Category: Tesla

Introduction

The concept of competitive profile matrix provides a framework for comparative analysis between a business and its primary competitors to disclose their strengths and weaknesses. In the case of Tesla Motors in Abu Dhabi, the competitive profile matrix is summarized in the table below.

Tesla’s Competitive Profile Matrix

From the above competitive profile matrix, there are several critical success factors that have spurred the performance of Tesla Motors in the Abu Dhabi market. From the above table, it is apparent that the most significant critical success factors for the Tesla Motors are brand reputation (0.13), strong online business presence (0.15), and strategic market share (0.14).

The success of Tesla Motors in Abu Dhabi depended on the ability of the organization to establish effective marketing communication strategies. Fortunately, Tesla had a budget of $7m for its marketing, and it attained revenue growth of above 75 percent by 2014-2015 fiscal year. Incorporating brand communication strategies has helped in pushing Model S into the market. With a specific marketing communication budget, Tesla Motors’ attempt to brand itself as ‘Apple automaker’ akin its use of technology in production was fruitful since it managed to build a strong brand identity (Bowden 20).

Through budgetary allocations to initiate brand communication over new and traditional media, Tesla Motors has increased its brand identity across the city of Abu Dhabi. Perhaps, this step is the biggest strategic marketing opportunity available to the organization. In terms of strategic market share, Tesla experiences high bargaining power from its competitors, as it does not purchase the commodity type of goods. It depends on suppliers who are derived from different places and in different areas of specialization to ensure sustained manufacturing processes.

Apparently, Toyota has the strongest performance of 2.94 followed by BMW at 2.71, with Tesla taking the third position at 2.44. The last position is taken by Honda at 2.31. However, the difference in scores between the companies is less than 0.3. This means that the higher score attributed to Toyota and BMW over Tesla can be attributed to their existence in the market for a longer time and production of more units than Tesla.

These incumbent automobile makers pose a significant threat to Tesla Motors in the Abu Dhabi market. They have a well-established and protected brand, which may enable them to secure higher sales even if they may resort to the production of inferior, fully electric vehicles. Besides, Toyota and BMW are in their advanced stages of developing fully electric cars (Kotler and Keller 35). Tesla Motors also suffers from the twin problem of introducing a new company and a new product on the market.

Strategies to deal with the threat

Tesla Motors can create a unique brand to remain competitive in the highly stratified Abu Dhabi market. The creation of a unique brand will give Tesla a competitive over competitors such as Toyota, BMW, and Honda. Competitive technology can also be adopted by Tesla to make the company improve its products and services. Strengths that will place the firm at the top of its main competitors include provision of affordable high-tech products to the target population (Cheverton 54). Contrarily, most electric car manufacturing firms prefer selling at extraordinarily high prices in order to meet the cost of production.

By 2017, Tesla Motor will provide cars with high value and low costs in Abu Dhabi. It will be easy to acquire a brand new Series X vehicle at less than $40,000 in the next two years. The company should invest largely in quality marketing that constantly makes it visible to the public. The company needs to embrace more traditional media marketing in order to keep growing, especially when targeting the clients. In order to effectively reach such audience, the marketing communication plan must suggest the best advertisement strategies to cover its wide market area to accommodate divergent views and perceptions on different brands.

Strategic Competitive Intelligence Matrix

One of the most difficult things is to launch an electric car company in an environment in which people mostly trust the gasoline operated vehicles. Tesla has a competitive corporate strategy that majors on the deployment of talented, passionate, and innovative employees who share a common vision with the firm. Technology runs most functions in the firm from communication, product design, and overall product development.

Unlike companies that target the rich and sophisticated customers, such as BMW, Tesla decided to target the middle class in the new corporate strategy of 2009. In addition, the entire organization settles on a product design and price before making the information public (Mariotti 34). For instance, Musk sought the popular views of the employees and managers before settling for US$57,400 as the price of the Model S (Tesla Motors par. 7). With subsequent model productions, the company aimed at reducing the prices of products in order to attract the middle class.

While offering a range of sporty electric cars, Tesla operates in a rivaled market in Abu Dhabi. This explains the significance of quality leadership in the overall management of human resources. Common vehicles designed by the company include the luxury sedan, Model S, and Model X. Tesla is in the process of creating future car models with a mileage of about 650km, high battery power made from lithium-ion. Tesla has limited time to prove to the rest of the world that it is worth the attention received by gasoline-driven cars by improving on the vehicle technology (Rhim and Lee 159).

Both Advanced Technology Vehicles Manufacturing Loan Program and the previous loan earned Tesla US$8.465 billion in one year, enabling the management to continue with the eighth and ninth capital investment plan of the company. The company began earning interest and acquiring contracts by 2005. In 2009, it was evident that collective opinions from different workers and supervisors earned the company the goodwill of suppliers (Cheverton 28). Reduced loan acquisition has enabled the company to have its own malls that can couple up as showrooms and galleries for contact center in Abu Dhabi.

Works Cited

Bowden, John. “The Process of Customer Engagement: A Conceptual Framework.” Journal of Marketing Theory & Practice, 17.1 (2010): 63-74. Print.

Cheverton, Philip. Key Marketing Skills: Strategies, Tools, and Techniques for Marketing Success, London, UK: Kogan Page, 2013. Print.

Kotler, Philip, and Kevin Keller. Marketing Management, New Jersey, NJ: Pearson Prentice Hall, 2012. Print.

Mariotti, Steve. Entrepreneurship: Starting and Operating a Small Business, New York: Prentice Hall, 2012. Print.

Rhim, Hosus, and Chan Lee. “Assessing Potential Threats to Incumbent Brands: New Product Positioning Under Price Competition in a Multi Segmented Markets.” International Journal of Research in Marketing, 22.1 (2010): 159-182. Print.

Tesla Motors. Abu Dhabi Market. 2015. Web.

Introduction

Organizations operating in the modern business environment are required to be sustainable for them to remain competitive. The concept of sustainability seeks to address the environmental and economic issues affecting the business and society (Witjes & Lozano, 2016). Sustainability is also a long term objective that pursues a greener future where environmental degradation is minimal. The functions of sourcing and procurement are not exempt from these considerations. In the manufacturing industry, raw materials and other essential inputs into the production process have serious environmental and socioeconomic implications. For example, raw materials such as rare earth metals are obtained from the Earth in processes that pollute the land and render it unusable after the mining activities (Rogetzer, et al., 2019). Such environmental issues should be considered by a firm that sources those materials and makes an effort of engaging those suppliers who are conscious about sustainability. This report examines sustainable sourcing and procurement practices for a manufacturing company. The firm selected for this purpose is Tesla, a company well-known for the manufacture of electric cars and other energy production and storage products.

Literature Review

The current literature regarding sustainable sourcing and procurement explains how businesses can pursue sustainable goals through various strategies. Other literature focuses on sustainability models and others on expressing the need for sustainability. The study by Rogetzer et al. (2019) explains how recycled materials can be a means to achieve sustainability in sourcing under the price and demand constraints. The researchers explain that sustainable sourcing is constrained by demand, prices, and yield and understanding the correlations between these elements can offer a pathway for firms to pursue their goals. Additionally, the economic feasibility of recycling is an important consideration not only because of the cost savings but also because of environmental impacts. Rogetzer et al. (2019) present their study in the context of manufacturing where certain raw materials are obtained from the Earth. Alongside environmental degradation, other socio-economic issues, for example, conflicts in the Democratic Republic of Congo where the materials are sourced also bear sustainability challenges.

The literature on sustainability is largely concerned with the environment. However, some researchers are attempting to highlight the importance of achieving a balance between other sustainability issues, including economic and social. A holistic perspective to sustainability, according to Witjes and Lozano (2016) is needed to attain that a balance. These researchers propose the concept of a circular economy as a critical model to help with sustainability goals. Such a framework involves the pursuit of economic growth and at the same time addresses the serious concerns regarding the raw material and energy shortages. Circular economy implements strategies such as resource efficiency meaning minimal wastage. Other ideas proposed alongside the circular economy include durability, industrial symbiosis, eco-designs, and renting/leasing among others. A circular economy is a concept that can be pursued by private businesses as well.

Sourcing such materials should be done in a manner that helps the supply chain pose the least possible threat. The term ‘responsible sourcing’ has been used by (Brink, et al., 2019) to imply practices that address sustainability concerns across the mineral supply chains. The researchers explain that due diligence and the development of sustainability schemes can make the supply chain more sustainable. In other words, the first step to pursuing sustainability is becoming responsible. Sourcing such materials by the companies that use them for manufacturing or other purposes should be a responsible practice. Brink et al. (2019) insist that such practices include the management of environmental, economic, and/or social sustainability. Therefore, it is not just the firms directly involved with mining that are required to be sustainable.

As seen with the literature examined above, not many researchers examine sustainable sourcing and procurement without mentioning the entire or other elements of the supply chains. Research by Singhry (2015) seeks to propose a model of sustainability from sourcing to reverse logistics. In other words, the study focuses on the entire supply chain that starts with sourcing production materials for transporting the finished products to their final destinations. The author describes supply chain management as a holistic corporate strategy covering sourcing, transporting, producing/manufacturing, consuming, and reverse logistics. As such, the sustainability goals set for sourcing and procurement practices are part of the broader supply chain management goals.

As mentioned above, sustainability goes beyond the environment to address other concerns such as economic and social concerns. As such, Singhry (2015) goes ahead to define social sustainability as managing and creating skills and capabilities to suit future generations. More so, social sustainability seeks to promote health and equal treatment of all people to promote a good quality of life. The author further argues that social sustainability is embedded in socially responsible behavior. Singhry (2015) also describes the economic sustainability of a supply chain as being characterized by improved quality, cost efficiencies, shareholder value, and market performance. That is to say that business is allowed to pursue economic benefits from the economic activities mainly because that is one of the core purposes.

Besides explaining the need and importance of sustainable sourcing and procurement, some authors propose models with which to pursue these goals. A model for analyzing fuzzy data envelopment to be used in sustainable sourcing has been presented by (Hatami-Marbini et al., 2017). They emphasize that sustainable sourcing is increasingly becoming a priority for businesses because of the changes in consumer behavior and norms across the supply chain. Similar to studies such as Rogetzer et al. (2019) and Brink et al. (2019), these researchers have also used natural resources as the focal point for their hypotheses and arguments. They explain that the rates of natural resources depletion, climate change, carbon emissions, and global warming make sustainability the key factor for the social and economic survival of firms. Businesses are also using sustainability as a strategy to pursue competitiveness. It is argued here that consumers are aware of the current environmental predicament and understand that only sustainable businesses can help resolve the situation.

Various techniques to help in the pursuit of sustainability in sourcing and procurement have also been proposed. Researchers such as Lintukangas et al. (2019) propose that business should adopt innovative practices in supplier management and orient the suppliers in the sustainability expectations of the company. Supplier management is an act of selecting the suppliers to provide the company with materials and production or other operational requirements. In other words, it is an act of managing the sources of the suppliers. Innovative practices in sourcing allow the firm to use its innovations and those of the suppliers in addressing the sustainability concerns. Lintukangas et al. (2019) propose dynamic capabilities that allow businesses to scan, detect, identify and interpret threats and opportunities presented to them. In this case, the dynamic capabilities are intended to help a company recognize and utilize new approaches to sustainability. The emphasis here is that such efforts should be coupled with a critical requirement that the suppliers follow the same strategies and align their sustainability objectives to those of the company.

