Tesla, Inc. is the United States electric car and renewable energy company named after Serbian Inventor named Nikola Tesla and created by American engineers Martin Eberhard and Marc Tarpenning. Tesla has swiftly grown to become one of the world’s fastest-growing companies. The achievement of Tesla can be attributed to the car industry’s innovation. Tesla has a reputation for being an ecologically responsible company that specializes in the development of electric automobiles and parts for them. Tesla’s stated goal is to assist the world in making the transition to sustainable energy.
The firm began as a niche specialist in the automobile industry, developing market-disrupting luxury electric vehicles. Human resources are employed to fulfill their successful applications and efficiency goals by employing individuals who share the organization’s values, having a fast-paced, long-hour working environment, rigorous recruitment and training processes, and expanding worldwide to reach their business aims. Extended hours are required by the firm in order to attain production efficiency (Thompson et al.). The purpose of this report was to research the Tesla corporation.
Mission and Vision
Tesla’s objective is to hasten the world’s most significant transition to renewables. The foundation of Tesla’s company model is its goal. Tesla thinks that the sooner the world transitions away from fossil fuels toward a zero-emission economy, the healthier. Elon Musk’s aim for Tesla has always been to electrify it all with inexpensive solar electricity and store it in batteries in Tesla automobiles, structures, and the current electricity supply.
Strength of Tesla
Tesla is a forerunner in electric automobiles due to its adept usage of renewable energy sources such as solar energy. Despite its numerous issues, Tesla’s sales have surged as a result of its evaluation of a company, design, and development pace (Bilbeisi and Kesse). Tesla’s architecture is excellent. In order to provide excellent comfort to customers, they consider numerous concerns throughout the design phase of electric vehicles.
Tesla may confront an issue of supply-side mismatch, being unable to satisfy production needs, and it still faces challenges with manufacturing cost, strategic planning, and space growth. Tesla is regarded as a high-end renewable energy company. One of the challenges they may face is the cost of electric cars as well as customer trust. The more the mechanical complexity and manufacturing risk, the higher the inventiveness standard. When Tesla introduces new vehicles, it suffers ongoing start-up, manufacturing, and production problems. Because of the scarcity of batteries, their production has suffered. The scarcity has a profound influence on electric car and battery energy storage selling. Musk, however, is also heavily invested in other initiatives, such as space travel technologies.
Tesla’s autonomous technology is well-known for its dependability and simplicity. So that customers and the stock market may have faith in it. Tesla’s work on self-driving cars is evolving. The Asian market is still underserved. Primarily as Tesla seeks to grow its worldwide market in order to strengthen its financial stability and market impact. As consumer knowledge of environmental preservation grows, so does the need for more electric automobiles. At the same time, fuel-powered cars must be reduced. Tesla intends to produce its batteries in-house. This has the potential to alter the game’s rules by assisting businesses in lowering manufacturing costs. Furthermore, it will generate a large number of employees, which will benefit the economy.
Patent infringement lawsuits, which the corporation is concerned about, are one of the most significant financial losses. Litigation and claims connected to technical product failures are also being filed against self-driving automobiles. A great deal of research is being conducted on renewable power automobiles. Mercedes, Audi, Lexus, as well as many significant corporations in the economic area, such as Mitsubishi, Volkswagen, Ford, universal motors, are becoming adversaries of Tesla. New technologies enable effective energy utilization in automobiles. High operational expenses and narrow company profits might result from competitive forces. Due to growing production material prices, Tesla may suffer a substantial disruption in supply. The firm uses aluminum, titanium, rechargeable, nickel, copper, and cobalt, as are rechargeable batteries from vendors. All of these components’ prices change, which might have a negative impact on the company’s manufacturing line in the future. Renewable energy vehicle firms must maintain their long-term viability. Because of Tesla’s uncertain production conditions and weak EV infrastructure required in North America and portions of Asia, this is a possible concern.
