Essay Example on Tesla's Electric Cars: VRIO Framework for Competitive Advantage

Introduction

VRIO framework is a mnemonic for valuable, rare, imitable, and nonsubstitutable used for testing the competitive advantage and the core competencies of a company. The following are the core competencies that give the company an excellent competitive advantage:

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• Car model such as Model 3 and the S series model. The model is valuable, rare, costly to imitate but substitutable. Competitors have also started embarking in the manufacture of electric cars making the competition stiff (Chatterjee and Terez).
• Battery pack. The company manufactures large volume batteries with high quality at low cost (Tesla, Inc.). Tesla has invested in battery packs that are valuable, costly to imitate, and easily exploitable. The battery pack gives the company a sustained competitive advantage over its rivals.
• The supercharger network. Tesla Motors has a supercharger network that is valuable, rare, costly to imitate, and nonsubstitutable. It, therefore, gives the company a competitive advantage over its competitors.
• Gigafactor. Tesla has set up several Gigafactories from where workers work together with suppliers to integrate production materials in one location (Chatterjee, and Terez). The Giga factory is valuable, rare, non-imitable, and partially non-substitutable. Hence, it gives the company potential for sustained competitive advantage.
• Elon Musk. Musk is the company's CEO who has steered the company to greater heights of success. He is valuable to the company, rare, non-inimitable, and nonsubstitutable. Musk gives the company a sustained competitive advantage.

From the above analysis, Tesla Motors has resources and capabilities that provide sustainable competitive advantage over its competitors in the industry. As a result, the company has become a disruptive force in the industry. Such core competencies are sustainable and will ensure the company remain competitive over several years to come.

Leadership and Management - experience, depth, diversity. Board governance.

Tesla Company prides in its excellent leadership of Elon Musk, who has over the years come up with ideas and inventions that have placed the company at the apex of innovation in manufacture of electric cars (Tesla, Inc.). Elon Musk has many years of experience having founded PayPal and SpaceX. The board of governance has set up guidelines to be fulfilled by the directors. Hence, the directors act in compliance to the guidelines, regulations and applicable laws governing the company. The board of directors sets the standards and corporate culture that employees are top follow in ensuring success of the company and alignment towards one direction. They oversee the management of the company and over the years, they have maintained proper functioning of the company.

HR Strengths and Weaknesses

The company's HR provides customers with after-sales services for products without the warranty. Through the after-sales services, customers feel valued. However, the HR has not been able to establish a strong market base and presence. The market is concentrated in America but limited in other regions such as China. The greatest hindrance to market expansion is the limited supply chain which the HR have failed to manage and establish suitable supply chain for the company's products.

Supply and Value Chains

The electric cars produced by Tesla comes with high cost due to associated high cost of manufacture using the supply chain. The company's supply chain consist of no tangible dealerships but a direct distribution system. Tesla distributes the products to its customers where they are without using a third party or intermediary. Besides, the Gigafactory also eliminates the need for intermediaries since it gathers the resources and raw materials together in a single location from which manufacturing takes place (Tesla, Inc.). Through the Gigafactory, the lithium-ion batteries are assembled for use. Using the research and development, the company has created an autopilot technology, which has become an intangible human asset to the company.

Works Cited

Chatterjee, Sayan, and Dennis Terez. "Tesla: Testing A Business Model At Its (R) Evolutionary Best." Ivey Publishing, 2018, https://store.hbr.org/product/tesla-testing-a-business-model-at-its-r-evolutionary-best/W18126. Accessed 16 Feb 2020.

Tesla, Inc. FORM 10-K Annual Report. United States Securities and Exchange Commission, Washington, D.C, 2018, http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_TSLA_2018.pdf. Accessed 16 Feb 2020.

Tesla, Inc. "Corporate Governance | Tesla, Inc.". Tesla, Inc., 2020, https://ir.tesla.com/corporate-governance/highlights.