Tesla Executive Summary
Tesla Executive Summary
Tesla is a car manufacturing company which is located in California. The company operates from the Silicon Valley, and only deals in electric car components. The company also manufactures power train components which it supplies to most of their clientele around the region and beyond. The company started operating in the year 2003 with the help of three engineers namely Ian Wright, Marc Tarpenning and Martin Eberhard. The company name came as a result of the famous Nikola Tesla and used Tesla instead. After long periods of struggling with their finances the company needed new blood which will steer their objectives further. This became possible after the introduction of Musk Elon to the company as the CEO.
Musk was the board chairman originally but took over as the CEO while also overseeing other companies working in other different industries. The new CEO took over in the year 2009 where he oversaw another financial crisis in the company, but was able to overcome the obstacles after coming up with different strategies that were meant to safeguard their general wellbeing. The best-established product during this time was the ‘Roadster’ sports car which became famous during this period. The car was electric and used power train battery with other components that were superior.
Due to the company’s marketing strategy it was able to sell more than 2500 units which were sold to both the local and global customers. The productions of the ‘Roadster’ were stopped in the year 2011 when the company’s contract with Lotus Elise ended.
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They also released a new model in the year 2012, which was named Model S, which had been planned by the company earlier in the year 2008. The new model won many awards and more than 2650 units were sold. The expertise nature of the CEO made it possible for the company to win many awards and also reach a high turnover mark within a short period.
Tesla Motors Corporation started their operations in the year 2003, with the main aim of providing cars that make use of rechargeable batteries as opposed to gasoline. Their main objective was to provide cars that produced zero carbon to the atmosphere and instant torque. The cars were to be environmental friendly and affordable.
Telsa has come a long way and has achieved several awards while selling various electric car units to both their local and global clients. The company has been able to manage their overall selling capabilities due to the expert nature of their administration and the high quality models produced within the organization. The company increase in sells was realized due to the various strategies that were employed in the company. There also different other variables that enabled them to become one of the top electric car seller in the US. Other regions that benefited from the productions of the company include parts of Europe, and many regions within the US. The main object of their success was the introduction of the new CEO to the company who had a greater vision to make them succeed during difficult times. Since his inception to the company major changes have been seen in Tesla’s operations and overall provision of different units and services.
The company has generated more revenue because of its unwavering desire to produce the best electric cars ever made by man. Due to this, the company has increasing attracted more investors who have sort to increase their participation in the company while providing support to ensure their overall success. The company exclusively deals in the production of electric cars which are environment friendly, and this has conformed to the world desire of producing products that are environmental friendly. This has led to reduced gas emissions hence protecting the world from damage and safeguarding it for the generations to come. Non-electric cars are known to produce products that have an adverse effect to the environment due to the emission of gases to the environment.
The reduction of oil prices around the globe have led to the low prices that have been felt by different manufacturers. This situation however is not permanent as there is a possibility of rising prices in the future due to the volatility of the market. Tesla understands this situation well hence their provision of cars that do not need gas and increased expenditure from the users. Electric car users are able to maintain their expenditure and also plan for future strategies that will enable them to break even. Tesla company believes that the issues that pertain to oil pricing might stabilize in the year 2020, and this is a long time hence the need to provide products that are pocket friendly.
The use of electric cars during this period before the reduction of oil prices will make the company increase their sales and also competing adequately in the market with other giants from the industry. The need for such products has brought about the desire by most clients to own such cars leading to high sells within a short period of time. The future of the company is bright as it is being led by a visionary leader who sees the company going far to other markets to enjoy the increased desire for their products. Clients are able to save more money from their purchases due to the low amount of money required for servicing.
The model S can become one of the best in the market as it desires minimal repairs and is known to be durable hence the high demand. The increased demand from different clients has made the company to increase their productions and can become one of the leading suppliers of electric cars in the future. Free recharging has been promised by the company to all cars in US and also plans to construct more stations that will be used for recharging the cars.
The industry is developing at an alarming rate due to increased consumer demand, industry shifts and support from the government (Armand, 2008). The support has come at a time when many nations are working towards eliminating various issues that accelerate global warming. The electric car industry is environmental friendly, and this has made it increase their support from the government and other many stakeholders from around the globe. The industry in the US has also started developing a big electrical vehicle support from both the public and private sectors. Electrical vehicles are cars that are propelled by batteries that are rechargeable.
