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November 13, 2024
The primary objective of this article is to assess the strategic business management of Tesla, Inc.
The strategic position and current strategies of the organization will be analyzed to comprehend the present condition of the selected company.
Tesla is a North American firm formed in 2003 by Martin Eberhard and Tarpenning. The company's previous name was Tesla Motors, and its current CEO is Elon Musk. As to recent sources, in mid-2021, the company's sales hit 1.62 billion US dollars, which subsequently increased. By the conclusion of 2021, Tesla Company's sales reached 2 billion US Dollars, with expectations for additional growth, positioning it as one of the most valuable entities in both the American and worldwide automotive markets. Tesla's primary objective is to enhance the environment by manufacturing vehicles powered by renewable energy and facilitating the global shift towards more sustainable energy sources. Tesla manufactures advanced, high-quality electric vehicles that eliminate the need for natural or destructive resources like diesel or fossil fuels. The corporation intends to penetrate the Chinese and European markets by augmenting electric vehicle manufacturing, aiming to achieve a 50% reduction in carbon footprint by the end of 2050. Tesla is regarded as one of the fastest-growing brands globally, and its CEO, Elon Musk, is recognized as the world's wealthiest individual (Perkins and Murmann 2018). In the market, few rivals approach the company's market capitalization; nonetheless, firms such as Ford Motors and General Motors are also expanding and manufacturing sustainable electric vehicles.
This article will use different models to analyze Tesla's growth strategy and other strategic plans that facilitate the company's market expansion. This research will use several analytical methods to comprehend the company's development plan. A PESTLE study will be used to identify the external variables affecting the company. The company's strengths and weaknesses will be assessed to comprehend the aspects that positively and negatively impact business development. This research will perform a gap analysis to discover the company's strategic options and its existing strategic position. Furthermore, to ensure the study's relevance, several evidence-based ideas will be integrated, which is crucial for offering a logical explanation. Furthermore, many suggestions will be presented to assist the organization in refining its strategic decisions to facilitate market growth and increase market share.
The United States has a score of 0.44 on the political stability index, which ranges from -2.5 to 2.5 (TheGlobalEconomy.com, 2022). This figure suggests that the United States government is somewhat stable; nonetheless, the nation's position in the political stability index declined in 2020. Should the rank decline further, the point will reach a negative threshold, leading to governmental instability. In recent years, the corruption rate in the USA has declined to 67 out of 100, which is very low. This score signifies that corruption has escalated inside the government or public enterprises in the nation. This signifies that enterprises must navigate corrupt governmental institutions to secure a stable market position, which is arduous.
Economic - recent statistics indicate that the majority of billionaires dwell in this nation. The current GDP of the United States is 24.49 trillion dollars, ranking among the biggest GDP figures globally (Data, 2022). The United States has the first position in nominal GDP ranking, indicating its substantial financial strength. The inflation rate has declined from the previous year and presently stands at 1.4%, indicating strong economic advancement (Statista 2022). This suggests that enterprises may reduce product pricing, which is advantageous for consumers.
Social - Each year, North American nations have a 0.45 increase in population levels. The United States now has a population of around 331,002,651 individuals throughout the continent (Data Commons, 2022). Recent statistics indicate that roughly 94 individuals reside per square kilometer. The per capita income in the nation is 66,060 PPP dollars, projected to increase by year-end, attributed to the expansion of industries, which positively impacts enterprises (Data Commons, 2022). The country's adult literacy rate is 88%, which is relatively lower than that of other nations; nonetheless, it has improved compared to the previous year (ThinkImpact.com 2022).
Technology - Reports indicate that in 2019, investments over 50 trillion dollars, specifically 656 billion dollars, were made by the United States. The predominant investments were contributed by the nation's private sector, totaling almost 486 billion dollars. Research and development investments constitute around 3% of the total GDP of the United States. In recent years, the government has implemented several technical initiatives that have enhanced public technological understanding. Furthermore, 89.4% of the whole population has been identified as internet users, indicating that the majority are cognizant of technology advantages (Data Commons, 2022).