To sustain its expansion, Tesla needs to create new service centers and boost employees to maintain and improve mobile service. Tesla aims to minimize the amount of service required through creative design, but until such improvements are shown to lower demand for maintenance, Tesla should come down on the side of safety and provide a little more than is required to maintain their brand (Sharma). Tesla will need to establish a website that will provide licensed and qualified personnel access to some of the technological news and guidance that Tesla service has access to in order to allow non-Tesla shops to operate on Tesla vehicles. They should provide clear standards outlining which operations they educate other businesses to conduct and which they reserve solely for Tesla Service.
Furthermore, Tesla should provide some form of concierge for consumers who are unable or reluctant to traverse the internet presence that will suit many of its consumers’ demands. This monthly subscription will compensate for itself, allowing consumers who love automobiles but dislike the servicing experience to become delighted Tesla consumers who talk about their vehicles to their colleagues. This service might offer decreased wait times, increased phone assistance, and continuous repair for a fair cost.
Tesla and Mercedes Union: Potential Advantages and Disadvantages
Elon Musk has long thought about buying a manufacturer of conventional vehicles with internal combustion engines for merging it with Tesla. The purchase assumed was Daimler AG, a manufacturer of Mercedes-Benz cars. Daimler AG is the world’s largest manufacturer of business and premium vehicles. Working closely with this company allows Tesla to quadruple production worldwide and gain greater popularity and market share. However, this merger seriously undermines Tesla’s global image as an environmentally friendly independent company. In such an alliance, Tesla loses much of its identity and joins a precisely business-oriented market with less emphasis on brand sustainability.This union may have advantages and disadvantages, but Tesla presumes a more stable and promising position. The company has a market value of $ 500 billion, while Daimler is now worth $ 76 billion (Bilbeisi and Kesse). Tesla also fails nothing in the patent matter since the company has established “the open-source philosophy”, which remains all technologies aspects on the surface (Mask, 2014). The company has all the patents in the public domain and actively promotes this fact as an additional emphasis on its globality and uniqueness.
Tesla’s Diversification Strategy
The diversification strategy is often used to effectively stimulate business growth through the development of new areas of activity. While the method usually serves as a bailout from the financial dwindling of previous businesses, in Tesla’s case, it is more like capturing more of the market for a dominant position. Tesla’s diversification extends well beyond extra services and goods in the global product market. It is the direct outcome of a vertically integrated organization and an extensive product portfolio that enables rapidly swift changes in product footprints (Välikangas). In this case, diversification can be considered related since Tesla is moving in approximately the same technological direction, only modifying technologies and the overall direction of action.
The New Energy Business and Its Prospect Regarding Tests of Corporate Advantage
As a result of the company’s diversification strategy, Elon Musk continues to expand and embrace a completely innovative branch of the energy market. Tesla continues to build electric vehicles, still hampered by limited battery production. However, it does not prevent Tesla from expanding a production base focused on the additional manufactiring of stationary energy storage devices. Tesla has yet to make a profit and is continuing to spend money on internal manufacturing (Perkins and Murmann). The new business of the company meets almost all Tests of Corporate Advantage and has a great potential. It is structurally attractive, and all innovative units still gain a decent competitive advantage. However, the cost of entry currently exceeds the profits despite all the positive prospects. In other words, the new business has the great potential to be profitable in the market and has promising financial prospects, but it has to overcome some manufacturing difficulties.
The Vertical Backward Integration Strategy of the Company
Large company distribution and supply chains have a few ways to operate within the current market framework. Backward integration is a type of vertical merger in which a firm increases its function to do duties that were previously performed by enterprises higher up the supply chain. In other terms, the production process occurs when one firm acquires another that provides the products and services required for manufacturing. Tesla chose backward integration because it allows more efficient investment, management over quality, and authority over production scheduling (Bilbeisi and Kesse). This approach helps to reduce shipping costs and short deliverables, significantly increasing the global control over production and gaining all profits. However, it is a rather capital investment method without any external support and chance for an exceptionally big misstep within the over-competitive market.