Forcing suppliers to become sustainable is a topic that has been addressed by several studies. For example, Wright (2016) explains that the mechanisms that mandate the suppliers and subcontractors to implement sustainable practices in aspects such as labor are becoming more common. As mentioned above, sustainability is a concept that goes beyond the environment and covers social issues as well as economic concerns. Labor in many cases can be a social issue, especially considering how employees are handled and the conditions within which they work. Such concerns are justified when considering that the developing economies have become a hub for large manufacturers because of the availability of cheap work. Such hubs are characterized by poor working conditions as manufacturers seek to reduce costs. The example of the Democratic Republic of Congo given by Rogetzer et al. (2019) where ‘conflict materials’ are sourced support Wright’s (2016) concerns. With the consumers becoming aware of such practices, the reputational from the sustainability concerns further push for more sustainable employment practices.

As can be seen from the literature provided above, sustainability can be approached from diverse perspectives. The most important aspect to notice is that sustainability requires commitment from the organizations and sometimes a legal framework to enforce the sustainability goals. Searcy (2017) explains that successful sustainable procurement initiatives require firms to persevere and their commitment to sustainability may depend on finding sustainable suppliers. Such suppliers may be concerned with the environment or other concerns such as the working environment. The bottom line is that when suppliers are committed to sustainability then there are great chances that a manufacturer will also persist in the pursuit of sustainability. In other cases, the efforts may require a legal or policy framework or even a favourable political environment. According to Brokaw (2017), the Trump administration may be blamed for the laxity in the pursuit of sustainability, especially with regards to climate change. Such a regime diminishes the efforts and commitment of businesses towards responsible business conduct.

Company Description

Tesla Inc. is a manufacture of all-electric cars based in the United States of America. It was founded by Martin Eberhard and Marc Tarpenning in 2003 and co-founded by Elon Musk. Within the first 15 years, Tesla had become an international phenomenon producing and selling electric cars across the world. Tesla has been described as a Silicon Valley-based pioneer firm operating in the electric car sector. The key business function is the development, design, production, and sale of battery electric vehicles (BEVs). Additionally, the company makes BEV components, including charging, battery, and powertrain technology (Moritz, 2015). Tesla’s reputation has grown as a result of successful car models such as the Roadstar, Model S, Model 3, and Model X among others.

Tesla operates in two broad segments with the first one being the automotive segment that focuses on the design and development, as well as production and sale of electric cars. The second is the energy generation and storage which specializes in the design, installation, manufacture, and sale/lease of products associated with energy storage and solar power systems for commercial and residential use. Additionally, this segment also sells surplus electricity produced by the company’s solar energy infrastructure (Tesla Inc, 2020). In the automotive sector, the most successful products are the Model S sedan and a sport utility vehicle (SUV) Model X. Model 3, a sedan made for the mass market is also an increasingly popular model.

The ownership of Tesla is distributed across three types of shareholders. Individual stockholders account for 6.33% of the ownership while mutual fund holders and other institutional shareholders account for 25.8% and 17.22% respectively. As of 2019, the company employed about 48020 employees. There has been a steady growth in the number of workers between 2015 and 2018 with 13060, 30030, 37540, and 48820 employees for 2018, 2016, 2017, and 2018 respectively. The 2019 figure is a slight drop and, with the COVID-19 pandemic in 2020 no further growth is anticipated, at least until the pandemic is over. The organizational hierarchy of the firm includes Elon Musk at the top serving as the CEO and director. Chief Financial officer (Zachary Kirkhorn), Vice President for the Asia Pacific (Robin Ren), Senior Vice President for Powertrain and Energy Engineering (Andrew Baglino), and Chief Designer (Franz von Holzhausen) all work under the CEO.

Sustainability is an issue of serious concern for Tesla because its business relies heavily on raw materials. Sustainability in sourcing and procurement as discussed in the literature review presents Tesla with a challenge. The battery technology used by Tesla requires some of the rarest earth minerals often acquired in countries such as the Democratic Republic of Congo where child labor and other vices make the raw materials unsustainable. Sourcing raw materials for the EV batteries are generally associated with squalid working conditions and child labor, two vices that should not appear in a sustainable company (Phan, 2020). According to Bulman (2015), the production of Powerball battery at Tesla will require a supply chain that is ‘Super-charged.’ In other words, the production energy storage systems ushers in an era of ‘lithium gold rush’ which can only mean an over-exploitation of the resource.

The company will need to establish early relations with suppliers and governments across the world where the resource is sourced. Cobalt is majorly obtained from DRC, which makes its supply unstable as it fluctuates depending on the current levels of conflict. These and other issues are serious sustainability concerns viewed from economic, environmental, and social perspectives. Lithium is another rare resource extracted from brines beneath South American deserts and evaporated using the energy from the sun. The growth in demand means other continents such as Australia have started crushing rocks to obtain the useful resource. Another rare metal is nickel, which is also mined in areas where human rights violations and child labor are abundant (Goldman, 2017). Evidence that Tesla does not recycle batteries is given by the fact that while 90% lead-acid batteries are recycled, only 5% of lithium-ion batteries go through the same process (Digital Initiative, 2017). Tesla, being a major producer of these batteries, is doing little to recycle the products majorly. The table below summarizes the findings from the literature review:

Table 1: Summary of Literature Review Findings

Current Sustainable Sourcing and Procurement Practices

Tesla’s procurement has led to a phenomenon the company calls ‘production hell.’ For example, the production hell was attributed to faulty procurements where the CEO admitted that Tesla chose the wrong suppliers and subcontractors. Such an error led to lost revenues and Tesla having to fire between 400 and 700 workers (Simpson, 2017). From a sustainability perspective, the firm is not maximizing the shareholder value as explained by the declining value of shares. The sustainability concern, in this case, is economic as Tesla was created to generate wealth for the shareholders. However, the company should be commended for the efforts to become sustainable overall. Tesla has established good relations with suppliers which should sustain the business economically. Environmentally and socially, however, Tesla requires to make several adjustments.

It may seem that examining sustainability initiatives at Tesla reveals more unsustainable practices that those that are sustainable. A company in Germany from which Tesla sourced pain for the Model 3 was found to be engaging in activities that were not responsible. The firm, Eisenmann, was contracted to build a paint shop in Fremont, California where it hired 140 employees from Eastern Europe and paid them as little as $5 an hour (Simpson, 2017). Such practices are considered exploitative and only explain that Tesla’s suppliers could be unsustainable.

Sustainability in sourcing and procurement at Tesla have led some observers to label the firm as unsustainable. There are fears that Tesla does not report adequate details regarding the production of its electric cars or the sourcing of its production. However, it can still be observed that the company is significantly inefficient in the raw material usage whereby over 40% of raw material purchases end up being scrapped (Katsos, 2018). Such a huge percentage does not compare well with automotive manufacturers such as Ford who are close to achieving their goal of zero waste to landfills. Electric cars are intended for a sustainable future, but their production is unsustainable. The table below summarizes the current practiced observed at Tesla.

Table 2: Summary of Current Practices

Gaps between Literature and Practices

The gaps between literature and practices regarding sustainable sourcing and procurement can be seen in two ways. First, Tesla fails to understand the real meaning of sustainability whereby producing electric cars for a greener future fails to account for aspects besides the environment. Second, there is inadequate data concerning Tesla’s sourcing and procurement functions in the context of sustainability. This is manifested by the lack of scholarly work on the subject specific to the Tesla and the fact that the articles appearing in the media about Tesla’s sustainability can hardly be considered credible. As such, it is hard to explain the extent to which Tesla’s procurement and sourcing practices can be considered sustainable.

Tesla fails to realize that most of the electricity produced globally is not green energy due to the use of coal and other fuels. Burning coal to power an electric car does not sound sustainable. However, it has been estimated that about 76.6% is derived from coal, natural gas, or petroleum. However, some people express that such a percentage is better than 100% of pollution attained when cars also use these fuels (Katsos, 2018). In other words, Tesla is only as sustainable as the amount of clean energy used. The fact that Tesla also produces clean energy and energy-producing equipment may hint at the firm pursuing green electricity for their cars.

Reading about Tesla’s supplier relations reveal that the company is only interested in suppliers who can deliver even in times of uncertainty. Additionally, the materials sourced should be the right materials. Looking at the waste levels at Tesla reveals that the materials supplied are either not the right materials or that the company is extremely inefficiency. In the incumbent automotive manufacturers, over 80% of the parts produced are re-usable while at Tesla over 1600 lbs of e-waste are produced (Katsos, 2018). Considering that the capacity of the planet to recycle e-waste is only about 5%, the company’s sourcing and procurement decisions are considered unsustainable. It is also important to mention irresponsible actions that include the exploitation of employees through low wages and child labor in countries such as the Democratic Republic of Congo, a conflicting nation where cobalt is sourced. For example, children are forced to work in the mines with no payment.

Additionally, it can be noted that Tesla is generally unsustainable as explained in the previous sections. For example, economic unsustainability is seen when Tesla financial performance is uncertain or when it strains resources attempting a direct distribution, which can be perceived as a high-risk undertaking. Issues such as toxic materials in battery production, high rates of waste to landfills, and overexploitation of resources represent environmental unsustainability.

Lastly, the unavailability of data about Tesla’s sustainable sourcing and procurement means that only best guesses can be made. However, this approach will lead to Tesla being seen as unsustainable. The literature review indicated that production data can be used as an indicator of sustainability (Brink, et al., 2019). The company’s production data indicates high levels of waste indicating inefficiencies in the supply chain. Additionally, the lack of data means that Tesla lacks a comprehensive policy or strategy for pursuing sustainability. The table below summarizes the gaps identified in this section:

Table 3: Summary of Gaps

Recommendations

The most significant recommendation would be one that outlines how such a system can be built. The approaches by Brink et al. (2019) are deemed adequate and should form the most basic recommendations for Tesla. Firstly, sustainable procurement is depicted by the firm’s procurement policy and effected through the buying actions and behaviors. Tesla, therefore, should start by developing a comprehensive procurement policy that encompasses sustainability goals. The concept of responsible sourcing should be deployed in the company as a new best practice in sourcing and procurement.

A policy in itself is not adequate in the quest for sustainable sourcing and procurement. As such, it should be followed by a strategic framework and a roadmap that outline the specific activities to guide the company towards the sustainability goals. A strategy outlines an action plan to be followed in the long term to achieve a set goal. The goal at Tesla is to become sustainable and reflect the same throughout the supply chain. A roadmap for sustainability in procurement and sourcing can be a more specific plan outlining the sequence of actions to be undertaken in the short term to achieve the short term objective. Insourcing and procurement, a roadmap outlines which suppliers are deemed sustainable, how suppliers can be made sustainable, or which suppliers can be engaged by the company based on their genuine commitment to sustainability.

Lastly, a sustainability culture can be created at Tesla where the actions of all employees and other actors in the supply chain all seek to achieve sustainability. The concept of organizational culture entails those behaviors, beliefs, norms, and values shared among a company’s members. The employees comprise the major group of organizational members and the leadership should target them for a culture change. Such a move may require a major organizational transformation which could be costly and complicated. However, the future of Tesla in the electric car market depends on how the company and its partners in the supply chain handle sustainability issues.

References

Brink, S., Kleijn, R., Tukker, A., & Huisman, J. (2019). Approaches to responsible sourcing in mineral supply chains. Resources, Conservation and Recycling, 145, 389-398.

Brokaw, L. (2017). Why the business case for sustainability will win out. MIT Sloan Management Review.

Bulman, P. (2015). Tesla’s Powerwall battery production requires ‘super-charged’ supply chain. Renewable Energy Focus.

Digital Initiative. (2017). Tesla and the environmental impact of lithium-ion batteries. Digital Initiative.

Goldman, J. (2017). Electric vehicles, batteries, cobalt, and rare eartch metals.

