental-friendly goods
· Social media network

Threats
· Competition
· Political divisions
· Substitute products
· Rapid technological advancements

Introduction

According to the previous New York Times business journal report on exchange rates, there has been an increase in cash flow in the market, which is characterized by the existence of large firms. However, it is also anticipated that in the long run, if such companies do not take precautionary measures through the execution of sustainable strategic plans, there will be a drop in the level of cash flow in the market which will affect the economy due to inflation. The inflation will come as a result of the high level of competition, ease of entry into the market, high bargaining power of suppliers, high bargaining power of consumers, and the existence of substitute products in the market. When such precautionary measures are not taken care of, there will be an automatic decline in prices. The decrease in prices will affect the day-to-day operations of the company because the company will not manage to produce high-quality products at a low cost. This may eventually lead to a collapse of the firm. Having that in mind, a research study is hereby conducted to address sustainable strategic management for Under Armour Company and recommend some of the necessary changes it should embrace.

According to Stead &Stead, 2014, sustainable strategic management is used in business to evaluate, formulate and execute plans on how the company will take the market by storm by increasing sales and solidifying the customer base. To have sustainable strategic management, the Under Armour Company should have a mission that will act as a guide to achieving the objectives. The strategic management will help the company to make decisions that will give a solution to stiff competition from companies like Nike and Adidas. Some of the strategies that should be addressed include a periodic assessment of the goal set. This can be done using data collection methods. The evaluation should also evaluate the company’s resources and liabilities. 

           The company’s council, which consists of senior leaders like the chief supply chain officer, material advancement, licensing, and legal teams, should lead the process. The strategies council has the role of determining the company’s core competencies, which is core for competitive strategies. Learning core competencies help the company to come up with the stages that will guide the company into attaining the desired outcome (Stead & Stead, 2014). First, the company is required to come up with a strategic plan that will meet most of the demands made by its customers. Under Armour should also get local and international acceptance to guarantee a good market for the products. In sustainable strategy management, the company is supposed to follow the right steps that lead to competitive advantages.

Stages followed in sustainable strategy management

Strategic Analysis

In this step, the leaders are supposed to use all the models that will give a reflection of the strength, weaknesses, opportunities, and threats. SWOT and PESTLE analysis can be instrumental in this case. The PESTLE analysis will help the company to deal with external factors that can positively or negatively affect the company by assisting the company to know its current positions and identify areas it needs to invest (Admin, 2019). Under Armour, will Company will be able to set a higher goal that is achievable within a specified period.

Strategy formulation

Strategy formulation is the second step in this process. Here, the team will come up with ideas that will propel the company towards meeting the objectives that will be set. In this stage, the company focuses on the strategic plans and the tactics that will be used to maximize the opportunities and curbing threats. This stage is also concerned with the strategies that will steer the company towards achieving the mission that was set during the initial step. The company is expected to come up with both long-term and short-term policies. It is in this stage the company reduces the gap that exists between the current financial position and the anticipated one (Stead & Stead, 2014).

Strategy implementation 

Here, the company is expected to execute the plans that were initially formulated are put into action. This means that the team should have a workable follow-up plan that will ensure every policy is implemented. The systems can also review and updated depending on market changes and consumer preferences. The review by the council will accommodate changes that will give the company an advantage over the other companies dealing in athletic wear. Policies implementation is the essential responsibility that the management team has to do (Stead & Stead, 2014). Managerial and supervision are done in this stage too.

Strategy evaluation

Strategy evaluation is the final step in the sustainable strategy management process. In this stage, the management monitors the headway the execution of the policies. The assessment will ensure that the company’s day-to-day activities are in line with the objectives that were set initially (Stead & Stead, 2014). The evaluation will show if there are any deviations from the goals and help the company to get back on track if such a case occurs.

Recommendations

The company should invest more in e-commerce. If a company takes full advantage of this opportunity, it will be able to raise more revenue and attract more customers. Ecommerce will enable the company to interact with customers who have different tastes and opinions about the commodities. The strategies’ core competencies should help the company to spot the gaps, be more accessible, reach a more comprehensive, and enter new markets (Salgado, 2017). The company has the opportunity to maximize sales of products all over the world through the internet. Ecommerce has been one of the latest trends where a client can check out the products they wish to buy and can get in contact with the sales department for inquiries. After that, the customer uses an online payment method to complete the transactions, and then goods are delivered at the appropriate time. The company can use this idea to increase more sales and attract more customers from different parts of the world.

Porter’s Five Forces Model

This is one of the models used to analyze the competitive strengths of the organization. The analysis helps the company to deal with threats that are posed by companies that are entering the market. The strategies will cover risks like the introduction of new products and the prices of commodities. Substitute products can be a challenge to Under Armour. Porter’s five models will help the company to deal with substitute products and services while maintaining a customer base (Omsa, Abdullah & Jamali, 2017). The model will also determine the bargaining power of the buyer. Under Armour will be able to prioritize the bargaining power depending on the number of purchases they make. Larger companies might have more considerable bargaining power compared to retailers. The model also aids the company in knowing the bargaining power of suppliers depending on the uniqueness, quality, and price. Porter’s five forces model will guarantee that the company offers similar products that cannot be imitated by rivals (Brett, 2018). This will help the company maintain its brand and serve loyal customers.

Lewin’s democratic leadership style

The leadership theory will help the company to get fresh ideas as all stakeholders are involved in the decision-making process. This style will also increase the satisfaction rate of customers as commodities will be crafted creatively. The laissez-faire style of leadership also allows the employees to raise their concerns, making them more comfortable with their workplace (Fiaz & Saqib, 2017).

Cost leadership

Cost leadership strategies will ensure that the company minimizes the cost of production, and prices are kept lower compared to other companies dealing in the same line of commodities. Under Armour has attained cost leadership, and this can help the company to control costs and compete effectively. Under Armour has a steady flow of raw materials, so it needs cost leadership to reduce wastage and maximize its opportunities (Brett, 2018). This helps the company to ensure that customers are satisfied, and prices are within the ceiling and the floor. It becomes more comfortable for the company to change the designs because there are a lot of materials and technological advancements that can accommodate the changes and costs are low.

Access new markets

Under Armour should enter new markets too. The Chief Executive Officer should have a clear strategic vision to guide the team on how to access the international markets. The company has been dominant in the U.S but has been able to sell more commodities across the world. This has been attained through technological advancements, brand recognition, and a good distribution network. In the past, Under Armour increased the sales margin by 57% by 2017 (Salgado, 2017). However, the company should expand the scope of its operations worldwide.

Technological Advancements

Over the years, Under Armour has come up with better designs, shoes, and other merchandise. This has been done through advanced technology that the company has adopted (Admin, 2019). This maintains the flexibility as demand increases and taste and preference of the customers’ change. Under Armour can use this opportunity to come up with creative inventions that will be more appealing to the customers and ensure the broader market is reached. The old designs can be improved to cope with the competition.

For Under Armour to achieve sustainable strategic management, the council should have meetings from time to time to ensure that desired results are achieved the team guarantees that the company improves over time and meet the goals that were set. The team should also advise the management on how Under Armour should deal with competition in the coming years. The council should evaluate and suggest strategies like early entry into the market or fundamentally becoming a late mover so as the company reduces mistakes and unnecessary costs (Salgado, 2017).