The Outsourcing Strategy
Panasonic originally supplied batteries to Tesla for over ten years. However, now things are changing, and the value chain is slowly shifting towards inner manufacturing. Tesla is moving away from outsourcing even further with the establishment of Gigafactory (Välikangas). The principal purpose of this financial investment has been making and manufacturing batteries for automobiles and other items with a bigger ratio of control overproduction. It can be considered the right direction, as it gives additional autonomy in the market. It also significantly reduces subsequent financial investments in manufacturing costs and allows selling these products to other companies instead of purchasing them themselves or performing alliances.
The Five Generic Strategies
General strategies are mainly focused on financial inclusion for the buyer and a wide range of products for each specific segment of the audience. Tesla has little support for generic strategies, as this precise market segment produces premium cars and parts that it sells at rather high prices. The main drivers of these strategies, in the form of low-cost providers or focused differentiation, do not correlate with the average consumer. The total cost of all spare parts and innovative technologies will remain outside the zone of financial access for a wider segment of clientele for a long time to come. Nevertheless, the uniqueness and high-tech nature of the most environmentally friendly cars makes the company the best and only seller of this particular offer at the moment. Perhaps further alliances with more global brands like Mercedes could make Tesla’s products more affordable for the market.
Tesla’s overarching marketing advantage is one of differentiation strategy. This generic approach gives a competitive edge by developing items that distinguish the organization from other enterprises in the sector. Tesla’s workplace culture encourages its employees to seek out optimal solutions that will help the company distinguish out in the automobile and energy generating and storage industries (Välikangas). The organization encourages workers to innovate to assist the continuing performance of the business. Tesla workers are urged to work best under pressure while having a break when needed to avoid a mental breakdown. Tesla’s environment also encourages teams to collaborate closely and encourage innovation while remaining focused on the company’s goals.
Potential Business Threat
A potential threat to business can be a high level of competition in a similar segment. Tesla now presents an exceptionally unique offering at a correspondingly high price. However, open patent policies and the constant development of competitors may soon bring new similar models to the market. Open patent policy leaves almost no trade secret and is publicly available to all actual and potential clients. In this case, Tesla will either have to team up with opponents based on a background of common efforts or rapidly invest more funds in innovative programs. Any delay or ineffective solution can significantly set aside years of effort.
Tesla has rapidly expanded to become one of the world’s fastest-growing corporations. Tesla’s success may be ascribed to the automotive industry’s innovation. Tesla’s goal is to accelerate the world’s most major shift to renewables. The aim is the core of Tesla’s business strategy. Tesla believes that the quicker the world moves fossil fuels to renewable energy and toward a negligible industry, the better. Tesla is a pioneer in electric vehicles because of its effective use of alternative renewable energy sources like solar energy. Despite its multiple problems, Tesla’s sales are up as a consequence of its corporate evaluation, architecture, and development velocity. Tesla may suffer a stockpile mismatch, in which it is unable to meet production demands, as it continues to encounter cost of production, long-term planning, and capacity expansion issues. Tesla has to build more branch offices and hire more people in order to maintain high mobile phone service.
Bilbeisi, Khamis M., and Moulare Kesse. Tesla: A successful entrepreneurship strategy. Morrow, GA: Clayton State University, 2017.
Mask, Elon. (2014). “All Our Patent Are Belong To You.” Tesla, Web.
Sharma, Sonali. The Tesla Phenomena A Business Strategy Report, 2016.
Perkins, Greg, and Johann Peter Murmann. What does the success of Tesla mean for the future dynamics in the global automobile sector?. Management and Organization Review 14.3, 2018: 471-480.
Thompson, A., Peteraf, M., Gamble, J., Strickland III, A. J., & Jain, A. K. Crafting & executing strategy 23/e: The quest for competitive advantage: Concepts and cases. McGraw-Hill Education, 2021.
Välikangas, Liisa. Forum on Tesla and the global automotive industry. Management and Organization Review 14.3, 2018: 467-470.