Advantages
Dsicuss about the Comparative Analysis of BMW Group and Tesla.
Tesla Motors was co-founded in 2003 and is based in Palo Alto, California. Since its inception in 2003, the company has made significant growth in the electric vehicle market. Tesla Motors designs, manufacture, and sells electric PowerStation components and cars. Also, the company manufactures battery charging equipment (Motors, 2010). This assignment will focus on the key strategic management processes of the Tesla Motors and the internal and external environment of the organization. It will also focus on the trends and conditions in the external environment that affects the firm’s strategic actions. We will examine the advantages and risks that the firm’s business strategy faces (Hughes & Drury, 2015). Lastly the task will identify the challenges that the firm is likely to face as it grows and the recommendations to reduce the risks.
- 1. Electric cars are likely to overtake the traditional vehicles and demand for transport services like uber are being preferred to public transportation and owning vehicles altogether. Tesla motors emerged to be the world’s manufacturer of these electric cars but its facing competition from Federal signal, Ford Motor Company, General Motors, Honda Motor Company, Toyota Motor Corp and many others firms. Due to this competition, the company has experienced loss of $0.01 per share than the expected sales. Even though it has invested heavily in infrastructure, it’s expected to reduce the costs of batteries that are set in the vehicles by 30% (Palin et al., 2012). Tesla is among the most shorted stocks because its stock price has remained inflated as compared to Ford and General Motors. One source of its competitive advantage is that it is a technology firm which builds technology platforms other than being an automotive company(Mangram, 2012). This has made it to become a leading player in the energy industry because the aim is to bring the same integration and data analysis as it did in the automobile industry. Tesla has taken advantage over its competitors by equipping its new cars with sensors necessary to the autopilot software. Every function of Tesla cars is controlled by software hence the company has optimized its functioning just like the google search do. Another competitive advantage is that; Tesla will be able to use these improved technologies to create a Tesla Network that will enable the car owners to rent their cars as taxis hence making profits from this(Yurynets & Tomyuk, 2014). Tesla has ensured that its business is diversified in case the automotive industry sinks. The batteries of the Tesla cars are commercializing because they are rechargeable hence providing people with solar-captured which they use at night when there is power breakages. Tesla has been able to provide energy storage systems to utility companies and this increased their production hence a cost advantage (Rothaermel, 2015).
- 2. Tesla Motors Company is capable of manufacturing electric vehicles of high quality, technology, self-driving and beautiful screens. They have manufactured different vehicle models; the company has produced Tesla Model S which is a luxury model with the highest acceleration on the car market. Tesla company is also capable of manufacturing Tesla Model X which has more technology than model s but with lower acceleration.(Hughes & Drury, 2015) Tesla Model III is also manufactured by the company which was released in 2016 and this will be able to target the middle class. The company is capable to produce high-performance batteries like Tesla Power Wall, Tesla Power Pack, and Tesla Solar Roof. This has enabled the company to establish a smart energy management services. The company is capable to draw a consistent future because the CEO of the company is involved in many successful companies which is important in the next future. Every project that the founder has developed is capable of improving the world-wide situation hence this can be the hidden feature of Elon Musk’s businesses(Yurynets & Tomyuk, 2014). This has made the Tesla Motors to be the best electric cars manufacturer hence its success.
Vehicle engineering, innovative manufacturing techniques, and powertrain are the core competencies of Tesla Motors. The distinctive competency of the company includes; safety design, battery pack technology and also distribution. With these competencies, Tesla has gained a competitive advantage over its rivals because the customers look unto them as the leaders in the electric vehicle manufacturer (Motors, 2010). The business model of the company is unique as compared to the other automotive industries and by integrating the vehicle sales, the prices have become non-negotiable. Tesla uses direct and online sales to develop customer experience and their sale and service staff creates a value propositions for their customers. The company has also developed charging stations for their vehicles to increase the rate of electric vehicle adoption. By providing energy efficient and environmentally friendly electric vehicles has made the company stronger and successful. The use of advanced technology has transformed the automotive industry because of more investors and partners.
Tesla has experienced several weaknesses which have limited its ability to compete in future and reduced the business growth. The company has a limited market presence because it generates most of its income in the US and a small presence in developing countries hence reducing the business growth. Tesla has a limited supply chain and this makes the company not to expand in the overseas markets. Another weakness is that the products of the company are expensive than those of their competitors (Nykvist & Nilsson, 2015). This weakness makes the company not to increase its customer base and market share. These weaknesses have reduced the company’s competitiveness and business growth.
- 3. Tesla Motors has many opportunities which increase its growth and development, improve its performance and strategic growth. To increase its business growth, the company can expand the global automobile market. By increasing global sales, the company will experience economic growth of those countries it has no market presence(Rajashekara, 2013). Example, the company can expand the Asian automotive markets so as to increase its revenue.