Capitalize on low inflation rates and subsidies

Under Armour Company should also make the best use of low inflation rate subsidies by the government. Since the company enjoys inflation rates that will be experienced for the next two years, it is expected to produce more and market its commodities. This will help the company to earn more revenue as the cost of production will be low, and customer and customers’ needs can be met (Salgado, 2017). Under Armour is also one of the companies that delight in subsidies since it deals with environmentally friendly commodities.

Triple bottom line

The company focuses on the triple bottom line by observing environmental and social distresses. Tipple bottom line ensures that the Under Armour compile with the government policies and the terms produced are acceptable by the public (Stead & Stead, 2014). Ways in which Under Armour Company utilizes the concept of the triple bottom line is by ensuring safe products that meet the government standards. The company produces environmentally friendly products, which gives it the potential to grow bigger.

Conclusion

In conclusion, sustainable strategy management will play fundamental roles in establishing ways that will help the company to compete effectively. Therefore, Under Armour is required to observe the core competencies to increase the sales margin and win over the customers. The company has more strengths and opportunities that it can capitalize on. The chances that are in Under Armour’s disposals should be used to beat the threats and weaknesses posed to the business. The company should also have a long term strategic plan that will guarantee more success in the coming years. A proper leadership style should also be adopted to warrant the smooth running of operation and quality products.

  

References

Admin-J.-L.M.W. (2019, December). The History of Under Armour and their Logo. Retrieved from

Under Armour Logo and Its History

Brett, M. R. (2018). Cost Leadership or Differentiation? Applying Porter’s Competitive Strategies in Ecotourism: A Case Study of Mkhuze Game Reserve.

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Running head: tesla, Inc. analysis 1

tesla, Inc. analysis 20

Undergraduate Capstone Paper

Tesla, Inc.

Blaine Smith

February 26, 2020

University of Redlands School of Business

BUSB 485 SD12

Professor Richard Doyle

Table of Contents

1. Executive Summary …………………………………………………………………………………………….. 3

2. Financial Management BUSB 361 ………………………………………………………………………… 6

2.1. SWOT Analysis Table ……………………………………………………………………….. 6

2.2 Supplementary Financial Metrics Over Last Ten Years ………………………….. 9

2.3 Stock Market Performance ………………………………………………………………… 11

3. Principles of Marketing BUSB 340 ………………………………………………………………………. 13

3.1. SWOT Analysis Table ………………………………………………………………………. 13

4. Strategic Management BUSB 481 ………………………………………………………………………. 19

4.1. SWOT Analysis Table ………………………………………………………………………. 19

5. Business Information Systems BUSB 333 ……………………………………………………………. 24

2.1. SWOT Analysis Table ………………………………………………………………………. 24

6. Managing and Leading Organizations BUSB 330 …………………………………………………. 29

2.1. SWOT Analysis Table ………………………………………………………………………. 30

7. Conclusion ……………………………………………………………………………………………………….. 35

Executive Summary

Reason for the Paper:

This paper will be a strategic audit of Tesla to fulfill the requirements for a CAPSTONE paper, utilizing the concepts of five different courses in my undergraduate program at the University of Redlands. The five courses are as follows:

· Business Information Systems

· Financial Management

· Managing and Leading Organizations

· Principles of Marketing

· Strategic Management

Each section will be labeled, with numerous key concepts highlighted to demonstrate my ability to apply what I learned to a real world organization; Tesla. I will also be employ a SWOT analysis through the lens of each course to identify strengths, weaknesses, opportunities, and threats. I will identify the most important issues and opportunities, recommending strategies to mitigate damage and take advantage of opportunities. Improvement may not be instantaneous, but the findings will provide a direction for the company, providing them with objectives to develop a strategic plan around.

Background of Tesla:

Tesla was founded in 2003 by Martin Eberhard and Marc Tarpenning, later joined by Elon Musk, J. B. Straubel and Ian Wright in the first round of Series A funding (Baer, 2014). The founding group of engineers wanted to prove “people didn’t need to compromise to drive electric – that electric vehicles can be better, quicker and more fun to drive than gasoline cars (Tesla Inc., 2020). Tesla’s mission has always been “to accelerate the world’s transition to sustainable energy” (Tesla Inc., 2020). Tesla is currently headquartered in 3500 Deer Creek Road, Palo Alto, CA. 94304; incorporated in Delaware. The current board members are as follows:

· Elon Musk

· Robyn M. Denholm

· Ira Ehrenpreis

· Larry Ellison

· Antonio J. Gracias

· Steve Jurvetson

· James Murdoch

· Kimbal Musk

· Kathleen Wilson-Thompson

Tesla’s first product, the Roadster, was launched in 2008 and was an all-electric sports car. The company started with a high priced item, luring in investors with capital before scaling down to other products. The company currently has a vehicle line of the Model S, 3, X, and Y. The popular roadster is set to make a reappearance in the coming years with improved technological design and performance. To complete the main theme of sustainability Tesla invented and designed the Powerwall, Powerpack, and Solar Roof for homes. Each item is designed with the same principles of moving away from carbon-based fuels, to ones that involve renewable energy. Tesla states, “Electric cars, batteries, and renewable energy generation and storage already exist independently, but when combined, they become even more powerful – that’s the future we want” (Tesla Inc., 2020).

The following section will outline the main issues and opportunities and a recommendation of action to take advantage or prevent disadvantages.

Key Issues/Opportunities and Recommendations:

The opportunity found through the lens of Business Information Systems is the collaboration between multiple firms to build the electric vehicle (EV) infrastructure. The downside to an all-electric vehicle is the distance that can be traveled before having to recharge. There are few to none infrastructure development outside of big metropolitan areas. The battery technology will improve in time with the advancements in technology, but the need for charging stations will still be for nationwide travel. To put it into perspective, think about every gas station in just a single town or city, the amount of charging stations will need to mirror the number of gas stations. Working with other companies to start the development will be crucial to one day meet that goal of 100% sustainability.

Through the scope of Financial Management the main opportunity deals with the investment overseas. Having the ability to produce vehicles in countries, such as China, will open up the door for brand awareness globally, not to mention after the initial investment in production, the cost of building a vehicle will decrease, due to the lower cost of labor in countries outside of the US. The investment will not be cheap, but the long run profitability makes the idea feasible.

Viewing the company through Managing and Leading Organizations the objective for the company should be to hire new executive leaders, or insist on keeping the leaders they have now. The problem isn’t so much the individual leaders and the management styles they bring to the company, but the constant turnover the firm has. A stable leadership base is vital to the productivity of the organizations, since human capital is the one of the most valuable assets a firm holds.

Through the lens of Principles of Marketing the main recommendation is to target the younger generation of young professionals and college students who will become the target market, the product or service main focus on a particular segment group of consumers based on specific demographics (Hartley & Kerin, 2017), as they advance in their careers. Early introduction is essential for the firm to ensure the consumers inherit the interest in the value and beliefs in the company. Early adoption will allow the company to build a sustainable market base comprised of future consumers.

The final class to identify opportunities and threats, is through the view of Strategic Management. The possible outcome is the development of new hardware or software that gives Tesla a technological advantage down the road as the companies continue to grow, through the beginning of collaboration and extending microloans, “allow the poor to break the cycle of poverty by building small businesses that provide them with a sustainable livelihood” (Stead & Stead, 2014, p. #).

