Final Capstone Project

MGT: Capstone 599

Strayer University

February 21, 2021

Importance of Innovation for Long-Term Survival of Tesla Corporation

At Tesla, innovation remains and is treated as the backbone of the company and this is a practice that appears to have along of benefits in regards to the long-term survival of the company. For instance, Tesla Inc. heavily invests in non-stop engineering and innovation and a perfect example is where the company has invented electric motors that make use of lithium-ion batteries. Because of the great innovation, Tesla is currently focusing in how to turn around the world for the better through manufacturing products that promote clean energy use, reduce global warming, conserve energy, and completely minimize overreliance on fossil products.

The innovations seems to hold the future for Tesla since the world is moving towards products that does not harm them or the environment and Tesla is on point which means in the future, it would be the global automobile leader. Secondly, clients are seeking for cheaper vehicles that have a low maintenance while offering quality services and this is direction that innovation at Tesla is driving the company towards (Purificato, 2014). This is because the vehicles designed by Tesla do not need energy from fuels to move which means using electricity would be much cheaper. Additionally, there are a lot of mechanical challenges that vehicles develop from use of fossil fuel product and the innovation at Tesla is eliminating all such problems making their models easy to maintain.

For the Tesla Company to remain competitive in the industry and even become market leaders, it should embrace the architectural innovation strategy. This is a strategy that demands the company to constantly review the current products and make improvements to make the products meet the very best standards that does not have an equal in the global electric vehicle market. The strategy would help Tesla in having completely unique products that cannot be substituted since every model would have a slight and better change than the initial model. It would also be hard for the competing brands to understand the next move Tesla would take.

Automotive Industry Evolution

In the current times, the automobile industry is in an era where a lot of changes are taking place. With intense advanced technology that seems to bring new innovative inventions on a daily basis, the industry is being compelled towards embracing change. This is more so because consumer needs and demands are changing often and failure of the companies to embrace change is affecting sales and overall performance of the company. The current changes are shaping the next five years of the automobile industry. For instance, in the next five years, there is a high likelihood that vehicles will be designed with better in-fitted features like GPS vehicle tracking, autonomous vehicles, vehicle-to-vehicle communication, backup cameras, Cars-as-a-Service, Smart Home Integration, and automatic high beam control among others.

These advanced changes are likely to introduce and sustain changes in the industry that will be realized between the fifth and the tenth year. For instance, the industry will have embraced artificial technologies, robots, machine learning, and the Internet of things. it is likely in the next ten years, vehicles will be built and designed by robots as a way of reducing the cost of production and eliminate defects (Singh, 2019). It is possible the companies in the industry would have cut short the supply chain and use the internet of things to get the clients directly as well as improving the security of the vehicle using artificial technologies thereby making it hard for the vehicles to crash and roll or even crush and catch fire. It is also possible that vehicles being designed in ten years would have an inbuilt control system that will trigger automatic stops when being badly driven. .

Tesla’s top competitive advantage strategies over its competitors

Tesla Corporation has over the years utilized available strengths and opportunities while at the same time improving in its weaknesses and working towards professionally handling threats. From this practice, Tesla has managed to create and maintain strong competitive edges against its competitors. Some of them include; applying innovation and creativity successful and managing to disrupt the automobile industry, a strong financial status, quality leadership, hiring quality and reliable skills, and effectively marketing its products naturally through application of high quality products, at affordable prices, and also making the products highly accessible.

According to Dzialo, (2018); innovation and creativity at Tesla has made the company to stand among strong competition. For instance, manufacturing hybrid vehicles is a unique innovation at a time when the world needs products that conserve the environment and offer quality services to the user. Further, Schowalter, (2017); states that though the buying price of Tesla hybrid vehicles is much higher than petrol and diesel vehicles, the reality is that maintenance of hybrid vehicles is extremely low while as fuel using vehicles record a high maintenance cost. The hiring of quality and reliable skills has made it possible for the company to utilize available resources leading to excellent end results.

Innovative Breakthrough Strategies

It is a good thing that Tesla is strategically positioned in regards to innovation. Nevertheless, the company is not yet off the hook which means more strategies are required to exploit its innovation breakthroughs. The company should embrace product diversification and diverse market penetration to attract a much higher customer base (Schwartz, 2014). It is a fact that Tesla is doing well in electric vehicles and in order to target a wider target market, the company should exploit innovation to design different designs and sizes of vehicles in order to offer the world diverse products to choose from. Secondly, the company should work in penetrating other new potential markets to make the vehicles known and accessible across the globe.

Strategy Recommendation

Product diversification is one of the recommended strategies that Tesla should exploit because it would lead the company making use of available innovative abilities to design and market different products that would target various clients. The recommended strategy would increase the company’s competitive abilities since it would attract a higher number of clients since the products would be sold at different prices and would also serve different consumer needs. It would be a way for the company to prove that it is an all-people’s company and not discriminative which is a good reputation to send to the public. The strategy would also reduce some weaknesses like limited number of products and more important to note is that with increasing number of products, the company shall be compelled to expand and invest in other countries to increase the number of plants and selling outlets. The more reason is that such changes would make the products accessible thereby making the marketing of the products much easier.

References

Dzialo, B. (2018). Charging down the Road: A Historical Analysis of the American Auto Industry and Tesla Inc

Purificato, M. (2014). The open innovation paradigm in electric vehicle industry: a case study of Tesla Motors.

Schowalter, J. (2017). Determining the Effectiveness of Tesla's Strategy.

Schwartz, R. (2014). Telsa, Vertical Integration, and Incumbent Legal Disadvantages in the New

Car Retailing Market. Wayne L. Rev., 60, 567.