Hatami-Marbini, A., Agrell, P., Tavana, M., & Khoshnevis, P. (2017). A flexible cross-efficiency fuzzy data envelopment analysis model for sustainable sourcing. Journal of Cleaner Production, 142, 2761-2779.

Katsos, J. (2018). Tesla is not “sustainable”, or what people get wrong about sustainability. Medium.

Lintukangas, K., Kahkonen, A.-K., & Hallikas, J. (2019). The role of supply management innovativeness and supplier orientation in firms’ sustainability performance. Journal of Purchasing and Supply Management, 25(4), 1-10.

Moritz, M. (2015). Tesla Motors, Inc. – Pioneer towards a new strategic approach in the automobile industry along the open source movement?Researchgate.

Phan, T. (2020). Why Tesla’s former CTO is crazy about the battery recycling industry. The Hustle.

Rogetzer, P., Silbermayr, L., & Jammernegg, W. (2019). Sustainable sourcing including capacity reservation for recycled materials: A newsvendor framework with price and demand correlations. International Journal of Production Economics, 214, 206-219.

Searcy, C. (2017). Sustainable procurement requires perseverance. MIT Sloan Management Review.

Simpson, P. (2017). What’s behind Tesla’s supply chain woes? CIPS.

Singhry, H. (2015). An extended model of sustainable development from sustainable development from sustainable sourcing to sustainable reverse logistics: A supply chain perspective. International Journal of Supply Chain Management, 4(4), 115-125.

Tesla Inc. (2020).

Witjes, S., & Lozano, R. (2016). Towards a more Circular Economy: Proposing a framework linking sustainable public procurement and sustainable business models. Resources, Conservation and Recycling, 112, 37-44.

Wright, C. (2016). Leveraging reputational risk: Sustainable sourcing campaigns for improving labour standards in production networks. Journal of Busines Ethics, 137(1), 195-210.

To become successful on the market, Tesla Inc. requires more than knowledge of internal, external, and other factors and experience to handle it. Corporate and business strategy has to be implemented in order to act on the knowledge and use the experience. Competition on the market could significantly influence the choice of those strategies, as well as the type of market itself. Adequate management of these forces and planning capabilities could benefit the company both in the short and long term. Therefore, this paper is aimed to research and explain the above-mentioned concepts in application to Tesla Inc. in order to determine the best course of action for the corporation in the vehicle market.

Business-Level Strategies

Business-level strategy is a set of actions aimed at providing the customer with services or goods that will satisfy them and achieving leadership in competition through the exploitation of the company’s core competencies. Such a strategy is usually chosen judging from the organization’s stance in the industry, taking into account the competitive environment with all its forces (Hitt, Ireland, & Hoskisson, 2013). Electric vehicle industry appears, at the same time, a separate market and a sub-market integrated into conventional, gas/diesel car niche. As an individual industry, it continues to grow and expand at the expense of customers from gasoline-propelled car industry (Hertzke, Müller, & Schenk, 2017). There are also hybrid cars that can use both gasoline engine power and an electric one, which is why the market for electric or semi-electric vehicles is so complex to define as per the cars to include in the category. Nevertheless, Tesla Inc. successfully operates on the electric vehicle market, having a 30% share of it (DeBord, 2018).

Arguably, the most appropriate business-level strategy for Tesla Inc. is integrated cost-leadership differentiation. This strategy combines the features of the cost-leadership and differentiation approaches and may become a new solution for companies that are presented globally. Pure cost-leadership is not fully applicable to Tesla Inc. as their products are rather expensive in comparison to the company’s competitors. Differentiation is more likely to fit with the organization, yet, due to the peculiarities of the Tesla’s marketing strategies and technological advantages it may combine the two strategies. The reason the integrated approach would be best suited in this case is the premium-market electric cars that in the long-term perspective can be cheaper than conventional ones. Tesla Inc. produces cars on electric batteries that possess the high capacity and, as the company states, they can be less costly to use as they let customers economize significantly on fuel and road tax (Tesla Inc., n.d.a).

The core competencies of the firm include battery technology, brand power, and marketing strength. The company uses each of these competencies to its advantage in order to stay competitive. Patented battery design lets Tesla cars have extended mile range adding notable value to the product. Tesla Inc. is rather popular and stands in the same row as auto giants such as BMW and Mercedes Benz if not for annual sales then for recognition (Agrawal, 2016). The company positions itself as car manufacturer of the future staying on the verge of technological development and automation.

Corporate-Level Strategies

Corporate-level strategies include actions that allow the company to ally themselves with other corporations in order to achieve greater gains (Hitt et al., 2013). Alliances are crucial to the company from the standpoint of benefits they can yield. For instance, Tesla Inc. may experience difficulties with distributing their production on their own due to the limited nature of their facilities that are located only in the U.S. Since they cannot yet produce their vehicles in Europe or Asia, they require new factories and equipment. Consequently, it becomes evident that the growth strategy for the Tesla Inc. corporation becomes the best choice. In case of this company, vertical and horizontal growth can be expected. Vertical growth may be anticipated in the number of vehicles produced, the number of production facilities constructed across the regions of interest. Horizontal growth applies here in the aspect of new locations where Tesla Inc. can distribute their products.

This strategy can be seen as profitable due to the fact that the firm, like any other car manufacturer, is dependent on the number of sales it can make. By increasing the public and accessing new markets, Tesla Inc. can significantly benefit from the raised demand. The other reason is in the nature of the firm’s production facilities. Recently the company automated its Gigafactory for battery production, which means its capacity grew several times. The firm’s competitors produce rather significant numbers of vehicles overcrowding market with them, while Tesla electric cars can be considered a limited edition. As the demand for electric cars grows, the company needs to consider further expansion of its production capabilities and building new facilities in other regions such as Europe. In addition to that, growth strategy seems to be the best option for the firm due to the fact that it provides the opportunity of pursuing the company’s goals and objectives. Tesla Inc. leader, Elon Musk, announced that the company strives towards a renewable future and a new world without gasoline (Tesla Inc., n.d.b).

As the growth aligns with Tesla’s mission and vision, pursuing higher outputs becomes a natural strategy for the company. In addition to that, the popularity of the electric vehicles grows in other regions, such as China, where concern for the environment is a serious issue. China is a huge market and to satisfy its needs, Tesla Inc. might consider creating new facilities in order to be able to do it.

Competitive Environment

The competitive environment in the market for electric vehicles with the entrance of Tesla Inc. became harsher. Interest in renewable solutions in the private car industry is evident as the exhaust fumes produce a toxic effect on urban environments, negatively affecting health and life of their residents. One of the first fully electric cars for the mass market was Nissan Leaf that earned popularity in Canada and Europe (Nissan Motor Corporation, 2018). However, Nissan cannot be considered a competitor for Tesla Inc. as it occupies the market niche for low-price electric vehicles, while the company in question produces cars for the high-end segment. Arguably, the true competitor for Tesla Inc. is BMW. Bavarian Motor Works company operates in markets for premium vehicles for a rather prolonged period of time.

The market commonality in the two companies is rather high, as both companies produce sedans and roadsters for high and middle-income customers, which indicates a multi-market competition (DeBord, 2018). Geographically, BMW sells its vehicles in many regions that Tesla Inc. is also interested in including Europe, Asia, and the U.S. Resource similarity is also significant in these two companies. Capable personnel and technology can be considered the assets BMW and Tesla Inc. both require. Yet, their strategies in acquiring them differ. BMW creates value through its well-established brand that focuses on the quality and power of its vehicles, making a proud statement that many people respect and honor. Tesla Inc., on the other hand, sets forth the positive environmental impact that their cars produce along with technological advantage (Tesla Inc., n.d.b).

The competitive behavior of the BMW is rather diverse from Tesla’s. The rival strives for defending its competitive advantages by producing an increased number of vehicles and developing new models to compete in multiple markets. Such a strategy is understandable and justified in terms of BMW’s considerable resource pool. For instance, its model 5 series that is close to model 3 of Tesla in terms of technical characteristics is produced volumes far greater than those of Tesla (DeBord, 2018). Among other competitive actions, BMW expands its line of products by developing fully electric and semi-electric cars such as the i3 series (Stewart, 2018). To counter that, Tesla Inc. develops model 3 in order to win the competition for middle-income customers that may be interested in electric vehicles. BMW responds with developing batteries of their own, which are not yet ready for production but can potentially challenge Tesla’s leadership in that technology (“Solid Power, BMW partner to develop next-generation EV batteries,” 2017).

Overall, competitive dynamics can be characterized as a battle for technological advantage and sales. The development of technological solutions for electric vehicles can be considered a key to winning the competition against conventional cars, as now many people doubt their potential as a substitute for gasoline-powered vehicles. Sales may, arguably, be called one of the criterions for success in many car market segments as each sale of high-price commodity brings additional value to a company. As far as capabilities are concerned, BMW has a higher potential to win the competition with Tesla for the electric car market in the long-term perspective. BMW has multiple production facilities, strong distribution and partner network, a large pool of tangible and intangible assets, and a well-established brand with a long history. Compared to Tesla Inc. that has only two factories, BMW can outmatch it as soon as it puts i3 on conveyer belts.

Market Cycles

In slow-cycle markets, Tesla Inc. has an advantage of unique battery technology that can shield it from rivalry and grant temporary leadership. The imitation of that technology can be costly even for large ventures such as BMW or Mercedes Benz. In addition to that, research and development require considerable time. In fast-cycle markets, Tesla will quickly lose its competitive advantage. Mainly, it could happen due to its relatively low production capabilities and resources as compared to huge corporations such as General Motors or the above-mentioned BMW and Mercedes Benz. Above that, Tesla’s brand name may be associated with innovative technologies which in fast-cycle markets is not as permanent as in slow-cycle ones.

Conclusion

All things considered, Tesla Inc. is a solid company with considerable competitive advantages that can be exploited with the implementation of integrated cost-leadership differentiation at the business level and growth at the corporate level. However, one of its greatest rivals on the market, BMW, has larger capabilities that in the long term can surpass those of Tesla. In slow-cycle markets, Tesla Inc. may hold a privileged position, but in fast-cycle ones, it can dwindle quickly.

References

Agrawal, A. J. (2016). 3 ways Elon Musk conquers marketing.Forbes. Web.

DeBord, M. (2018). Tesla is making confusing claims about how Model 3 sales compare to its competitors like Mercedes, BMW, and Audi.Business Insider. Web.

Hertzke, P., Müller, N., & Schenk, S. (2017). Dynamics in the global electric-vehicle market. Web.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2013). Strategic management: Concepts and cases: Competiveness and globalization (10th ed.). Mason, OH: South-Western Cengage Learning.

Nissan Motor Corporation. (2018). Nissan delivers 300,000th Nissan LEAF. Web.

Solid Power, BMW partner to develop next-generation EV batteries. (2017). Reuters. Web.

Stewart, J. (2018). BMW’s new electric iX3 SUV looks shockingly normal.Wired. Web.

Tesla Inc. (n.d.a) Cost comparison. Web.

Tesla Inc. (n.d.b). About Tesla. Web.

Introduction

Tesla, a small but rapidly growing manufacturer of electric vehicles, has a history of significant financial losses. This year, however, has become crucial for the company as it has managed to enhance its profit largely. This report provides information about recent Tesla’s job cuts and their consequences. It reflects on Tesla’s position in the market of electric vehicles and presents the analysis of the company’s decision to reduce its workforce. The report concludes that the firm’s action was successful and contributed to significant profit maximization.