The next section will begin the strategic audit, starting with Financial Management BUSB 361.

Financial Management BUSB 361

The following section will outline the vital financial strengths, weaknesses, opportunities, and threats, review the current stock market performance, and end with a conclusion of the main factors of the S.W.O.T analysis for future growth and potential of Tesla.

Strengths

· Recognized Premium EV Allows Premium Pricing
· Growing Vehicle Sales
· Use of Information Technology

Weaknesses

· Price of Non-Standard Vehicle Manufacturing
· Poor Financial Metrics

Opportunities

· Sales potential in global markets
· Increasing solar energy and battery distribution

Threats

· Competitor pricing
· Elon Musk activities

Strengths:

Recognized Premium EV Allows Premium Pricing. The ability to sell vehicles at a premium price gives Tesla the possibility to increase the variable cost ratio (1-contribution margin ratio), a ratio that compares the cost of production to the amount of revenue and is one indicator of profitability (Brigham & Houston, 2014). Tesla can output a better decimal percentage, averaging .78 (Tesla Inc., 2011-2019), by increasing sales revenue the profitability in production, for all vehicle types, will increase. The contribution margin ((sales revenue – variable costs) / sales revenue)), calculates a per unit profitability of a given product (Brigham & Houston, 2014). Therefore another indicator of the cost efficiency of creating vehicles, which Tesla is sitting at an average of .22 (Tesla Inc., 2011-2019). The ability to sell at a premium price allows Tesla to move towards sustainable cash flow. The previous company history of net income losses gave potential investors a worrisome feeling. Net income is the operating income after deducting all expenses (Brigham & Houston, 2014). Nevertheless, the influence and ingenuity of Elon Musk have kept investors’ faith and lured new investors to keep the firm from bankruptcy during troubling years.

Growing Vehicle Sales. The growing sales of vehicles are a great sign of productivity and delivery. The company has had problems with manufacturing and stable production, making the growth potential of vehicle sales impossible. The sales revenue has doubled from 2017 (~$8.5 billion) to 2018 (~$17.6 billion), giving Tesla a chance to return to a positive net income (Tesla Inc., 2011-2019). The decisive turn around has enabled Tesla to increase the operating margin, although the company has some more work to be done, to get out of a negative operating margin.

Use of Information Technology. Another way Tesla has increased profits is by employing the information technology concept, where “Companies are linking networks of personal computers to one another, to the firms’ own mainframe computers, to the Internet and the World Wide Web, and to their customers’ and suppliers’ computers” (Brigham & Houston, 2014, p. 9). This information technology concept suggests that the modernizing world will use these linked networks to make more informed financial decisions. The advantage for Tesla is the exclusive connection between the vehicles and battery packs, to Tesla’s network for updates and continual improvement. Updates continually come out for patches and bugs, much like a modern computer. The company has all the products directly connected to detect problems, analyze information, and update products from any year when needed.

Weaknesses:

Price of Non-Standard Vehicle Manufacturing. The non-standard line of productions by offering different vehicle layouts has made productivity unstable and the price of manufacturing high. “Over the years, we have been gradually simplifying options for Model S and Model X by standardizing options,” to resemble the cheapest priced Model 3, “which results in significantly lower manufacturing cost” (Tesla Inc., 2018, p. 2) Without standardization the company gives the possibility of keeping costs high and vehicle production unstable, leading to less deliveries and unsatisfied customers. The higher costs in production, would result in other financial metrics to worsen.

Poor Financial Metrics. The metrics from the last ten years averaged terrible results in comparison to the industry averages. Some of these metrics include the current ratio, return on common equity (ROE), return on assets (ROA), inventory turnover ratio, and earnings per share (EPS). The first ratio, the current ratio, falls under liquidity ratios that “show the relationship of a firm’s current assets to its current liabilities, and thus its ability to meet maturing debts” (Brigham & Houston, 2014, p. 119). The current ratio is “calculated by dividing current assets by current liabilities,” and is “the most commonly used measure of short-term solvency” (Brigham & Houston, 2014, p. 90). The next two ratios are part of the profitability ratios, which “show the combined effects of liquidity, asset management, and debt management policies on operating results” (Brigham & Houston, 2014, p. 119). ROE is “net income available to common shareholders divided by common equity” (Brigham & Houston, 2014, p. 107). ROA takes the “net income and divides it by total assets” (Brigham & Houston, 2014, p. 107). Inventory turnover ratio is part of the asset management ratios and is calculated by taking sales and dividing by the average inventory (Brigham & Houston, 2014). The asset management ratios “measure how effectively a firm is managing its assets (Brigham & Houston, 2014, p. 119). EPS, “net income divided by the number of shares of common stock outstanding,” and “there is a high correlation between EPS, cash flow, and stock price, and all of them generally rise if a firm’s sales rise” (Brigham & Houston, 2014, p. 27).

It is good to note that the metric are below the industry average, but that does correlate to failure in every instance. “Although industry average figures are discussed later in some detail, it should be noted at this point that an industry average is not a magic number that all firms should strive to maintain — in fact, some very well-managed firms will be above the average while other good firms will be below it” (Brigham & Houston, 2014, p. 90).

Supplementary Financial Metrics Over Last Ten Years

Current ratio

1.08

ROE

-13.42%

ROA

-2.69%

Inventory turnover ratio

1.43

EPS

$-5.72

(Macrotrends, 2009-2019)

Opportunities:

The opening of the Gigafactory in Shanghai, China, has provided the opportunity of global market sales for the Model 3 in a country with the highest population in the world. The pollution for many major cities in China is harmful and unsustainable, providing EV makers the ability to tap into a solution for a country needing to use less carbon-based fuels. The company will be able to reduce costs, therefore returning a higher profit. The Purchase Power Parity (PPP), implies that “the level of exchange rates adjusts to cause identical goods to cost the same amount in different countries” (Brigham & Houston, 2014, p. 765). With lower manufacturing costs in Shanghai, Tesla will still be able to sell vehicles for the same price as the United States.

The increasing battery functionality of the power storage units that utilize solar power has enabled Tesla to start moving a new product into a more significant section of the market. The company can use the countries of Europe and Australia, which have high energy costs, the potential for efficient solar power units. “We see growth opportunities for Powerwall not only in North America, but also in Australia and Europe where electricity rates are high and solar panels combined with Powerwall units will help reduce electricity bills” (Tesla Inc., 2018, p. 3). Globalization has made it essential for companies to be connected to markets around the world and strategize for ways into different segments. Tesla’s opportunity stems from the uniquely carbon-free premium products it offers and is the first to control this premium electric vehicle (EV) market. Other companies have attempted to make hybrid electric vehicles (HEVs), but they have not come close to the success of Tesla’s premium EVs.

Threats:

The potential threats in the EV sector stem from other automaker companies. The EV market has a large portion of lower-priced vehicles that directly impact the sales of Model 3 vehicles. The influence of EV has forced other luxury brands to start delivering EV’s. The luxury car companies are a more significant threat since they are directly competing for the same customer base. Porsche is introducing the new Taycan Models at $100,000, the first wholly EV by Porsche. The assumption is that this is just the first line of models for the competing firm to introduce (Porsche, 2020). The customers who are buying the lower-priced standard EV’s are not in the market space that the majority of Tesla’s customers base, so those competitors, such as Honda, are not a direct threat as of the moment, but could be a decade from now.

