Research Analysis for Business

Research Analysis for Businesses

Catrina Herbert

ECO 561

University of Phoenix

July 06, 2019

I decided to go with the Tesla Motor Company which is a company located in the United States and deals in the manufacture of electric cars. The market structure that the Tesla tor Company competes in is the oligopoly structure of market. The reason behind this is that it is accompany that only competes with other companies that deal in automobiles. This is a company which totally owns the market in which they deal in [I am not sure that I agree with you here. Check your facts and argument carefully.] and this is an advantage to them. The only issue is that there is still manufacturing of vehicles which run in diesel or gasoline which are cheaper compared to the electric ones. The company has been doing well over the years and in 2018 they produced more cars than ever before. They increased from 120,000 in 2017 to 350,000 in the next year which was 2018. The fact that they haven’t been able to sell most of their vehicles is because their prices are relatively high and folks with high incomes are the ones who could afford to get them. [Very good research! You supported your assertion well! It is important to have a valid citation to support such facts. Your citation was missing, though.] Comment by Eugene Kaufman: [Use 1-inch margins at the top, bottom, left, and right of every page.] Comment by Eugene Kaufman: What is that? Comment by Eugene Kaufman: [Check spelling of this word. This is an incorrect use of this word. Please consult a dictionary to find the word's definition and to locate the right word for this context.]

There are various factors which goes a long way to prevent other investors from falling into this path. The following are the factors which obscure them, they include; first is the cost of production. The production of electric cars is extremely costly and before a person thinks about this, they should have billions of dollars with them. As much as the government provides incentives to help with the production, still it would be a lot of money needed to start this business. The other factor is the issue of infrastructure. The infrastructure which favors the electric vehicles is not yet deployed in most parts of the country and this would reduce the number of sales in areas that lack them. These infrastructures which I’m talking about are the charging points. The charging points that are already available are not efficient enough since they operate on modes one to three. [Very nice! You explained this idea quite well!]

The other reason is that it would take a lot of time before this company would come to order so that they start the processes and by the time this happens, they would have used a lot of time as well as funds without any returns. This would not only be bad to the whole company but to the employees whom work there as well. Moreover, the case of obsolescence would also go a long way to prevent new investors. Some people might not want these cars yet. The reason being their prices are exorbitant and they are willing to wait until they become common so that their prices are reduced. This has made it easier for the Tesla Motor Company so that it thrives well in its day to day activities [Awkward and/or vague phrasing. I am not too clear what you are trying to say. Please rewrite for greater clarity.] .

The fear of getting to this business has made them the only firm in America and therefore no competition for them. The firm would continue to thrive every minute until the time where most of the citizens would adopt to them. Eventually, the improvement in technology which takes place on a daily basis would trigger more companies to come up and deal in electric vehicles. For instance, in the need to conserve the environment, the government would pass a law that would encourage people to use the electric vehicles more and abandon the fuel driven vehicles. This would make the investors to perceive a new market and therefore they would ultimately bring up more competition for the Tesla Company. [This is a good assumption. I cannot disagree with your reasoning.]

Currently, the Tesla Motor company is at the trough stage of the business cycle. It has been facing a lot of challenges lately. First, it has had issues over its finances. Without finances a business cannot run as the daily activities would be reduced. The other challenge was the inability of the company to build the cars to scale. This is the inability of the company to build cheaper cars for their consumers who have been waiting. They say that they can’t make cheaper cars without the help of China who are supposed to manufacture their spare parts in large scale. The issue about the GDP has also brought up a lot of questions in the company. The credit worthiness of Tesla Company has reduced drastically due to the various fluctuations in its performance. The company has not been producing a good result when the Gross Domestic Product is concerned and this has led to a great mess. Comment by Eugene Kaufman: [What do you mean? I don't quite follow what you are asserting.] Comment by Eugene Kaufman: Why?