Environmental- The United States has implemented many laws and measures that are advantageous for environmental protection. Significant legislation includes the Clean Air Act of 1970, the Clean Water Act of 1977, and the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, among other environmental protection statutes (Findlaw 2022). Furthermore, the government has established trash management facilities, which inhibit enterprises from generating garbage consistently.
Legal - Businesses must adhere to several standards for consumer protection as mandated by government rules, including the Fair Debt Collection standards Act and the Fair Credit Reporting Act, among others. Furthermore, the government has enacted copyright rules that protect a company's goods and services against fraud. Consequently, it can be said that enterprises possess several prospects for growth inside this industry with less hassles.
In addition to external influences, Tesla's business strategy is also shaped by internal forces. This firm has several strengths and flaws that influence its market position. Tesla is regarded as the preeminent automotive firm globally and the primary pioneer in highlighting the significance of electric vehicles in the industry. Furthermore, Tesla is recognized for using cutting-edge technologies in its production processes. The company's automotive products include distinctive revolutionary characteristics that provide competitive benefits. Furthermore, the corporation has spent around 1.8 billion dollars to implement innovative technologies, so enhancing product quality and thereby elevating client happiness.
Tesla has challenges in its manufacturing processes, and its output rate is comparatively lower than that of other automobile manufacturers. A significant shortcoming of this organization is its limited target client demographic. The specific cause for this situation is that the items are costly and not universally affordable. Consequently, the company's commercial development may be challenging due to a limited consumer base in the market. Furthermore, in 2016, the corporation had a debt of 2.5 billion dollars due to insufficient earnings. The data indicate that the corporation has not yet recovered its obligations due to a lack of profitability.
Tesla now employs a differentiation strategy to attract consumers. It also confers a competitive edge to the firm in the market. This corporation has a differentiation focus approach, providing distinctive items to the market to capture client attention. Tesla concentrates on a certain, devoted consumer demographic (Ingram 2018). These clients have a strong propensity to purchase items that use advanced technology. A primary advantage of this generic approach is that, when introducing a distinctive product to consumers, the number of market rivals diminishes instantly. Tesla is the only business that has launched electric-driven vehicles to the market, and there are currently no competing firms offering similarly sophisticated automotive technology. Tesla has now adopted a wide differentiation approach to broaden its client base. Tesla intends to lower product pricing to a level that enables more consumers to get the car. This method will enhance brand popularity in both the local and international markets. This new price plan will facilitate the company's entry into a market with lower per capita income than the USA, hence promoting future expansion. Tesla continues to spend significantly in its research and development department to enhance its technical reliability for consumers. This also meets consumer desire for a smart automobile equipped with many integrated features.
This firm does not depend on paid advertising and engages in little product marketing. Social media significantly influences product popularity among consumers. The company's income is significantly reliant only on its brand image, without any promotional methods. This corporation has a strong presence in digital media rather than conventional media, appealing to clients who are knowledgeable about technical advancements (Dai 2020). Tesla's primary intensive strategy is to enhance profitability by maximizing product returns and expanding market presence via a market penetration approach. To enhance worldwide sales, the corporation provides reductions on car costs to attract buyers from other regions (Fisher and McCabe 2019). Tesla often employs aggressive marketing strategies to acquire consumers in the competitive consumer market. Tesla's market penetration approach emphasizes enhancing sales via price reduction, so making the new product more accessible to consumers. Upon achieving satisfactory sales and revenues, Tesla reinstates car pricing to their former levels, therefore ensuring profitability and targeting a specific consumer niche within the new market.
Tesla has launched an extensive and creative product range in product development. Consequently, the corporation prioritizes research and development, providing clients with a wide array of vehicle options to choose from (Kozlovskyi et al. 2018). The primary objective of Tesla is to invest in innovation for product development. The expanded product choices are advantageous for recruiting current clients, hence enhancing the company's total profitability.
