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Vineet Kumar answered on
Mar 28 2020
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Tesla Motors Company
Abstract
This research paper examines the business of Tesla Company in the context of its product, business policies, and customer targeting policies. Initially, this paper provides a
ief description of the selected case company and its products. It serves to understand the products, their nature, target customers, business strategies and competitive strength. Furthermore, this research paper includes a short description of about the internal and external environment, business strategies and strategic alliances. This paper contains the sales analysis of the selected case organization that defines the importance and significance of its electric engine based car towards the competitive success of the organization. This research paper includes some recommendations based on environmental analysis and SWOT analysis of the Tesla Motors. Such recommendations will assist this organization to retain its existing business performance by making effective strategy to replace the cu
ent weakness. Overall, this paper will provide complete information about the case organization Tesla Motor to its users and allow them to develop the understanding about the business strategies and their effectiveness.
Keywords: Innovation, Automobile, Electric Car, Electric Engine, Zero Emission, Tesla Motors
A
eviation List
SWOT: Strengths, Weaknesses, Opportunities and Threats
OEM: Original Equipment Manufacture
USA: United States of America
GM: General Manage
R&D: Research & Development
STEEP: Social, Technological, Economical, Environmental, and Political
UK: United Kingdom
GDP: Gross Domestic Product
EU: European Union
BYD: Build Your Dreams
Table of Contents
Abstract 2
A
eviation List 3
1. Introduction 6
1.1 Problem Definition and Objective 6
1.2 Structure 7
2. Company and Products 7
2.1 Tesla Motors— Company Profile 7
2.1.2 Vision Statement 9
2.1.3 Mission Statement 9
2.1.4 Cu
ent Objective 9
2.1.5 Strategy for Achieving Objectives 11
Marketing Strategy 13
Production Strategy 13
Technology strategy 14
2.2 Automobile Products of Tesla 15
Sales Strategy 16
Sales Analysis 16
3. Market Analysis and Definition 18
3.1 STEEP-Analysis 18
3.1.1 Definition 18
3.1.2 Political 19
3.1.3 Economic 19
3.1.4 Social 20
3.1.5 Technological 20
3.1.6 Environmental 20
3.2 SWOT-Analysis 21
3.2.1 Definition 21
3.2.2 Opportunities 21
3.2.3 Threats 23
3.2.4 Strengths 24
3.2.5 Weaknesses 27
3.3 Customer Analysis 28
3.3.1 Behavioral Analysis 28
3.3.2 Customer Demographics 29
3.3.3. Target Market 30
3.4 Competitor Analysis 31
3.5 Stakeholder Analysis………………………………………………………………………………………………………………………..34
Conclusion and Outlook 39
References 42
List of Figures
Figure 1: Global Sales of Electric Vehicles…………………………………………………….42
Figure 2: Tesla Model Deliveries……………………………………………………………….42
List of Tables
Table 1: SWOT Analysis Chart …………………………..……………………………………43
Table 2: Analysis of Competitors’ Product………………….……………………………….. 44
1. Introduction
Tesla Motors is an automobile organization, which is emerging as an electric vehicle producer. Tesla Inc. that is known as Tesla Motors is an American automobile company. This organization was founded in 2003 (Kauerhof, 2017, p. 3). This company is named after physicist and electrical engineer Nikola Tesla who is a founder member of the company. It is engaged in marketing of its vehicles, designing of its products, production of its vehicles and productions of other companies’ components.
It markets components of the electric vehicle. Tesla Company has specialization in energy storage, electric vehicles, and manufacturing of the solar panel.
1.1 Problem Definition and Objective
The production house of this company is mainly situated in Palo Alto, California. Electric car segment of this company has helped it to improve its
and value and image in the target marketplace (Doeden, 2015, p.17). This can be proved through an example of Model S. This car of Tesla was a best-selling electric car under the plug-in section in 2015-2016 (Heisler, 2016, para.1).
Due to this reason, the sales of this model have reached 200,000 units until the end of the fourth quarter of the financial year 2017-2018 (Kane, 2018, para. 1-3). In the end of Fe
uary 2018, the production of the electric car has passed 300,000 that is a big achievement for the company (Kane, 2018, para. 1-3).
Meeting the demand for electric cars, case organization has developed production & assembling plants that facilitates to make continues production of its electric cars. It has established its production house in Reno, Nevada and Fremont in California. It has also established a Gigafactory to produce battery packs and batteries for vehicles (Hitt, Ireland & Hoskisson, 2016, p. 288).
1.2 Structure
In the above context, this research paper discusses each aspect that is related directly or indirectly to the Tesla Motors. For this research paper, the information related to the background of the company, internal and external environment and competitive strengths are some important aspects, which will be considered.
With the help of these aspects, this research paper presents the consideration of all relevant facts related to Tesla Motors that will help the users of this paper to develop understanding towards the Tesla Motors and its businesses along with its competitive position in target marketplace and survival strength in the competitive market.
2. Company and Products
2.1 Tesla Motors— Company Profile
In the year 2003, Tesla Motors was established by a group of engineers who were working in Silicon Valley (Vance, 2015, p. 173). They were working on a concept that the electric engine can be a better option for car users in the comparison of gasoline engine based car.
