Tesla Motors De Wit was founded in 2003. The Tesla Company has expanded, becoming worth more than $50 billion (Abratt, 2016). Tesla Company's success is based on the global market as well as a strong brand and the technology that has advanced. Tesla has expanded over the years with expensive, fully electric sports cars. Production of the various models by Tesla has been maintained, and it hopes to move into the market lower end while expanding its market share. It began as an electric car company and extended to the battery storage and solar panels. Tesla has a vision that is based on accelerating the advent of sustainable transport while ensuring an effective, compelling mass market. The company is, therefore, investing heavily in changing the world network by supporting the brand of electric vehicles while developing battery technology. Tesla follows the strategy for the high market and works towards ending the market (Investors Overview, 2016). The approach of the Tesla Motors De Wit is based on building more affordable cars. Although it started as a new company with little experience in the motor industry, it has had mass production. The strategy of mitigating the high cost targeted the wealthy adopters, with the customer likely to adopt the expensive vehicles maintained. It plays a role in ensuring its customers leave a positive review by delivering the promise while minimizing the apparent drawbacks. In the study, external, as well as internal environments within which Tesla Motors operate are analysed while looking at the crises, face by the company to produce the strategic analysis of the company for the future suggestions.
From the way Tesla Motors has become popular across the globe, it has acquired a strong position within the industry. Therefore, its external environment within which it operates is identified along with the practical business strategy that helps the organization move forward. Thus, five competitive forces that shape the company are analysed to determine the degree of competitiveness while forming the company develop in its strategies. The five-force model for the motors with analysis relevant to Tesla Motors is summarised in figure 1, as shown below.
The threat of entry with the entry barriers in Tesla Motors has contributed to a low level of investment with the consumers demanding the products at a lower price. As a result, it becomes difficult for new companies entering the market to compete favourably from the price point of view. However, it allows the small and new entrants to offer unique designs that can enable them to access the market. The barriers to entry force show that the fixed cost business that is high entails the economies of scale for sustainable profit. Although Tesla Motors is a famous company, it involves advertisements and store promotions. It also provides brand equity that is valuable to consumers.
Substitutes have increased with several companies choosing products for other industries. Substitution in the motor industry has become extremely high, with the individual consumers choosing alternative providers for cheap motors. As a result, it leads in mass-market competition with reduced price issues that give offers to different types of products. Also, the low buyer switching cost substitutes the customers making them walk into the nearby stores rather than Tesla Motors (Abratt, 2016). Although Tesla Motors has gained substantial customer loyalty, making it a competitive store, copying its styles have become prevalent in this industry, thus, attracting customers who have to mind about the quality products.
The buyer power force has been revealed through the motor industries with regular consumers not willing to acquire the low-quality products. Consumers have a lot of choices when it comes to motor products. Tesla Motors has been positioned as a low-end product, especially in Europe and America. Also, the supplier power is a force with the contract on motor production functions making the products available. Rivalry with the industry is a high barrier resulting in excess inventory with a lot of cash for sufficient motor inventory. The suppliers' power within the motor industry has decreased with various organizations outsourcing the products to the developing countries to keep the costs low. Tesla Motors has the opportunity when it comes to changing the suppliers, which offers it opportunities to reduce the cost.
From the five forces discussed, it is evident that competition in Tesla Motors has increased. The competitive rivalry suggests the need for Tesla Motors to establish itself with a competitive advantage based on consumer preferences while keeping in mind that costs are critical in the market.
Opportunities and Threats of Tesla Motors
The opportunities and threats of Tesla Motors are summarised in Table 1.
- Building the distribution centres in the developing countries
- Recognition of the company globally
- The environmental issues
- Rise of new designers
- Law on the sweatshops
- Imitation of the products
- Dilution of the brand
Opportunities of Tesla Motors
The opportunity for Tesla Motors to build the distribution centres in the developing countries can cut down the distributing costs for the products. Although challenges of infrastructure are common in developing countries, the opportunity favours Tesla Motors Industry's efficient supply across the globe.
Recognition of the Tesla Motors Company across the globe is an opportunity for its expansion. Its excellent reputation is a winning point for the company to expand based on its image in the eyes of the consumers. The environmental issues give Tesla Motors Company an excellent reputation as it is an eco-friendly company. Since the consumers are concerned about the eco-friendly issues, Tesla Motors are preferred.
