Strategic Management in Company
The report has analysed the factors associated with Tesla and how the company has expanded in the global market. Moreover, the strength and the weaknesses of the company has been analysed in the company. Therefore, the company’s marketing strategy and challenges have also been analysed in this report. Recommendations are also included in this report.
Table of Contents
Tesla is one of the most popular automobile and technological companies which has a greater impact in the automobile market. The report has analysed different factors related to internal and external factors. Moreover, Global expansion of the company has also been analysed critically in this report.
|Advanced technology Energy efficiencyPartnerships with different companies Innovation Strong brand image||High prices productsRestricted presence of company Self-servicesAdministrative functionality|
|Sustainable battery supported System Automation of driving systems Technology for battery production Cost-reduction||Rapid changing technologies Long-term sustainability in the market Huge competition Funding|
Table 1: SWOT ANALYSIS
Source: (inspired by Elavarasan et al., 2020)
|Bargaining power of customers||Switching cost is low Preferences of innovation Differentiation of products Streamlining sales and innovation||Moderate|
|Bargaining power of suppliers||Lose relationship with the supplies increases technological risksForward integration has been observed Finding proper suppliers is difficult for chemical and technological factors (Tarigan and Siagian, 2021). Issues in the supply chain||Moderate|
|Competitive rivalry||Firms’ approach to sustainable products and automation Investment in the technological aspect in different countries Collaboration of competitors||High|
|Threats of substitution||Customers’ need and requirement are recognised by the companyLow switching cost Less substitute availability||Moderate|
|Threats of new entrants||Innovation in the automobile and technology industry Scopes for research and development Building economies in betterment of technological development New entrants might not match the scale of Tesla||Low|
Table 2: Porter’s Five Forces
Source: (inspired by Mo and Wang, 2021)
Innovation and strategic partnerships:The Company has continuously improved its innovationand technology. Therefore, different products and development would be improved with the help of different technological factors. The company has strengthened its relationships with strategic partners (Rosado-Serrano, Paul and Diovan, 2018). Model S is one of the most eminent examples for Tesla. Daimler, Toyota, Panasonic and AT&T are the strategic partners for Tesla (Wit and Meyer, 2010). The strategic partnership was focused on boosting the performance in the market.
Competition: Both internal and external competition are crucial for the company. While Tesla has competed with hybrid, PHEV and ICE vehicles to improve the position of battery vehicles. After that internal competition among the dealers and merchants would help to improve the functions of existing franchises and pricing to the customers in the presence of middle level management. The budget of Tesla’s R&D section was to develop better competitive advantage.
Supply chain management: Infrastructural patchwork improvement needs a proper supply chain but the supply chain uncertainty in the business isaffecting different factors like development of competition (Wit and Meyer, 2010). On the other hand, Tesla has opted for a strategic alliance with Panasonic for better supply of lithium-ion batteries in the market. However, Tesla’s unsophisticated storage and loose supplier relationships affected the production and sales of the company.
Battery and softwaretechnologies are the most critical factors for better competitive advantages. Charging infrastructure is also critical in technology based car markets. The charging technology provides charges up to 120kWh within 3 hours (Wit and Meyer, 2010). Therefore, with only 20 minutes of charge. Tesla has invested more than $100000 USD with the help of Zero Emission Vehicle credits in 2014 in California (Wit and Meyer, 2010). The company scored more credits after establishing super chargers in different places in the USA and Canada. With the references of energy management and storage, the company has improved its battery systems. Human resources is considered as the highest resource by Elon Musk.
Tesla has expanded through direct selling, certified pre-owned programs, strategic positioning in galleries and showrooms and local responsiveness. Market penetration with aggressive expansion models are used by Tesla. On the other hand, related diversification can also be used by the company to improve strategic alliance inthe market of automobiles to get proper battery products (Wit and Meyer, 2010). In direct selling franchising or dealership models are the expansion models which are used by Tesla. Conflict ofinterests among the dealers for selling gasoline carsand electric vehicles. With a vertical integration strategy, suppliers would be integrated in the production process.
The motive of Tesla is to improve sustainability in the automobile industry. The expansion model is based on better innovation and advantages in the betterment of brand image. Innovation in technological factors would help to improve new production (Perkins and Merman, 2018). With the motive of empathy expansion Tesla has improved its approach of internationalization for the development of the business chain after they found out the scopes in the external market.
Tesla has improved different factors like market economy and employment across the world. As Tesla explored the market of China to set up a factory, they could use a huge amount of workforces in the markets. With vehicle assembly operations in Germany, the company could improve the number of produced vehicles in the country. Therefore, 47% rise could be observed in the workforce (Woodhouse, 2021).
Figure 1: Effect of Tesla’s global expansion
Source: (Woodhouse, 2021)
The global expansion might affectthe performances of local automobile companies as Tesla has a huge supply network and strong back up with the strategic partners. Moreover, the economic development of the countries could be observed due to Tesla’s investment in the market. The FDI would help to improve in the countries.
- The company should improve the supply chain in the market to get different types of elements like manganese, lithium and cobalt. Therefore, strengthening the supply chain of the company should be improved for the betterment of the automobile industry. The fast-paced industry would improve the niche position and the target market regulation.
- The automotive cars had faced different government regulations and challenges to overcome as the traffic rules and detection of safety parameters might not be properly navigated.
- To improve the competitive advantages, new models of Tesla would be launched with cost-effective approaches. The features and characteristics of the company would helpto improve acceptance of different models.
The report has analysed internal and external environmental factors in company growth and product development. Moreover, the factors in global expansion were also analysed in this report to make a clear understanding about the company’s strategic decisions. On the other hand, some recommendations are also given in the report to improve the company’s performance.
Elavarasan, R.M., Afridhis, S., Vijayaraghavan, R.R., Subramaniam, U. and Nurunnabi, M., 2020. SWOT analysis: A framework for comprehensive evaluation of drivers and barriers for renewable energy development in significant countries. Energy Reports, 6, pp.1838-1864
Glowik, M., 2020. Market Entry Strategies: Internationalization Theories, Concepts and Cases. Walter de Gruyter GmbH & Co KG.
Mo, F. and Wang, Y., 2021. Risk and Opportunity Analysis of Tesla Motors Inc. Marketing Strategy and Business Ethics Study:–A Mini Review. BCP Business & Management, 13, pp.440-449.
Perkins, G. and Murmann, J.P., 2018. What does the success of Tesla mean for the future dynamics in the global automobile sector?.Management and Organization Review, 14(3), pp.471-480.
Rosado-Serrano, A., Paul, J. and Dikova, D., 2018. International franchising: A literature review and research agenda. Journal of Business Research, 85, pp.238-257.
Tarigan, Z.J.H. and Siagian, H., 2021. The effects of strategic planning, purchasing strategy and strategic partnership on operational performance (Doctoral dissertation, Petra Christian University).
Wit, B. and Meyer, R., 2010. Strategy- an iternational perspective. 7th ed. Andover: South-Western Cengage Learning.
Woodhouse, S., 2021. Tesla’s Global Expansion Boosted Employment by 47% Last Year. [online] BloombergQuint. Available at: <https://www.bloombergquint.com/business/tesla-s-global-expansion-boosted-employment-by-47-last-year> [Accessed 3 December 2021].