To develop such concept physically, they participated and produced an engine with an incredible power, which was based on zero emission (Tesla, 2018, para. 1). Due to its benefits to customers, first electric car of Tesla was accepted by target consumers aggressively, which helped company to generate huge demand for its new vehicles in the USA.
Tesla has expertise in conceptual designing of electric cars, for which it has significant competitive advantage in the market as well as a
oad base of loyal customers. After the success of the first car, each car of Tesla Motors comes with same promise that facilitates the customers to buy an innovation.
The sustained loyalty of the customers encourages the company to work with same pace to achieve the mission of the company by accelerating the demand of the world towards the consumption of sustainable vehicles (Linxweiler, 2017, p. 3). As like the other traditional manufacturers, Tesla Motors operates its business in the world automobile industry as an OEM (original equipment manufacturer).
It is producing components for other companies to help them in their production process. For example, to sustain their position with the business activities of partner companies, Tesla Motors has confirmed its partnerships with Toyota and Daimler. This organization is working with Panasonic to produce the battery for its vehicles (Tesla Inc., 2018).
2.1.2 Vision Statement
For the long-term survival of a company, vision of a company plays a most important. In the similar context, the vision of Tesla is “to be developed as a most convincing car company in the 21st century that can transform the world towards sustainable driving through the use of electric vehicles” (Krippendorff, 2011, pp. 90-94).
This vision statement is used by the organization as it defines the motives of the company towards the transformation of the world through the adaptation of renewable energy.
2.1.3 Mission Statement
The mission statement is another important term for the organization because it guides the employees about the ways in which they can achieve the vision of the company. As per this, the mission statement of Tesla Motors is “to accelerate the transition of the world towards the sustainable vehicle” (Piercy & Piercy, 2016, p. 128).
The mission statement of Tesla explores that it wants to improve the process of transformation through the help of a sustainable vehicle. The interpretation of the analysis of the mission statement depicts that Tesla Motors wants to transform the lives of the world community through electric vehicles, which do not need a huge cost for fuel and does not produce harmful gases into the environment.
2.1.4 Cu
ent Objective
Every marketing activity of an electric car manufacturing company focuses towards how the market share of the company in the existing car industry of world can be increased. Marketing objective of a company that is a main part of marketing strategy helps in deciding success and survival factors for the business. It is reflect by the marketing objective of Tesla’s. To achieve the objective of growth in market share, the company is working hard to earn high profits and improve cu
ent market share in world electric car industry.
As per a research, the market share of the case organization has reached from 0.5% to 1.5% in the USA (appendix 1) as it has successfully developed the eco-friendly image of its produced vehicles. Such
and image is an important term behind the demand of personal vehicles. Last year sales of its small and luxury personal vehicles have passed the total sales of Fiat Chrysler and Ford automobiles that has not established this company in the top of larger market capitalization (Debord, 2017, para 1).
Existing market growth of Tesla in the USA is threatening to the General Motors also that is giving strong competition to case organizations in the context luxury automobile sector. This is because that GM has adopted premium price range to sell its products in the target market.
As a result, it is creating a big issue for Tesla to achieve its objective through marketing. Further, the production process of the company is another hurdle that is affecting the efforts of the company to reach the planned objectives. For example, the delay in production of the Model 3 car is not allowing the company to supply cars to target customers as per pre-booking orders and it is creating a delay in the supply.
This scenario is raising the dissatisfaction among the clients of Tesla. In this context, a research study explores a fact that the main factor that is working behind the delay in production is the lack of capital (Pressman, 2018, para. 4).
It implies that the lack of capital is making cash burns situation to a company which is restricting Tesla by timely production of demanding vehicles to meet pre-booking orders. Therefore, it can be said that the overall production system of the company is not working as per the commitment of the company to consumers through its marketing activities. Due to this, it is also possible that the company may not be able to retain the target customers and maintain the demand as it will affect the future of the company.
2.1.5 Strategy for Achieving Objectives
Marketing and promotions are a main and important function for the companies because of its role in improving customer awareness that helps in increasing the sales of products. Tesla uses different policies to promote and market its products in the competitive market and gain competitive advantages over its existing competitors.
For example, Tesla focuses on the small group of target people who have sufficient potentiality and capacity to purchase a premium car of Tesla. It uses the environmental aspects, such as reducing ca
on foot-print and its benefits to the world community in the promotion of its products. These allow it to attract customers towards its product who prefer to consume environment-friendly products favoring the Earth’s climate.
Further, the automobile industry in the world is more competitive because of the many producers. In the similar context, the common person may not go to buy the electric car for the short-distance driving, as it needs a huge price and special facilities such as the charging facilities to charge automobile everyday. Besides, the high price for the vehicles will not attract the usual customers to purchase the electric cars of Tesla.
Hence, the organization of Tesla positions itself as a premium electric car producer and it does not target each class of the population through its promotional and marketing activities. Consequently, it does not face adverse comparison between its vehicles and gasoline vehicles.