Tesla’s Job Cuts

Tesla made a news headline last year for cutting its workforce to maximize profit. The report by Boudette states that the company’s chief executive, Elon Musk, reduced the number of employees by 3,500 as a part of his restructuring strategy. Musk noted that he decided to take such an action to demonstrate that Tesla can be sustainably profitable and adhere to its mission to promote the world’s transition to clean energy (Boudette). Staffing cuts were a part of the company’s effort to transform from a niche car manufacturer to a mainstream producer.

Musk’s decision was considered newsworthy as the company was known for the high levels of losses while investing billions of dollars in creating its products (Boudette). The authorities of the organization reported that the problem might be associated with the excessive use of automated machinery and robots for tasks that workers could perform more effectively. Thus, it was evident that Tesla needed a strategy that will allow for profit maximization. According to Musk’s forecast, the decision to reduce the workforce would result in higher profit. Independent analysts agreed that such an action would allow for a decrease in costs and an increase in expenses, leading to profit maximization (Boudette).

Tesla’s Position in the Market

Tesla is the company that produces all-electric cars and clean energy storage products. The organization also develops energy solutions for homeowners and businesses; they include Solar Roof, Powerwall, and Powerpack (“About Tesla”). Tesla aims to make its factories the safest in the world by providing on-the-job training for its employees, as well as multi-day training programs. The organization operates in the price-insensitive segment of the electric car market, establishing high prices for its products and targeting the economically advantaged population. It is evident that Tesla strives to improve the quality of its performance on all levels, from management to manufacturing.

Market analysis shows that the organization can be considered a highly competitive company in its segment. The reason for it is that few companies produce electric vehicles and they are not competitive in the market, while Tesla is one of the most valuable car manufacturers in the US (DeBorg).

Moreover, currently, many automakers see electric vehicles as a science project rather than a profitable investment. The majority of customers prefers gasoline and diesel cars due to their lower cost and the accessibility of petroleum. Indeed, in some countries, owning an all-electric vehicle may be challenging due to the lack of charging options. However, Tesla has a target audience too; its products are popular among people wanting to own luxury cars. DeBorg notes that in the future decades, the market of electric vehicles will expand and transform from being primarily monopoly-based to competition-based. Nevertheless, currently, Tesla is the main manufacturer in the field of all-electric cars.

The report by Hernandez also shows that Tesla has the leading position in its market and is close to becoming a monopolist. The company’s investment into electric vehicles projects in the next five years may be estimated by about $32,5 billion, which is 40% more than other companies’ expenditure (Hernandez). In contrast, the investments of Tesla’s competitors, Daimler and Volkswagen, may reach around $12 billion for each organization. This data allows concluding that although Tesla has competitors, it can be considered the leader in the market.

Action Analysis

Tesla’s decision to reduce its workforce was a part of the company’s strategy to enhance its financial position during the period of major losses. The organization aimed to decrease the majority of its salaried employees drastically, concentrating on production-line workers (Bomey). The action appeared to be successful as Tesla’s showed an unexpectedly high level of profit in the third quarter of this year.

According to Kopecki, the company’s revenue increased by 70% from June and constituted more than $6,8 billion. Notably, analysts suppose that Tesla’s production rates will also improve. The organization has managed to decrease the number of work hours by around 30% while ensuring a shorter timeline of production (Kopecki). These facts prove that Tesla’s decision to cut its workforce was beneficial to the organization.

The action relates to the topic of profit maximization as it is a part of the company’s strategy to enhance its revenue. Musk noted that job cuts were necessary as Tesla’s rapid growth resulted in the duplication of several job functions and roles (Bomey). The company’s recent financial statements show that the action allowed for the profit of more than $310 billion (O’Kane). This case of profit maximization is the first one in Tesla’s history.

It is necessary to mention that such an improvement in profitability was not caused only by the reduction of the workforce. Tesla reports that the company managed to reduce the costs of raw materials as well to reach this goal too (O’Kane). However, it is possible to say that job cuts contributed to profit maximization significantly.

One of the possible issues that the company was considering when making the decision was the need for restructuring of its middle management forces. As mentioned above, many of the job functions within the firm were duplicated and unnecessary. The organization was founded fifteen years ago and has aimed to grow and develop rapidly, which means that many of the decisions regarding its productivity might be outdated.

Moreover, as Tesla is known for significant losses over the years, it may be possible to say that its profit maximization strategies were not successful in the past. These facts allow for a conclusion that the organization needed a significant change to improve its performance. Thus, the primary considerations that led to the action were the history of Tesla’s losses and the need for the elimination of its employees’ duplicated roles.

Another possible issue that the organization was considering is that its existing structure did not reflect its goal to become sustainably profitable. Supposedly, many of the employees were assigned the tasks that did not lead to significant improvement in Tesla’s performance. To ensure sustainability, the organization had to use its sources effectively, investing in the workforce that would have tangible value. Thus, it was a vital decision to decrease the number of middle management forces. It is evident that Tesla was able to relocate a significant part of its assets by discharging of 3,500 employees.

Finally, it is necessary to mention that the company has strived to accelerate the global transition to sustainable energy (Boudette). To achieve this goal, it would be vital for Tesla to promote its products and make them more affordable for the public. However, as the organization had not shown increases in profit before the decision, it could not invest in the enhancement of the production speed or the change in utilized materials. By cutting its workforce, Tesla maximized its profit and was able to invest in achieving its goal. Moreover, the dramatic increase in the firm’s revenue probably resulted in the enhanced support from its investors. I believe that the company considered this issue while deciding on job cuts.

The importance of the presented considerations is determined by the fact that Tesla is a rapidly growing company that aims to bring significant transformations in the car market. To ensure that this goal can be achieved, the organization had to implement changes in its structure. The issues that were considered when making the decision were vital as they affected Tesla’s ability to maximize its profit and relocate its financial sources.

Conclusion

Tesla’s decision to discharge of 9% of its employees has been successful as it allowed for the dramatic increase in profit. The analysis of the market shows that although the company has a history of significant losses, it remains the leader in the electric vehicles segment. Staffing cuts allowed Tesla to improve its performance, decrease the number of work hours, and ensured high revenue rates. The company’s action is an example of an effective strategy for profit maximization.

Works Cited

“About Tesla.” Tesla. Web.

Bomey, Nathan. “Tesla Cutting 9% of Workforce and Home Depot Deal, CEO Elon Musk Says.” USA Today, 2018. Web.

Boudette, Neal. “Elon Musk, in Search of Profit, Cuts Tesla’s Work Force.” The New York Times, 2018. Web.

DeBorg, Matthew. “Tesla Isn’t Facing a Wave of Competition Because There Isn’t Any Competition in the Electric-Car Market.” Business Insider. 2018. Web.

Hernandez, Raul. “Tesla Might Soon Have a ‘Near-Monopolistic’ Hold on the Electric Vehicle Market.” Business Insider, 2017. Web.

Kopecki, Dawn. “Tesla Shares Soar on Surprise Third-Quarter Profit That Beats Wall Street Expectations.” CNBC. 2018. Web.

O’Kane, Sean. “Tesla Rides Model 3’s Popularity to its First Profit in Two Years.” The Verge. 2018. Web.

Introduction

Over the past few years, the electric vehicles (EVs) market has experienced immense growth. This can be attributed to technological advances, new regulations on vehicle emissions and safety, as well as shifting consumer preferences. Tesla is one of the rapidly growing companies in the vehicle manufacturing industry. The organization’s investment in research and development has enabled it to create innovative products, contributing to its success. Tesla’s move to China was inspired by the change in government policies and the need to serve the growing Asian market.

Description of the Company and the Products It Provides

Tesla is the biggest manufacturer of EVs in the world today. The company, originally known as Tesla Motors, was founded in 2003 by Marc Tarpenning and Martin Eberhard, who were the organization’s chief financial officer (CFO) and chief executive officer (CEO), respectively (Ferrell & Fraedrich, 2021). The business aimed to transform the automobile market by manufacturing environment-friendly electric vehicles to increase the sustainability of the transportation market. Elon Musk, one of the company’s initial investors, became its CEO in 2008, after which Tesla began diversifying its portfolio to include clean energy production (Ferrell & Fraedrich, 2021). Tesla has six factories that act as its manufacturing sites located in Fremont, Nevada, New York, Berlin, Texas, and Shanghai (Crider, 2022). Tesla’s headquarters, located in Palo Alto, California, was recently moved to Austin, Texas (Kolodny, 2021). The manufacture of environment-friendly products has significantly boosted Tesla’s sales.

Although Tesla was initially created to manufacture EVs, it has expanded its operations into energy production. In this case, the Roadster was the company’s first car produced in 2008. Tesla has also made other popular vehicles, including Model 3, S, Y, and X (Ferrell & Fraedrich, 2021). Additionally, the company is involved in buying and selling tax credits (Ferrell & Fraedrich, 2021). Similarly, Tesla manufactures solar panels and batteries for vehicles and home power storage (Ferrell & Fraedrich, 2021). These technologies enable businesses, homeowners, and utilities to effectively generate, store, and consume renewable energy.

Recently, Tesla has expanded its operations into different countries to increase its production of EVs to match the global demand. One of its expansions has been to China, where the company established a manufacturing plant in Shanghai in 2018 (Langley et al., 2020). However, most of Tesla’s operations remain in the United States. Therefore, only a part of the company moved to create the new plant in Shanghai.

The Reasons Behind Tesla’s Move to China

Several factors may have led to Tesla’s expansion to Shanghai. One of the major reasons for the company’s move to Shanghai was China’s acceptance of fully foreign-owned companies in vehicle manufacturing, especially renewable energy vehicles. In the past, foreign businesses intending to manufacture cars in China were required to form joint ventures with domestic vehicle producers. In such an arrangement, the local partner would own a 51% majority stake and an equivalent share of profits (Horwitz & Huang, 2017). Thus, the change in China’s regulations on foreign ownership of vehicle manufacturers greatly attracted Tesla to establish a plant in Shanghai. In addition, Tesla may have moved to the region to serve the large Asian market. Over the years, Tesla’s market in the country has significantly expanded. A report shows that by 2017 Tesla occupied an estimated 8.6% of China’s EV market (Horwitz & Huang, 2017). Hence, Tesla’s move to Shanghai was inspired by its need to serve its customers in Asia while increasing its market share in the region.

China’s reduction in import tariffs may have encouraged Tesla’s move to Shanghai. The nation had placed considerably high tariffs on imported vehicles, making Tesla’s vehicles costly and unaffordable to many consumers. Since the company is a wholly foreign-owned enterprise, it still pays import taxes. However, China reduced the import tariffs from 25% to 15% to facilitate Tesla’s expansion (Jourdan, 2018). Therefore, the decrease in taxes may have prompted Tesla’s move to Shanghai because it was a guarantee that its EVs could be more affordable to customers in China and the broader Asian region. The goal behind Tesla’s expansion to Shanghai was to serve the rapidly increasing Asian markets, particularly China. It also aimed to use Shanghai as an export hub to deliver vehicles to other regions, such as Europe.

The Difficulties Involved in Tesla’s Move to China

During its expansion to Shanghai, Tesla experienced a myriad of setbacks. One of the major challenges was stiff competition from local EV manufacturers. In China, companies such as SAIC Motor, BYD Auto, Geely Auto Group, and NIO occupied over 90% of the market share (Lambert, 2017). In addition, these local producers were highly subsidized by the government in its push for 100% EVs by 2030 (Horwitz & Huang, 2017). Thus, Tesla struggled to expand its niche due to the increased competition from local manufacturers. However, the most significant challenge regarding Tesla’s move to Shanghai was the trade wars between the United States and China. From 2018 to 2019, the ties between these countries had considerably deteriorated, resulting in sanctions and high tariffs against each other (Rosenbaum, 2018). In this case, Tesla’s operations in China were adversely affected by tariffs on American-made vehicles in retaliation to the United States import duty on Chinese goods. Therefore, stiff competition and political tensions between China and the United States were the primary challenges associated with Tesla’s move to Shanghai.

