Business Analysis

Assignment 2: Tesla Motors: Innovation and Competitive Analysis

Ronnie L. Taylor

Prof. Dr. Obioma Iwuanyanwu

MGT 599 – Management Capstone

08 FEB 2021

Innovation and Competitive Analysis

Competitive analysis of the company’s industry using porter’s five forces

Tesla operates in a highly competitive industry. The automotive industry is one of the most selling sectors across the globe .in the company porters five forces analysis, the study considers competitive rivalry, new entrants’ threat, supplier’s power, substitute products’ threat and, buyer’s power. The automotive industry faces a low threat of new entrants to the industry. Notwithstanding the numerous advantages accumulated with the offer of vehicles, for example, high income, the expense of beginning a business turns into a considerable hindrance to section. The assembly of its creation line focusing on electric vehicles is still new, drawing immense costs (Dudovskiy, 2019). Different organizations are endeavouring to make clean energy vehicles as they look to catch the developing interest (Grant, 2016). Nonetheless, even though the passage of new firms is moderate, an undeniable high competition rivalry exists. Tesla is as of now confronting hardened rivalry from Honda, general engines and Toyota. Both electronic and nonelectric car manufacturers offer a high competition to Tesla.

There’s a moderate suppliers bargaining power in the market. There exist many car parts manufacturers in the market. Notwithstanding, there is as yet a lower number of the individuals who indicate the market's electric force parts, making them hold a moderate force. Although Tesla has distinguished itself with moderate electric vehicles, the other auto industry players and their items offer options in contrast to the market (Dudovskiy, 2019). However, buyers have high bargaining power. Consequently, they hold high force in the deal as they can go for other options from competitors. Additionally, substitutes form a significant threat to tesla products. Customers who can’t meet the cost of electric vehicles prefer ordinary vehicles that utilize fuel. Thus, the substitutes form a significant threat to the company vehicles' demands in the market.

Two innovative and technology trends that the company or its competitors introduced and their feasibility and expected market impact of the trends

Tesla applied pragmatic strategy in technology that led to the production of electric vehicles. It applies a quick disruptive technology in creating differentiated products and availing them in market. The company has set an excellent move to reduce global warming by lowering carbon emissions and other toxic elements from burning fuels (Kim, 2020). It’s one of the moves that make it holds a differentiated aspect and position in the market. So far, Millions of people worldwide prefer low-cost electric cars as they support a green economy with no fumes emitted from cars. The strategy has significantly marketed the form as one of the leading innovative firms. There is a high possibility that with the continued application of its strategy, more demand will grow as the world seeks to promote the move to lower global warming and carbon emissions to create a better environment.

Secondly, Toyota’s innovative symbiosis strategy aims at creating a high value in the products. Toyota considered the symbiosis strategy to select the right customer choice for its products (Liu & Meng, 2017). It has created hybrid electric vehicles that will meet the high demand for the firm. Toyota is driving its innovation strategy that considers a technological advancement that will create a new future for Toyota. With the symbiosis strategy, Toyota can easily collaborate with the customers in new development. As a result, it will meet the expected value in the market.

Assessment of the company’s situation regarding its recent development

Tesla is currently in a good position in the market. Its application of high technology makes it operate in the automotive industry. The company holds a high level of homogeneity in the car manufacture with its electric car technology. According to Thomas & Maine (2019), Tesla is well positioned with an outstanding design, interior components and materials and high brand value. As a result, it's positioned as a luxury car that holds an advantage of availing it at high prices. However, the same may be hide insurance if the larger consumer segments consider it an expensive model. Generally, the car market has both electric and fuel-based vehicles. Thus, with the positioning, it limits the consumer market significantly. Such positioning and the low market will lead to lower sales hence unable to compete effectively. Technological innovation is a crucial driver when it comes to the automotive industry. Despit5e the fact that its cars are considered expensive; the innovative move will gain a potential market in the future. The world is talking a technological change, and with time, Tesla's technologies will hold a high demand across the globe. Generally, Tesla's differentiation strategy offers a long-term focus on adopting and dominance of electric automobile automation and environmentally-friendly vehicles shortly.

Whether the company’s organizational structure supports or impedes its ability to innovate and be a successful

Tesla is supported by an effective organizational structure that supports its business growth continuity. An excellent organizational and corporate structure aids in defining the patterns that exist in interactions within the firm/. It applies a unitary-form organizational structure. The structure operates with a central power and extends to the separate departments. The structure holds three significant features: centralization, divisions and function-based hierarchy (Argyres & Zenger, 2016). The function-based hierarchy includes how the management and teams work with the CEO on top. The centralization aspect characterizes its corporate structure where all heads are involved in decision making and control. Divisions extend to different geographical business sections. With the unitary structure, Tesla can easily make the right decisions as it considers several key management officials' views. Thus, it has suitable decision-making bases that will allow innovation and new ideas to consider in decision-making.

References

Argyres, N., & Zenger, T. R. (2013). Dynamics of organizational structure. In Handbook of economic organization. Edward Elgar Publishing.

Dudovskiy, J. (2019). Tesla Porter’s Five Forces Analysis-Research-Methodology. Research-Methodology.

Grant, R. M. (2015). Contemporary strategy analysis: Text and cases. 9th Ed. John Wiley & Sons.

Kim, H. (2020). Analysis of how Tesla Creating Core Innovation Capability. International Journal of Business and Management, 15(6).

Liu, J. H., & Meng, Z. (2017). Innovation model analysis of new energy vehicles: taking Toyota, Tesla and BYD as an example. Procedia Engineering, 174, 965-972.

Thomas, V. J., & Maine, E. (2019). Market entry strategies for electric vehicle start-ups in the automotive industry–Lessons from Tesla Motors. Journal of Cleaner Production, 235, 653-663.