Tesla as a company has to deal with internal and external features of the environment. The external environment involves the task aspect and the general aspect. The crucial features of the general environment include demographics, economic, political and legal, socio-cultural, and technological factors. The political and legal factors have the most direct impact on the company’s operations. Due to the environmental benefits of electric cars, many governments have come up with policies that support of their manufacturer. One such policy is the introduction of subsidies for many states for the production of electrical automobiles. These are an added advantage to companies such as Tesla since they will boost performance in global markets as a result of the preferential treatment. Technological advancements, such as an installation of recharging stations, provide more market for the vehicles. Consumer awareness campaigns on the importance of vehicles that do not increase global warming are also beneficial to Tesla as it seeks to position itself strategically in the market.
Hostile economic conditions, however, bring about undesired effects on the market. The customer’s purchasing power is usually influenced by a state of the national economy. During economic recessions, employment rates plummet and consequently lower the customers’ spending capabilities. In addition, Tesla’s target is particular markets. Since their target is focused on the middle class and above, Tesla cannot venture into developing countries as the realized sales will be minimal.
The scrutiny of the industry’s environment is very crucial when developing techniques that will assist in countering challenges. There are five influential forces in the industry environment: rivalry, buyer power, supplier power, new entry threats, and substitute threats. Of these, the supplier power is the most important to the company. The producers of important electric equipment that the company needs very few, and since the equipment are not categorized as commodities, the suppliers have an unfair advantage in terms of bargaining power. It is, therefore, imperative that Tesla sources from different producers.
Industry rivalry is the second most significant factor among the forces. Various vehicle manufacturing companies are coming up with new technologies to those used by their rivals. As a result, competition is expected only to become stiffer as time progresses.
The threat posed by substitute products is the third most important factor. At the moment, it is low but with time manufacturers that have invested in EV’s will undoubtedly be at same level with Tesla.
The threat of new entrants comes fourth. Currently, the equipment used for the production of electric vehicles is expensive. However, this is expected to change with time as investors realize the untapped potential in the production of electric and will, therefore, be more willing to invest in it. The increase in the number of new entrants will increase substitute products and as well as competition. Buyer’s negotiating power is least influential among the forces. Advanced technology helps Tesla to produce some of the most luxurious models and market demand wouldn’t have much impact on the price of the vehicles.
The possibility of new entrants into the production of electric vehicles should push Tesla to anticipate stiffer global competition in coming years. Charging stations will also present a new kind of challenge as a situation may arise whereby the interest of consumers in electric vehicles reduces as a result of lack of charging stations internationally. This will cause a decrease in sales and significantly cause deterioration of the organization’s performance.
Tesla’s primary comes from rivals such as General Motors, Federal Signal, Ford Motor Company, and Honda Motor Company, and they are all well established in the Auto industry. As expected, these rivals are inventing methods of competing with use electricity for motor production or how to better it. For example, there is research by Honda into the use of hydrogen to run vehicles. Tesla is currently unrivaled in technology, and this is its main advantage over the rivals when it comes to the introduction of advancements in the production of electric vehicles. Tesla’s current excellent team should easily outsmart its competitors and maintain its position at the top.
Finally, Tesla’s focus should be on creating and improving strategic groups whose work is developing more advanced vehicles. The company should embark on strategies that will outdo their main competitors, the BMW group, and Honda, who are working on ideas that have the potential to surpass Tesla’s current technologies.
Suggestions on how the ‘new Tesla’ could market their product(s) and/or services
On marketing the company will need to focus their attention more on the production of eco-friendly products that will ensure increased support from the government. They should also expand their services and products to other regions that have not been tapped by their previous operations. The company can succeed in their expansion by ensuring that their products and services are of high quality around the region. They should provide products with high quality through the use advanced technology which has not been used by most companies in the region.
They should start by doing a survey of different regions and pick those that fit their market clientele. Through the survey they will be in a position of making different decisions that are pertinent to expansion. Regions like Africa should be ventured by the company as this will increase their clientele level and overall turnover within a short period. They will also need to venture into low production costs methods which will save them from spending more money on their developments. The company ought to use a marketing mix that is efficient and readily available within their areas of operation.