Goleman’s Six Leadership Styles

Various approaches to management are used according to the situation at hand. For instance, a visionary or authoritative leadership style is required when momentum is needed towards a shared goal (Price-Dowd, 2020). This type of leadership originates from an individual’s position and vast expertise in a given area. This strategy can be used when an organization needs a different direction. Thus, authoritative leaders can be vital when a company plans to move to a foreign market. Creating a new vision may ensure that employees’ efforts align with the organization’s goals and create products that meet customers’ needs.

Successful managers do not rely on a single leadership approach. The affiliative leadership style can be employed when a company has already initiated its operations in a foreign country. These leaders are known to create a positive work environment for their teams (Price-Dowd, 2020). Therefore, this approach can be critical in easing tension between workers or if they need to be motivated through a stressful time, such as meeting production targets within a short time.

The automotive industry is very competitive and requires constant creativity and innovation. Therefore, for a company like Tesla to stay ahead of the competition, a pacesetting leadership style is needed to set high-performance standards to realize short-term goals, such as being updated with the latest technological trends in car designs. These leaders are suitable when production is already in progress to obtain high-quality results from a motivated team.

Goleman’s coaching leadership approach focuses on mentoring and assisting the workforce in developing skills or competencies in certain areas. Mentors work closely with their teams to identify strengths and weaknesses to improve their job performance (Price-Dowd, 2020). These leaders may help employees develop new and long-term skills to adapt to a new market. For example, companies usually train their employees to remain updated with foreign market cultural needs and changes in technologies in the automotive industry. However, this leadership type is unsuitable, especially when operations run smoothly and leaders want to build team consensus or seek other members’ input to achieve certain targets. For this reason, the democratic leadership approach can help promote team collaboration and achieve the set objectives (Price-Dowd, 2020). This approach can be essential when leaders want to harness the ability of their employees to share knowledge to transform the organization through innovation and make it more competitive after moving to a foreign country.

Coercive or autocratic leadership is a top-down approach to management that usually depends on issuing orders and strict control. This style can be effective during a crisis or when a quick response is required, such as dealing with unproductive employees or introducing a drastic change in an organization (Price-Dowd, 2020). Autocratic leaders can improve employees’ performance in the short term, but they may hinder motivation and creativity.

The most appropriate approaches are authoritative and coaching leadership. For a company like Tesla, it needs to quickly adopt technological advances to deliver on its mission to make China a major production hub for clean energy cars. There has been increasing customer demand to make EVs with longer ranges and quicker charging times, which are the significant barriers to mass adoption of these technologies (Collin et al., 2019). For these reasons, visionary leaders can be effective where changes are required to gain a competitive advantage and improve sales. Since Tesla has moved parts of its operations to China, a leader such as Elon Musk may act as an inspiration to employees to develop new technologies to serve customers’ unique needs in the Asian market. For example, Tesla may need to produce low-cost alternatives to Model 3 and expand its superchargers infrastructure to accommodate increasing the number of Tesla cars in use.

Coaching leadership strategy is essential because it focuses on improving employees’ skills for future roles within the company. These leaders serve as mentors and work closely with their teams to attain excellence, which may be suitable for employees who are open to improvement (Price-Dowd, 2020). For example, under Tesla’s START program, managers provide candidates with needed expertise for a successful career in the organization. During the training, participants earn certifications through in-class theory learning and acquire technical knowledge. Therefore, the coaching leadership approach helps employees improve their performance and develop long-term work capabilities.

Tesla’s Success

Tesla’s move in China market has been successful in the long run. The Asian country is the company’s second-largest market after the United States, accounting for approximately 30% of its total sales (Mathews, 2021). However, a report shows that the electric car marker’s sales to Chinese customers have decreased by over 60% between March and April 2021 (Isidore & He, 2021). This is due to increased customers’ protests about faulty brake systems in Tesla’s China-built cars, contributing to accidents and another vehicle catching fire in Guangzhou province. (Harwit, 2021). All these have led to online criticism and negative press coverage, which has reduced the company’s sales.

Conclusion

Tesla is one of the leading EV manufacturers globally, and it has expanded its operations in other countries, including China. Apart from EVs, the company also produces solar panels and batteries for power storage which helps businesses and homeowners to generate and store renewable energy. Tesla’s move to Shanghai may have been inspired by a reduction in tariffs and the need to serve the growing Asian market.

References

Collin, R., Miao, Y., Yokochi, A., Enjeti, P., & von Jouanne, A. (2019). Advanced electric vehicle fast-charging technologies.Energies, 12(10), 1-26. Web.

Crider, J. (2022). Tesla’s 6 factories are a new phase of its future. Clean Technica. Web.

Ferrell, O. C., & Fraedrich, J. (2021). Business ethics: Ethical decision making and cases. Cengage Learning.

Harwit, E. (2021). Tesla’s path forward in China. China-US Focus. Web.

Horwitz, J., & Huang, E. (2017). Tesla might soon have “made-in-China” cars, but they’ll still get taxed there like imports. Quartz. Web.

Isidore, C., & He, L. (2021). Tesla may be much worse off in China than anyone thought. CNN. Web.

Jourdan, A. (2018). China cuts car import duty to 15% in boost for BMW, Tesla, Mercedes, Porsche. Automotive News Europe. Web.

Kolodny, L. (2021). Tesla moves headquarters from California to Texas. CNBC. Web.

Lambert, F. (2017). Tesla leads foreign electric car sales in China as government considers opening its growing market. Electrek. Web.

Langley, C. J., Novack, R. A., Gibson, B., & Coyle, J. J. (2020). Supply chain management: A logistics perspective. Cengage Learning.

Mathews, E. (2021). Tesla’s China orders fall by nearly half in May – Report. Reuters. Web.

Price-Dowd, C. (2020). Your leadership style: Why understanding yourself matters.BMJ Leader, 4(4), 165-167. Web.

Rosenbaum, E. (2018). Tesla and China trade war: Elon Musk’s belief China will outsell US gets a new test. CNBC. Web.

Introduction

Tesla Motors is a unique company, which focuses on electric car manufacturing (“Tesla’s Mission” par. 1). The main goal of the company is to provide evidence to the world that electric cars can be more efficient than normal gasoline vehicles (“Tesla’s Mission” par. 1). An interesting fact is that the company is named after a famous inventor, Nikola Tesla (“Tesla’s Mission” par. 2). Nikola Tesla was a well-known scientist, who could be called a father of the “electrical age” (Syon 347). He is not only famous for his contribution to the applied sciences but also by his charismatic personality and ‘magic powers.’ This person is truly inspiring, and it is not surprising that a company has chosen his name to represent an electric company.

This essay provides a SWOT analysis of Tesla Motors. It will encourage seeing its strengths, weaknesses, opportunities, and threats. Moreover, the analysis of its external and internal factors allows seeing the company’s position in the current market. Furthermore, the results will provide the company with recommendations for its future development.

SWOT Analysis

In order to determine a position and the company’s competitiveness on the market, a SWOT analysis is used. This analyzing tool is rather simple. However, it allows seeing a product from different perspectives and evaluating possible future steps (Hall 92).

Both internal and external environments are discovered with the help of a SWOT analysis (Hall 92). The strengths and weaknesses provide the internal exploration of the company’s assets and features, which differentiate the company from its competitors. In turn, the opportunities and threats focus on the external analysis (Hall 92). It could be said that a SWOT analysis is the most suitable tool to determine future steps of Tesla Motors. It evaluates important aspects of the internal and external environment.

Strengths

As it was mentioned previously, strengths are referred to as the internal factors of the company. Firstly, one of the most important resources of any company is its employees. Like other companies, Tesla Motors tries to recruit only the best specialists, which are available on the labor market. It increases the company’s efficiency and competitiveness on the market. Consequently, one of the strengths of the company is know-how (Tilley par.1).

Another important strength is the fact that the company pays a significant amount of attention to the design of its cars. It could be said that Tesla Motors’ cars stand out from its competitors. It seems that cars can be possible future jets. Tesla Motors has a reputation for a highly advanced technological company, as it won several awards and prizes for design and innovation (McKenzie par. 1).

As for the cars, the vehicles are comfortable to use, as it is not necessary to go to a gas station in order to recharge them (“Tesla’s Mission” par. 6). Moreover, Tesla’s cars do not require gasoline (“Tesla’s Mission” par. 3). It could be said that it is the main benefit of the product. It saves money and reduces time since electric cars could be charged during the night.

Weaknesses

Tesla Motors was founded in 2003 (“Tesla’s Mission” par. 1). Consequently, it was present in the car industry, not for a long time. It could be assumed that it might lack competence and experience in this sphere. This weakness could be considered as a benefit for the competitors.

One of the strongest weaknesses of the car is the fact that it might unexpectedly run out of charge (Mandel par. 4). This situation occurs due to the undeveloped infrastructure of the charging stations. An unplanned stop in the middle of the road might be a reason for the accident and injuries.

Another disadvantage of Tesla Motor is the fact that the car can be hacked. Two researchers have conducted an experiment. The results revealed that it was possible to start the car and even infect the system with a virus (Zetter par. 2). This fact might also lead to accidents due to a lack of control.

Opportunities

Today people are more concerned with the environment, as they were before. Tesla’s cars are perfect vehicles for environmentalists, as the cars do not pollute the surroundings (Tompson par.5). Moreover, Tesla Motors supports green policies and encourages people to be environmentally friendly. This fact can be considered as a chance for the company, as the trend might become widely known in the future. This tendency will help the company gain a bigger share of the market and become more popular among people around the world.

Tesla Motors has an opportunity for growth and development. It has established a partnership with several companies in order to reduce costs (“Tesla’s Mission” par. 7). The contracts with companies will help Tesla Motors become more productive on the market.

Threats

As the world and technology are continuously growing, it could be mentioned that the competition in the electric car industry also becomes more intense. Nissan, Renaults, and Carlos Ghosn started new product lines of hybrids and electric cars (Stenquist par. 3). It could be said that more and more companies consider electric cars as a future of the industry. This fact might be the most serious threat to the company, as it might lose its market share in the future.

Another threat is Tesla Motors’ price policy. The company states on its official website that “each new generation will be increasingly affordable” (“Tesla’s Mission” par.2). However, it could be said that Tesla’s cars could be considered expensive. Only a limited amount of people could afford to buy an electric car. Moreover, people might experience difficulties while driving it. The car might get hacked, and charging stations for this type of vehicle are not widely available.

Recommendations

As for recommendations, there are several suggestions. The proposed steps will help the company remain competitive on the market and gain a bigger market share. Firstly, it is important to fix all the errors, which might lead to a lack of control. It will help the company assure its users about its reliability. Secondly, it has to expand and develop the infrastructure of charging stations. This fact will keep the drivers safe. Thirdly, it has to continue its participation in various events and try to win as many awards as possible. It will help increase its reputation and gain the loyalty of the customers.

The next step is to pay close attention to the trends in the car industry. This fact will allow staying competitive and increasing effectiveness. Moreover, reevaluating the price policy is also vital, as a majority of potential customers might not be able to afford it. Tesla Motors might not need to reset the prices. However, it might be necessary to find a new market niche or a marketing strategy to reach the target audience.

Works Cited

Hall, Richard. Starting a Small Business, Haverford: Infinity Publishing, 2003. Print.

Mandel, Dutch. “The great Tesla bubble.” Automotive News. Web.

McKenzie, Angus. “2013 Motor Trend Car of the Year: Tesla Model S.” Motor Trend 2013. Web.