Moreover, the limited production and supply of cars to target customers is establishing this
and into the electric car industry as the main demanding vehicle company in the world. Therefore, Tesla promotes its product in the competitive market through the help of unique product design, innovative technology and the huge demand that impacts positively on target customers and manipulates their decisions in favor of Tesla.
Furthermore, satisfied customers of Tesla promote the vehicles of Tesla in the market through their mouth publicity that is strength of the company in promoting the product against the existing competitors. It can be stated that Tesla is in a good position in the market due to its marketing and promotional activities, which is not available to others.
The core business aim of the Tesla is to disrupt the entire automotive industry of the world through the creation of many innovative technologies that can fit together. It is called "complex coordination". The production, marketing, technology strategies and sales all are very considerably because of their different nature in the comparison of its competitors.
Marketing Strategy
Automotive strategy of Tesla is emulated distinctive life cycles for technological-product (Sunley, 2017). It is initially targeting the affluent buyers. Hence, it uses social media to increase the discussion between people that help the company to promote its products (Sunley, 2017). Furthermore, Tesla moves to target larger markets through attractive marketing based on environmental concepts.
It uses each available media to promote its products. It uses co-
anding policy to promote its product. It uses
and value of its business partners. This is a common strategy for the automotive industry in the world because of the need for huge money that cannot be achieved, through the use of available capital.
Production Strategy
The production strategy of the company includes vertical integration. It is engaged in the development of infrastructure for proprietary charging and the production of electric car components to capture the economies of scale of production and achieve desires of target customers, Tesla has operated with enormous Japanese organizations such as Toyota for improving responsiveness to customers, to improve the quality, efficiency and product innovation.
To ensure the quality of each production, company has implemented Six Sigma to ensure the entire production of vehicles through lean manufacturing process. The company controls the possibilities of the possible variations in the output by implementing this. This production method is facilitating the company to hold the unskilled and not creative people within the organization (Switch and Shift, 2015). Due to this, it does not face the lack of required resources.
Tesla has developed a cross-functional team. This team of Tesla helps in planning and conceptualization of products and product development process. This team does not only assist to make effective coordination between employees and manager but also helps in developing products from the input collected from marketing and manufacturing team members. Consequently, it comes always a customer attracting vehicle model (Jones & George, 2015, p. 238). For Tesla Motors, different kinds of raw materials are required. Eventually, it depends on their suppliers.
In the context of the USA, it has some limitations on the production of aluminum. Therefore, Tesla has moved towards China for the supply of metal because there is no restriction of the required metal production. Thus, the company can get raw metal from suppliers at lower cost and may be able to produce low cost electric car (Jones & George, 2015, p. 301).
Tesla has decided to produce its own lithium batteries, which are a lifeline of its product. However, it is facing issues in their production because of the limited supply of the required materials. Due to this reason, it has invested in various small organizations, which are involved in the lithium battery production (Jones & George, 2015, p. 300).
Technology strategy
Due to the rare example of vertical integration in the automotive industry, technology strategy of Tesla focuses on the use of pure-electric momentum technology (Mangram, 2011, pp. 289-312). This technology is used to transfer the other kind of approaches to the industry that can help to improve the experience of customers in using electric vehicles. Tesla is allowing the other business partners and the public to use its patent technology in good faith and company will not charge for that technology use. This strategy of the company develops it as a more responsible organization towards societies. This also helps to create social image of the company in the market.
2.2 Automobile Products of Tesla
In the present scenario, Tesla group is famous due to the performance of its well know electric cars and their eco-friendly nature due to zero-emission of harmful gases. This is because that Tesla Motors does not use the prototype system to produce its cars that are generally used in the production of gasoline cars. It uses a serial production method to produce its cars that reduce the possibilities of emissions of harmful gasses (Sellers, 2016, pp. 81-82).
Tesla is also known for its R&D activities that help the company to
ing new design, develop new concept and give a new look to vehicles. Right now, the case organization is focusing on the production of small size car as well as the production of luxury vehicles. The annual report of the company explains that the management is regularly focusing towards the technology enhancement for improving the experience of the target customer.
To achieve this target, company uses a premium policy system to gain high margins on its eco-friendly products because its cars have created a sense in the market that its vehicles have environment friendly features. This price policy helps Tesla to improve the life cycle of its vehicles that enhances its competitive strength against its strong contenders because the other automobile companies have aged product line that causes adverse impacts on their demand also (Voigt, Buliga & Michl, 2016, pp. 190-194).
Then again, the changes in the demand of customers and high demand for hy
id vehicles in public due to the growing effects of ecological problems, most of the companies are struggling in maintaining their sales. In the same context, Tesla is in demand because of its technology that does not emit any kinds of harmful gas in external environment protects the climate. Therefore, it can be stated that Tesla has established its electric cars as an alternative of gasoline cars and some section of hy
id cars.
Tesla has also taken several steps to target the entire world through its innovation and inventions. These steps help company to convert its products as a global
and rather than an American
and (Tillemann, 2015, p. 148).As a result, this company is getting demands for its products from different countries.
Sales Strategy
For the selling of its vehicles, the company has adopted a strategy to replace the market...