Tesla has also embraced the blue ocean concept to enhance sales and revenue growth. Tesla aims to increase the variety and availability of electric cars for the public to reduce dependence on detrimental chemicals and oil emissions. It endeavored to meet customer demands by offering enhanced safety and dependability at a competitive price. The primary aim of sustainable vehicles was to achieve low energy usage, which seemed incompatible with the characteristics of high-performance sports cars. Tesla Motors is the only firm to integrate the aforementioned traits into a single car, termed the Tesla Roadster, which is also the company's first product. The business showcased the vehicle as a high-performance automobile with substantial torque and zero emissions. Tesla is credited for establishing a market for electric vehicles, a completely novel sector that did not previously exist.
Tesla is regarded as the most successful automotive brand in terms of product innovation, having effectively introduced new goods to the market. Plug-in electric vehicles were previously nonexistent; yet, Tesla successfully captured 2% of the U.S. automobile market share only with the introduction of revolutionary electric cars (Gali 2020). Tesla opted to include further distinctive characteristics, making the vehicle digitally autonomous, since the torque may be regulated without user intervention. Consequently, it can be said that Tesla concentrated on product development and technological investment to attract consumers and enhance sales.
Tesla used process innovation by modifying the methodologies for car development and distribution. Initially, they transitioned their development approach from stringent innovation to inclusive innovation. Furthermore, this corporation established partnerships with entities like as Toyota and Panasonic. The partnership with the aforementioned businesses and their research and development teams facilitated the company's attainment of genuine open innovation in technologies and electric vehicles (Kim 2020). Consequently, Tesla acquired enhanced resources and support from other entities regarding process innovation. This creates additional opportunity for Tesla to launch new goods and prolong existing product life cycles.
Tesla's paradigm innovation strategy conveys to consumers that mitigating environmental damage is the optimal approach to enhancing quality of life (Lang, Reber, and Aldori 2021). Consequently, electric vehicles are advantageous for both quality of life and environmental considerations. This model appeals to clients who are concerned about sustainability issues.
Tesla has innovated the luxury electric car market and has positioned itself as the industry leader. This company's new market is separate from conventional autos and lower-priced gasoline-powered vehicles. Individuals interested in advanced sustainable environmental concepts are regarded as Tesla's target buyers.
This component of the research will analyze Tesla's strategic decisions and market position to identify the company's shortcomings. Tesla's stated objective is to facilitate the global transition to sustainable energy, which is very advantageous for the environment. The company originated as a distinctive differentiator in the automotive industry, manufacturing market-disrupting products in the form of high-end electric vehicles. Moreover, the company grows via the use of cutting-edge technology to develop new products as a component of its comprehensive growth strategy. Tesla's ambitious growth strategy prioritizes product differentiation as a strategic option.
Tesla is facilitating the transition of the global transportation sector and the globe from detrimental gasoline engines to more sustainable and environmentally favorable energy sources. The company manufactures distinctive electric vehicles and lithium-ion batteries to actualize this plan (Toumi 2018). Additionally, under the rigorous growth strategy, the company's second principal approach is significant research and development, enabling the organization to provide unique products and achieve increased sales. Tesla employs expansion plans as a supplementary intense growth strategy, focusing on broadening its market reach and augmenting revenues by entering new global markets.
Tesla has adopted a direct-to-consumer (D2C) business approach, eliminating middlemen like as dealers from its supply chain to deliver automobiles directly to customers. Tesla's supply chain operations are highly integrated, since the company owns and manages the plants that manufacture electric vehicles (Shao, Wang, and Yang 2021). Tesla has mostly concentrated on research and development, including software upgrades, automation, and material expenses. As the corporation excels in integrating distinctive characteristics into its cars, it is important for the organization to concentrate on new elements. The substantial investment in research and development aims to provide more sophisticated technology for their products, hence increasing the barriers to entry in the electric vehicle and battery industries. its corporation has the distinctive position of being the market's innovator and leader, attributable to its much greater R&D investment relative to other entities in its sector (Taylor 2022). This maintains Tesla's unique advantage in the electric vehicle industry.