Tesla’s Mission is to accelerate the world’s transition to sustainable transport 2015. Web.

Tilley, Parker. “Tesla Motors offers the epitome of automobile innovation.” The Dispatch . 2014.Web.

Stenquist, Paul. “Electric Vehicles Are Cleaner but Still Not a Magic Bullet.” The New York Times. 2014. Web.

Syon, Guillaume. “Tesla: Inventor of electrical age.” Canadian Journal of History 49.2 (2014): 347. Print.

Tompson, Clive. “Batteries Not Included.” New York Times. 2009. Web.

Zetter, Kim. “Researchers Hacked a Model S, but Tesla’s Already Released a Patch.” Wired. 2015. Web.

Introduction

It is common to experience poor performance in a company operating in a modern business environment. When a firm performs well in a market, the implication is that there is growth. The performance is an indication of the fact that consumers are willing to purchase the products of the firm. However, there are cases where the performance of a company is not as expected. In such cases, the organization is forced to come up with innovative measures to overcome the impediments to growth and attract more consumers. Companies can improve performance by adopting practices that are known to increase customer loyalty. The 6 Sigma is one of the avenues through which companies can enhance their performance (Pande, Neuman & Cavanagh, 2000).

In this paper, the author provides a framework through which Six Sigma can be used to increase customer loyalty to solve other challenges facing Tesla Motors. To this end, an overview of the model is provided. The analysis is done from the perspective of the consumer. To this end, the author of the paper evaluates what the customer values and are willing to pay for as far as the products of Tesla are concerned. The selection of Tesla Motors is ideal, given its poor performance in the stock market. A recent review of the company’s stock revealed a $5 decline in prices. The findings show that consumers are not willing to pay for the company’s products. Consequently, the organization provides an appropriate rationale for the application of the Six Sigma concept.

The essay is divided into three sections. In the first part, an analysis of the Six Sigma Way is outlined. A brief literature review on the application of this approach is provided. The discussion provides an insight into the best theoretical frameworks to use in underperforming companies (Pande et al., 2000). The second section provides an analysis of Tesla Motors. The aim is to establish the actual problem in the company. The third section provides the Six Sigma management plan for Tesla Motors using an appropriate theoretical framework.

Overview of the Six Sigma Way

As previously mentioned, Six Sigma is used to improve performance in a company. Chakravorty (2009) argues that the strategy provides a statistical variation required to analyze the status of the firm. The concept is also ideal for the development of suitable business strategies for companies aiming to improve consumer loyalty. According to Chakravorty (2009), the model was developed by Motorola in 1981. Companies make use of this concept to improve, among others, the quality of their products. Chakravorty (2009) adds that Motorola developed the strategy in a bid to identify and eliminate the causes of defects in its products. In this regard, Six Sigma can be used to improve the production processes of a company. Consumers are willing to pay for high-quality products. As such, the performance of the company improves.

The improvement of a company’s performance is an opportunity to increase its competitive positioning. Truscott (2003) points out that most consumers prefer a brand with high perceived value. To this end, Six Sigma allows a company to improve these perceptions. The statistical aspect of the model is realized in the improvement of the quality level to a maximum of 3.4 defects per million.

The Six Sigma approach has been tried and tested in several companies and business scenarios. For instance, the study by Chakravorty (2009) found that Motorola saved $17 billion as a result of integrating the model into its processes. However, some studies argue that the concept is only suitable for consumers of products from small and mid-sized enterprises (Pande et al., 2000). In spite of this, Chakravorty (2009) points out that the strategy can be used on organizations of all sizes as long as there is strict adherence to its tools. The following is an outline of the principles of this model:

1. Focus on customer needs.
2. We are reducing process variations using statistical analysis.
3. Improvement and control of manufacturing processes.
4. We are enhancing team spirit.

Analyzing Tesla Motors

Tesla Motors was founded in 2003. The objective of the founders was to produce fuel-efficient vehicles for the discerning consumer. The company produces vehicles based on the rising demand for alternative sources of fuel. However, the firm’s sales records reveal that it has been making losses consecutively from 2003 to 2013. The company is facing several problems in addition to its poor performance in the fourth quarter (Ratner, 2015). Some of the company’s problems include poor performance of the batteries produced and logistical challenges. Consumers are dissatisfied with the low quality of these products.

The automotive industry is very competitive. Issues touching on production have to be properly addressed to ensure that consumer perceptions towards a brand remain high. Recently, the Business Reference Services (2014) published an article describing demands in the automobile industry. According to the authors of this article, owners of motor vehicles are interested in performance. As such, Tesla Motors should improve the quality of its production processes to minimize the incidences of battery failure. Improved performance increases the brand’s ‘perception of value’ among consumers.

The drop in market share price implies that Tesla Motors needs to improve one of its operational procedures to boost the confidence of the market. The major challenges lie in the company’s production and supply chain departments. Ratner (2015) points out that Tesla Motors has a small target market. Consequently, the production of vehicles with poor quality parts has a negative impact on consumer perceptions. As a manager at Tesla Motors, I will use the Six Sigma concept to improve the situation.

Six Sigma Way and its Adoption in Tesla Motors

Overview

A critical analysis of Tesla Motors reveals a scenario where consumer perceptions of the brand are extremely low (Ratner, 2015). With regards to this, the Six Sigma concept will be used to develop an ideal plan to address this problem that is affecting performance at Tesla Motors. The plan is based on the theory of constraints. It will bring together the theoretical framework and the Six Sigma concept.

The Plan

The following is an action plan illustrating the actual procedures to be employed at Tesla Motors based on the Six Sigma principles:

Six Sigma is a process. The procedure outlined in the figure above is derived from the theory of constraints. According to Chakravorty (2009), the theoretical framework assumes that a company can improve its performance without having to increase costs of production. Truscott (2003) points out that the theory helps an organization to adopt Six Sigma by following the steps below. Implementation of the theory and the plan should take into consideration consumer preferences.The steps below will be followed by Tesla Motors in the implementation of the strategy:

• We are identifying constraints.
• They are exploiting constraints.
• Subordinating process.
• You are elevating constraint.
• You are repeating the cycle.

The steps are explained in the section below:

Identification of constraints

The production aspect of Tesla Motors contributes towards brand perception among consumers. Six Sigma identifies weaknesses based on the type of waste associated with the production process (Truscott, 2003). In this regard, the following is a list of the production weaknesses at Tesla Motors:

1. Research and development.
2. Overproduction.
3. Transportation.
4. Correction.

The production of faulty batteries is a result of a failure by the research and development department. Based on the theory of constraints, the research and development weakness emerges when companies tend to waste time on ambitious projects. Chakravorty (2009) argues that companies must focus on delivering quality services to the consumer. The overproduction cited is a result of Tesla Motors’ assembling of more vehicles than consumers demand. Transportation and correction are all elements of the supply chain. The slump in vehicle delivery is a result of the company’s inadequate flow (Truscott, 2003). Customers complain when deliveries are delayed.

Improvement of constraints

Most consumers opt for vehicles produced with minimum waste. Adoption of the Six Sigma approach will help me in minimizing this waste. Consequently, the performance of the company will improve (Pande et al., 2000). The theory of constraints supports the idea of innovation that puts emphasis on quality of production as opposed to the development of new products. In this regard, Tesla Motors’ research and development department should emphasize the improvement of the fuel efficiency of the vehicles as opposed to the development of new models (Truscott, 2003).

Delivery of vehicles to consumers is another major setback to Tesla Motors’ realization of profits. In this regard, I will recommend outsourcing the processes of its logistics department to minimize the time wasted due to weather challenges. According to Truscott (2003), Six Sigma alleviates transportation challenges by identifying process flows and providing an efficient site layout with corresponding lead-times.

Application of control measures

The improvement phase requires control measures to guarantee the success of the development plan. The study by Chakravorty (2009) found that Six Sigma comes into effect once the points of wastes in production are identified. The constraint theory points out that Poka-Yoke is one of the tools of Six Sigma that can be used in the identification of the activities that bring about wastage. Consequently, I will make use of this tool in the proposed plan. The approach will help the company to save on financial resources and improve consumer perceptions of its products. A similar approach was applied to General Electric. It resulted in a $2 billion rise in profits. Such a move will enable Tesla Motors to increase its market performance by reducing wastage in production (Ratner, 2015).

Conclusion

Six Sigma is one of the approaches used by modern organizations to enhance performance and consumer perceptions in the global market. The strategy is used to identify and improve the attitudes that clients have towards a given brand. Some of the issues that negatively impact consumer perceptions include wastage, bottlenecks in the distribution network, and faulty products. Currently, Tesla Motors is facing a number of problems that negatively impact its financial performance. Such problems include the production of faulty vehicles and erosion of market share and stock price. In this paper, I developed a plan to highlight the use of Six Sigma concepts to solve these problems. The plan was based on the assumptions made in the constraints theory. If Tesla Motors follows the recommended strategy, its performance in the market is likely to increase.

References

Business Reference Service. (2014). Research on modern automobile manufacturing automobile technology and innovation.Web.

Chakravorty, S. (2009). Six Sigma programs: An implementation model. International Journal of Production Economics, 119, 1-16.

Pande, S., Neuman, R., & Cavanagh, R. (2000). The six sigma way: How GE, Motorola, and other top companies are honing their performance. London: McGraw Hill.

Ratner, J. (2015). Tesla Motors Inc. has more problems than weak Q4 results. Web.

Truscott, W. (2003). Six Sigma: Continual improvement for business. London: Butterworth Heinemann.

Introduction

The following paper is an elaborate presentation of the marketing strategy over the next three years (2013-2016) for Tesla Motors, which is an electric carmaker company whose portfolio includes only two car brands, namely The Model S and The Roadster.

Marketing strategy involves the analysis of Tesla as a company without focusing on any of the two brands of cars that are currently at its disposal. In this paper, the approach will be a brief introduction of the company as a player in the larger auto industry, with a presentation of the situational analysis being made thereafter.

This section will then be followed by an informed investigation of the strategic considerations together with a statement of some of the recommendations in the strategic route while capturing both the primary and selective demands.

The paper will also use these recommendations to construct a marketing strategy that is both achievable and reasonable. A conclusion will be made based on the findings of the marketing strategy.

Organizations can choose between primary and selective demand marketing strategies. In the primary demand strategy, organizations aim to increase the number of sales within their respective industry by boosting the number of customers either by making themselves attractive to clients who are non-users of the product or by growing the number of sales in the already-established pool of users.

This essentially means that organizations increase the overall demand for the product, not just the brand, but also the class of the product or its form in the industry. Contrary to the primary demand marketing strategy, selective demand marketing strategy requires that organizations increase the demand for a particular brand of the product rather than the product or class in the industry.

The two marketing strategies interact in most organizations. They cannot be described as being mutually exclusive.

Before a detailed marketing strategy for the company can be presented, it is important to understand Tesla Motors in the context of the industry in which it operates. In the age of global warming and environmental pollution, a number of engineers got together to provide an answer the problem through the provision of a cleaner way of transport.

Tesla Motors was born out of this dream, with the engineers developing an electric car to replace the ones that are an environmental menace. The company that is currently making only two brands of cars as stated earlier (Tesla Motors, 2013, Para. 1) has managed to capture a significantly large part of the automotive industry.

It has presently sold more luxury cars relative to some of the other renowned companies such as BMW and Lexus (Loveday, 2013). Tesla has also managed to create electric cars to provide more power in relation to what was previously possible in this form of propulsion, with this contributing more to the evident respect in the industry.

