Case study--Best Buy

2. Challenges and Major Problems

Tesla Motors has been faced by several issues over the years. One of the challenges that the company has experienced has been issues in the battery charging and pack fires. In 2013, three fire accidents were reported in a span of five weeks. Although these incidents were reported, the only good thing is that no serious accidents or even deaths were reported.

The worst of these cases was the situation in which a fire occurred in the residential garage of one of the customers of the customers of the company. The customer had purchased the Model S car and the fire happened in the process of charging the battery. The cause of the fire was the faulty wall socket, coupled up with charging cables that do not cut off electricity once a problem is detected.

The major problem that arose from this situation was the manner in which Tesla Motors handled the situation. Its CEO Elon Musk made no efforts to apologize to the garage owner, as well as the public for the fire incidents occurring from the electric vehicles. Moreover, the company shifted the blame to the media and claimed that it was tarnishing the company’s name. This aspect led to the consumer’s lack of trust and confidence in Tesla Motors and its electric cars. The people believed that the company had no sympathy for the victims since it did not accept responsibility for what had happened.

Another challenge faced was the concerns raised by the public concerning the type of batteries that the company was using to power its cars, as well as materials used in the manufacture of these batteries. The situation was further made worse by the media coverage of the fire incidents on the local and international arena. This issue led to a drop in the company’s stock prices to around 20% since the people were no longer confident that Tesla’s vehicles were safe for them.

Tesla Motors also faced challenges in its application of innovative technology. The company has in the past invested its resources in the carrying out of research that was used to develop the various models of electric cars. However, the company failed to apply its research capabilities when developing the Model S cars, and thus did not come up with innovative batteries with no risk of fires. Tesla Motors did not consider the fact that its innovative technology could be applied to also make upgrades on its cables, thus ensuring that fires do not emerge.

Another of the challenges was the range anxiety faced by the drivers of the Tesla’s electric cars. The drivers are always afraid that their vehicles will run out of charge before they reach their destinations. Consumers are afraid of purchasing the vehicles because the charging stations are far apart, making it inconvenient.

3. Tesla’s Corporate Objectives and Mission

Mission Statement

Initially, the company’s mission statement was “to accelerate the world’s transition to sustainable transport” (Mangram, 2012). However, as of 2016, Tesla Motor’s mission statement was changed and stated as “to accelerate the world’s transition to sustainable energy” (Mangram, 2012). This mission statement shows the shift of the company’s business strategies with an aim of capitalizing on the existing market opportunities in the renewable energy. Several features of this mission represent the changes in the company. These features include:

· Sustainable energy

· Acceleration

· The transitioning of the world

Acceleration, in Tesla’s case refers to the efforts by the company to push the automotive industry towards embracing the use of renewable sources of energy to conserve the environment. It also refers to the effort of increasing business sustainability through the renewable sources of energy. The transition of the world indicated in the mission statement refers to the attempts of the company to ensure that the society embraces the use of electric cars. It also represents a shift from the use of petroleum-powered cars to those using electricity. Lastly, the sustainable energy aspect of the mission puts into consideration the business strategies used by Tesla Motors to achieve the use of sustainable energy all over the world.

Corporate Objectives of Tesla Motors

Tesla Motors’ corporate objectives are based on its goals of ensuring the Transition of the world to the use of the sustainable sources of energy. Additionally, it is also focused on ensuring that the revenues of the company are increased. For this reason, its corporate goals are divided into three categories. These categories include

· Primary objectives

· Secondary objectives

· Overarching objectives

1. The primary objectives of Tesla motors in include driving the dales of its cars up through the generation of demand. It also aims at increasing awareness concerning the Tesla brand, and increasing its customer base, thus creating brand loyalty.

2. The secondary objectives include ensuring that the market share of the company continues to increase and to ensure that the word understands its goals of sustainable energy.

3. Lastly, there are the overarching objectives, which including empowering the society, inspiring others, and educating the world on renewable energy.

4. Tesla’s Competitors

The electric vehicle segment of the automotive industry in the international market has had several companies operating in it. As of 2013, the production of passage cars amounted to around 65 million. Out of these vehicles, only 1% of these were electric vehicles. These vehicles were manufactured by a number of players in this industry alongside Tesla Motors. The other companies manufacturing the plug-in electric vehicles are the competitors of Tesla Motors. These companies include

· Chevrolet

· Nissan

· Toyota

· Ford

· Mitsubishi

· Honda

· Volkswagen

Among Tesla’s competitors. Toyota has been the most competitive. As of 2013. Toyota Motor Corp was names as the global leader in the manufacture and sale of the plug-in electric cars, as well as the hybrids. By 2013, Toyota had manufacture 6 million units of the plugins (Mangram, 2012).

Another company that has proved to be too competitive is Volkswagen. The company has been researching into the manufacture of the electric cars while keeping its production costs lows. In 2013, the company explained that it made efforts to ensure that it became a market leader in the manufacture of electric cars in the global market.

5. Recommendation

Improving the Competitive Position

Advertising

Tesla motors should improve its competitive position by increasing its advertisement all across the globe. One advantage of advertising is that it increases the knowledge of people about the company and the products offered thereby increasing the reputation of the company. Increased advertising means informing the people about the operations of the firm therefore making the people interested in purchasing the vehicle. Advertising is actually the primary tool that businesses use to create and maintain a competitive position in the market. It is by appealing to people to make purchases that a company get more customers than the competitors and thus a competitive position. Moreover, to remain relevant and always on the minds of potential customers, the company needs to advertise its products and services in the market.

Positioning

Positioning entails building the reputation of the firm among the consumers to ensure that the products is perceived positively among the people and that it can be easily remembered by people. A better position in the market provides a firm with a competitive position better than its competitors since people will always think about the product of the firm in preference to the competitors. In positioning the company should conducts campaigns that involve competitions that will lead to an individual winning a free or subsidized tesla car of a given model. Such a competition may entail the customers sending the tesla models they know of after which a draw for a lucky winner will be conducted. The approach would place the company at a better position in the market which will result to increased competitive advantage for the firm.

The company should also sponsor some common events in the society such as football, athletics, and other forms of sport that are watched globally or in the specific target market. Participating in such events will put the firm into the lime light and attract a wider market which comes with a better competitive position. The move will also endear the company to the public and thus attract more customers improving the Tesla’s competitive position.

Improving the Financial Condition

Tesla should consider issuing unsecured notes to the renowned organization generate more funds for the firm. Al the notes are risky, they would offer the firm more returns to help in adding to its financial pool to use in developing the firm further. The approach would mean more earning for the firm which would be used to support the expansion of the firm.

Moreover, the firm should invest in advertising to raise the revenues of the firm and thus add to the earning of the company. In 2014, the revenues and earnings of the first quarter declined from the previous quarter impacting negatively on its financial condition. This should be changed to improve its financial condition and performance.

References

Mangram, ME 2012, 'The globalization of Tesla Motors: a strategic marketing plan analysis', Journal Of Strategic Marketing, 20, 4, pp. 289-312