The company should market their products through the use of different motor shows and indicate various reasons why people should venture into buying products from them. They will need to make use of social media, print media and other communication networks that are usually known to work best when it comes to marketing. They will also need to provide different options for buyers where they will be required to test the products before they are fully purchased. This method can work properly in new regions where the company has not ventured before. The online portal is a better way of marketing as it will ensure that more customers are reached within a short period. It is also a cheap marketing modality because the company can use different portals that are already in existence.
High level suggestions on how Tesla can fund/pay for the plan
The money used to provide the marketing strategies will need to come from the company proceeds. The percentage provided for the marketing options should be low to ensure continuity of the company (Barmore, 2013). The company should also make a decision on how much to spend on their marketing and include this money on their budget. By so doing they will be in a position of spending money in accordance to an already planned budget and also avoid overspending.
The company will need to make use of marketing strategies that are cheaper before they know the feedback from their clients. Donors can also be a big part of funding for the company. The company can include different stakeholders in their operations, and these are those who have a similar vision with the organization (Becker, 2009). They should be provided with different incentives that will make them agree to support the planning and execution of the company’s marketing strategies.
High Level Suggestions on how Tesla’s leadership can begin
The company needs to have a coordinated approach which operates like the reciprocal approach with no cyclical effect (Yu, 2011). Tesla can increase their productions if they make use of sequential approach, which can only be introduced and encouraged by the CEO and other members of the administration. The company leader will need to encourage the workers to ensure that all the departments are in agreement and work together towards achieving their set goals and objectives. The company needs the CEO to align their overall needs and the various strategies for purposes of increased sales of the products from the company. They should ensure that all the brands produced are of high quality to capture a wider market that will have repeat customers and marketing through word of mouth.
At the moment the company is headed in the right direction through the superior leadership of their CEO. However, the company needs to start investing in technology that will ensure cheap production of their power batteries. They should also Endeavour to have more electric stations in their regions of operation to actively compete in the industry without problems. Through their leaders the company needs to follow after the state legislation that was passed to ensure backup systems. The company production of batteries for such cars will grow in the future because of the support they receive from the government and other stakeholders.
The use of wind and solar energy is increasingly getting more demand in the US. Most companies are making use of the energy for grid-regulating related jobs. Companies like Solar City which is also led by Tesla CEO has an advantage as he can rely on information from both companies and come up with comprehensive plans that are geared towards succeeding in the region. The companies should also get more funding to increase their technological research where they will need to learn new methods of operation and also join hands with other technology savvy companies to ensure superior productions. The company can achieve all these if they work together with the CEO who is visionary about the future of the organization. The company can be a market leader if it desires to make partnerships and also borrow technology from other regions without problems.
Through their different departments the company acquires new factory plants around the region to increase their relative number of productions. The new plants will need to use high technology provisions that are able to put the company ahead of its competitors. They should also ensure that all the plants are run by experienced and qualified personnel who have the capability to make use of advanced technology while using and producing the new units. Such initiatives can only be encouraged by the CEO who has the power to make changes that are desirable within the organization. The company will also need to embrace the production of other unique products which are not currently produced by the company to ensure increased competition and high quality productions (Hidrue, 2011).
In the recent past, there have been electric cars have caused a renewed revolution in the automobile industry. Tesla Motors have been at the center of this resurgence, but there hasn’t been noticeable advancement beyond the tech developed cities like San Francisco. The electric automobiles, lauded for their negligible emissions, have been flaunted too much in showrooms but have not been embraced by the consumers in so many numbers due to the high cost as well as regulatory policies. For instance, the price of the Tesla Model S base model is around $70,000 while other base models have a price range of between $20,000 and $30,000. Compared to this, the smaller traditional cars such as Nissan Versa whose fuel efficiency is much better offer a better alternative to both the manufacturers and consumers at a price of less than $15,000. New technologies and an increasing in demand for the electric cars, however, may cause an increase in their popularity across the United States.