The Tesla Motor Company has been influencing inflation in America. The company has only reduced the prices of the cars once by $2,000 when the government had granted them a tax relief which reduced the cost of production. The Company hasn’t been able to increase inflation levels of the country despite their expensive prizes which are only favor the wealthy people. The calculation of the Consumer Price Index showed that the company was safe from causing inflation nonetheless the prices of the electric cars. The company has greatly contributed to the employment of the citizens with an average pay of $20 in the hour of work. They continue to create employment for the fresh students from college as well as providing internship for the continuing students.

Tesla Motor Company has been struggling for some time now concerning creating enough profit in each quarter in order to meet its wants. It has been facing expensive challenges which have made them yearn for more Federal funds in order to moderate their spending. They have been lately planning to issue shares to the public as well other companies as well as convertible debts. The company’s spending has been overwhelming there proceeds such that they would require new cash so that they are safe from incurring losses and enable them to carry on with their growth plans. Tesla Company has missed their production targets for the Model 3 a lot of times and the sale of almost 400,000 0f these cars were supposed to be sold so that they would be able to fund their ingenuities. This hasn’t been a real struggle for them in the past years and therefore they require funds. Their prime rate has dropped to $3 billion to $4 billion if they would get a way to meet their target of making up to 10,000 Model 3’s in the year 2019. [Very good research! You supported your assertion well! It is important to have a valid citation to support such facts. Your citation was missing again.] Comment by Eugene Kaufman: [Check spelling of this word. This is an incorrect use of this word. Please consult a dictionary to find the word's definition and to locate the right word for this context.]

Over the last three years, the demand for electric cars has been increasing putting more pressure on the Tesla Company. They went on to fail when they entered into the first quarter as well as the second when they failed to reach their targets. The company was able to deliver 63,000 vehicles to their customers in the first quarter of 2019 which was about 31% drop from the number of vehicles they had delivered from the previous quarter. The company has pledged that they would deliver 360,000 to 400,000 vehicles by the end of this year.

The prices of the vehicles are as follows; Model 3 starting price is at $36,200, Model S $86,000, Model X $88,000, Model Y $48,200 and the Roaster at $200,000.as seen these prices are a bit too exorbitant for starter. The customers whom as mostly middle income earners wouldn’t want to get them. So company should consider doing a price elasticity of demand by calculating the percentage of quantity demanded of the cars and divide by the percentage change in the price which would be settled at to determine it. This would aid in determining the best price for the car and the same time the price that the customers would gladly comply to. When this is achieved, the company will be guaranteed an increase in sales thus more profit. [Where is this data coming from?!?]

The manufacture of electric cars obviously is very high. The Chief Executive Officer of Tesla has a strategy which includes China manufacturing their batteries in bulk and exporting them to the U.S. this would be a variable cost which may have positive impacts in the company’s output. Some fixed costs that the company incurs may include utility expenses, property taxes, insurance are ones which wouldn’t have a lot of impact on the outputs since they cannot be avoided regardless of the level of production or sales. Other expenses of the company such as transport are variable costs which are only paid for when the services are needed and may be negotiable so they would have less impact on the business.

In conclusion, I would like to recommend the company to perform some certain activities which would guarantee them great output at the end. The company should ensure that they introduce new cars to the market, making sure that it exceeds the customers’ expectations so that they wouldn’t think twice in buying them. The prices should be regulated so that it is not too expensive for the market and at the same time not too low so that it brings loss to the company. The issue of funds should be dealt with immediately by finding new investors and shareholder who would entrust their money in the business for its success. In not so, the few profits that are being received by the company should be brought back to the business so that they would be able to perform their activities.

Most important of all is that the company should reduce their plans, take some points of the list so that they focus more on the important issues and reduce the burden in which the want to carry on their backs. The company should also look for market overseas so that they don’t only rely of the American Citizens. This will help expand their market so that more profits may be felt. The company should acknowledge the market structure and the stage in which they are every single time so that they don’t over produce vehicles when the market demand is low or produce fewer vehicles when the demand is high. By following these instructions, plus the fact that there are no other competitors, the company would thrive and yield more than it did before. Enduring that all the incentives and government funds are put to good use, using proper advertising techniques, proper pricing and ensuring that you follow the business cycles, the Tesla Motor Company would thrive well to become the multi-billion dollar company that it is meant to be.

[Where are you references?]