Situational Analysis Summary

The 20th century was marked by an outcry that the environment was being polluted beyond repair. If no interventions were made, the human race would have ceased to exist. One of the victims of the environmental pollution established was the ever-growing number of vehicles on roads, with the fuel they burn causing the bulk of pollution (Leitman, 2013).

On the background of these concerns, Tesla Motors positioned itself to produce not just environmentally friendly electric cars, but also vehicles that could match the demands of the client base. Electric cars, mainly running on solar power, were also more efficient compared to those running on petroleum (Blakeslee, 2013).

The company managed to establish itself as a leader in this new industry, with only a few other organizations following suit.

Factors Affecting Willingness/ Ability to Buy

Companies face many challenges in the process of coming up with strategies that will help them stand firm in this competitive market. Tesla Motors is not an exception. One of the major challenges that the company faced was the development of batteries that could hold enough energy to power the electric cars.

Through its adequate financing in the industry, Tesla was, however, able to develop and use new batteries that were efficient based on their ability to hold more energy (Rodriguez, 2013). Considerable growth in the automobile industry has been recorded over the last few years, both in the US and globally.

Individuals are now spending a large percentage of their income and loans to finance vehicles (Baumgartner, & Gross, 2000) (Figure 2). The auto market is still recording growth, with sales hitting their highest levels after the global economic crisis (Figure 1).

In the industry, Tesla competes with other automakers although these are mainly the traditional automakers. In the specific market for its products, the company has managed crush any competition, thus enjoying relative monopoly. In the electric car industry, the company competes with the likes of the hybrid and plug-in hybrid vehicles.

Some of the companies that Tesla is in competition with include Mercedes, BMW, Lexus, Honda, Nissan, Toyota, and Ford Motors. However, in the category of pure electric cars that Tesla has capitalized on, it remains the undoubted market leader.

Relevant Market Definition

Relevant market is the client base that a company has for a specific product. In the case of Tesla Motors, the relevant market is set at the product level. The product that is used in this case is the alternative fueled vehicles that are manufactured by Tesla Motors.

In this paper, an inclusion is also made in the relevant market for environmentally friendly products by the company, with a particular focus on the market for premium and sports vehicles. In the primary demand, Tesla has seen a recorded increase in the demand for electric cars, with the growth being steered by the desire to stop pollution and/or invest in efficient vehicles.

The number of units sold has increased with the steadily improving economy, with more people being able to purchase vehicles in general. Based on this fact, the demand for Tesla’s products is likely to increase in the coming years with competition also growing significantly.

There has been an observed increase in the demand for electric vehicles, with the demand being projected to increase over the coming years. In Figure 3, there is a consistent rise in demand for all types of vehicles over the last few years. In the last three years, for example, passenger cars rose to 7 million in 2012, as opposed to the 6 million cars sold in 2010.

The sales for light truck models also rose in the same period to stand at 7.2 million units in 2012 from less than 6 million in 2010. The sale for light vehicles also rose from 10 million in 2010 to reach slightly below the 15 million mark in 2012. The increase will boost the sales for Tesla, thus ensuring profitability.

Target Market Identification

There has also been increased acceptance of electric cars across the US, with more people receiving them positively, with the authorities being supportive of the move. The charging areas for these vehicles are also expected to increase in all states, with some of the states having the existing charging areas (Tesla Motors, 2013, Para. 1).

Figure 4 shows the three stages that the lithium-ion batteries have undergone in terms of cost. The last stage is a projection of the expected decrease in price, with 2014 having 400 $/kWh while 2015 has values lower than this figure. 2016 is also projected to have a cost of slightly below 400 $/kWh. This period will be followed by a decline in price.

The company has also been recognized as one of the safest automakers in the US as established by NHTSA, with the report coming as an added advantage to the company. The target market is likely to remain in the US, with the growth in demand also being observed in the non-traditional markets such as Asia.

The target market could also be divided into age groups. The youths have demonstrated an increased desire to own a vehicle. For this market, Tesla Motors Company should produce cheap and easy-to-operate vehicles while still maintaining its luxurious characteristics.

Selective Demand

In the selective demand, Tesla Motors has managed to establish itself quickly as the preferred automaker in the category of Luxury Sedans, with sales for the same being high (Tesla Motors, 2013, Para. 2) (See Figure 5). The sales have also showed an increased probability of stabilizing over the next few years, with the number of units sold increasing constantly.

Tesla as a brand has also established and cultivated client confidence in the company. Despite the faults that have previously been found in some of the vehicles that the company produced, the automaker continues to be unbeaten in the field. Despite the market dominance, Tesla is likely to see an increase over the next years in the number of competitors in the field.

Some of the specific attributes in the company’s products that are likely to influence its performance include fuel efficiency, duration of charging, and the driving range. These attributes are, however, yet to be applicable. The company remains the sole competitor.

Tesla Motors should target to introduce other brands in the market. This strategy will improve the company’s evaluated performance. The specific demand for all new products will increase the overall profitability of the company, thus ensuring a continued performance.

Segmentation

In the segmentation strategy, the next three years are likely to have a change in the company’s economic trends in the market. This change is however going to be very insignificant and dependent on some of the factors of change such as the change in the American GDP, the market demand for electric cars, and the emergence of competitors.

The foreseeable change is an increase in the demand for Tesla’s products, with the products being influenced by the above factors. The different segments mentioned in the paper will be affected by different trends.

Segmental effects are the effects in the particular specific market in which the company will see changes. Tesla Motors will have increased sales in a number of models of its vehicles. These are mainly in the luxury cars as stated above.

The electric car segment is also likely to undergo a series of positive and negative changes, with these changes having different effects on the company. The best example of the segmental effect is the policy that will be developed to curb global warming. The company will play a special role here.

Over the next three years, the company might see a change in the outlook on electric cars, with this situation affecting the sales and marketing strategy in place. Although a negative change in the social environment is likely for the company, the more probable change is a positive one as indicated by the change in attitude towards electric cars (Gilbert, 2002).

Tesla is likely to benefit in the event of such a change. Some of the changes observed in the past in the auto industry were, however, unpredicted. These may be duplicated in the next three years. The determining factor will however be the marketing strategy that the company is able to put in place.

Competition

Competition for the company is likely to increase over the next three years, with the main drivers for the competition being the emergence of smaller companies producing electric cars. The traditional automakers that mainly produce vehicles fueled by petroleum together with other fuels are also likely to venture into the electric car field, thus offering competition to the company.

There are, however, a number of ways that the company can ensure that is stays competitive with the entry of these players. Some of them include marketing itself as the original maker of the electric cars and/or using the brand that it creates to be competitive in the industry.

The other way in which the company can increase its dominance in the industry is through collaboration with other related companies such as those that are involved in the development of parts such as solar power systems. The company also needs to invest in new technology to ensure that it stays ahead of the ever-rising competition.

The next source of competition for Tesla Motors over the next years is also likely to come from the bio-fuel industry, with large firms that are dedicated to bio-fuels emerging over the last decade. Bio-fuel can be favored due to its relative safe and environmentally friendly nature coupled with the cheap production process.

Strategic Considerations for Determining the Strategic Route

The marketing strategy to be applied by Tesla Motors is dependent on several strategic considerations. These are important in determining whether selective or primary demand will be applied in the strategy. These considerations will be discussed in this section.

Market Measurement Workings

Tesla Motors is located in an industry where competition for its specific products is limited as stated earlier. It is important that the sales that the company has had in the last few years be analyzed along with sales in the respective industry.

An important source of sales for the company is the Electric Drive Transportation Association’s website, which provides vital statistics for the recorded sales in the past year (Electric Drive Transportation Association, 2013, Para. 3). T

he sales made by Tesla during this period were approximately 13,850. These figures represented the sales in the specific brand. The industry’s sales for plug-in electric cars during the same period were 78079, with those for Hybrid Electric ones amounting to 423290 vehicles.

Since plug-in electric cars and their hybrid counterparts are only competing in the overall automobile industry, it is only reliable to use the market potential for the whole industry. With an estimated absolute potential of 12,979,521, the industry is likely to spiral with companies fighting for this potential, such as Tesla Motors.

While considering the specific brands sold by the company, Model S featured as a dominant one in the luxury car segment. In the US alone, the model sold 4,900 vehicles, with the sale of its closest competitors in the same segment being 9787 vehicles, with an absolute market potential being estimated at 29,692 (Cain, 2013).

The market is however likely to experience more growth upward, with the potential being higher than calculated based on the binding policies that several administrations have made to invest in efficient propulsion systems and/or prevent pollution.

Market Share Position

Tesla Motors has a significant market share as shown in the above statistics. The company has a market share of approximately 10% (Figure 5), with the specific brands having a larger share in their respective market segments. Model S in particular managed to have over 70% market share in the luxury vehicles segment, with this being the largest share in the market.

Pioneering Advantage

Tesla Motors and engineers who came up with the company were the pioneers in the electric car. The company thus enjoys this advantage as a very useful determinant of the marketing strategy as the legacy built can work to the benefit of the organization during marketing.

This fact is also likely to affect the choice of marketing strategy. The company has also pioneered in the use of longer lasting batteries, the increase in the range for the electric cars, and the types of batteries that these vehicles use. The pioneering capability and achievements are likely to place the company ahead of its competition as the fight for the market intensifies.

Likelihood of Competitor Reaction

Using the results of an environmental scan, there is a high possibility of an increase in competition in the industry. Over the next three years, this competition is likely to increase as stated above, with the companies positioning themselves for the market potential being established.

The industry is also likely to receive more companies, with the established players venturing into the manufacture of electric cars as their returns and demands improve.

The analysis shows that the competitor reaction is likely to increase over the next three years in the automobile industry. Some of the measures that are likely to define the competition increase the vehicle ranges and the efficiency that each company is able to achieve with its batteries.

Nature of Market Opportunity

This factor is not an important one in the determination of primary or selective demand market strategy for Tesla Motors because the company presents no factor that is likely to be used as a defining one in the measure of competition. The main determinants of the competition drive are the clients, with these being influenced little by the marketing strategy but more by the demand that they have.

Resources and Capabilities

One of the most important resources that the company has is the successful Brand that it has created over the years. With years of pioneering in the industry, Tesla Motors has managed to dominate the industry through the introduction of more advanced methods of utilizing solar energy and the reduction of charging time for its vehicles.

Another important resource that may be considered is the confidence that government administrations globally are expressing toward electric cars with the attempt of taming global warming. Tesla Motors also possesses the capability of manufacturing large volumes of vehicles, with this endeavor being possible because of the efficient manufacturing process utilized.

Life Cycle Analysis

The life cycle of the products offered by Tesla Motors including the luxury models of vehicles represented by Model S is predictable. Unlike the gadget industry such as the Smartphone industry where an annual course of the products is expected, the auto industry has a rather longer life cycle, with the products lasting longer.

This situation is a major influence on the marketing strategy to be utilized, as it favors primary demand rather than the selective demand marketing strategy.

Recommended Strategic Route

As stated earlier, organizations have a choice between primary and selective demand marketing strategies. The two strategies can be applied together if required. Some of the major factors influencing the decision to apply either of the two include the market, the microenvironment, and the microenvironment of the company. The main factors that influence the choice of marketing strategy have been discussed above.

These factors are crucial in the recommendations made below for both marketing strategies. The market measurement for industry revealed a big potential for growth, with the performance of the US economy and the global economies being projected to continue improving after the economic crises experienced in the last decade.

The automobile sales were also reported to be increasing, with the same trend being maintained over the next three years.

The market share for the company stood at 10%, with the luxury car segment performing better. The other section that the company performed well is in the pioneering advantage, with several landmark achievements being highlighted. In the competitor’s reaction, the industry was projected to receive more players, with the traditional competitors diversifying in the manufacture of electric cars.