Leadership has been an issue in the past since the actions of Elon Musk can directly influence the share price and investor trust. The new leadership has given stability to the top management that Elon Musk was unable to provide since his ingenuity and uniqueness has made investors feel uneasy and nervous. Multiple examples ranging from the SEC telling Musk to resign as the CEO, from the time Musk openly partook in drug activities and paraphernalia on the Joe Rogan Podcast, has directly correlated with a drop in stock price, reflecting a lack of investor trust in the leadership. This threat can also be resembled as a weakness since it stems internally, but the outside regulators, like the SEC, can do more damage after internal shenanigans.

Stock Market Performance

2010

$17.00

IPO

2014

$147.62

January 7, 2014

2019

$321.72

January 7, 2019

2020

$800.03

February 14, 2020

(Tesla Inc., 2020)

Stockholder wealth maximization, “translates into maximizing the price of the firm’s common stock” (Brigham & Houston, 2014, p. 16), is the last piece of information that may not mean anything about the actual profitability or strength of a company’s finances. However, it does show investor confidence since the initial public offering (IPO) in the management or vision of Tesla. The IPO is the first time a company offers common stock shares to the public via a stock exchange (Brigham & Houston, 2014). The company has yet to post a net income profit on a 10-K report, starting from data in 2010 (Tesla Inc., 2011-2019). Years of net income loss is astonishing, considering the number of investments the company has been able to secure from different investors and investment avenues.

Conclusion/Recommendations:

To conclude, the opportunity for Tesla is the production overseas as the Gigafactory in China starts to produce Model 3s, with lower manufacturing costs and keeping all prices of the Model 3 constant, it will lead to rising cash value for the company. It is providing new opportunities and more capital to invest in the research and development, the heart and soul of Tesla. Ties with the growing sales and streamlining of production, more cash will be available to invest in the solar panels, battery packs, and autonomous driving technologies. The company has produced years of net income losses. However, faith in the brand and technology has kept investor confidence, along with the finished product, the Tesla vehicle’s reliability, and unique design functions.

The company has addressed the weakness of non-standard manufacturing for multiple lines of vehicles, and streamline improvements in production have started. The threat/weakness of leadership stems from Elon Musk, who must not be allowed to be CEO, even after his penalty of three years has been served. He is erratic and displays considerable objectional information as truth, and along with the inability to fulfill every hopefully optimistic promise on Twitter. Examples of the Twitter incidents will be provided in the Principles of Marketing BUSB 340 and Managing and Leading Organizations BUSB 330 sections of the strategic audit. Elon as the innovator and ingenious individual he has proved to be, will serve the company better in another capacity, other than the role of CEO. Overall the financial stability of Tesla looks promising with more strengths and opportunities than threats and weaknesses.

The following section will investigate the strengths, weaknesses, opportunities, and threats, using concepts from PRINCIPLES OF MARKETING BUSB 340.

Principles of Marketing BUSB 340

The SWOT analysis determines a company’s strengths, weaknesses, opportunities, and threats, is “the foundation upon which a firm builds its marketing program” (Hartley & Kerin, 2017, p. 41). The following section will outline the vital marketing strengths, weaknesses, opportunities, and threats, and ending with a conclusion of the main factors of the SWOT analysis for future development and progression.

Strengths

· Ability to Apply Prestige Pricing
· Product Differentiation

Weaknesses

· Demonstrate an Understanding of Ethics vs. Law

Opportunities

· Generational Cohorts Sharing Similar Values
· Social Media Opportunities
· Consumers Advertising Products

Threats

· New and Existing Competition
· Technology as an Environmental Force

Strengths:

Ability to Apply Prestige Pricing. The Four P’s of Marketing, price, product, promotion, and place (Hartley & Kerin, 2017), are the essential traits of a successful company. Tesla’s introduction was able to incorporate all four concepts with the introduction of the first product. The initial launch of Tesla started with the marketing technique, prestige pricing, when consumers perceive price as an indication of quality or prestige. A high price tag keeps consumers concerned with quality, prestige, and continual intrigue into the product (Hartley & Kerin, 2017). The first car introduced was the Roadster, an electric-vehicle (EV) sports car, starting at $80,000 (DeBord, 2019). People who had a disposable income are the main aim of prestige since the price was out of the range of most middle-class citizens in 2008. The company used prestige pricing to create brand equity, which resides in the minds of the consumers and results from what they have felt, seen, and heard about brand overtime (Hartley & Kerin, 2017), from scratch. Once Tesla created a couple of Roadsters, they were able to prove the quality and feasibility of building EVs, expanding to new models that were more affordable for a broader market segment.

Product Differentiation. The next biggest strength of the firm is differentiation, a change in the attributes or selling point of a product or service that differs from a similar product or service (Hartley & Kerin, 2017). The introduction of electric cars started in the early 20th century when a third of all vehicles on the road were electric until the introduction of the Model-T by Ford (Department of Energy, 2015). The cars stayed in the dark until the EV1 by GM, but the car did not take off like the hybrid vehicles of Toyota, the first mass-produced hybrid vehicle (Department of Energy, 2015). Enter Tesla, with a new model of what an EV vehicle, a sporty vehicle, reliable, and modern version of the early 20th century dreams of engineers.

Weaknesses:

Demonstrate an Understanding of Ethics vs. Law. Ethics are the moral principles and values that govern the actions and decisions of an individual or group; guidelines on how to act rightly and justly when faced with moral dilemmas (Hartley & Kerin, 2017). Whereas ethics deal with personal moral principles and values, laws are society’s values and standards that are enforceable in the courts (Hartley & Kerin, 2017). Tesla consumers have shown high value in the values and principles the firm, tracked by the increasing sales volume shown in the finance section. Now the problem with Tesla is not that they are not abiding by the law, but there are a couple of situations that can hurt the marketing potential, and contribute to a decline in brand equity. 

The first instance comes from empty promises and predictions on the future potential of the company’s profits. “Tesla made 0 cars in 2011 but will make around 500k in 2019” (Elon Musk, 2019). “Am considering taking Tesla private at $420. Funding secured” (Elon Musk, 2018). The Securities and Exchange Commission has determined these statements are misleading and not in line with the law. Elon Musk is the opportunity and the weakness, depending on how he uses social media for marketing the company and expressing ideas.

Opportunities:

Generational Cohorts Sharing Similar Values. New market opportunities have emerged with the onset of the internet. The advantage of connecting and communicating in ways that were impossible just a decade earlier. To achieve the best marketing results on the internet, Tesla will have to first identify the correct market base. The attack this problem the marketing department should focus on generational cohorts. Generational cohorts, categorizing people into groups based on the year they were born and that hold certain attributes and values (Hartley & Kerin, 2017). Tesla has three potential cohorts to research. The first are the Baby Boomers (1946-1964) with a population of 76 million. They “will be 65 or older by 2030, and hold interests in health, fitness, retirement housing, financial planning, and appearance” (Hartley & Kerin, 2017, p. 76). The second option is Generation X (1965-1976) with a population of 50 million. This group is “well educated, has declining birth rates, supportive of racial and ethnic diversity is self-reliant, becoming more dominant over other cohorts” (Hartley & Kerin, 2017, p. #). The third option is Generation Y (1977-1994), holding a population of 72 million. This segment are the children of baby boomers, they have a “strong influence on music, sports, computers, video games, and networking” (Hartley & Kerin, 2017, p. 76). The traits heavily associated with them include being strong-willed, passionate, holding a positive work-life balance, and enjoy personal experiences over the previous cohorts (Hartley & Kerin, 2017). The focus should primarily lie with Generation X and Y. These two cohorts have the highest possibility of holding the same values with Tesla’s, who also have the capital to continually purchase Tesla products.

