Competitive Landscape: Major Competitors of Tesla
Discuss About The Theory Practice Strategic Marketing Planning.
Tesla is an organization which operates in the automobile industry and has gone through significant breakthrough in the industry of electrical vehicles. The company launched its first model named Roadster in the year 2003. Tesla has also been facing a challenging situation in the recent times due to the growth of competition and entry of new automobile organizations in the industry. The family sedan was launched by the organization in the year 2012. This model was the representative of the entry of Tesla into the family cars market. The upper luxury market of the automobile was targeted by Tesla with the help of this sedan of Tesla (Tesla.com. 2018).
Tesla is however facing huge competition from organizations like the Toyota Motor Company which is a multinational organization and has its origins in Japan. The organization further owns a luxury brand named Lexus. The largest market for the Toyota Motor Company lies in Japan and North America. The goal of the organization is to achieve around 40% of the total share of the market in Japan. The company has a partnership with Tesla for the purpose of procuring the specialised equipments that are required for the manufacture of its products (Cegli?ski 2016).
Another major competitor of Tesla in the automobile market is General Motors which is also considered to the second largest automobile manufacturer in the world in terms of the volumes of production. Ford Motor Company is also another company which provides huge competition to Tesla in the automobile industry in the entire world. The primary market which is served by Ford is in the United States, however the Ford does not have a vast international presence like General Motors. Ford has focussed its attention on a small range of its products rather than producing different types of products in the market. Ford had planned to manufacture electric cars in the 2011 (Chacour and Ulaga 2015). The name that was given to the electric cars of the company was the Focus Electric, which can be competitive with the products of other organizations like, Chevy Volt and Nissan Leaf.
Honda Motor Company is another huge multinational organization which has its origins in Japan. Honda provides a diverse range of products to the customers and the net sales of the organization that comes from outside of Japan amounts to 79%. The vehicles of the company are mainly known in the market for their efficiency and the durability. These features have helped the company in creating a different position in the industry. The electric car model of Honda was launched in the year 2010. The electricity based vehicles of the organization are divided into three groups which are, sport, economic and the normal modes (Frow et al. 2015).
SWOT Analysis of Tesla: Internal Environmental Analysis
Nissan also provides tough competition to Tesla in the automobile industry. Nissan also has its origins in Japan. The organization has recently launched an initiative which is based on the acceleration of its growth in the industry. The company has also increased the focus of its operations in the production of electric vehicles. The EV Leaf was launched by Nissan and had received positive reviews from the various customers.
Strengths, core competencies and capabilities of Tesla – The unique position that is held by Tesla in the automobile market is the major strength or core competency of the company. The organization thereby has the capability to transform the concept and ways of driving in the changing environment internally and externally. The innovative technologies that have been developed by the organization have been the major sources of competition that Tesla can provide to the other organizations in the industry. The company has been dominating the market of long-range and luxury vehicles with the help of its unique products (Frynas and Mellahi 2015). Tesla has shown a high growth rate in the automobile industry and the sales of the company have increased by 27% in the year 2015. The extraordinary that has been faced by Tesla is mainly based on the strong demand of the Model S all over the world. Model X was introduced by the company in the year 2015 which has increased the sales of the company in the years 2016 and 2017. The cost reduction related initiatives that have been taken by Tesla in the recent years and the factories that have been built have been able to provide huge benefits to the organization. Tesla is working hard on building on the abilities that it has created in the industry with the help of its unique products (Galliers and Leidner 2014).
Weaknesses of Tesla that can reduce its ability to compete in the market – The huge amounts of costs which are being incurred by Tesla have proved to be a threat to the long-term sustainability of the company in the industry. The organization has been spending huge amounts on the research and development related activities which have adverse effects on the revenues. The heavy investment that is being made by Tesla in the building of its Gigafactory has caused huge pressure on the profitability of the company. The organization has also fallen under huge load of debts which can cause capital losses in the future. The debt obligations of the company can further lead to the insufficient flow of cash (Heding, Knudtzen and Bjerre 2015). The interest payments that are to made to the parties from which the company has taken debts can reduce the amounts of money that Tesla is planning for investing in the processes of the organization. This weakness can reduce the efforts that can be taken by Tesla to compete with the other companies in the automobile industry. The changing demands of the customers in this industry requires the introduction of new and improved products in the existing product line. However, due to the heavy burden of debts on the company resources, Tesla may not be able to provide competition to the other players in the market (Hill, Jones and Schilling 2014).