Despite focusing on the research and development department, several consumer complaints about Tesla's product quality have been reported. Tesla's electric vehicles are distinguished by their superior performance, environmentally sustainable energy use, and cutting-edge design. Nonetheless, the prior challenge of managing and augmenting output without sacrificing quality has been a substantial difficulty for Tesla (Zhang and Wang, 2019). During the early stages, challenges related to unmet commitments and inadequate delivery were prevalent. The primary deficiency identified in the strategic position is the exorbitant pricing of Tesla automobiles. The corporation has recognized this issue, since the client base has plateaued due to many being unable to purchase the items. The business has pledged to introduce a $25,000 Tesla car within three years, which is comparatively cheaper than other rates. The most affordable Tesla now retails for about $38,000, with a range of 250 miles per charge (Business Strategy Hub 2022). The cost of the alternative model varies from $100,000 to $200,000, which is very expensive for the ordinary consumer. Colors, opulent interiors, wheels, and several other digitally controlled features are absent in vehicles within this price levels (Wang and Peng 2020). Consequently, clients often express dissatisfaction with the restricted quality and exorbitant rates of the vehicles.
Tesla has also failed to meet consumer expectations regarding the provision of accurate customer support. Tesla prohibits owners from servicing or repairing their vehicles. All repairs and maintenance must be performed at a Tesla Service Center, save for the replenishment of washer fluid (Wu 2021). In reality, several consumers have stated that the maintenance procedure is quite sluggish. Despite imposing elevated costs on clients, the corporation fails to provide precise services, which has been a significant challenge for the organization. Tesla only permits certain repair facilities to service its cars (Furrier 2022). Moreover, Tesla is the only firm that provides body components for its automobiles. Following an accident, consumers must identify a Tesla-approved body shop, which will then procure parts from Tesla, to be delivered to the body shop, initiating the repair procedure. Tesla has a poor reputation for delivering repair components to body shops promptly. The duration may range from 3 to 4 months.
Notwithstanding the challenges, the principal concept of enhancing sustainability has garnered widespread acceptance among the populace. Despite the inability of individuals to buy the vehicle, many have expressed admiration for the company's philosophy. Tesla markets electric vehicles to all genders; yet, its clientele mostly consists of males seeking premium luxury and sports cars. Tesla's target market comprises technologically adept, ecologically conscious, and eco-friendly people. The demand for Tesla vehicles is rising not just among environmentally conscious customers but also among technologically adept individuals, owing to developments in technology and the brand's esteemed image.
Tesla may focus on the quality management process to avert any faults that compromise the overall quality of the final product. Prior to the delivery process, Tesla may use effective quality control evaluation techniques to identify quality issues and reduce different defects (Thomas and Maine 2019). The quality of the vehicles may be enhanced if the corporation adopted various quality standards, so improving both the overall quality of the products and the services provided to consumers, which are often subjects of complaints.
In addition to emphasizing product differentiation techniques, the firm is advised to use market development tactics to expand its reach to a larger audience. Owing to insufficient advertising techniques, individuals often remain uninformed about the authentic message about sustainability. Diverse market growth tactics will be advantageous for the organization in securing a dominant position in both the local and worldwide markets.
The corporation may also adhere to the Consumer Decision-Making Process Theory to comprehend the fundamental needs of clients. The company's sales and income often stay static. The specific cause for this situation is that automobile costs are too high. Consequently, to enhance sales, the corporation may reduce logistical and supplier costs or seek new options, according to the hypothesis.
Fast charging technology is essential to enhance electric vehicle demand and address the issue of limited charging capacity. Consequently, the corporation must construct extra charging sites due to the heightened demand resulting from the increasing sales of electric vehicles.
In conclusion, Tesla is the most renowned electric vehicle company, distinguished by its great reputation for delivering environmentally friendly solutions. Moreover, the external market analysis of the electric vehicle industry revealed an increasing demand for electric cars in current society, driven by heightened environmental concerns. Nonetheless, other concerns have been highlighted in the research, including supply shortages, high costs of services and goods, and inventory deficiencies, among others. Moreover, the firm has a deficiency in marketing strategy, which hinders its ability to attract additional clients in the worldwide market. Tesla is intensely focused on a product differentiation approach. To reach the foreign market, the organization must enhance its sales and income. Moreover, to enhance its market presence and achieve its objective of accelerating the worldwide transition to sustainable energy, the company needs execute a market growth strategy.
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