Since its founding by Elon Musk, the Tesla Company has been at the forefront of innovation in the automobile industry but has not been successful in getting consumers to spend big on their vehicles. In the first few years, Tesla aimed to cater to the well-off clientele exclusively. Other car-makers took the opportunity to create a larger customer base. For example, BMW sold their electric model, BMW i3, at $40,000. This is a huge bargain considering the BMW i3 has a combined mileage rating of 124 compared to Tesla Model S’s combined mileage rating of 96. In an attempt to counter the competition presented by the likes of BMW i3, Tesla introduced a new model 3 at a much fairer price of $35,000. Advanced technology and more efficient methods of manufacturing were instrumental to Tesla’s ability to lower the cost of its electric automobiles. The company’s new “Giga factory,” for example, has the capability to manufacture more lithium batteries within one year than the whole world can manufacture in the same period, according to reports from the company.
“In cooperation with strategic battery manufacturing partners, we’re planning to build a large-scale factory that will allow us to achieve economies of scale and minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead,” according to Tesla’s website. The cheaper and more developed alternatives are expected to result in an increase in the popularity of the Tesla electric cars among consumers.
There has been considerable media attention on the Tesla Model 3 which is the company’s next model in a very impressive lineup and is also a disrupter in the electric car industry. Tesla’s primary competitor, BMW, has also increased production as demand is increasing for its suave electric vehicles. The company reported that it aims to increase the production of i3 by over 43 percent in an attempt to cater for the consumer demand, which the company has confessed has been beyond its expectations. BMW is currently producing it electric cars at almost twice the rate that had been predicted initially, with the company reporting production of around 5,000 cars during the first half of the year 2014.
BMW production chief, Harald Krueger, stated that after the market introduction of BMW i3 in Europe, they were planning to roll it out in the United States during the next phase. He speculated that the United States would offer the biggest market for the car. This speculation is not far-fetched considering the United States is currently the world’s leader in the electric car industry. Forbes indicates that the US has a 45 percent share of global electric car sales. This can be partly attributed to increase in funding for charging stations but credit also to the federal for the attention directed towards the industry. This, coupled with technological and manufacturing advancements, is expected to propel the electric cars’ demand and help them to become eventually a force to reckon in the automobile industry soon.
Despite Tesla’s remarkable success in the production of an array of models of electric vehicles, their target market has always been limited to a specific class of customers. Due to this primary target, Tesla’s cars have been considered overpriced keeping them out of reach of the young people and unemployed people who form a big percentage of possible consumers. Therefore, if the company aims to develop a successful marketing strategy, it would be advisable that it changes its current primary focus and instead target the urban youth market. This should be attainable if they introduce new models aimed at attracting customers from this segment of the market.
The company should also intensify its marketing campaign to counter the notion that its cars are extremely expensive compared to other companies producing similar cars. As they do this, they should bear in mind the current markets demands of environmental friendliness, reliability, affordability, and durability.
Besides, Tesla should consider cost-benefits analysis even though their cars are currently fetching high returns. It would also be prudent for the car to cushion itself from long-term losses by avoiding court cased which might may be being a risk at the moment as their cars have been associated with mechanical problems like low battery life and, overheating which may subsequently lead to injuries to the clients.
As a move to strategically position its products in the market, Tesla should venture into the diversification of the products e.g. through the production of novel products such as electric motorcycles. Improving quality, embracing lean manufacturing, and Tesla’s promise to willingly share its patent are all steps in the right direction.
The future strategic alternatives for the company will need to be those that will push them towards success and away from competition (Khan, 2012). The company will need to start producing other models that are also environment friendly with high level of technology. Such provisions will put the company ahead of competition and also offer them the opportunity to make diversifications which are important for competition in the industry. The different models to be produced will need to be for different markets because most users have different desires and environmental conditions that determine their overall provisions.
The company will need to have more models that will bring a good name to the company. It is vital to note that having a single model is never the best idea when desiring to become a world leader in both productions and sales. The new models will need to target different markets in accordance to the different needs that markets have when it comes to the use of technological innovations.
The company should also check on their pricing because the current models are said to be expensive and only affordable to few individuals. Making the price affordable will make the company have more customers who will desire to purchase their products. Currently, the prices of the products from the company are only affordable to the rich and few individuals who are in the middle class. Sales can only be increased and improved if the company provides different models for different groups of people from the region. This will make consumers not to feel that they have been left out, and they should feel as part of the organization’s mission and vision.
