According to Yougn (2013, 23), Tesla is an American automotive company that deals with the designing, manufacturing and selling of electric cars and associated electronic components such as car battery products. This company is headquartered in Silicon, California with its particular attention being linked to the designing, manufacturing, and manufacture of the Tesla Roadster, became the original electric car alongside the S type, a renowned electric luxury personal car (Wernerfelt, 2014, 87; Tallman & Li, 2015, 30). Currently it is vibrant automaker carries out the building and selling of highway-capable Electrical vehicles in not only the United States but also the entire world. The company produces approximately 15 cars on a weekly basis as an adherence strategy to its customer purchasing orders (Huth, Wittek, & Spengler, 2013, 69). Tesla operates with a goal of increasing the number and the assortment of electric vehicles in three critical strategies.
First, the company sells its vehicles in a growing number of customers by displaying them in showrooms and utilizing online platforms (Gunzel & Holm, 2013, 87). Secondly, Tesla sells patented electrical power train products to other car manufacturers to allow them to make their electric automobiles to their customers as fast as possible. Lastly, the company ensures that it serves as the best example to its competitors to show the public that there are numerous clients with a higher demand for efficiencies and high-performance vehicles (Westwood, 2011, 50; Kazmi&Kazmi, 2008, 43). This report begins with the background information about this company and moves to assess its strategic position by Porter's five forces, the SWOT analysis technique and the PESTLE approach. The results gathered from this model will play a critical role in helping to understand its marketing strategy alongside generating viable recommendations for further organizational improvements.
According to Shisia (2013), Tesla began its operations in 2003 as a critical revolutionary car business that used the latest and updated technology as its primary competitive advantage over its competitors. Tesla's initial marketing strategy was to attract the affluent customers who could afford to buy high expensive and valuable electric vehicles and their corresponding products (Griffin, 2007, 39) John (2012, 34). However, the company acquired TSLA as its significant operational symbol and changed its strategy when the initial product attained its mature stage of the product lifecycle. This fundamental shift saw Tesla target the entire public and led to an increase in the acceptance threshold among the public by targeting markets that are highly competitive while keeping its products at a lower price range (Reed &Luffman, 2016, 77).
The roadster was the first car to be conceptualized, designed and manufactured by the company under the inspiration of the Silicon Valley. Studies indicate that the organization has shown a high level of perfection in designing, manufacturing, and selling of electric car that are environmentally friendly (Gunzel& Holm, 2013, 89). Additional products such as power train parts including lithium-ion battery packs have been tested and proven to emit zero levels of hazardous gases and products that may pollute the environment. Today, Tesla operates with a strategy of increasing its market share by penetrating new markets both in developing and developed countries. The company is also expanding its strengths and opportunities by entering strategic partnerships with multinational corporations such as Toyota, Daimler, Toyota, Panasonic, and the US department of energy (Griffin, 2007, 39) John (2012, 36) .
Teslas environmental analysis indicates that the company operates with missions and values that incredibly aimed at protecting the environment and providing their customers with a new experience in the automobile industry (Westwood, 2011, 50; Kazmi&Kazmi, 2008, 43). The Companys vision statement is to, "Create the most compelling car company of the 21st century by driving the world's transition to electric vehicles." The Company Mission is to design and sell highly efficient, high-performance electric sports cars without any form of compromises. As a result, the company ensures a proper combination of modern styles, acceleration alongside good handling that is combined with advanced technologies with the capacity to make them be among the fastest as well as leading energy-saving vehicles in the market (Pils, 2009, 56; Betz, 2012, 17).
Tesla External Analysis
This section utilizes appropriate strategic frameworks and models to carry out a detailed analysis of Tesla's external analysis. The PESTLE model will help in the discharge of the company's macro-environmental analysis while Porter's Five Forces will offer an analysis of the industry before identifying the business's main opportunities and threats with the use of the SWOT analysis strategy.
Tesla Motors PESTEL Analysis
The PESTLE analysis is an approach used in the examination of the external environment of an organization and plays a critical role in the identification of vital areas that need substantial improvements alongside potential risks that may affect the business in future (Gunzel& Holm, 2013, 91). A group often lacks control of the external environment despite its significant effects on the general operations of the company. PESTLE strategy takes into concern the economic, political, the technology, environmental and legal issues affecting a business on an external viewpoint.