Social Media Opportunities. Social Media is the best way to sell to these generational cohorts. The cohorts are not technology challenged and embrace technological innovation. The CEO, Elon Musk has shown to be active on social media and possess the ability of self-disclosure, “individuals want to make a positive impression to achieve favorable age with others,” and the “greater self-disclosure is likely to increase one’s influence those reached” (Hartley & Kerin, 2017, p. 541). Elon Musk is mostly active on Twitter, but the potential for Tesla is more substantial involvement on the social media platform Facebook. “The benefits of using Facebook is the magnitude of content and users; has 936 million active users, process 10 million messages a day, 82% of the people live outside of the United States, has over 2 million advertisers” (Hartley & Kerin, 2017, p. 544). Social Media is accounting for a far greater number of advertisements, compared to the traditional advertisement avenues of television, radio, and newspapers. From 2016 to 2019, the amount spent on social media advertising has doubled from $15.63 billion to $32.18 billion (Guttman, 2019). The ability to advertised on social media and also have an inside voice project the values of the company, Elon on Twitter, will put the company ahead of other competitors.

Consumers Advertising Products. Media richness, “involves the degree of acoustic, visual and personal contact between two communication partners,” and, “the higher the media richness and quality of presentation, the greater the social influence” (Hartley & Kerin, 2017, p. 541). Media richness does not need to be produced by the marketing company, the highest influencers of consumers is other consumer through user-generated content. “User-generated content (UGC) refers to the various forms of online media content that are publicly available and created by end users” (Hartley & Kerin, 2017, p. #). People are more likely to trust someone that is a close friend, colleague, or family members content over an advertisement about why a particular product is the best money can buy. Use-generated content effects people, similarly to word of mouth advertising. Word of mouth advertising is “the influencing of people (friends, family and colleagues) during conversations. It is the most powerful and authentic information source for consumers because it typically involves friends viewed as trustworthy” (Hartley & Kerin, 2017, p. #). The only way to have people adopt these practices is to target the people who hold the same values and actually construct a product that consumers will identify with.

Threats:

New and Existing Competition. The biggest threat Tesla faces is the marketing campaigns started by a variety of car companies, attempting to penetrate the emerging electric vehicle market. The electric vehicle market only accounts for 2% of all sales and is trending upwards in growth (Tesla Inc., 2018), leaving plenty of room for new advances in electric vehicle technology. These new competitors are defined as new entrants, the companies who are new to the market, and become a new competitor. (Hartley & Kerin, 2017, p. #). “The markets in which we operate are highly competitive, and we may not be successful in competing in these industries. We currently face competition from new and established domestic and international competitors. (Tesla Inc., 2011-2019). Tesla does have a first-mover advantage, the first company to hold a large majority of a particular market (Hartley & Kerin, 2017), in the premium EV vehicle market, but not the first movers in terms of the first electric vehicle.

Technology as an Environmental Force. The Five Environmental Forces are, social, economic, technological, competitive, and regulatory (Hartley & Kerin, 2017). The environmental force with the highest potential to disrupt Tesla’s market share in the EV industry is the technological force. The technological force involves “changing technology, technological impact on consumer value, and technology enabled analytic” (Hartley & Kerin, 2017, p. #). The adoption of electric vehicles has not been rapid, as seen by the 2% total market penetration, leaving companies with the uncertainty of the future of vehicle power. Research by outside entities into other technologies is a constant threat; nobody can predict the future of technology or the power it will yield in a decade. “Our future growth and success [are] dependent upon consumers’ willingness to adopt electric vehicles and specifically our vehicles … and expect to face competition from others in the future, including competition from companies with new technology” (Tesla Inc., 2011-2019).

Recommendations:

The first recommendation is to target the younger generation of young professionals and college students who will become the target market, the product or service main focus on a particular segment group of consumers based on specific demographics (Hartley & Kerin, 2017), as they advance in their careers. Early introduction is essential for the firm to ensure the consumers inherit the interest in the value and beliefs in the company. Early adoption will allow the company to build a sustainable market base comprised of future consumers. The goal is to target people early enough and give exposure to a product that a consumer may not be able to afford at the moment, but will be able to afford as they advance in their career. Competitive advertising that promotes a specific brand’s features and benefits to persuade the target market to select the firm’s brand rather than a competitor (Hartley & Kerin, 2017).

The other recommendation is to attempt to keep Elon from having the Securities and Exchange Commission from coming down on the entire company, rather than the single individual. The media richness is high on social media, and the presence of Elon is infectious for the consumer and believers of Tesla. Elon is a benefit to the company, rather than a threat, but all it takes is one quote that creates a domino effect. Overall, the company’s marketing techniques from the start to the present have been sound and practical. The quotes of Elon on Twitter could have impacted the company positively after a couple of days of small stock hits. As the company has gained more attention, the sales have spiked, and they have become a dominant force in the car market, EV aside.

The next section will cover the strengths, weaknesses, opportunities, and threats, from the view of Strategic Management BUSB 481.

Strategic Management BUSB 481

A SWOT analysis helps management discover a company’s strengths, weaknesses, opportunities, and threats (Stead & Stead, 2017). The following section will outline the vital strategic management strengths, weaknesses, opportunities, and threats for the future expansion and sustainability of Tesla. The section will conclude with a summary using Michael Porters Five Forces Model and several recommendations.

Strengths

· Sustainability
· Triple Bottom Line
· Embracers

Weaknesses

· Turnover in Leadership
· Stakeholder Belief

Opportunities

· Expansion

Threats

· New Entries
· Race to AI Vehicles
· Established Competitors

Strengths:

Tesla is the motor vehicle embodiment of sustainability, “providing a high quality of life for current and future generations” (Stead & Stead, 2014, p. #), and minimizing or ultimately reducing the impact on the environment. It is integrated into the mission of Tesla, to “accelerate the world’s transition to sustainable energy” (Tesla, 2020). Sustainability is an essential factor that will help the image of the company in the consumer mind, it aligns with consumer values, “enduring, emotionally charged abstractions about matters that are important to people” (Stead & Stead, 2014, p. #). The world has become more concerned about the degradation of the natural environment and the negative impacts that will ensue if businesses do not start implementing proper practices. The concerns are forcing companies to look at their entire business, from energy output, waste accumulation, carbon admissions, and other environmental impacts that could harm the environment. Tesla has an advantage in this arena since sustainability is the top priority for the company.

