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INTRODUCTION
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This study will discuss the case study about Tesla incorporation and a brief overview of the strategies that are used by the organization to develop business at a global level and maintain performance in the competitive market. Tesla Motors is considered one of the most important companies in the global automotive market. Tesco Incorporation was founded in the year 2003 and headquarter of the company is in Palo Alto, California, United States. This report will provide brief information about Tesla Incorporation and its business and product launch strategy in the global market. The strategic situation of the organization will be studied in the report as per the case study. Different aspects that are related to the case study and organization will be analysed in the report. A range of information will be used in the report to analyse the case of Tesla Incorporation (Baffour-Awuah, 2020). Brief information related to the organization will be discussed in a report to get a better overview of the business strategy of the company. Different assessment tools will be used in the report to assess the current business strategy of the company in the target market. In the study, the Porter Five Forces model will be used to analyse the competitive position of the company in the target market. Ansoff Matrix will be implemented in the study to analyse the best strategy to increase sales and profitability of the organization in the target market. Various theories will be analysed in the report to improvise the business strategy of the company. Critical reflection of the study will be provided in the report to improve knowledge by assessing own experience related to the case study.
PART 1
Case Study Application
This case study is about tesla Inc. which is working on their project of All-electric car Roadster with a difference. The main motive of an organization is to provide a sustainable product to the customers where they do not have to compromise with speed, performance, and comfort. According to Tesla Inc., the Roadster car has a torque of 686 lbs immediately and it can reach 0 to 60 mph within 3.2 seconds with noise negligibility. Among other organization. Tesla Inc. is a very young company that is giving tough competition to other old and well-established organizations. According to the business plan of the company, Roadster is described as a disruptive technology. It is a high-end sports car with a lower price and emission than competitors (Thomas and Maine, 2019). According to the case study, it is the initial plan of the organization to enter the high-end market where the customer is willing to pay for premium. The major strategy of Tesla Inc. is to target people with high social and economic standing in the market. As per the business model of Tesla Inc., if someone buys a premium Roadster car then one part of income is returned to the research and development department to develop cost-efficient family cars.
Product Information
According to Tesla Inc. and information provided in the case study, Tesla Roadster is a supercar or a sports car that can reach a top speed of 0 miles per hour to 60 miles per hour in 3.2 seconds (IMPACT REPORT, 2018). The main purpose of the organization is to provide a supercar to the customer with premium features (Hettich and Müller-Stewens, 2017). In the perception of customers, electrical cars are like golf cars but Tesla Inc. is trying to provide the high-speed car to the customers with top-level comfort. The roadster that is developed by Tesla Inc. is all electrical based car and this car is developed by a company to meet the expectations of the premium customers.
Information about Company
Tesla Inc. was established by a group of three Silicon Valley engineers in the year 2003. It is an American electrical vehicle and cleans Energy Company that is located in Palo Alto, California in the United States of America. There are different products are produced by the organization (GS and LS, 2020). Most of the products that are manufactured by the company are based on clean energy. Tesla Inc. is currently famous for its energetic and charismatic leader, Elon Musk. This is how Tesla Inc. is currently the most trending company in the automotive sector in the global market.
Porter Five Force Model
Porter Five forces model is considered the most effective tool that is used by the business organization to analyse the competitive situation in the market place. This model is considered the most effective tool that can be used by the organization to make effective changes in the business strategy and marketing strategy to increase the profitability of the organization in the global market. In this tool, different forces are analysed for the business approach of the company in the target market that is consists of different competitors that are in the same industrial sector (Salman, 2019). This model can be used to develop an effective business strategy based on the information that is collected in the porter five forces model. In Porter Five Force, model five different forces that are present in a competitive market are studied by the organization in the study. Forces that are considered in the Porter Five Forces model are- Competitive Rivalry or Competition in Market, Bargaining Power of Buyer or Customer, Bargaining Power of Supplier, Threat of Substitutes or Substitution, and Threat of New Entrant or New Entry. These are major five forces are considered by the organization in competitive analysis to design an effective business strategy for the company (Gilson and Abbott, 2017). All these forces must be considered by the organization to identify various factors related to their business operations in the target market. This assessment also helps the organization to perform impact analysis of these forces on the business strategy of the company.
Competitive Rivalry or Competition in Market
Competitive rivalry is one of the most strong forces in the market place. This is most important for the organization to analyse the impact of this factor on the business operations and business strategy of the company. The market place in which Tesla Incorporation is currently working is consists of forces like - The small number of manufacturing plant or weak force, the High Aggressiveness of firms and the low switching cost (Lugtu Jr, 2019). These are major rivalry forces that can affect the business operations of the organization. There are limited competitors in the electrical automotive market and it is a positive factor for the organization. The business approach that is used by Tesla Inc. is based on innovation and promoting their products in the target market. The marketing mix that is used by the organization is based on the aggressive approach that is allowing the company to penetrate effectively in the market place. Switching cost is also low in the case of Tesla Inc. This is how the position of Tesla Inc. is strong among other competitors in the market.
