BSS050 6 Strategic Management Assignment Sample
Introduction:
The Tesla brand is run by Elon Musk. Major car companies got confused by the use of hype marketing strategy by Elon Musk for their electronic vehicles. Tesla is an example of an overnight success that took time to reach the market. Tesla has been in business since 2003 but they have become successful only from the past 5 years Which gives the impression of an overnight success. The first eight years Tesla was able to sell only a few thousand cars which caused the loss of founders to leave the company, but Elon Musk continued with the company (Toumi,2918).
In the nine year the company launched a high and model S car where only one lakh cars were sold over 3 years. It is at this time when people started discovering Tesla. At the launch of the Tesla 3 customers were filled with Hype, the company struggled to produce to keep up with the demand for the car as the company was unable to manufacture faster. The stock price of the company was not stable from the year 2015 to 2019. It was a roller coaster situation where the stock price went up to $85 from $40 and back again to $40. But in the year 2020 Tesla was able to bring together everything which resulted in the increase of their stock price by 10times, thus the stock price went from $85 to over $900 as a result of which Elon Musk Became the richest person on earth (Wu,2021).
Analysis of strategic tools:
PESTEL analysis:
PESTEL analysis is a business strategy that gives a boost to startups. It is a tool that determines the external factors that affect an organization and its business strategy. PESTEL analysis helps to identify the firm’s strengths and weaknesses and provide strategies that enable the growth of the business.
PESTEL analysis for Tesla
Using PESTELl, you may assess the most essential aspects that influence a company’s operations. These considerations include political, economic, social, technical, environmental, and legal considerations. Tesla is a high-end Karbonn with distinctive characteristics that have earned it international acclaim for its design. Learning about Tesla via a PESTEL study will assist students in understanding how the firm has established itself in the automobile sector in a very short period of time.
Political factors: The political dimensions of a company are concerned with the government’s involvement in that firm. The ability to comprehend how laws, limits, and corruption affect the organisation and its evolution through time is critical for effective business management.
These factors contribute to the growth of the industry and its business
- Political and economic factors are directly affected by the ecological factor of Tesla. Tesla depend more on electricity and less on petrol which are environmental friendly product, because of which its buyers get specific tax credit for using an electric car
- Owing to Tesla Drive for environmental sensitivity government incentives has strengthened the financial performance of the company (Thomas,2019)
- Other countries political factor are also in favor of Tesla growth which result in the expansion of the company
Economic factors: Economic growth of the company and its profitability is known by its economic factors that includes the current interest rates, exchange rate, inflation, Unemployment rate, economic growth rate and all the other economic factors that influence a business.
- as cars come under the category of luxury product but the demand for electric automobiles have proven to be a boost for the global economy. the automobile industry has seen tremendous growth in the year 2016 and 2017, increase number of sale has made it possible for the company to produce more of cost-effective vehicles for the future
- Local economy of a country is a very important factor for the growth of any business. Tesla’s ability to create cost effective cars for ordinary consumers benefited the company in the long run.It is able to meet the growing demand for electric cars in the market which enable a decrease in the cost of Renewable Sources, this factor of Tesla helped the company to grow. whereas economic instability is one of the major threat for such companies
Social factors: social factors relate to consumers directly, consumer behavior in consumer demand that are affected by societal norms. It is true socio-cultural factors that a company can understand the need of the target customer through which feedback is received by the companies to achieve the short and long term goals.
- Tesla has able to popularize luxurious electric cars among customers
- Tesla’s environmental friendly attitude and the use of of renewable energy work in favor for Tesla and because of which it has gained popularity in the industry
- Tesla should consider investing carefully in developing countries which will help the company to earn more revenue for the company. in the Macro environment Tesla will be able to give a tough competition to the other competitors in this industry
Technological factors: innovation and other innovative factors that influence the company favorably or unfavorably are termed as technological factors, this factor may affect the overall growth of the company
- Tesla is able to be at par with the technological advancement, it provides luxurious cars with letters gadgets in consideration to the future which atrox customers. Its characteristics of efficiency redefine sustainability (Shen,2022).
- The Tesla company uses the latest technology which is an important factor for the growth of the business. however technology is evolving every now and then and it can easily be e used by other competitors in the same industry
- as of now test class online mobile system and automation are and parallel as compared to other car company thus this factor provide the analyses that the company can grow through technological enhancement
Ecological factors: ecological factors are the environmental concerns including government regulation in regard to pollution, scarcity of raw materials and other factors influencing the ecology.