Tesla’s original idea of removing carbon from everyday life started with an all-electric vehicle, the Roadster. As the company grew, they started developing carbon-free energy generating and storing products, going outside of the niche, proving the company lived by the mission statement. “Tesla believes the faster the world stops relying on fossil fuels and moves towards a zero-emission future, the better” (Tesla, 2020). The ideas laid forth define them as an embracer, “those strategic managers who preemptively put sustainability at the top of their strategic agendas because they believed that sustainability was important to their firm’s competitiveness” (Stead & Stead, 2014, p. #). To this day, the company operates under Triple Bottom Line, “managerial commitment to all three dimensions of sustainability (economically, society, natural, environment)” (Stead & Stead, 2014, p. #). An example is the environmental impact report that outlines, product impact, operational impact, supply chain, and employees and culture (Tesla, 2018).

Weaknesses:

The key to maintaining a positive organizational culture, “composed of artifacts (i.e., logos, products, and icons), norms, values, beliefs, and assumptions shared by its members” (Stead & Stead, 2014, p. #), is to keep everybody a part of the team. To keep the top management steady since they distribute and portray the companies values. The CEO “creates value for the firm” (Stead & Stead, 2014, p. #) and is, therefore, the person ultimately responsible for the organizational culture. The turnaround in senior management positions, in particular, has been startling. The consecutive years of 2018 and 2019, Tesla had 34 senior positions replaced, and according to the story, “Tesla is known for its high rate of executive turnover” (Matousek & Rapier, 2019). It is hard to create and keep values with high rates of executive turnover.

The turnaround situation hurts the company’s reputation with the stakeholders, “those individuals, groups, and entities that affect or can be affected by the organization’s purpose and actions, participate and provide inputs into the SSM strategy formulation process” (Stead & Stead, 2014, p. #). A situation that may not be the ultimate downfall, but could undoubtedly hurt the board of directors, “ elected by the shareholders to represent their interests” (Stead & Stead, 2014, p. #). The board of directors has the possibility of replacement if they cannot keep talented personnel, especially in the executive positions. The situation needs addressing before the problem of turnover worsens, leaving doubts in the eyes of the shareholders.

Opportunities:

The world is expanding and changing simultaneously, creating markets in parts of the world that were once behind the development stage of countries. The Base of the Pyramid “85% of the world that are untapped markets of the world’s poorest poor in undeveloped and developing markets” (Stead & Stead, 2014, p. #). Expansion into countries in the developing markets needs to be part of the long term strategy to start gaining customer trust and support. The possibility of gaining partners that thrive in the technology sector of the industry is another result that could Tesla an innovation advantage if the partnerships are maintained throughout the years.

Threats:

Threats, “factors in the external/internal environment that prevents a planned goal” (Stead & Stead, 2014). Tesla’s first threat that has the possibility of disrupting plans are new entries. Companies that are starting to move into the electric vehicle (EV), solar energy, and solar battery markets will undoubtedly absorb some of the company’s market share. The companies that have been obtaining artificial intelligence (AI) information for self-driving cars will play the most notable threat. Whoever can achieve the AI self-driving vehicle first will have a major advantage in the future and could make a large section of the vehicle market obsolete.

The second and most prominent threat is an established car company entering the EV industry. The amount of capital that established companies can put into their EV vehicle could mimic that of Tesla, especially a luxury car brand, who could fight for the most luxurious EV. The extraordinary detail about the threats of other car companies is that they would be characterized as casual adopters. Casual adopters are “firms that were late into the sustainability market and invested only in short-run, eco-efficient strategies (which do not afford much of a competitive advantage today)” (Stead & Stead, 2014, p. #). Many firms adopted hybrid vehicles, thought to be sustainable by a large section of consumers who adopted the Prius. Hybrids, regrettably, are not sustainable, Elon Musk even concluded, “They are really just gasoline powered cars with a little battery assistance…,” and “…as a friend of mine says, a world 100% full of Prius drivers is still 100% addicted to oil (Tesla, 2006).

Michael Porters Five Forces Model:

The following will outline, Michael Porters Five Forces Model “(1) the risk of entry from potential competitors, (2) the intensity of rivalries among established firms within the industry, (3) the bargaining power of suppliers, (4) the bargaining power of customers, and (5) the threat of substitute products” (Stead & Stead, 2014, p. #) starting with the most severe force.

(1) The rivalries among the established firms create the most important force that could negatively impact Tesla. Large, capital-rich firms have the opportunity to compete with Tesla’s growing cash base. (2) Tesla has to rely on rare minerals for the battery packs it creates for homes and vehicles, making the supply chain subject to regulation and fluctuations in the market. (3) Substitute products, including AI vehicles and new fuels, could create a problem, more significant than the combustible engines have with electric vehicles. (4) The risk of entry from new technology companies could potentially make Tesla vehicles obsolete unless a plan to change and innovate is already laid out. (5) Consumer tastes weaker force that could be harmful, if Tesla does not remain innovative, the company could lose customers to other luxury car brands.

Conclusion/Recommendations:

The first plan is a lengthy strategic plan that cannot be estimated on success, but begins with microfinancing, “a critical role in creating and supporting local entrepreneurs at the base of the pyramid” (Stead & Stead, 2014, p. #), is a possible solution in entering the countries that are going to begin going into development. Helping less fortunate countries understand the importance of sustainability and educating them on the same values the company operates under will create a customer base for the future. Another possible outcome is the development of new hardware or software that gives Tesla a technological advantage down the road as the companies continue to grow, through the beginning of collaboration and extending microloans, “allow the poor to break the cycle of poverty by building small businesses that provide them with a sustainable livelihood” (Stead & Stead, 2014, p. #).

Finally, the company needs to take a hard look at that turnover rate for senior management. This behavior of constant hiring, firing, retiring, and leaving does not set a gold standard example of keeping and maintaining employees. The problem has the possibility of leaking into to the lower stems of the company that will not necessarily destroy the company, but cost the company millions of dollars. The trend in many industries to constantly rotate senior executives is known, Tesla unfortunately is a little to known for these occurrences.

The next section will explore the strengths, weaknesses, opportunities, and threats of Tesla, employing concepts from BIS BUSB 333.

Business Information Systems (BIS) BUSB 333

The SWOT analysis determines a company’s strengths, weaknesses, opportunities, and threats. The SWOT analysis is vital in determining the six strategic objectives in business information systems; operational excellence, new products, services and business models, customer and supplier intimacy, improved decision making, competitive advantage, and survival (O’Brien & Marakas, 2013, p. #). The following section will outline the key information system processes that contribute to the strengths, weaknesses, opportunities, and threats of Tesla. The section will end with a conclusion and recommendations to improve efficiency.

Strengths

· Integration of Technology
· Ability to Update Vehicle Systems

Weaknesses

· Vehicle Range
· The Limited Availability of Charging Stations

Opportunities

· AI Enabled Vehicles and Applications
· Creating New Products

Threats

· Subject to a Potential Hack
· Companies/Countries not Practicing Copyright Infringements Laws

Strengths:

(1) Integration of Technology. The Tesla systems are connected through a controlled network, giving the car maker the ability to update and keep diagnostic statistics on every vehicle sold. The system uses basic information system fundamentals; input, output, feedback, and control (O’Brien & Marakas, 2013), to monitor and improve the functionality of the sytem. An information system is “any organized combination of people, hardware, software, communications networks, data resources, and policies and procedures that stores, retrieves, transforms and disseminates information to an organization” (O’Brien & Marakas, 2013, p. #). The primary or crucial information system for Tesla involves the numerous vehicle computer systems and the network on which they operate. The vehicles computer systems are responsible for the input, “capturing the data to be processed” (O’Brien & Marakas, 2013, p. #). The computers use processing, “changing data into information” (O’Brien & Marakas, 2013, p. #). Each individual vehicles processes the input and sends the information back to the Tesla network via the servers output, “disseminating the information product to its destination” (O’Brien & Marakas, 2013, p. #). The feedback is “data about the performance of the system” (O’Brien & Marakas, 2013, p. #), that can be interpreted and presented to top management to create to useful software updates. Control, “monitoring the feedback to determine if the system is meeting its objectives” (O’Brien & Marakas, 2013, p. #), determines if the software is working correctly and if there are any minor discrepancies within the update.

