mgmt

CRAFTING AND EXECUTING STATEGY

Chapter 5 and Chapter 6

By Zackery Rogers

Professor Anna Phillips

MGMT 3900-07

Oct. 13, 2020

Introduction

Tesla has set the bar for competitive strategies. When we hear the name Tesla, we

think of forward thinking, innovative strategy. They take full advantage of and even

adapt strategies to make them a company that is well known around the world. This

innovation is reported in the Harvard Business Review in their article, “Lessons from

Tesla’s Approach to Innovation” published February 12, 2020. (Furr and Dyer) The

strategies we are learning are apparent in the Tesla Company.

Chapter 5

LO1 What distinguishes each of the five generic strategies and why some of these strategies work better in certain conditions than others.

1.Tesla has blended the four strategies of competitive strategies. Tesla has used a

focused differentiate strategy when they produced a high-end electric vehicle that

looked good and had luxury included. The concept and look of the car were

forward thinking. Elon Musk promoted the uniqueness of his automobile which

appeals to many buyers. They had a market segment that would embrace this

luxury vehicle. Other carmakers were not ready to produce such a product and

certainly not to specialize in a high-end buyer. There was absolutely no other

manufacturer specializing in this market segment.

Tesla has set the bar for competitive strategies. When we hear the name

Tesla, we think of forward thinking, innovative strategy. They take full advantage of

and even adapt strategies to make them a company that is well known around the

This innovation is reported in the Harvard Business Review in their article,

“Lessons from Tesla’s Approach to Innovation” published February 12, 2020. (Furr

and Dyer) The strategies we are learning are apparent in the Tesla Company.

2. Tesla initiated a broad differentiation strategy when they produced their unique

electric vehicle. They incorporated features that were unique to Tesla such as the

hideaway door handles and the option of the “driverless” or self-driving vehicle.

To further differentiate themselves, Tesla opened their own showrooms in select

areas, and produced a website dealer free to pre-purchase the vehicles. Elon

Musk has been known to personally communicate with his customers and takes

their opinions and suggestions and acts on them. The look of the car along with

its outstanding attributes such as outstanding customer service make Tesla the

leader in the field. They are forward thinking and incorporate new innovations.

3.Tesla is now moving into a hybrid strategy by producing a new vehicle in their line

that will be in the $25,000 area within a few years. This will undercut the new

competitors as the others will haven high startup costs. BY already being

established in the market segment, Tesla will now attract a new buyers’ market.

This will broaden and enlarge their customer base while still providing a quality

vehicle. They are just getting started in this strategy. They have produced the car

for some time and can use their prior knowledge in the production end to offer this

new lower cost Tesla. Now that Musk has announced a new model that will be

affordable to more customers it will seal the company’s market position as a low

cost provider. In the article used in this media analysis, Elon Musk has

announced a new Cybertruck. Once again Tesla is on the cutting edge as a first

mover in the truck line. This company is the first mover and leads the way. His

electric car line and Cybertruck are the leaders in the field. He is also talking

about making an electric tractor. Tesla beat the competitors into production

because they have the experience and know how to make it work.

LO4 The attributes of a best cost provider strategy and differentiation strategies.

1.Tesla has shown the way in innovation and strategic moves. Although they are

not a low-cost provider in their area, they are showing movement to that area. There

are many car brands to choose from but not a lot of dealers that offer an all-electric

vehicle. They are going to produce a lower cost car that will attract a more dollar

conscious buyer. Tesla does not produce cheaply made autos but will incorporate all

the reputation in their lower cost model Tesla. They have the resources to produce not

only a high-end vehicle but also a more affordable model to capture a broad market of

consumers. Now Musk has announced a new model that will be affordable to more

customers to seal the company’s market position. In the article used in this media

analysis: Elon Musk has announced a new Cybertruck. Once again Tesla is on the

cutting edge as a first mover in the truck line. This company is the first mover and leads

the way. His electric car line and Cybertruck are the leaders in the field. He is also

talking about making an electric tractor. Tesla beat the competitors into production

because they have the experience and know how to make it work.

#2 Their product already has the reputation of being unique. It is easy to spot a

Tesla on the road. The features that are offered such as hideaway door handles

and the option of the vehicle being “driverless” or self-driving make this product

stand in a class of its own. Tesla’s competitors are hurrying to catch up with the

Tesla. The strategy of producing a luxury high end electric vehicle and moving

into the more affordable market make Tesla the leader in the market. Tesla has

the ability and resources to stay far ahead of its competition.