Bargaining Power of Buyer or Customer
This is the most important force that can influence the direct revenue of the organization. There are some external factors must be considered by the organization to maintain bargaining power of customer moderate. These factors are- low switching cost, moderate substitute availability, and low volume of purchase (Chen and Perez, 2018). These are major factors that are limiting the bargaining power of customers on a moderate level. Switching cost is low for customers and tendency to buy one or a few cars also work for Tesla Inc. to limit the bargaining power of the customers. This is how the bargaining power of the customer is using an aggressive strategy to reduce the bargaining power of the customer. In the case of Tesla Inc., bargaining of the customer is moderate.
Bargaining Power of Supplier
The bargaining power of supplier is the major factor for the competitive positioning of the organization in the target market. There are different factors need to be considered by the organization to keep the bargaining power of supplier is moderate level. The bargaining power of supplier can affect the internal operations and manufacturing operations of the organization. Moderate forward integration is moderate force, moderate size of supplier is moderate force, and moderate supply level is a moderate force in the case of Tesla Inc. Suppliers of Tesla Inc. have low-level forward integration (Brandt, Wagner and Neumann, 2017). This external factor is connected to the limited control of supplier on the distribution and sales of their products. Some supplier of tesla Inc. used third party organization to sell their products and services to Tesla Inc. The impact of supplier is moderate on Tesla Inc. So the bargaining power is also low in the case of Tesla Inc. The bargaining power of supplier also can be reduced by increasing the number of the supplier. This can help the organization to keep the bargaining power of supplier to the minimum level.
The Threat of Substitutes or Substitution
To analyse the threat of substitute for Tesla Inc. this is important to analyse three external factors that can help the company to keep the impact of this force minimum or moderate on the company. The moderate forces that are considered to analyse the threat of substitute for Tesla Inc. are- Low switching cost, which is a strong force in case of Tesla Inc., Moderate substitute availability is moderate force and moderate performance of substitute is a moderate force for the company (Alghalith, 2018). Low switching cost can help the organization o increase competitiveness in the target market. The availability of substitute product is not limited to the market. Some other organizations are also providing similar products to the customer. But the global image of tesla Inc. as an innovative organization is helping the company to perform effectively in the target market. Overall, the threat of substitute product is moderate in the case of Tesla Inc. This threat can be reduced further by providing better products to the customers at an effective low cost. This can help the organization to maintain sales and increase sales in the global market.
The threat of New Entrant or New Entry
The threat of a new entrant in the market place can be explained as the capability of the organization to enter a new market. This is challenging for the organization to enter a new market that is consists of strong competitors. In the case of tesla Inc., threat of new entrant is moderate. The technology that is used by the organization is best in class and other organizations do not stand near to Tesla Inc. in terms of technology. This is how Tesla Inc. is a strong brand in the global market and the threat of new entrant is moderate in the case of Tesla Inc. High cost of brand development is a weak force in case of Tesla Inc. High cost of doing business is also a weak force and high economies of scale is also a weak force in case of company. This is how entering a new market not a threat to the company.
Sustainability
In terms of technology and sustainability, Tesla Inc. is working with electrical technology in the automotive sector. According to many authorised sources, Tesla Inc. is considered one of the most sustainable organizations in the global market. Tesla Inc. is working to find different innovative and creative solution to make the automotive sector more sustainable (Madry, 2020). As compared to the car’s that are based on gas fuel, Electric cars that are produced by Tesla Inc. are more sustainable. The products that are produced by the company are based on solar energy. Cars that are developed by the company are fuel-efficient and these products are based on renewable energy. The roadster car that is produced by Tesla Inc. is completely based on electrical technology (IMPACT REPORT, 2018). According to the claim of the company, it is the first one of its type. Roadster is designed to get maximum performance while in operation. Other organizations that have invested to develop electrical vehicle have lost their investment in the process but Tesla Inc. is working innovatively and creatively to develop a vehicle based on electrical technology and moving towards sustainability (Nieuwenhuis, 2018). According to Tesla, the master step of Tesla Inc. is to develop an all-electrical sports car the Tesla Roadster to prove that people do not need to compromise performance, speed, and comfort to drive all electrical vehicle. Tesla is about to launch its first-ever premium all-electric sedan from the ground up. Tesla is also claiming to be sustainable and superior in terms of products and quality for customers. This is how Tesla Inc. is a sustainable organization that is thinking towards a sustainable future. According to the business strategy and business objective of Tesla Inc. main focus of the organization are one sustainability factors and the use of clean energy in the business operation. With the innovative and creative business approach, the organization can keep the impact on the environment to the minimum level (Perkins and Murmann, 2018). All the sustainable practices of the organization are helping the company to maintain a low impact on the environment. With a lower carbon footprint, Tesla Inc. can be considered a sustainable organization.