The company needs to have a strategy to exploit new markets outside the US and Europe. Markets like African are still new and can be venture by the company easily. The introduction of their products to such regions will increase their presence in the market and also overall turnover in the long run.
The potential for solar energy in Africa is high, hence the need for the company to exploit such a region to increase their productions and clientele level (Orbach, 2011). The high level of power blackouts can be addressed easily by the use of the rechargeable batteries which the company produces for backup purposes. The company can also make use of other technological innovations that are geared towards increasing their presence in the world.
The introduction of hybrid cars will also be beneficial for the company as they will ensure the overall use of gas and electric machines without any problem (Yang, 2011). Consumers often have a hard time when changing from the use of gas to electric materials; hence a combination of both technologies will be beneficial to both the company and its consumers in the long run. The introduction of hybrid cars will make the company consumers to make easy choices while moving from one technology to another. The company will also be able to increase their recharge stations which will be used by the different consumers from their regions of operation. The company is a market leader in the US, and this has made the company contemplate on ensuring a global shift to take advantage of the competition around the globe.
Corporate Level Strategies
The corporate level strategies to execute the alternatives include value creating strategy. Here the company will need to edge out most of its competitors and gain more market share in the long run (Propfe, 2013). They can manage to become the world leaders if the edge most of their competitors. The company will also need to ensure that more technological savvy personnel and equipment are used if they want to increase their market share and presence around the globe without problems. They will also need to adjust to the market demands and produce products that are environmental friendly while considering their prices. Value creating strategy, is a corporate strategy that seeks to find the best alternatives to be used by organizations while producing and selling their products to their clients. The company will also need to seek for advice from other leading manufacturers to understand and follow the industry better.
The strategy is important as it adds real value to the productions made from the company (Wirasingha, 2008). The value is often added through the exploitation of the economies of scope that are readily available within the organization. The company will also need to reduce their costs and increase their efficiency as this will enable them increase their overall bargaining power while selling their products to their clients. Diversification has been known to be the main idea behind this strategy. The company will need to diversify their productions to ensure that majority of the people around their regions of operation are able to get their products and services without problems. This will make them dominate the entire region with ease, thereby increasing their overall returns in the long run.
Business Level Strategies
The various business level strategies to be included in the business include coordinated unit activities and utilize human resources (Rajashekara, 2013). The two strategies are crucial for both increased clientele level and returns within a short period. The company will make use of the coordinate unit activities to ensure that all the activities that are found in the company are well coordinated through the company leadership. The leaders will need to have a plan of how to execute different objective available in the company. Such a coordinated process will ensure minimal collision among different members of the company and lead to overall success. Coordinated activities usually lead to success and profitability in the long run.
The CEO will be mandated to lead the coordination process and ensure that every department and member in the company operates in accordance to the set down rules and regulations. He will also need to provide assistance and direction to the member while providing different services to the company. Such a coordinated plan will put the employees on the same page and also allow them to work together as a group. The manager will also need to allocate different resources among the members and also ensure that the different activities are followed and done without any compromise.
The Structural Elements
The various structural elements that will be employed in the organization will ensure small pieces of work that is broken down to ensure efficiency. The company will need to break their different operations into smaller units so that the workers can finish the various pieces easily for purposes of moving towards new productions. The various structural elements to ensure success of the company’s plan include a pooled form of interdependence which will ensure that every department is dependent on their own. The different units will perform different functions without getting help or support from other units (Werber, 2009).
They will need to utilize their resources and expertise while producing the different products that will be sold to different markets. The company needs to form an assembly chain to ensure success with the structure. This is because there are instances whereby different departments might not be able to support themselves and thereby depend on others who are able to provide them with support or information on where they should be going. There is need for coordination among all the departments even if they will be operating independently.
The plan will succeed 100% and this will give the company an opportunity to shine among other competitors who are producing similar products. The company will need to have diversification and coordinated work if they desire to improve on the products and increase their revenue and client level. They will also need to increase the number of products they produce and new areas to be ventured for purposes of competitive advantage.
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