(2) Ability to Update Vehicle Systems. Tesla vehicles can be updated like a phone or computer, providing the vehicles the opportunity for higher customization on the vehicle dashboard and for the company remain fresh in the mind of the consumer. The other important aspects of the system include monitoring control and power for safety concerns. The vehicle is a giant computer, that has the provided ability to be mobile for an owner. The computer inside of the vehicle, much like a smartphone, needs constant updating to remove bugs and update the performance. The ability to update the computer system gives Tesla an Information Technology (IT) competitive advantage, an important factor in gaining value and technological superiority over competitors (O’Brien & Marakas, 2013).

Weaknesses:

(1) Vehicle Range. The vehicles are the most technologically advanced vehicles on the market that are compatible with the 21st century systems and ideas. The ideas include moving away from carbon dioxide fuels, to more sustainable options, the problem is the technology is not advanced enough for long distance travel. The network system of charging systems has yet to be laid out in stretches that are realistic for the everyday consumer of vehicles. The city dwellers can easily make a case for owning an electric powered vehicle, but rural areas will need a wider range of networks for electric vehicle practicability.

(2) The Limited Availability of Charging Stations. The company can only use charging stations, currently, designed and implemented by the company. To cover the entire US, the charging stations would have to be endorsed by the government, to ensure the capital needed to tackle a project of such size is secured. The other possibility is to collaborate with other companies to create charging stations that are compatible with multiple vehicles. The weakness is the product differentiation of the charging stations developed by Tesla, the charging stations are superior, in regards to the amount of time it takes to charge a vehicle. The differentiation is advantage only if the network can be expanded to a broader range of consumers. Apple is a company is known for differentiation. For example, the chargers utilized by its cellphone products allows them to make the consumer have to use their developed products. The problem is that installing charging stations is a much larger and expensive project then simply changing the charging port on a cellphone.

Opportunities:

(1) AI Enabled Vehicles and Applications. The ability to create machine learning vehicles and software would enable vehicles to achieve autonomy, driving without human input. The utilization of spatial analysis, complex analytical functions such as visualization and modeling (O’Brien & Marakas, 2013), can be inserted into the software that controls the vehicle cameras. Elon Musk is relying on cameras to obtain autonomy, and says, “Anyone relying on Lidar is doomed” (McFarland, 2019). “LIDAR, which stands for Light Detection and Ranging, is a remote sensing method that uses light in the form of a pulsed laser to measure ranges (variable distances)” (National Ocean Service, 2020). Lidar is the system being used by most companies to create autonomy in vehicles, but Elon believes using machine learning cameras will be the optimal and most realistic way to achieve autonomy in vehicles. Whatever the system, whoever can create the AI vehicle first will control the vehicle largest segment of the market in the future.

(2) Creating New Products. The company is an E-Business, “use of Internet technologies to empower business processes, e-commerce, and enterprise collaboration within a firm and its customers, suppliers, and stakeholders” (O’Brien & Marakas, 2013, p. #). The companies incorporates E-Business to a higher degree over other car companies by the practice of E-commerce, “using the Internet to sell products” (O’Brien & Marakas, 2013). A customer orders a vehicle via the Internet, and similar to an Amazon package, then the vehicle is delivered to the customer address. Tesla is the first car company to not only utilize the Internet, but embrace the usage of advertising and selling directly via the Web. The company can take advantage of the online presence to push other products, such as modifications, backgrounds, games, and streaming platforms for the gigantic dashboard screen. The car has to charge for a couple of hours on longer trips, about every 300 miles. Having the ability to stream or play games on the dashboard while the car is charging could be a lucrative business.

Threats:

(1) Subject to a Potential Hack. The company is essentially an online network that connects every aspect of their business, leaving the possibility of a hacker breaking into the network. The company is not an open source software that, “grants a license that allows developers free access to the source code in order to modify” (O’Brien & Marakas, 2013, p. #), but is a closed source software. This allows Tesla security that cannot be obtained with an open source platform that is more vulnerable to hackers. This does eliminate the possibility of a security breach, but simply reduces the risk. The company must maintain the highest degree of security protocols to ensure a bug is not implanted into the system. A bug could be detrimental since every system is connected through a main network.

(2) Companies/Countries not Practicing Copyright Infringements Laws. Copyright laws are part of American Law, but not every country participates with the same mindset. Countries, such as China, do not have copyright laws and have the capital to replicate the exact software, system, or computer. Tesla has been involved with setting up and operating a manufacturing plant in China, but that does not mean the country or a company within the countries border will not take advantage of the technology established and implemented by Tesla.

Conclusion/Recommendations:

Tesla is a virtual company, “uses information technology to link people organizations” (O’Brien & Marakas, 2013, p. #). The ability for Tesla to use the Internet and information has given the company a competitive advantage in many aspects, including vehicles computer software, battery power, and selling vehicles online. The company will need to continue improving the ability of their network and be careful not to let company’s trade secrets on technology be disclosed or stolen by outside entities.

The first recommendation is for the company to put additional capital into the research and development of AI driven vehicles. Technology is continually advancing at unprecedented rates and Moore’s Law is a prime example. Moore’s Law, “the number of transistors on a chip more broadly interpreted the power or speed of a computer will double every 18-24 months” (O’Brien & Marakas, 2013, p. #). This law has had the time halved to 12 months (O’Brien & Marakas, 2013). This example shows technology will continue to accelerate as more people invest into it and new discoveries are exposed. It would behoove Tesla to do everything in their power to be the first one to the finish line, i.e. put more additional income into research and development.

The second recommendation is to collaborate with other car companies to place the necessary infrastructure required for electric vehicles. The project requires capital and investment that will be extremely hard for a singular company to take on, but if multiple billion dollar companies tackle the problem, the feasibility of success is improved. This will help Tesla move towards the company’s vision of sustainability and if they are the first to suggest the idea of working together, it could increase brand equity.

Managing and Leading Organizations BUSB 330

The following section will outline the indispensable factors involved in managing and leadership within Tesla utilizing a SWOT analysis. The section will begin with a vital function that all managers and leaders must have in an organization, communication, and end with a conclusion of the main factors recognized for future stability and transformation.