- Tesla uses the ecological factor as an important concern, the company supports environment program that deal with climate change and enable use of Sustainable resources to control issues regarding to resource
- The company abides by many ecological norms which has enabled the company to establish a brand name.
- tesla already have an advantage over ecological factor the company can further analyze this factors to help more growth in countries That uses environmental sensitive product like electric vehicles
Legal factors: legal factors are the countries rules and regulations company have to take into consideration
- Tesla needs to maintain Regulation and update its policies to be able to expand its business in other countries. Because of its eco-friendly vehicle Tesla have a advantage to promote its vehicle overseas which will improve its International patents (Han, 2022)
- Tesla’s legal macro environment remote factor analysis shows that Tesla has a growth opportunity in the Global Automotive market (Premec,2021)
Porter’s five forces analysis
Porter’s five force analysis represents the five individual factors that shape the overall extent of competition in the industry. The five force analysis is used to analyze the competitive environment of Tesla company
- Threat of new entrants : Model X and Model 3 electric cars are now in development, and they will have enhanced technical features to compete with gasoline-powered automobiles in the future. Because these characteristics, which include fast speed and a long range on a single charge, are both technically demanding and expensive, making their manufacture difficult to attain. Taking into consideration these hurdles, it will be difficult for any new business to enter the market without confronting many of the worries that the present one has, as well as experiencing many of the same challenges.
- Bargaining power of buyers : Absence of switching cost increases the burgeoning power of bhaiya That is an important factor to be considered. There is no cost for customers to switch from Tesla model 3 to any other electric vehicle. Price sensitivity is another important factor the customers May choose other companies because of the high expensive prices of Tesla. Thus Tesla need to reconsider its pricing strategy
- Tesla’s suppliers have just a limited amount of bargaining power with the corporation, according to the company’s own internal data. In addition to the fact that Tesla has extensive brand recognition and a favourable brand image on a worldwide scale, many suppliers are interested in doing business with the firm. As a consequence, suppliers’ bargaining power in relation with Tesla is diminished. With the development of Tesla’s manufacturing capacity, the company has experienced an increase in the number of orders made with vendors. As a consequence of this Ability, the negotiation power of suppliers is diminished.
- goods or services that are not conventional: In the case of Tesla, the threat of substitutable goods or services is significant since the traditional automakers have a big and devoted customer base. This ultimate level of brand loyalty, on the other hand, provides the firm with a competitive edge. The shift of the major automobile manufacturers to electric vehicles has triggered intense competition among competitors in the sector. Tesla’s competitors are using pricing and differentiation strategies that are impeding the company’s potential to increase its market profitability in the long run.
As a consequence, Tesla has a low barrier to entry, strong bargaining power with suppliers, growing bargaining power with customers, a high risk of replacement, and intense competition in the marketplace.
Value chain analysis
This analysis comprises all the activities such as purchasing of raw materials, storage, handling production, marketing and distribution, and post marketing management. it is true value chain that a company can optimize its operations, it consists of two categories of activities that are primary and supportive activities
- primary activities: primary activities include inbound logistic, outbound Logistics, operations, sales and marketing and services.
- Model S was released in 2008 and is the second vehicle produced by the business. Transportation of Tesla items into the country: There are a huge number of Tesla distribution centres across the world, one of which is situated in Taiwan. These distribution centres serve both as delivery and storage facilities for the company’s products. Tesla’s activities are as follows: The Roadster is the first generation of Tesla and the quickest legal serial electric car production. It was released in 2008 and is the company’s fastest legal serial electric vehicle production. As the organisation started to grow its operations into two other countries throughout the world, mostly in China, the company’s size increased.
- Outbound logistics: Nevada is home to the final manufacturing network, which includes the world’s biggest and most technologically sophisticated plant. Tesla marketing and sales: Automobile companies use digital media to promote their products and services. The manufacturing site is located in Corcoran, California, and the distribution centre is located in Tilburg, with numerous other warehouses located around the United States. Despite the fact that companies spend tremendous amounts of money on marketing, Tesla is the component that has spent a very small amount of money on marketing when compared to the other components in this business. The company’s website and other digital media have received the lion’s share of the company’s marketing expenditure. Retail sales have been bolstered by the creation of shops in different places around the country, many of which also provide service.
- There are many different services offered by the cyber truck, which is a new Tesla creation that is both a powerful vehicle and also ecologically sustainable. The company is well-known for its pioneering work in the development of energy storage technologies and the cars that use them. Consumption after-sales help is provided to customers via the many retail stores and service stations that are strategically located around the nation.
