Opportunities and Challenges in Electrical Vehicle Industry According to Porter's Five Forces

Introduction

Tesla manages its profitability levels through strategic measures that help the company address its problems making it competitive as outlined in Porter's Five Forces analysis. Under the competitive rivalry, the few firms that exist in the electric vehicle industry suppresses the ability of these firms to compete. However, these companies are aggressive, and the low stitching costs strengthen their force of competition.

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The substitutes for Tesla products are few, and therefore its customers have limited bargaining power. The volume of purchase is low. Hence it reduces the influence that Tesla has on its customers. The degree of forwarding integration for the suppliers of Tesla is minimal. Thus, the forces imposed by this factor is minimal. For the case of threat of substitution, the low stitching costs create room for substitutes, like public transportation, which attract customers. Tesla is already an established firm, and therefore it enjoys the economy of scale. Thus, the threat of new entrants cannot meet the required threshold to enjoy the same privilege, and this is an excellent opportunity for the firm.

Strengths, Weaknesses, and Competitive Advantage

Tesla is aggressive in promoting its innovated products. It has an aggressive marketing campaign and its marketing mix meets its dynamic state, thereby strengthening the effects of its competitors against its operations. Its innovativeness is a strength, which empowers Tesla to come up with products that are competitive and profitable. The company has a strong brand, which new entrants cannot match. A strong brand like Tecla's maximizes the ability of the company to attract new customers and retain them.

The market presence for Tesla is limited. For instance, the company gets most of its revenue from the U.S, and in developing countries like China, it has a small presence.

Tesla is one of the biggest players in the industry of electric vehicle ("Case 29: Tesla motors 2015," 2015). Therefore, it should address its external factors effectively to enable its resilience and long-term competence in the competitive rivalry that involves other automakers. It accounts for the characteristics and nature of these competitions in both international and domestic markets.

The position of Tesla Model S in the Market

Tesla Model S is unique. It presents itself as having been manufactured from a high-end dealer and manufacturer of a sports car, which is electric. The model has a pricey release and has established its reputation in the automotive market space as a renowned electric automobile. The existence of Model S has helped it to get the goal and position of a mass market segment.

The transition from High-end Car to Mass-market Car

It was sensible for Tesla to get into the market with a car that was high end and later transit into a mass-market vehicle. With its innovativeness state, Tesla has a wide range of options to choose from. It has to be diverse to suit the needs of its established clientele. Every customer has their own needs according to their expectation. Besides, Tesla has a well-articulated strategy to sell its products. It does not spend any money on advertisement, or hire advertising agencies and run ads (Hill, 2013). It has an in-house marketing team, who run its website and use the stores for its advertising strategies. The company is confident of making good annual sales even without the advertisement costs. Therefore, it believes that no matter the kind of vehicle that it produces, it will still have a good sale anyway.

References

"Case 29: Tesla motors 2015." (2015).

Hill, C., & Jones, G. R. (2013). Strategic Leadership: Managing the strategy-making process for competitive advantage. Strategic Management Theory (Chapter 1).