Strategic Challenges Faced by Tesla in the Automobile Industry
Tesla has been positioned in the automobile industry as the only manufacturer of vehicles that operate fully on electric. The organization has thereby enjoyed the advantage that is provided to the first movers of the industries. The various products that have been able to provide this advantage to the company are, the Model S Sedan of Tesla and the Model X crossover. These vehicles have allowed Tesla to gain a huge customer base among the affluent and well to do and the affluent customers of the organization. The concerns of the organization related to the environment has led to the development of the environment friendly cars (Katsikeas et al. 2016). Tesla has to however compete with many automobile organizations in the industry. The major strategic challenge is being faced by Tesla from the effects that the lithium-ion batteries manufactured by the company have on the environment in the longer term. The rising competition in the industry from organizations which have huge resource base and are operating on a global basis for quite a long time. The major advantage is provided to Tesla by the growing concern related to the environment among the public. This has helped the company in receiving support from the government regarding the initiatives that it takes (Kumar, Sharma and Gupta 2017). The threats are provided to the strategic actions of Tesla from the competition that it faces in the external environment due to huge number of potential new entries in the automobile industry. The debt financing method used by the company is also a major threat to the future operations of the company in the market. The changing demands of the consumers in the external environment are increasing the pressure related to the introduction of more new technologies. Major parts of the shares of Tesla are now owned by Toyota and the company needs to take a decision regarding the future direction that it plans to take in the automobile industry. Tesla depends on the suppliers for the production of the equipments that are required for the manufacture of cars (McDonald 2015). This has reduced the scope of operations of the company in the industry as there are other organizations which have wider reach and greater resources as compared to Tesla.
The business model that has been established by Tesla is mainly based on the focus the company has on innovation and the concern for the environment. The threat that has been posed by the changes that are taking place in the external environment has created business opportunities for Tesla in the automobile industry. The main concept that is followed by the company is based on the environmental concerns that has increased among the customers of the automobile industry. The products or the vehicles that are provided by the company are thereby based on these concerns raised by the consumers. The public concern related to the changes that have taken place in the global environment causes changes in the legal and the political trends in the market (McDONALD 2016). The business model has been provided a huge competitive advantage by the initiatives that have been taken by the government related to the increase of pollution levels. The rapid improvements that have been experienced in the lithium-ion related products of the company are also linked with the successful business model. The changes that are taking place in the global demographics result in the increase in demands of the products that are offered by Tesla. The growth in the global population in China and India has also increased demands in the automobile industry. The population and shifts that take place in the preference of the consumers affect the demands in the automobile industry. The rise that has been seen in the prices of crude oil has also been able to increase the revenues of Tesla motors and the demands of its products (Payne and Frow 2014). The business model that has been established by Tesla is therefore able to provide huge opportunities to the company to expand its operations in the future.
Conclusion
The changes in the global economic trends will however affect the expansion related plans that are formulated by Tesla. The huge amount of investments that are required to be made in the implementation of technologies will be affected by the economic conditions of the countries where Tesla is planning to expand its operations. The product lines and business opportunities of Tesla needs to be increased so that the company can compete with the other larger organizations which are already operating in the business environment. The dependence of Tesla on the suppliers for the equipments can also pose a considerable amount of risk on the expansion of the organization in the other countries (Tomczak, Reinecke and Kuss 2018).
The major challenge that will be faced by Tesla in the modern business environment is related to the increasing levels of competition. The huge organizations are also planning to enter the market with the help of new technologies and products that can provide tough competition to the products that are offered by Tesla in the market. Tesla has tried to sustain in the market by differentiating its products from the other organizations in the industry (Varadarajan 2018). However, the entry of the large organizations in the electric cars market will cause huge pressure on the profitability and revenues of Tesla. This will impact the revenues that are gained by the organization in the market with the help of its unique products. The lack of adequate cash back-up for the operations of Tesla in the market will affect the future expansion related plans of the organization in the automobile industry (West, Ford and Ibrahim 2015).
Tesla must therefore need to concentrate its resources on other business opportunities to increase the revenues that are gained by the organization in the market. The management of the organization can think of pursing the various retail opportunities so that Tesla is able to sustain its business operations in a successful manner. This will help Tesla in continuing the future expansion related plans in an effective manner.
References
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Chacour, S. and Ulaga, W., 2015. Customer Value Audit in International Business Markets: A Strategic Marketing Tool. In Proceedings of the 1998 Academy of Marketing Science (AMS) Annual Conference (pp. 505-506). Springer, Cham.
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Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.
Galliers, R.D. and Leidner, D.E. eds., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.
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Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Katsikeas, C.S., Morgan, N.A., Leonidou, L.C. and Hult, G.T.M., 2016. Assessing performance outcomes in marketing. Journal of Marketing, 80(2), pp.1-20.
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McDonald, M., 2015. Marketing accountability. Wiley Encyclopedia of Management, pp.1-8.
McDONALD, M.A.L.C.O.L.M., 2016. Strategic marketing planning: theory and practice. In The marketing book (pp. 108-142). Routledge.
Payne, A. and Frow, P., 2014. Developing superior value propositions: a strategic marketing imperative. Journal of Service Management, 25(2), pp.213-227.
Tesla.com. (2018). Electric Cars, Solar Panels & Clean Energy Storage | Tesla. [online] Available at: https://www.tesla.com/ [Accessed 4 May 2018].
Tomczak, T., Reinecke, S. and Kuss, A., 2018. Introduction. In Strategic Marketing (pp. 1-18). Springer Gabler, Wiesbaden.
Varadarajan, R., 2018. Advances in strategic marketing and the advancement of the marketing discipline: The promise of theory. Journal of Marketing Management, 34(1-2), pp.71-85.
West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage. Oxford University Press, USA.
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