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Outline Slides Group 5
1
Introduction
Tesla Auto Company is automotive and energy storage company. It was founded by a group of engineers in 2003 in Silicon Valley, its CEO is Elon Musk and its headquarters are in Palo Alto, California.
The aim of the company was to introduce electric cars and do away with gasoline-powered cars by proving electric cars are better than the latter.
According to the founders, these cars would have no compromise since they would have zero emissions, instant torque and incredible power.
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Driving Forces Analysis
Tesla Auto Company has been able to remain in the market through the availability of the following driving forces in the automotive industry;
Increasing globalization- companies are going global and the global markets are easily accessible thus Tesla is able to venture into new global markets.
Increasing internet usage and power- this has enabled the company to market its products and sell through the online market on their website that has no geographical limitation.
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CONTINUATION
Changing lifestyles and customer’s preferences-currently people are shifting into electric cars rather then gasoline-powered cars. Customers also prefer cars that have minimal environmental impact due to rising environmental protection campaigns.
Technological advancement- this has enabled the company to increase its innovation in product production and through this their products are differentiated and this increases Tesla’s market share.
TESLA’S INTENSIVE STRATEGIES
Tesla Auto Company has managed to maintain its profitability through effective use of intensive strategic measures, they include; product development, market development, market penetration and diversification.
Market development – in this strategy Tesla enters into new markets to enhance growth of the business and produce more sales. Tesla enters new markets through differentiating their products.
Market penetration – this is the present primary intensive strategy and this enhances business growth through growing sales revenue in the current market
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CONTINUATION
Diversification – Tesla uses diversification but as a minimal important intensive growth strategy, it assists in growing the company through creation of a new business. The main objective of using the diversification strategy by Tesla is to assist in the development of the company’s R&D investment that enables it to recognize new business opportunities in the industry.
Product development – in this strategy Tesla enhances its growth through developing new products which emphasize progressive technologies that have minimal environmental impact.
PORTER’S FIVE GENERIC STRATEGIES
Tesla addresses the automotive industry external forces as shown in Porter’s five generic strategies below;
Bargaining powers of buyer – Tesla buyers have an impact on the level of the company’s sales revenue therefore the company has to make strategies to maintain their buyers. This factor has a low intensity thus the company does not give it the first priority in strategy formulation.
The new entry threat – this is a weak force since most there is little threat of entry in the market since most companies have their own niches therefore reducing competition as well.
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CONTINUATION
Rivalry intensity in the industry – the automotive industry is a highly competitive industry. Tesla has positioned itself in a market with low competition though there is effort by other companies to enter into the market through providing environmental friendly cars. This is a strong force and Tesla has to establish strategies as a first priority.
Threats of substitution or substitutes – this is a moderate force since there are few substitutes of automated cars example walking and cycling and they are inconvenient for long distances. Tesla cars may be substituted by trains and buses but in the modern world people prefer using personal cars.
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CONTINUATION
The suppliers bargaining power – suppliers bargaining power is high and therefore Tesla has to make strategies since it relies heavily on suppliers and any mistake would be reflected in the company’s performance.
Through the porters generic strategies analysis done above Tesla is able to formulate strategies that enable it to overcome the external forces it faces and this enables it to become more productive, competitive and it maximizes its profitability.
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REFERENCES
Hitt, M., Ireland, R. & Hoskisson, R. (2016). Strategic management : competitiveness & globalization. Australia: Cengage Learning.
Kissinger, D. (2016). Tesla Motors, Inc.’s Five Forces Analysis & Recommendations (Porter’s Model). Panmore Institute. Retrieved from http://panmore.com/tesla-motors-inc-five-forces-analysis-recommendations-porters-model
Rowland, C. (2016). Tesla Motors, Inc.’s Generic & Intensive Growth Strategies (An Analysis). Panmore Institute. Retrieved from http://panmore.com/tesla-motors-inc-generic-strategy-intensive-growth-strategies-analysis