Theories for Case Study
According to the case study, tesla Inc. is about to launch its new super sports car Roadster in the global market (Nobile, 2019). The company have to develop an effective strategy to launch their new product in the global market. According to the case study, various facts are needed to be considered to analyse the business plan of Tesla Inc. For the case study of Tesla Inc. Ansoff matrix and Freeman Stakeholder Theory can be used.
Ansoff Matrix
This Matrix is also known as the product/market grid. It is considered a tool that is used by the organization to analyse and plan their strategies for growth in the target market. There are four strategies are suggested in the matrix and these strategies can be used by the organization to place its product in the market place (Szekely and Dossa, 2017). The strategies that are suggested in the matrix are- Market Penetration, Product Development, Market Development, and Diversification strategy. Among this strategy, an organization can select one as per their requirement.
Market Penetration
Market penetration strategy is used by the company when they are placing the existing product in the existing market. In this strategy, an organization can decrease their price to attract new customers. Increase promotion and distribution effort also can help the organization to attract new customers. Acquiring a competitor in the market place can help the organization to gain more customer.
Product Development
This strategy is used by the organization when they are placing the new product in the existing market. The company can invest in research and development to offer better product and services to the customers (Kim, 2020). Acquiring competitors’ products and adding resources to them for improvement. This also can help the organization to develop a customer base. The strategic partnership is also a positive option for the organization to improve the business process.
Market Development
This strategy is used by the company when they are entering a new market with their existing product. For market development, strategy organization can use some strategy to make a positive impact on the target market (Grijalva, 2017). In this process, the company can target a new customer group to increase the customer base. Work on the domestic market also can help the organization to improve customer number in the market. The company also can expand in the current foreign market to provide a product to the new people.
Diversification strategy
A diversification strategy can be used by the organization in a situation where they are introducing a new product in the new market. In this process, different approaches or strategies can be used by the organization to maintain the profitability of the company in the target market (Krüger, 2017). The company can use related or unrelated diversification to maintain the profitability of the company in the target market.
As per the business case of Tesla Inc. for the launch of Roadster, Company have to launch this product in the existing market. According to the Ansoff Matrix, the organization is introducing a new product in an existing market then they have to use a product development strategy to increase the sales of the product.
Freeman Stakeholder Theory
This theory is developed to include all the stakeholders’ theory within the business operations and business operations of the organization in the target market. This is highly important for the organization to evaluate and analyse the impact of business strategy on the stakeholders of the organization (Jozi?, Zidanšek and Repnik, 2020). The stakeholders that are considered in this theory are- Customers, Suppliers, Employees, Environmental groups, political action groups, media, financial institutes, government groups and many other groups that are associated with the business operations of the company. All these people must be prioritised in consideration to provide them higher satisfaction.
According to this theory, this is important for the organization to consider their stakeholder to keep them satisfied and motivated. This is associated with the corporate social responsibilities of the company. This is a challenging process for Tesla Inc. but effective prioritization can be performed to analyse the needs of stakeholders in the organization (Glowik, 2020). In the prioritization, process an organization can focus on the high priority stakeholder initially to meet their satisfaction level and keep the organization productive. This is also important to maintain continuity in the business operations of the company.
PART 2
Critical Reflection
Tesla Inc. is one of the business organization that is considered a sustainable business organization on the global level. Tesla Inc. is focusing on sources of clean energy for the future perspective. There are different business actions are considered by the organization to keep their business sustainable. In my opinion, Tesla Inc. is working too hard to meet its business standards and business goals in the target market. There are different actions are performed by the company to move towards clean energy. Products that are developed by the organization are based on clean energy. In the Tesla, car’s electrical technology is used to avoid the application of traditional fuels to power the vehicle. As compared to the other organizations in the global market within the automotive sector, Tesla is a young company that is giving tough competition to well-established organizations. According to the sustainable business goals and efforts towards sustainable energy sources, Tesla Inc. is getting more attention from customer and investors. I have analysed that Investors of Tesla Inc. are too much interested in the sector of electrical car. They are providing high capital to Tesla Inc. is working on their latest model which is Tesla Roadster which is a high speed, high comfort, and Premium car for the customers. The main purpose of the organization is to enter the premium class to make more profit and get the attraction of the top customers who can buy premium products of the company. According to the profile of the company, they are projecting themselves as an organization that is future-oriented along with innovative thinking. The CEO of the organization is also projecting the company as a sustainable organization on the global level. This is the main purpose of the organization to project the company as a sustainable organization with their electrical cars. Tesla Roadster is the first supercar that is designed by Tesla Inc. for the supercar sector. According to my understanding, the main purpose of the organization is to enter into the complete new zone to increase the profitability of the organization and address new customers. This car is designed for customers who are looking for high speed and comfortable car with sustainable technology. Currently, the organization is providing products to the customer which are based on electrical technology but some factors are lacking in the current products. Lack of torque, speed and fuel efficiency, and life of electrical sell that is used in the car. Tesla Roadster is the first of its type. In this car, the organization has implemented all the factors that are important to meet the demands of the premium customers. I have analysed that the competitive positioning of the organization is also effective in the global market. I have analysed all the competitive factors that are related to the business strategy of the company. There is a range of actions and processes that are performed by the organization to keep all the factors and forces to keep them moderate for the business organization.