Risks
The company can also expand its supply chain and this will be important because it will support the global expansion of sale operations and production. The company can also diversify its business by creating new businesses and this will be able to reduce risks in the automotive industry (Cherubini, Iasevoli, & Michelini, 2015). The company is expected to reduce prices of their products so as to start making more profits.
The company will establish a factory which will be able to produce batteries at lower costs than the previous, this factory will be able to increase capacity (Chaika, 2016). Offering more government incentives will make the customers to switch to electric vehicles hence Tesla work with the federal government to increase the financial incentives.
The company has bought a solar energy company which will be able to increase its capabilities in the energy storage. By adopting a new automotive technology, Tesla will be the world’s leading company to switch the public to sustainable transportation (Rothaermel, 2015). The company has done this by producing tesla autopilot and more improved car batteries. Tesla company manufactures environmental friendly automotive vehicles and this has reduced air pollution hence having more markets for their electric cars due to high demand.
- 4. Tesla Motors applies a generic business strategy so as to achieve a competitive advantage over the other firms producing similar products. The business level strategy has both advantages and risks(Teece, Peteraf, & Leih, 2010).
The business level strategy gives a reflection of the company’s focus to use advanced technologies in the electric vehicles so as to compete with its competitors.
The business strategy ensures business growth in terms of the company’s popularity and profitability.
The business strategy of Tesla company helps it to maintain competitive advantage and attract more markets in the automotive industry because they are interested in the environmentally friendly products (Mangram, 2012).
Differentiation applied in the business strategy enables the products of the company to be unique hence decline in production costs.
The company is likely to experience delays in design, manufacture, launch and production of new vehicles in the past and in future.
Delays and complications in connection with new vehicle models in the past have been experienced like production delays of model s and model x vehicles.
The company may experience delays in realizing their timelines, cost and volume targets for production of model 3 vehicle. This could lead to harming the business prospects and financial condition.
There is lack of experience in manufacturing vehicles at high volumes and hence need to acquire efficient, automated and manufacturing capabilities which will be able to support such volumes.
Recommendations
There is a risk of failing to meet the growing production and delivery plans of the company and this may harm the business and its prospects (Teece, Peteraf, & Leih, 2010).
The manufactured vehicles may fail to perform as expected hence affecting the company’s ability to develop, market and sell their automotive vehicles.
- Tesla Motors is faced with many challenges as it grows and expands internationally. The challenges are discussed below;
Competition in the automotive industry is high because electric motors have become so popular and hence increasing more competitors in the market. This will reduce the market share and profit margin of the company (Yurynets & Tomyuk, 2014). The Tesla company has many competitors including general motors, Honda, Nissan, and Ford. This is because these companies have more experience in the car industry and also their resources are unlimited as compared to Tesla. Tesla products are expensive and its competitors have luxury cars with combustion engines. The company will be required to prove that its capable of competing with the other companies which have financial, manufacturing and marketing capabilities.
The fluctuations in the material prices is another challenge that Tesla motors face. For example, the cost of lithium is fluctuating and increasing (Nykvist & Nilsson, 2015). This is a material that the company uses in the storage of energy products. This will reduce the company’s profit margin.
There is a possibility that the employees of Tesla Motors company will unionize. This will make the company have higher employee costs in the production stoppage.
Another challenge that the company faces is the dealership regulations. This is because the company sells its products to customers directly without dealership hence increasing selling prices. This has led to some states opposing the direct selling of the company’s products by making sure that the sales undergo dealership. Hence for the company to remain profitable, it should be able to maintain competitive advantage regardless of competition from other automotive industries (Yurynets & Tomyuk, 2014).
Tesla motors is capable of becoming successful in future and must address some issues so as to improve its profitability and competitiveness. The company should expand its multinational presence by establishing new facilities and sale operations in developing countries hence increasing business growth (Cherubini, Iasevoli, &Michelini, 2015). By doing this, the mission and vision of the company will be satisfied.
The company should continue with the investment in research and development and this will ensure that they produce more technologically advanced products (Rajashekara, 2013). This will make the company to compete globally with other automotive companies.
The company should also expand its diversity in the supply chain and this will reduce the risks on the supply side.
The company needs to be more innovative in reducing costs and match their revenues to the levels of funding.
Conclusion
This task has discussed the Tesla Motors which is a company that manufactures electric vehicles and battery charging equipment. We have also discussed the swot analysis of the company its capabilities and core competencies. We have also discussed the challenges that the company faces as well as the advantages and risks of the business level strategy adopted by the company.
References
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