Strengths

· Adaptation to a Changing Market

Weaknesses

· Inconsistent Messages to Stakeholders

Opportunities

· Introducing Stable Executive Positions

Threats

· Rising Conflict Potential

The key to managing and leading organizations, and arguably the essential function of an organization that ensures a company can meet deadlines and mitigate errors, is communication. Communication “provides the information individuals and groups need to make decisions by transmitting the data needed to identify and evaluate choices” (Judge & Robbins, 2017, p. 346). Communication starts with the sender, the person “in charge of the original message and initiates a message by encoding a thought” (Judge & Robbins, 2017, p. 346). The sender incorporates encoding “the language and use of words to communicate a certain message” (Judge & Robbins, 2017, p. 346). The message is “the actual physical product of the sender’s encoding, the literal words in speech or the literal words in writing” (Judge & Robbins, 2017, p. 346). The individual in charge of the message chooses a channel of speech, the “medium through which the message travels, where the message could be in the form of writing, speaking, body movements etc.” (Judge & Robbins, 2017, p. 346). The people who see, read, or hear the message use decoding, “translating the symbols into an understandable form, taking what we heard, read, or saw and interpreting” (Judge & Robbins, 2017, p. 346). The person(s) the message designed for is the receiver (Judge & Robbins, 2017). When choosing the channel and message, the sender must be aware of noise, “communication barriers that distort the clarity of the message” (Judge & Robbins, 2017, p. 346). The last part of communication is feedback, “the check on how successful we have been in transferring our messages as originally intended” (Judge & Robbins, 2017, p. 346). Determining the success can be done in two distinct ways; viewing the actions of the receiver(s) or having the receiver(s) respond with a statement that displays understanding. Strengths:

Adaption to a Changing Market. The consumer market is changing dramatically with the customs and values consumers now hold. Values are the “basic convictions about what is right, good, or desirable” (Celano, 2019, slide 18). The prior generations had less concern about the well-being of future generations or did not understand the impacts of carbon-based fuels as we do now. As the years went by, Tesla started a new idea of what can fuel a vehicle. The transformation of the car industry from gas-powered to electric-vehicle (EV) has changed the way the industry researches, develops and markets vehicles to consumers. The evidence of changing values is supported in the Marketing section of the paper, outlining the different generational cohorts’ wants, needs, and values. The organizational leadership has instilled into the company the importance of moving to sustainable energy and not relying on carbon releasing fuels.

Tesla has continually upheld the values by incorporating a person-organization fit. The person-organization fit has three principles, “people high on extraversion fit well with aggressive and team-oriented cultures” (Celano, 2019, slide 23). Secondly, “People high on agreeableness match up better with a supportive organizational climate than one focused on aggressiveness” (Celano, 2019, slide 23). Lastly, “people high on openness to experience fit better in organizations that emphasize innovation rather than standardization” (Celano, 2019, slide 23). Tesla hiring process involves finding innovative engineers who enjoy methods that are not standardized. The reasoning being, innovation has led Tesla to be a significant competitor in the car market and has led to the expansion into the solar panel and battery technology fields. Weaknesses:

Inconsistent Messages to Stakeholders. The top management has contributed to the confusion around company messages and what they are attempting to portray. For example, in early February, Elon Musk tweeted, “Tesla made 0 cars in 2011, but will make around 500k in 2019” (Musk, 2019). Elon later in the day tweeted, “Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k” (Musk, 2019). The two messages created cognitive dissonance, “incompatibility an individual might perceive between two or more attitudes or between behavior and attitudes” (Celano, 2019, slide 5). Attitudes are the “evaluative statements—either favorable or unfavorable—about objects, people, or events” (Celano, 2019, slide 3). Attitudes, broken down, reflect how a person feels about a given situation. The Securities and Exchange Commission (SEC) decided Elon’s statement falsely influenced investors and stockholders’ attitudes by creating cognitive dissonance. The SEC determined this messaging needed to be regulated and forced Elon to have his tweets about Tesla monitored and reviewed before they could be posted.

Opportunities:

Introducing Stable Executive Leader. Leadership is “the ability to influence a group toward the achievement of a vision or set of goals” (Celano, 2019, slide 4). An organization’s leadership is responsible for significant aspects of business, like stories, rituals, material symbols, and language. Opportunities to create cultural customs enable the company to withstand the hard times and bounce back from potential hazards, such as a market crash. Stories can “anchor the present in the past and legitimating current practices” (Judge & Robbins, 2017, p. 541). An example is hearing the story of how the Tesla started and the idea of becoming 100% sustainable. Rituals “repetitive sequences of activities that express and reinforce the key values of the organization—what goals are most important, and/or which people are important versus which are expendable. (Judge & Robbins, 2017, p. 541).

Material symbols “convey to employees who is important, the degree of egalitarianism top management desires, and the kinds of behavior that are appropriate” (Judge & Robbins, 2017, p. 542) Material symbols include the look of Tesla vehicles and the type of people that work for the company. Positive material symbols depend on individual perspectives, but hiring people that exemplify the value and ideas of Tesla will ensure the customs continue. Language is “unique terms to describe equipment, officers, key individuals, suppliers, customers, or products that relate to the business. (Judge & Robbins, 2017, p. 543) Examples of specific cultural language include jargon, acronyms, and how people speak to each other. Leaders are responsible for stories, rituals, material symbols, and language that will bond the entire company. stories, rituals, material symbols, and language that will bond the entire company like a glue.

Threats:

Rising Conflict Potential. Conflict is a “process that begins when one party perceives that another party has negatively affected, or is about to affect negatively, something that the first party cares about (Celano, 2019, slide 13). Now conflict can be positive, such as “functional conflict, or conflict that supports the goals of the group and improves its performance” (Judge & Robbins, 2017, p. 459). For example, employees arguing about an upcoming project and deciding the best way to execute the project. This conflict is positive, as long as the argument is open, and people are putting forth good points of view, and the conflict at hand is managed correctly. Conflict can become bitter if not handled correctly, and if the managers/leaders are unable to maintain an orderly department that breeds positive conflict and trust.

Conclusion/Recommendations:
The Lewin’s Three-Step Model, unfreezing the status quo, a movement to the desired state, refreezing to ensure changes become permanent (Judge & Robbins, 2017), outlines an effective strategy to implement recommendations. The recommendation is to hire executive leadership that contributes to the values of the company and ensures that ethical behavior will always be used. The process begins with unfreezing the status quo, the state at which the organization is currently at, or the equilibrium state (Judge & Robbins, 2017). Unfreezing makes sense to get people away from the normality of current leadership. To ensure growth, the company should find a socialized charismatic leader, leadership that conveys other-centered values by leaders who model ethical conduct (Celano, 2019, slide 33).

The search begins with movement to the desired end state, the new direction the company starts to go, by implementing a new idea or a new way of doing things (Judge & Robbins, 2017). The movement helps push people during a cultural shift, and finally, when they reach the cultural norm a company agrees with, the new culture needs to be reinforced to freeze the new norm. The leaders who embody socialized charismatic leader qualities, a combination of ethics and charisma, will start the refreezing stage. Refreezing, “without this last step, the change will likely be short-lived, and employees will attempt to revert to the previous equilibrium state” (Judge & Robbins, 2017, p. 612). Fundamentally refreezing new changes make it permanent. Once the company accomplishes the implementation of new leadership, the company reinforces this new equilibrium.

The next section will conclude the major findings of the strategic audit discovered by the SWOT analysis.

Conclusion

Not sure if this section is necessary, but I was basically going to pick three out of the five classes and discuss the three most important things I uncovered.

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