Tesla Strategic Analysis Report

Tesla Strategic Analysis Report

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Tesla Strategic Analysis Report

Introduction

Tesla is an American electric cars company which was found in 2003 by a group of engineers who want to prove to the people that electric cars can be better and quicker as compared to gasoline cars. In 2008, they started production of the Tesla Roadster which was considered as the fastest and high-performance electric sports car. All the vehicles of Tesla are manufactured and produced at its factory in Fremont, California. Tesla believes that the world will stop relying on fossil fuels in the future and will prefer electric cars in the future. They don't only build electric cars, but they also build clean energy generation and storage products (Mangram, 2012). To achieve its vision while remaining financially reliable, Tesla is facing many opportunities in the market. However, Tesla still needs to sort out how they can improve their strategy to compete in the electric cars market and confirm its position.

Strategic Analysis

There are many auto manufacturing companies in the US market such as Toyota, BMW, Honda, Ford, Nissan, etc., which are competing against Tesla in the US market. However, Tesla's long term strategic goal is to create affordable electric vehicles for the people. In order to achieve its goal, Tesla is selling its own vehicles in company-owned showrooms. They are also selling their electric components to other auto manufacturers so that they can produce their own electric vehicles in the future. Tesla has partnerships with Mercedes, Panasonic, and Toyota to supply their charging systems and batteries (Grant, 2016).

There are many companies in the market which are larger then Tesla, and they have more financial resources as compared to Tesla, so they are releasing their own environmental friendly cars and have a chance to survive if the fuel prices don't increase in the near future. Tesla can face an economic slowdown in the future as electric cars are limited and also expensive for many people. They don't have created awareness of the importance of Tesla's electric vehicles in the market as it was required. Tesla is also lacking in experience and has a limited supply for raw materials (Sierzchula et al., 2012).

Porters five force analysis highlights a dominant pressure for Tesla due to other traditional car manufacturers, and if the company is not able to catch the market soon, then it will become difficult for them in future to compete with other auto manufacturers. Moreover, the pressure of government and suppliers are very high which means if the company faces any issue, it will be tough to go through in the future. Tesla is relatively safe and should meet quite easily their customer satisfaction considering their buyer power. However, Tesla can't be replaced in the market which is a positive for the company (Porter, 2008).

Conclusion

Tesla is one of the most popular electric vehicle manufacturers in America, and they are currently facing a lot of challenges in the market. With a change in technologies, they should focus on the development of new products to remain competitive in the market. Tesla is required to develop new technologies to decrease overall operating costs and also required to follow the cost reduction strategy to decrease costs. An effective way for growth is to enter into the new market and try to access more customers so that the company can sell more products. Tesla requires to keep a focus on their current status and expand itself in the international market. They can also get benefit from their R&D department and keep a focus on creating new cars to target more customers. However, if the strategy will be properly implemented, Tesla can easily gain its reputation in the market and get a leading edge in the market because of its electric vehicles.

References

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 78-93.

Mangram, M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing, 20(4), 289-312.

Sierzchula, W., Bakker, S., Maat, K., & Van Wee, B. (2012). The competitive environment of electric vehicles: An analysis of prototype and production models. Environmental Innovation and Societal Transitions, 2, 49-65.