Technological Innovations in Manufacturing - Free Essay Example

Introduction

There are instance many instances whereby companies develop products which can only become affordable to only a few groups of people. However, with the dawn of technological innovations, firms are now able to revolutionize manufacturing industries to produce accessible and affordable products to almost every individual in society. The disruptive strategy also focuses on the ignored customers by offering products that fit them. The action usually causes a market disruption to the seasoned companies that used to dominate the market.

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An example of companies that have revolutionized the electric car market is Tesla – which is making efforts to manufacture cars that the ignored premium customers are willing to spend a lot of money on them. This paper focuses on the vehicle manufacturing industry using Tesla as a tool of disruptive strategy – whereby the Company concentrates on manufacturing cars that fit the premium customers at the high end of the market. Consequently, Tesla will move down the chain to provide low-priced vehicles that will compete with BMW, Mercedes, and General Motors.

Tesla Company

Tesla is an electric car manufacturing company founded in 2003 by some engineers who wanted to prove the superiority of electric vehicles – currently run by Elon Musk, who is the Chief Executive Officer. The founders of the Company include Martin Eberhard and Marc Tarpenning. These engineers’ motive was to prove that electric vehicles have better performance than gasoline-powered cars. Tesla’s mission is to speed up the world’s transition to sustainable energy (Tesla, 2020). The Company started its operations in Palo Alto, California, in the United States. According to Wagner, recent data from the leading global repository of business data, Statista shows that Tesla was employing 48, 817 people by the year 2018 with a net worth of $42 billion (2020).

In light of the discussion of Climate Change mitigation measures, Tesla will stand out as the best clean energy electric vehicle that targets the people who are willing to pay premium prices. The disruptive strategy of Tesla lies in its electric vehicles’ capability to exemplify high performance while relying on clean energy. One of the Tesla flagship vehicles is the Model S, a full-size sedan that performs and handles like a sports car.

A Characterization of the Situation and Theories

The Chief Executive Officer of Tesla Company, Mr. Elon Musk, stipulated their plans of disrupting the use of the electric vehicle by manufacturing luxurious cars. In the past few years, Tesla is making tremendous steps in ensuring it becomes the leader in the manufacture of an all-electric vehicle with zero-emission rates. The Company prides in its best energy storage battery technology that gives their cars high performance. An excellent example of Tesla’s vehicle that speaks of high road performance is the Model S. The other dominant features in their cars include safety, luxury, and long drives hours before recharging hence enabling an efficient driving experience. The Model X is one of Tesla’s vehicles that comes out as the safest SUV in the world. In a way, Tesla’s cars are better than Global Electric Motorcars because of the fast driving experience and running for long hours before recharging.

Tesla targets the high-end market by manufacturing cars that people are willing to pay premium prices to own. These are the underserved group of customers since they had only access to fossil fuel vehicles that meet their needs. Thus, the high class of people who are climate change conscious will find Tesla’s Model more convenient for them. Consequently, high-end vehicles like Mercedes and BMW will have an alternative to buying emission-free cars.

Therefore, the incumbent manufacturer of luxurious vehicles that are fossil-fuel-powered will face stiff competition from the electric models. After that, Tesla plans on disrupting by moving down the chain by manufacturing cars that cater to the masses. An excellent example of the vehicle that they are making is the Model 3, which is currently recording the highest pre-orders ever recorded in the car manufacturing industry. Tesla has a charging system that is only compatible with their cars distributed all over the world. Therefore, it is likely that Tesla will be a dominant force in the global manufacture of electric vehicles.

Another significant advantage of Tesla’s cars is that they are all electric-powered cars. However, other companies like General Motors, BMW, and Mercedes Benz manufacture electric vehicles with a small fuel engine known as semi-autonomous. Therefore, Tesla gets a head start advantage since all of their cars are autonomous. Thus, Tesla has an excellent opportunity for intensifying the manufacture of all-electric vehicles that will likely dominate the market for a very long time before they get worthy challengers. Another crucial advantage that Tesla boosts is the extensive advertising campaigns that make them appear as if they are the only manufacturer of electric vehicles.

Another disruptive strategy that no one seems to notice is the entry of Tesla into the production of a clean energy Powerpack that is environmentally friendly. The move is set to position Tesla as a leader in the provision of clean energy for electric vehicles, home appliances, and business use. Companies known for producing products like generators that rely on fuel will end up finding themselves with no customers since most people are becoming Climate Change conscious. Furthermore, global warming, which exacerbates phenomena such as heatwaves, will force governments to develop policies that will ban the use of fossil fuel products. Consequently, Tesla will already in a position to control the production of clean and efficient energy.