3.Tesla has the advantage of being established in the electric vehicle market. They

offer a very personalized customer experience which can include receiving personal

phone calls from Elon Musk himself after their purchase. They produce their own

batteries in their own manufacturing plants. They keep their customers satisfied with the

performance of the vehicle and the availability of service as they maintain their own

repair facilities. Tesla uses different strategies to hold on to their competitive edge and

they have a product that their competitors have trouble duplicating and puts the

competition in a catch-up position. Tesla is in the forefront of marketing by using social

media and splashy introduction of their new product lines.

Chapter 6

LO1 Whether and when to pursue offensive or defensive strategic moves to improve a company’s market position.

1. Offensive strategies are used when an opportunity presents itself to a company.

Tesla has the power to exploit its strong competitive resources. Opportunities in

their target market is to offer equally good or better product at lower price. They

are making a quality product, probably considered the top of the line, while

preparing to market a lower priced vehicle while maintaining the reputation of the

Tesla brand. Besides the lower cost Tesla, they will also produce the new

Cybertruck well ahead of its competitors. Tesla has always been on the offensive

strategy wise. Tesla was first to put out an electric car that people wanted to own. It

had the bells and whistles that people wanted in a higher end vehicle. Now Musk

has announced a new model that will be affordable to more customers to seal the

company’s market position. In the article used in this media analysis, Elon Musk has

announced a new Cybertruck. Once again Tesla is on the cutting edge as a first

mover in the truck line.

2. Tesla leapfrogged their competition by being first to market with their luxury

electric car. The technology included in their cars is forward thinking. They are

the first producers of the self-driving car. Each year the Tesla becomes more

innovative and refined. Tesla hit the market with their electric cars well ahead of any

other manufacturer. All electric means it must have a power source, so Tesla

manufactures its own batteries. They offer the ability to purchase the cars ahead of

time with their forward-thinking websites. As preemptive strikes, when another

company proclaimed, they would produce an electric truck, Tesla countered and

answered that announcement by producing and out doing their rivals with their own

electric truck. Tesla Cybertruck will have a cold rolled steel outer shell which will

prevent dents and corrosion and provides maximum protection to the driver and any

passenger. Tesla has also announced recently that it is cutting the price on its

long-range Model Y by $3,000 dollars. Elon Musk also stated that he will offer a

single motor Model Y in a few months which will improve affordability, while keeping

the excellence of the product.

LO2 When being a first mover or a fast follower or a late mover is most advantageous.

1. Being a first mover puts a company in a first to market advantage. This will bring in customers and form a loyal customer base. In Tesla’s case, they are the first mover in mass producing an electric car and therefore has set and innovated the technical standards for the industry. They are constantly moving forward on the learning curve of the product and take the customers suggestions for improvement to heart and have been known to implement these suggestions. This company is the first mover and leads the way. His electric car line and Cybertruck are the leaders in the field.

Being first to market, can make the buyers and consumers face the prospect of

switching costs that they may not want to pay if they move to a different brand.

2. When the company is a fast follower someone else has already assumed the initial

risks of development. They also learn from any mistakes made by the first to market

producer. Fast followers can take advantage of what has already been produced

and attempt to copy. The market is evolving, and they can try to catch up but unless

they have the engineers to create the technology already being utilized, they will

have a hard time immediately following a first mover. They will have diminished

market research and technological costs. There is less risk of failure to produce a

viable product

3. The late mover takes advantage of all the technology, issues discovered, and

innovation already in use. They can sit back and observe the problems

encountered by the first mover and even the fast followers. The late mover has seen

what the consumers are asking for in a product and adapt their first pass production

to meet those needs that are clarified. They also benefit if they can capture a new

technology or meet an expectation that the other competition has not provided. The

late mover can avoid costly mistakes and avoid unnecessary cost incurred by the

other manufacturers before entering the market. Wedbush analyst Dan Ives is

quoted as saying, “Tesla has such a huge lead in manufacturing electric vehicles

over its competitors that it’s the only game in town”. He further said that “Right now

in the electric-vehicle market, it’s Tesla’s world and everyone else is paying rent”.

(Deagon)

Works Cited

Deagon,Brian, 10/09/20, Tesla in a League of its Own with Massive Expansion Plans, www.investors.com, accessed 10/11/20

Furr,Nathan and Dyer,Jeff, 2/12/20, Lesson’s from Tesla’s Approach to Innovation, www.Hbr.org, accessed 10/10/2020