Answer To: © Laureate International Universities 2016 Assessment Brief Program Bachelor of Business College...
Soumi answered on May 01 2020
STRATEGIC MANAGEMENT
TESLA CASE STUDY
Table of Contents
Introduction 3
1. Evaluating Tesla’s competitive environment and if it has a sustainable competitive advantage 3
2. Based on Tesla’s internal environment, analyzing its core competencies, capabilities and weaknesses if any 5
3. Conditions and trends in external environment with dominant effects on Tesla’s strategic actions 5
4. Benefits and risks of Tesla’s business level strategy 6
5. Challenges on expanding internationally and recommendations to reduce them 6
Conclusion 7
References 8
Introduction
Strategic management is an extremely competitive area of operation that initiates the company to proceed towards its organizational goals. The increasing competition in the market forces organizations to think beyond their regular strategies and act in an unconventional way that not only brings success to them, but also helps to sustain it. Hence, it can be said that in the current competitive scenario, earning competitive advantage is not the sole aim of the firms, but retaining it to the benefits of the organization is of the utmost importance. Tesla is an automobile firm established in California in 2003 that has been quite successful so far. Its major popularity has been in the market due to its electric vehicles (EV), which implements the power train technology. The current essay is the analysis of the situation for Tesla that might help it sustain its present position in the market in future.
1. Evaluating Tesla’s competitive environment and if it has a sustainable competitive advantage
The competitive environment of Tesla is impregnated with competitors, which is why operating within such a competitive market is very much difficult for it. However, it has tried so far to hold on to its success that it has gained over the years, with the help of strategic decisions and competitive strategies. According to Nguyen (2017), the Porter’s five forces analysis tool helps to analyze the competitive environment, within which an organization is subjected to perform. Hence, this tool can be used to analyze the current competitive situation of the company as well as for predicting if it can retain the competitive edge over the forthcoming future or not.
Threats of Competitive Rivalry: The key competitors of Tesla are General Motors (GM) and Toyota Motor Company, Nissan Motor Company, Honda Motor Company and Ford Motor Company (Hitt, Ireland & Hoskisson, 2015). Amongst them, Tesla excels due to its EV which is incomparable to the other competing brands because the latter have most of their automobiles in the internal combustion category and hybrid or plug-in model categories than in the EV category. As mentioned by Wee (2017), although a company can have a very few number of competing firms, however, if the competitive strategies of those few firms are extremely difficult to cope with, then it can be said that the competitive rivalry is quite high for the company. Therefore, if this situation is analyzed from the context of Tesla, it could be viewed that the competitive strategies of Nissan, Ford or Honda are far more potent in terms of earning competitive edge to them, than the strategies of Tesla. Therefore, the competitive forces of the rival firms are quite high for Tesla. On the other hand, there are other organizations as well that impose competition over Tesla in the US. However, these cannot be considered as threats because their levels of operations are quite inferior to those of Tesla.
Threats of New Entrants: The market, in which Tesla operates is already explicit with competitors and tough competition. Hence, it is not a feasible ground for any new company entering the market that could have posed threat on it. According to Napshin and Marchisio (2017), high expenses of brand development, establishing business and scaling the product in competition to the existing firms make the threats of new entrants quite low for the existing firms. Therefore, for established and highly popular brand such as Tesla, this forces of the analytical tool is quite low.
Bargaining Power of Customers: The customers of Tesla get a variety of automobile options from the company that is quite potent for covering their needs. Tesla has succeeded to cater to the needs of both the types of the customers, who buy the EV cars, and the ones who buy the power train machineries (Hitt, Ireland & Hoskisson, 2015). For example, the...