Final Capstone Project

Tesla Motors Innovation and Competitive Analysis

Harvey Allen

MGT 599 Capstone

Professor: Hassan Yemer

February 7, 2021

Tesla Motors Innovation and Competitive Analysis

Porter’s Five Forces of Competition at Tesla

The motor vehicle industry in the United States and globally is marked with a lot of competition that compels companies in the industry like Tesla to seek for different strategies to handle competition. The porter’s five forces help in understanding the competition state in the automobile sector.

a. Competitive rivalry

According to (Schowalter, 2017); the automobile industry does not a high number of competitors and some offers stiff competition for Tesla. Companies in the industry have to go an extra mile to attract the much-needed customer attention. Different marketing mixes like strategically places selling outlets, setting competitive places, conducting promotions, and designing products that meets consumer needs are used to keep the company progressing and meeting set goals.

b. Supplier power

The industry has a lot of suppliers and this makes the supplier power to go down since the companies have different supplier options to choose from. This is possible because the number of suppliers exceeds the number of companies being targeted and this comes as a great advantage to the manufacturers as they are able to negotiate prices leading to lower cost of production.

c. Buyer power

The motor vehicle industry targets middle to high economic class people and the fact that there are diverse companies fighting for the same target market increases buyer power. In the industry, buyers have power to dictate the quality, design, and shape of vehicles they want and other measures like cost (Schowalter, 2017). For instance, vehicles that client consider as being unnecessary expensive record low purchase and this means the company has to act in a manner that suits consumer needs to make sales and realize minimized profits.

d. Threat of substitution

The motor vehicle industry is one of the most expensive industries to join due to massive finances and investment that investors are required. There are also huge government demands for investors in the industry for instance operating licenses and taxes among other demands. This makes it hard for the substitutes to be manufactured and supplied in the market thereby granting companies like Tesla a chance to market and sell its products without facing substitution challenge.

e. Threat of new entry

Due to high demands of joining the industry also reduces chances of new entrants joining the market to do so (Schowalter, 2017). The more reason is that many investors finds it hard to meet all the demands and make sales in a market that is already dominated by specific companies that are known by the clients already. As a matter of reality, willing investors invests in already existing companies through buying of shares hence granting them a chance to enter and make profits from the industry without necessary having to establish a company. others enter the market through selling of spare parts and others through employment and request to become a shareholder.

Innovation strategies at Tesla

The motor vehicle industry is increasingly becoming innovative leading to advanced technology application. Tesla Motors is among the company leading in the application of innovation and as a matter of reality, other competitors look up to Tesla to learn the new trends. One of the latest innovations that have become a trend in the world is the application of internal digital communication devices that enables the driver to use his/her mobile phone while driving without necessary having to touch the phone (Dzialo, 2018). It is an innovation that has helped in increasing driver safety while keeping the driver connected to the world without massive distraction. The same device can be used to locate maps and directions that the driver uses to cruise to desired destination. The same device has a music system that makes the vehicle intriguing and entertaining.

According to Ahmad, & Khan, (2019) the world is facing global warming and from this reality, Tesla Motors has embraced advanced technology in a manner that it I s currently designing hybrid vehicles that use electricity instead of fuel product. This is a way the company has embraced to protect the people and the environment (Purificato, 2014). The hybrid vehicles have been found effective by many users since the vehicles are easy to manage and maintain. The more reason is that the owner only requires a working electric battery and the fact that one not need to fuel makes the maintenance of the vehicle to get extremely low something that many users appreciates and finds the vehicle worth buying.

Tesla Motors situation

Tesla Company is among the strategically placed entities in the global automobile industry. The company has great capabilities and they have promoted a good public reputation that makes many people to consider Tesla vehicles innovative, user friendly, environmental friendly, and durable. From the invention of hybrid vehicles that have an internal perfectly fitted digital devices; the company has managed to increase the number of sales recorded leading to maximized profits and financial stability (Holmberg, 2011). From the innovation and use of advanced technology, the company has hired the best skills the market can offer placing the company in a higher rank. The current state of the company has made the company to have a much better status in the market and also internally. The more reason being the company can now afford paying skilled and competent workers and also maintain the innovations and trends. It is expected that with time, Tesla Motors would lead the global motor vehicle industry due to the positive impact that the current abilities are making at the company.

Opinion on Organizational structure

The Tesla Motors has a hierarchical type of organizational structure which allows information and instructions to flow from higher positions to lower one. This type of structure can be said to perfectly support the company’s ability to innovate and be a successful company.  The more reason is that the executive team of the company is able to make decisions which are well-thought before they are communicated to the lower positions for execution. Additionally, the structure makes it possible for the leaders to delegate tasks to employees allowing them to develop their innovation and creativity skills which are critical in achieving and maintaining success. For instance, the manufacturing manager delegate tasks to subordinates for instance coming up with new designs and this makes the workers to maintain high levels of productivity and success. The fact that the structure has created a chance where employees feel valued, appreciated, granted a chance to grow is all that is fundamental in maintain a successful company. Moreover, the structure grants employees hope of being promoted which in most cases is done internally unless there is need to recruit externally.

References