- Supportive activities: the activities done early Inc with the primary activities and that provides assistance to the primary activities through which the functions of the organization are carried out are known as supportive activities. Supportive activities include technological development, the infrastructure of the company,
Resource Management and procurement
- Technology development: electric mobility Industries can only be differentiated from Technology e s automobile industry has evolved a lot. BMW is the main component of Tesla as it is launched its electric vehicle and is committed to expand its electric vehicles in the industry
- the firm’s infrastructure of Tesla: The products of Tesla are categorized as energy production division and automobile sector
- human resource management of Tesla: human resource management is an importance for maintaining profitability of the organization. Human resource is an essential factor to increase the competitive strength of the opponents which enables the company to be competitive. Tesla has been giving importance to human resource development to be able to strengthen the relationship with the customer which in the preserve in the increase of its strength
- requirement of Tesla: suppliers are ready to work with Tesla the company has thousands of suppliers globally with home the company has a good relationship. The key parts of raw materials are obtained from suppliers because of which the test class has built an active relationship with its suppliers. Panasonic is one of the best supplier for Tesla
SWOT analysis
SWOT analysis for a company recognises its strength, weaknesses, opportunities, and threats. Tata internal and external factors that help a business to understand its strategy .It helps the company to utilize its resources efficiently by understanding the threats for the company. SWOT analysis of Tesla will determine the current position of the company, its business prediction and the future plans of the company.
- Strength: The organizational missions of any organization are accomplished by the qualities of the company. the strengths of tesla are
- Energy Efficiency: Tesla is a leading when it comes to electric vehicles because of the prominent use of renewable energy like solar power
- Partnership: Tesla is collaborating with giant energy companies which helps the company to expand renewable energy and its growth in global market
- Highly innovative: test class for the art of class is the company futsal oath India electric vehicle to be able to make the product extreme comfortable to the customer
- Brand image: because of the market trance and the development of Clean Energy and profitable products by the company enable the company to gain immense fame.
- Weaknesses: some of the weaknesses of the sly include its Limited presence in the automobile market.Another setback for Tesla is in terms of affordability which may affect its customers trust.
- Opportunities: Tesla social momos driving Technology has gained Fame for its safety and convenience. It is an environmentally friendly card that minimizes fuel driving.
- Threats: Some of the threats for Tesla are increased competition to buy automobiles that include big companies like BMW and Volkswagen etc. innovative energy by companies increases competitive pressure with high operational cost resulting in decrease of profit margin.
Conclusion:
Tesla has a competitive advantage which makes it possible to compete in the intense industry. Its continuous headlines accelerate brand adoption especially targeting the young demographic. The company is structured with a less rigid anesthetic structure which enables its response to track and opportunities quickly in comparison to the competitors. The company shows strong future growth and an opportunity for expansion. Tesla promotes the value chain activities to improve its relationship with its customers, Tesla his father’s approach to develop its human resource method to enable better Human Resource Management. It has an advantage of suppliers through which the company purchases raw materials which helps the company to achieve competitive differentiation and ultimately helps in shortening the delivery time of the order product of the client. Based on SWOT analysis Tesla needs to to continue and increase its renewable energy sourceAnd should start establishing consumer trans that is beneficial for a company in long run. The company should take into consideration expansion overseas and work on securing production globally.
References
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Han, J., 2021. How Does Tesla Motors Achieve Competitive Advantage in the Global Automobile Industry?. Journal of Next-generation Convergence Information Services Technology Vol, 10(5), pp.573-582.
Jing, X.U., 2020. Analysis of the Operation Strategy of Tesla Inc. in China. Frontiers in Economics and Management Research, 1(1), pp.21-25.
Jingchao, P., 2021. Development marketing strategy of Tesla Motor (on the example of China).
MAOHENG, W., 2018. RESEARCH ON THE BRAND MARKETING OF TESLA ELECTRIC VEHICLE (Doctoral dissertation, SIAM UNIVERSITY).
Maughmer, T., 2021. Identifying Appropriate Strategies To Sell Tesla Automobiles in Ohio.
Premec, I.R. and Guzovski, M., 2021. Marketing strategies and their impact on brand strenght-cases of three companies. Zbornik sveučilišta Libertas, 6(6), pp.19-27.
Shen, C. and Zeng, Q., 2022, March. Research on the Marketing Communication Strategy of Tesla Motors in China under the Background of New Media. In 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022) (pp. 947-951). Atlantis Press.
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.
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