Tesla is highly exposed to different policy challenges bearing in mind that the company sells its products across Europe, Asia, and America. It is evident that climate change issues have far-reaching effects on the political environment of some countries; hence, different laws are formulated to cut the emission of carbon by a certain percentage thus affecting car manufacturers. However, the federal government provides incentives to manufacturers that help in the production of cars that are more efficient and environmentally friendly by utilizing the green car technology (Huth, Wittek, & Spengler, 2013, 76). Additionally, Tesla political stability that is currently being witnessed across its market segments alongside increasing free-trade agreements that the US is now entering to increase its revenue through taxation.
According to Gunzeland Holm (2013, 95), Tesla enjoys a stable economic environment due to its ability to use alternative sources of energy over its competitors who rely on the petroleum fuel. The rising costs of petrol and oil offer a competitive edge for Tesla cars that use batteries and electricity. Nevertheless, the continuous decrease in the prices of renewable sources of energy increases the attractiveness and market viability of Tesla's products, which increases product marketability. However, economic stabilities caused by fluctuation of raw materials pose a threat to the company in alternative markets such as Asia and Europe (Pils, 2009, 56; Betz, 2012, 17).
Tesla stands a better chance to benefit from the tremendously changing views of the social environment. Many people are currently embracing the green technology and associating it with automobile companies engaged in the production of environmentally friendly products such as Tesla. Additionally, customers have an increasing demand for low-carbon lifestyles and preferences for non-renewable energy vehicles produced by the company. These external factors alongside the companys aim to improve wealth distribution in its developing market segments have the effect of improving the market demand for Teslas electric vehicles and related products (Huth, Wittek, & Spengler, 2013, 76).
The high rate of technological transformations witnessed in the car manufacturing industry presents a vital opportunity for Tesla to improve its product technology. The company's market site as battery, electricity, and car manufacturer offers it an enormous competitive advantage over its rivals. However, this external aspect also hinders the business existence because of the potential of rapid obsolescence of expertise utilized in its produce. Tesla therefore, needs to utilize an appropriate R&D budget to manage the operations efficiently.
Tesla's risk to face challenges associated with environmental pollution is highly reduced due to its ability to produce cars that are electric dependent. This strategy helps the company to remain competitive in the world, as it does not expose the company to lawsuits associated with fuel leakages reported in different world regions. These leakages have far-reaching adverse consequences as they result in loss of marine life. Many environmentalists are now filing lawsuits to force their governments to regulate the automobile industry by allowing only fuel-efficient vehicles to operate. These trials coupled with the destruction of the ozone layer due to environmental pollution gives Tesla a competitive edge over other car manufacturing companies.
The company's direct sales strategy is accepted mutually in numerous countries despite restriction in some states. Some of these countries have continuously filed lawsuits against the company to challenge its operations. However, the introduction of the energy loan product increases the chances of the company to produce and sell more cars in the country. Tesla's patent release should aim at boosting other businesses entering the automobile industry. Additionally, Tesla can advance its electric cars based on energy utilization system that customer groups have to follow. Below is a chart to summarize the PESTLE analysis model of Tesla.
Political Increasing government initiatives for EV
Expanding free trade agreements
Political stability in the companys major market segments
Economic Decreasing costs of battery
Decreasing costs of renewable energy
The threat of financial stability issues
Social Increasing popularity of low-carbon lifestyles among customers
Growing preferences for non-renewable energy produced by Tesla
Improving the distribution of wealth in developing company market segments
Environmental Climate changes
Increasing environmental changes and lawsuits
Increasing standards for waste clearance
Technological Technological change favouring the Company strategies
Advancing opportunities due to business automation
Increasing popularity of online mobile systems supported by Tesla
Legal Dealer sales regulation increase in the USA
Expansion in the international patent protection
Increased regulations on energy consumption
For instance, every factor analyzed by the PESTLE technique affects the way a car manufacturer can operate a business in the US. It is important to determine and understand how the external environment affects the operations of the company to build the appropriate competence that benefits the entire organization. Franchise laws, have the potential of stopping the Tesla from distributing and selling its products in other states in the US, pose the greatest risk to the company. However, the changing technological environment and the rising demand for non-renewable energy cars will change the automobile sector to take Tesla's direction in the future.
Tesla Company Industrial Analysis
This section uses Porters Five Forces to conduct a detailed industrial analysis of Tesla. Michael Porter designed the Porters Five Forces whose fundamental principle was inclined on the assertion that five decisive forces play a fundamental part in the determination of the competitive ability of a c...
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