TESLA CASE STUDY ANALYSIS
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Tesla Case Study Analysis
Tesla has been a company that deals with auto-motives, and it is one of the best as of right now in the United States of America. It is perfect because it looks at how the environment can be made better and how possible it is for the automotive industry to produce vehicles that are not hazardous to the ground and are not too costly. Under Elon Musk, this is the company’s goal; to make cars that are low priced and are of the best quality. Under the CEO, who is an outstanding manager and innovator, the tesla company has been able to overcome many obstacles and challenges that it has faced in the course of its existence. However, in business, challenges keep on being existent day by day. It is upon the leadership of a particular company to determine the best ways to deal with the challenges (Moritz et al., 2015).
In the case of Tesla, there has been a great need for the world to go green and protect the environment, and this has pushed the company to produce more electric cars to satisfy the needs of the population. However, this alone is not satisfactory because there is great competition between the company and the other companies producing the same electric cars. Therefore, Tesla needed to expand its market, and it decided to venture into the China market. The china market is known for some of the best electric cars and all varied types of vehicles, and therefore the market will be very competitive since Tesla wants to join the market with more force and ambition. This is caused by the lack of sales in the United States of America. Therefore it is essential that Tesla expands and makes its market big enough to sell to anyone or anywhere in the world. Thus this makes the company a perfect business, and it may even expand its other resources because it has been able to develop its battery production ability (Perkins & Murmann, 2018).
Therefore Tesla wants to move to the china market, but it has some challenges like reducing the selling price of the cars, and for this to happens, they have to open a production branch in china. The location has already been identified, but issues like getting to know what rates are shared to set up such a company are a challenge. Also, the networking, and marketing within china, getting government incentives to lower the selling price, among many other factors, become a challenge to the establishment of the company in china. However, despite these challenges, there is hope that everything shall fall into place and the company can open the branch successfully in china (Stringham et al., 2015).
The company tesla has strengths, weaknesses, opportunities, and threats. All of these factors form every organization or even individual persons. Therefore, they have to be analyzed and know before a person or a company can get into more profound commitment about what they want to do and start doing it.
One of the company’s strengths is leadership which they do not doubt that they might or will make mistakes in the manner of doing their daily activities. Elon Musk is seen as one of the best CEOs the company has ever got. Therefore there is trust in him, and looking at him back then when the company was almost falling, it is appreciative of looking at him with eyes of gratitude. This is one of the best strengths of the company. Another power of the company is the technology it uses, which is very advanced. Even though it is not purely a monopoly, the company whose niche is particular makes it easier for the company to sail through everything it faces. The company does not focus mostly on exterior materials.
The company as well as weaknesses. One of the common weaknesses is the full dependence on Elon Musk as the face of the company. This means that if by any chance he stops being the face of the company, then there is a high probability that the company might have a setback. Another weakness of the company is that the company makes a lot of losses. This is because almost every year when they are announcing their profit, theirs is mostly negative. Even though this does not affect the company to a great extent, the continued losses might affect the company and make it unable to operate at some point. Even though the company is in the process of extending its market to China and other parts of the world, the fact that it has been operating in the united states alone for a long time is a weakness because working in one place is risking too much.
The company has opportunities. Some of these opportunities are the ability to expand its operations and open more branches in other countries. Another opportunity for this company is to produce environment-friendly cars, which makes it a possibility and a unique way of penetrating the market. The company also can get into the china market, which is the world’s best automobile market, and compete with other companies and brands. Some of the threats which Tesla involves itself in are that many other companies deal with automobiles, and therefore they are a threat to the prosperity of Tesla. Another danger that brings itself with having branches outside the united states is the possibility of paying so much in things like rent of the premises, tax, and many others, unlike in the united states whereby there are subsidies from the government.
The business issue, in this case, is the opening of a branch in China and expanding the market of Tesla. However, some challenges have to be addressed. The factors to be considered when analyzing the business problem are the possibility of getting funding from somewhere or even getting government subsidies in china like it is in the united states for the company to run. The market in China is also likely to be very competitive; therefore, the company must review the cars’ pricing and try to bring them to a reasonable amount that is almost similar to the other companies or even less.