From the sustainable perspective, the organization is working towards a clean energy source and producing an electrical car with zero carbon emission. So, Tesla Inc. can be considered as an organization that is following sustainability standard to keep its impact on the organization minimum. In this report, I have also worked on a different theoretical framework to analyse the competitive strategy and business strategy of the organization for the Tesla Roadster in the global market. As the organization is trying to enter a different segment, this is important for them to work on a different approach to maintain the performance of the organization in the target market. As per the business plan of the organization. Tesla Inc. is planning to go with a focused different differentiation approach to sell Tesla Roadster Model on a global level. In the company profile analysis, I have found some negative points about the company that can affect or limit their productivity on the global level. Major factors that can affect the business operation of the organization are related to the manufacturing process and workforce of the company. This is important for the organization to work on their workforce and manufacturing unit to increase the manufacturing speed of the manufacturing plant and develop an effective workforce to meet the business standards in the target market. I my opinion, this is most important for the organization to perform diversification on the global level to maintain an effective supply chain. With manufacturing plant development and diversification, Tesla Inc. will be able to reach a larger audience. This also can help them to improve their business.
Recommendations
Tesla Inc. is one of the most famous organizations in the current time. It is the most trending organization in the automotive sector. As per the case study, Tesla Inc. is about to launch one of its most awaiting car, the Tesla Roadster. According to the company officials, Tesla Roadster is an all-electrical supercar (Hettich and Müller-Stewens, 2017). The concept behind this car is to provide top-class services to premium customers. This model is specially designed for premium customers. This is a high-speed car with maximum fuel efficiency. It also consists of high comfort standards as compared to the similar cars of the other organization like BMW and Mercedes. As per the business case study, it has been identified that the Tesla Roadster model is specifically designed for the premium customer who is willing to have a sports car with a high comfort level. This is important for the organization to use effective business strategy to meet the financial goals in the market place and get the attention of people (Reinhardt, 2019). According to the case study, Tesla Inc. is using a differentiation business strategy to improve the sales of their car Tesla Roadster. It is one of the most effective strategies to perform business within the small group of people that are targeted by the company. Some changes can be implemented by the organization in the business practice to increase their productivity and profitability in the target market. Tesla Inc. can use a focused differentiation business strategy to attract top priority customers. In the focused differentiation business strategy, the company can perform marketing of the specific product as per the needs of the targeted customers. This process can help the organization to attract customers with a high economic standard (Narins, 2017). This approach can be used by the organization to get maximum benefits in the target market. This is one of the most effective business strategies to increase the sales of a particular product in the target market. Along with this process, the organization also can focus on the stakeholder to meet the sustainable factors in the business operations. This is how different changes can be implemented by the organization in business operations to get maximum benefits in the target market.
CONCLUSION
This report is concluding information about the case study of Tesla Inc. This study is based on the new product of Tesla Inc. The business strategy related to the Tesla Roadster model has been analysed in the report. Various factors related to the business organization and their business strategy has been analysed in the report. Brief information related to the company has been analysed in the study to get an overview of the business approaches that are performed by the company. Information related to new product launch also has been collected in the report to provide better suggestion to increase the profitability of their business strategy. Different theoretical frame like Ansoff Matrix and Freeman’s Stakeholder theory has been considered in the study for further implementation for the business case of the company. Based on the information which is collected in the case study, the complete business case of Tesla Inc. has been studied in the report to provide critical reflection. To improvise the business strategy of the company some recommendations also have been provided in the report.
References
Books and Journals
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Thomas, V.J. and Maine, E., 2019. Market entry strategies for electric vehicle start-ups in the automotive industry–Lessons from Tesla Motors. Journal of Cleaner Production. 235. pp.653-663.
Online
IMPACT REPORT, 2018. [Online]. Available Through.<https://www.tesla.com/ns_videos/tesla-impact-report-2019.pdf>.