Recommendations for a Future Course of Action

Tesla should probably concentrate their energies on wooing the low-end market as a means of disrupting since this is where the most significant population lies. Tesla must now be creating superior electric vehicles with better energy efficiency and storage. However, it is imperative for Tesla to quickly move down the low-end market segment before it gets dominated by incumbent competitors such as Mercedes, General Motors, and BMW. Although most people keep on ignoring Tesla as a non-disruptor – the master plans speak otherwise.

Tesla’s plan to use resources earned from the sale of premium vehicles will see them quickly scale down the large scale manufacture of low price electric vehicles. Therefore, if Tesla continues its push to move down the scale of electric cars, it is likely that they are going to be one of the dominant force in the production of electric vehicles. Additionally, if Tesla keeps its word of manufacturing cheaper electric cars, there will be a massive disruption of the fuel-powered vehicles’ market. Some of the mid-range sedans like the BMW 3-Series will lose a good number of their customers to Tesla.

All the current electric vehicles rely on the charging system form them to store power in their lithium batteries. However, Tesla plans to build solar roofs for their cars with an integrated compartment for battery storage. The technological innovation will make it easy for customers to generate and manage the production of renewable energy. Another breathtaking energy solution is Powerwall and Powerpack’s creation, which gives their customers the flexibility of management of energy. These technologies will also change the way we live our lives in our homes and workplaces. Perhaps Tesla should consider setting up Powerpacks in places like Africa since their supply of solar energy is uninterrupted. Furthermore, Tesla Company can focus on producing electric vehicles for use in public transportation, developing Continents such as South America, Asia, and Africa.

However, some of the implementation strategies of Tesla might not work out well in the end. For instance, Tesla plans to manufacture the energy solution for their vehicles to be entirely in-house. In-house manufacture of lithium batteries for Tesla vehicles might overwhelm the Company hence reducing its efficiency. Ultimately, Tesla’s cars will still become expensive because of the high cost of production. I would suggest that Tesla adopts Toyota’s Model of hosting the suppliers of their spare parts within their premises. Another strategy would be to start a subsidiary Tesla Company that would specialize in creating Tesla’s battery while supplying the same products to the competitors. The superiority of Tesla’s batteries suggests the Company’s future lies in the production of cells rather than cars (Dans, 2019).

Furthermore, Tesla’s Model does not entirely fit the traditional disruptive strategy, whereby the focus is on the low-end market. Therefore, it will prove challenging to penetrate the low price market that is already dominated by other players like General Motors, Mercedes Benz, and BMW. Thus, Tesla needs to review the pricing of their low market vehicle, which will enable them to compete favorably. I would also recommend exploring technologies such as machine learning and artificial intelligence when manufacturing Tesla’s electric vehicle. Since a significant percentage of the customer base, especially the younger generations, prefers cars with high technological innovations like driverless cars. Lastly, Tesla ought to consider manufacturing affordable luxury vehicles for daily use, such as driving to work - since the action will give the Company access to a broader market.

Since Tesla’s mode of operation resonates with futuristic technology - I can predict technologies such as facial and biometric scanners being a norm on their electric cars. Furthermore, I can also predict a scenario in which Tesla cars can take vital signs of a person’s health and recommend appropriate actions like visiting a hospital immediately. However, it is also crucial for Tesla to avoid making rush investments into the prototype business since the huge investment can easily cause the Company to collapse. The main goals ought to entirely focus on the current projects that are underway since most of them have groundbreaking technological innovation.

Conclusion

In conclusion, a disruptive strategy enables players in the manufacturing industry to focus on low-end customers that one can consider them under-served. The main driving force for the disruptive approach is advancements in technological innovations, giving the entrant an upper hand over the incumbent. The Tesla Car manufacturing company entered the market intending to manufacture high-performance vehicles that focus on the high-end market willing to pay premium prices. The strategy of the Company is to use the profit from the premium vehicles to make low price products that will serve every individual.

It suffices to say that the Company has managed to attract a good number of customers for their low-price vehicle Model 3. However, the price of Tesla’s low price vehicle is still high as compared to its competitors. Therefore, there is a need to make vehicles that meet the majority’s budget to establish market dominance. All in all, incumbent companies must be on the lookout for startup companies that might end up disrupting the typical market trends. Such companies will enable incumbent companies to diversify and implement new technologies that will address the underserved customers.

References

Tesla. (2020). Jobs at Tesla. Tesla. https://www.tesla.com/careersWagner, I. (2020). Number of Tesla employees 2018. Statista. https://www.statista.com/statistics/314768/number-of-tesla-employees/#:~:text=The number of people employed, at the end of 2018