The new designer rising is another opportunity for Tesla Motors to look for better manufacturers based on best motors while changing the product within two weeks. It is an excellent opportunity for Tesla Motors as it allows it incorporates the new manufactures in its industry.
Threats of Tesla Motors
Competition in the market is one of the biggest threats to Tesla Motor Company with new and affordable products offered by different stores. The competition harms the Tesla Motor Company consumer's loyalty. However, by making various advertisement investments, Tesla Motors can maintain remarkable growth across the globe.
The laws related to sweatshops are a threat to Tesla Motors, although they were not made public. Tesla Motors committed to ensuring the practices in the industry are stopped with high product production.
Imitating the products by Tesla Motors risks the close of consumers. Tesla Motors has, therefore, targeted the middle upper-class individuals who have no much concern. Also, its popularity can maintain its loyal customers.
Dilution of the brand decreases the value of the product in the eyes of consumers. As a result, it a threat to Tesla Motors and requires strategies to increase brand equity.
A resource-based view analysis framework is essential in determining the competitive advantage while identifying the most valued skills as well as competencies that help in formulating the effective strategy to sustain the competitive advantage. In this analysis, the focus is on the internal factors that Tesla Motors rely on for its success. The resource-based view analysis entails the physical resources, human resources as well as the organization resources which Tesla Motors have to ensure they are valuable by making them rare, hard to imitate, and not substituted easily.
The physical locations for Tesla Motors entail the prime location. Most of the Tesla Motor stores are in the prime location of the city. Active choosing of the prime location by the Tesla Motors benefits the company as the amount of store visitors results in more sales. Despite several commercial advertisements for Tesla Motors, it has attractive window displays, which is an effective marketing strategy that attracts the consumers while creating consumers' impressive shopping experience (Cheong, Song, & Hu, 2016). Exclusive motor production is useful for the Tesla motors with a variety of products suitable for the customers.
The human resources for Tesla Motors entail effective leadership. The award-winning CEO is the most significant resource based on his vision, skills as well as networking capabilities that allow Tesla to become a global leader in the Electric vehicle industry. Tesla has industry veterans that ensure the mass production of various Tesla models. The experts and industry experience provide an effective competitive advantage in the industry. Leadership networking skills help Tesla motors to become an effective network of the stakeholders while involving Tesla Energy as well as Tesla Solar that is an essential technical resource to the company (Cheong et al., 2016). Also, caring about the employees enhances active customer service in Tesla Motors. It is, therefore, necessary to train the employees in Tesla motors to provide quality services based on attitude, professionalism as well as hard work, and a sense of belonging to the Tesla motors.
The Tesla organizational resources include the market-oriented strategy, staff education, as well as the eco-friendly environment, production strategy, and value chain. Tesla has a highly competitive profile hence need to emphasize on the customer needs. Concentrating on the demands of the customer is maintained by Tesla's operation strategy and the commitment towards the customers (Mangram, 2017). Also, educating the staff allows them to give priority to customer services. Consequently, the eco-friendly has become a concern for most industries. Therefore, Tesla has to pay attention to eco-friendly issues to ensure positive responses from the customers. Tesla's production strategy is based on design and engineering excellence. The Tesla models have architecture excellence, which makes it excel in the hardware and software capability. The state of manufacturing in Tesla embraces complete in-house integration with architectural innovation. The effective production is due to the core competencies in the computer-aided design and the stimulation that reduces the development time. Tesla's value chain varies in terms of competition. It makes the Tesla motors produce new models in two years.
Strengths and Weaknesses of Tesla Motors
Tesla Motors' strengths and weaknesses are summarised in table 2, as shown below.
- Worldwide presence
- Strategic location
- An effective strategy for distribution
- Positive brand image
- Positive store image
- Fast-changing models
- High prices
- Limited stock
Strengths of Tesla Motors
Tesla's worldwide presence is revealed through its 14,000 chargers throughout the world. Tesla has 438 Tesla Motor Stores across the globe, with over 100 centres (Hardman, Shiu, & Steinberger-Wilckens, 2015). Its rollout has been steady despite cutting the price of Tesla cars by 26% to spark sales in the region.
The strategic location of the Tesla motors have been chosen carefully to ensure valid product promotion (Stringham, Miller, & Clark, 2015). Tesla motors have a unique approach in locating its stores for customer convenience.
Tesla's distribution strategy...
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