In analyzing the problem, one of the tangible pieces of evidence which can be used is the cars that are already made. The cars act as concrete evidence that the company is still operating. Even though it is getting difficult to open a branch in China, the company is very optimistic. They have to use the tangible evidence to re-assure themselves that it will be possible. Quantitative metrics, in this case, can be referred to as the increasing demand for non-emission cars in china. This makes it possible for Tesla to venture outside of America and begin a new market. The criteria used for analysis is the comparison method whereby Tesla is compared with other companies, and through this, the differences and similarities are found. Apart from this, Tesla also gets to know how the different companies operate and brings about operation methods to beat them.
The case evidence is that China is a tough market to get into; however, it is still one of the best in the world because it makes it possible for companies to interact, and there is also a vast market for cars. In recent times, the demand is for vehicles and environment-friendly vehicles, which gives Tesla a chance to explore. Tesla can employ many different strategies in getting into the china market. Therefore, getting into the china market must be considered a great competition because it has to be considered a risk. Therefore all care has to be taken to penetrate the market reasonably and succeed. Thus here, the company has to try and find out the charges for opening s branch, the government’s ability to offer them subsidies, the possibility of getting a network of marketing in China, among many other factors (Mangram, 2012).
The strength of researching China’s market is that they will be fully ready for anything that happens to them when they get to the market. However, this also has a challenge because the research cannot be done within a day, and it might consume time. Porters 5 forces framework identifies and discusses the competitive strategies and conditions of different businesses. It has its basis on industrial organization economics. Michael porter is the one associated with these fie strategies. The factors are the microenvironment which affects the company’s ability to make profits and serve its customers to the best. They include; the threat of companies’ new entry, the threat of substitutes, bargaining power of companies, the supplier’s bargaining power, and the competitive rivalry. The threat of new entry makes the entry of Tesla into the china market very difficult. Therefore it has to prioritize and plan effectively to beat the challenge. The threat of substitutes is also a challenge. Therefore it makes it challenging to allow Tesla because the electric cars already there do not want to lose their customers and be in competition (Teece, 2018).).
The bargaining power of the company is also considered. In this case, the company tesla has bargaining power in the china market, giving it an upper hand since it can bargain and get some of the services or commodities reduced in price. Therefore, this acts as one of the company’s positive impacts on the outside world and benefits the company at the end of it all. The competitive rivalry of the companies is also an issue that has to be taken into place. This is because Tesla can compete with almost any company that ventures into electric car production. Therefore, due to its competitive ability, the Chinese government and authorities might need it to be within the market. However, this does not apply to the other competitors in the market, and therefore there is the competitive rivalry that comes up.
The strategies which can be employed into getting into the china market are useful and essential, and therefore they all have to be deployed. However, there is a need for more caution and planning to make sure the business looks as attractive as possible, and thus at the end of it, all make it possible for the company to get into the market quickly.
The company tesla is one of the best companies producing automobiles that are friendly to the environment. Therefore, for its entry into the China market, the following recommendations have to be employed.
Creating links with the Chinese authorities for a possibility of obtaining subsidies
Getting cheaper premises and making sure that the beliefs are convenient
Creating a network of marketers around China
Studying the other companies in China and trying to find ways to beat them in the market
The success factors include the company’s ability to convince the authorities about its products as well as its operation in China and how it will benefit the country from an economic point of view to the environmental point of view. Implementing these goals and items can be possible through close cooperation with all stakeholders to make sure that the company is established successfully in china.
Mangram, M. E. (2012). The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing, 20(4), 289-312.
Moritz, M., Redlich, T., Krenz, P., Buxbaum-Conradi, S., & Wulfsberg, J. P. (2015, August). Tesla Motors, Inc.: Pioneer towards a new strategic approach in the automobile industry and the open-source movement?. In 2015 Portland International Conference On Management Of Engineering And Technology (picket) (pp. 85-92). IEEE.
Perkins, G., & Murmann, J. P. (2018). What does the success of Tesla mean for the future dynamics in the global automobile sector?. Management and Organization Review, 14(3), 471-480.
Stringham, E. P., Miller, J. K., & Clark, J. R. (2015). Overcoming barriers to entry in an established industry: Tesla Motors. California Management Review, 57(4), 85-103.
Teece, D. J. (2018). Tesla and the reshaping of the auto industry. Management and Organization Review, 14(3), 501-512.
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