This situation is, however, not likely to occur in the next three years, but will take more than a decade to be achieved. The company’s main resource is in the products that it manufactures, thus managing to maintain reduced competition in the industry.

The lifecycle analysis works against the company, with the vehicles lasting longer than any other industrial products. The two marketing strategies will be discussed below as a factor of the discussed determinants.

Recommended Primary Demand Strategies

The strategic considerations made above may be applied in the justification to the use of any of the two marketing strategies. It is, therefore, difficult in real life to use any of the marketing strategies in exclusion despite the likely application of a combination of both strategies in marketing Tesla Motors Company’s products.

As stated earlier, the application of primary marketing strategy is for users and non-users of the products. These elements will be considered separately under independent subheadings.

Non-Users

The non-users of Tesla Motors Company’s vehicles present the largest market that can be influenced to grow the sales for the company. In fact, due to the life cycle analysis, most of the users will not have a pressing need for the product since they will already be using it. However, they are also important.

Therefore, they will be discussed below. One way for Tesla Motors to increase sales among non-users is to capitalize on increasing their willingness to buy its products.

There are a number of ways that the company can increase consumers’ willingness to buy its products. The first of these ways is increasing, thus making them aware of the benefits that the products have over others in the market and/or showing them the benefits that these products have already offered to other users.

Tesla Motors will have to remind the potential users of the effects of global warming, the environmental pollution by other brands of cars, and the likely health effects that this situation will have on their health and that of their relatives in the future.

The company will then need to present itself as the solution to the problem. It will have to convince non-users that the use of electric cars will contribute significantly to lowering pollution and global warming.

Another benefit that the company should use to lobby its non-users to use its products is the efficiency of the vehicles that it manufactures. Over the years, the company has managed to manufacture fuel-efficient and safe cars, with the range for these products increasing exponentially.

Tesla Motors will also have to present itself as the market leader in the industry, with electric cars being its specialization. The other benefit that the company will have to sell to non-users is the financial efficiency of the cars. The company will have to compare the use of electric cars and other fueled cars to show that its products are cost-effective to the users.

Some of the other achievements that the company will have to sell to the non-users include the maintenance record that the products carry and durability relative to its competitors’ products. The company will have to present itself as a classic carmaker in the same level as some of the other luxury carmakers such as Lexus and Mercedes.

These benefits along with others that the company can attribute to its products will form a considerable part of its primary demand marketing strategy to its clients who are non-users of their products.

The second strategy that Tesla Motors can use to market itself to non-users is the development of certain products that will be more useful to a certain group of its targeted consumers. One strategic group is organization and government.

The company can ensure that it creates larger sized vehicles for the transfer of more people with larger capacities. With authorities looking for ways to reduce pollution in their cities, the company can capitalize on this to develop larger vehicles such as buses to establish itself in these markets.

There are also other groups of people that view electric cars as not being luxurious enough and thus not in their preferred class of vehicles. Tesla Motors can develop other luxurious models of vehicles for these high-end consumers, thus enabling them to acquire their desired class of the same.

Tesla could also target the untapped market in terms of electric cars for the middle class that only requires movement to and from work. This market constitutes the largest market for the company, with the bulk of its customers requiring their vehicles cheap.

The company can invest in production methods that make the vehicles cheap for its customers, thus targeting these clients. The easiest way to make the clients attracted to these classes of vehicles is to make them cheap for the ready market, thus ensuring a steady supply of the same in their respective market segments.

The third way in which the company can capture non-users of the products is through the development of new benefits with the use of the products that are already in the market. One such way of doing this task by the company is by marketing the new products through rebranding and adding of new capabilities to their functioning.

The company may also add the advantage of not having to visit the gas stations, the ability of using other electronic devices together with the car, and the ability to use interchangeable batteries for vehicles. The above strategies can increase the willingness of non-users of Tesla’s Vehicles to buy them.

However, other non-users may be willing to buy the vehicles although having no means of doing so. Some strategies can therefore be used to increase this ability of the potential customers.

The first major step that has the effect of increasing the ability of most clients to buy the company’s vehicles is the reduction in the prices for each of the vehicles. As stated above, the company can explore ways of reducing the costs incurred through the production process until the vehicles reach the end user.

One such a move is the reduction of the non-essential staff and/or investment in cheaper energy sources and cheaper states for labor. Tesla Motors currently has a wide range of prices for the various models. The two models that are purely electrical cars are fairly priced in its line of vehicles.

Since this sector of the company has the least competitors, the company should explore ways of reducing pricing to ensure that more people are able to acquire them.

The second way of increasing the ability of non-users to acquire Tesla’s models of cars is to ensure that there is availability of the products throughout the US and around the globe. The company has dominance in the US, with many markets outside the country not being sufficiently covered.

To ensure that the company benefits from the global trade, there is the need to invest in other regions of the world, especially in Europe and the developing nations. The company should also open branches all over the world to ensure that it markets its brand as the globally accepted pioneers in electric car manufacture.

Existing Users

For the existing users of Tesla’s products, varieties of methods are in place that the company can employ to ensure that the sales are increased to them. For these clients, the company should ensure that they are able to buy the vehicles more often, or buy more of the vehicles.

The company can increase usage of its vehicles among the traditional customers to ensure that the company is able to broaden the vehicle usage. In doing this, the company can make a variety of vehicles for different uses, thus enabling customers to acquire more than one for different uses.

Some manufacturers have the advantage of increasing the sale to its loyal customers by increasing the consumption levels. For Tesla Motors, the concept is scarcely applicable since the vehicles, unlike some other products, are not perishable.

Another way of increasing the consumption of the products is the encouragement of users to replace the vehicles when they are no longer useful to them. Unlike the Smartphone industry where customers are able to change their phone often, the motor vehicle industry is slow to change in the generations of vehicles.

Tesla Motors can, however, introduce new models regularly and/or rebrand the older models with new capabilities to ensure that the current customers have a choice of upgrading their vehicles.

Recommended Selective Demand Strategies

There are several ways that Tesla Motors Company may increase the sales of its products using selective demand marketing strategies. These methods can be categorized into ways to expand the market already being served. They include acquiring the company competitors’ clients and increasing demand within the current customer base.

Expanding the Existing Market

The company has the option of increasing the market size for the already existing products. One of the ways that Tesla Motors can accomplish this role is by broadening the distribution of its products. The number of outlets that the products are available can be increased through partnership with other like-minded organizations to ensure that the brand has many outlets.

Tesla can also apply e-commerce where the vehicles are sold online, with distributors being readily available. The company stands to gain a lot from the growth in information technology. The most successful marketing strategies include the use of IT. The company, therefore, needs to invest in information technology to ensure that there is a ready market online.

Another way in which the company can increase sales through the expansion of the existing market is the development of other models as stated earlier. The company should invest in vehicles that are tailor-made for specific groups of people. This strategy will be instrumental in increasing demand of the new models within the market that has already acquired the older models.

Consumers of various products have developed a liking for diversification. With the growth observed in the economies of various regions as documented earlier, it is likely that more people can afford the latest newer brands that the company can roll out.

Acquisition of Competitors’ Clients

There are two ways that Tesla Motors can achieve this goal: Head-to-head positioning and differentiated positioning. In head-to-head positioning, Tesla can offer vehicles with the same features as the competitors’ products by only improving them and/or ensuring that they are better known relative to competitors.

In the motor vehicle industry, some of the features that are crucial to customers include the off-road performance. Tesla Motors Company can ensure that the vehicles are able to outdo its competitors in this feature that is offered by many of its competitors.

Another feature is air conditioning that is present in almost all of its competitor’s vehicles. In an industry where motor vehicle clines are concerned about the charge retention of the batteries that the vehicle use, other electric and hybrid vehicle manufacturers have managed to reduce the charging time to less than two hours (Marchetti, 2013; Hill, 2013).

With Tesla being able to achieve the same and actually being the pioneer in this case, the company should ensure that it achieves the best charging time of all the other manufacturers to retain the position. This will however need constant innovation to ensure that the company stays on top.

Aside from capitalizing on the features that are already offered by competitors and ensuring it is the best, Tesla Motors can also develop newer features for its products. This measure is called differentiated positioning.

Based on the environmental scan performed in an earlier work, Tesla Motors has the capability of engaging in the production of newer features in the latest models that are currently under development. These will position the company among the top performers in the industry.

Retaining Demand or Expanding it Within Existing Customer Base

Tesla Motors can achieve this goal through the establishment of a working quality-assurance department. One of the major policies that the company needs to invest in is ensuring that customers are satisfied when dealing with the company or its products. This step is crucial in maintaining the existing customers and/or retaining them within the organization’s reach.

The principle will make marketing to the customers easy besides increasing sales within the three years. The company can also set up a department to ensure that relationships with its customers are well handled. To motivate the existing customers, the company can set up a loyalty program where customers who are loyal to the company are rewarded with special services or products.

An example is free repair for customers within the branches of the company. The other thing that the company needs to do to increase sales is to develop a line of products that are complementary to the electric vehicles that it makes. They include car batteries and engines for the repair of the vehicles when they break down. The other way is to ensure that customers have an easy access to these accessory products.

Conclusion

The paper is a detailed outline of the marketing strategy that Tesla Motors Company needs to adopt over the next three years. The paper is informed by the environmental scan carried out on the company, the situational analysis that is specific to the company, and a number of useful articles on the same.

Tesla Motors is one of the pioneers in the manufacture of electric cars, with years of experience in the same field. With the US and world economy being documented to be growing at a very fast rate after the recent global economic crisis, sales in the motor vehicle industry have also been reported to be on the rise.

The above strategy constitutes of a combination of both selective and primary marketing strategies. Both the existing customers and potential ones feature prominently in the strategy. The major strategies addressed in the primary demand strategies include the improvement of the abilities of customers to buy the vehicles and the willingness that they have in doing so.

The paper also proposes the introduction of new models by the company to ensure that it is able to compete more efficiently. More details on other primary demand marketing strategies were also provided.

An elaborate presentation of the combination of the two marketing strategies is presented with the suggestion of a loyalty program to ensure that customers are rewarded. The company should also invest in advertisement and/or expanding to other regions of the world that are previously not covered as a way of tapping the potential in the regions.

Reference List

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Tesla Motors Company

Founded in 2003 by a group of engineers in Silicon Valley, Tesla Motors is focused on delivering electric cars that perform better than gasoline-powered cars (Tesla Motors, 2015). Tesla is touted as an extraordinary automaker with a focus on technology and design, as well as energy innovation.

Tesla Motor Products

Tesla delivered the world‘s first premium electric sedan car in 2012. The company’s cars are designed with “instant torque, incredible power, and zero emissions” (Tesla Motors, 2015). These design features are incorporated without compromise. For Tesla, every new generation of its electric cars should be more affordable to assist the firm in achieving its mission of moving the world toward sustainable transport (Tesla Motors, 2015).

Currently, more than 50,000 Tesla Model S vehicles are driven in over 30 countries globally. Given this success in a short period, the company is preparing to introduce Model X with even more advanced features.

Major design features of Tesla Models include all-wheel-drive systems, dual motor, autopilot for side collision avoidance, automatic lane changing, and automatic parallel lane changing. The Models also boast of advanced safety features, touch screens and options for Supercharger with longer life batteries and drive warranty.

The models guarantee absolute Zero Emissions and Zero Compromise.

Configuration of Resources

Suppliers

Tesla Motors has developed a custom-built supply chain to compete with dominant auto companies. Along the supply chain, the company works with other automobile companies such as Toyota and Daimler. This strategy has helped Tesla to control costs of shared components by obtaining them directly from these dealers (Tao, n.d).

The company believes in working with suppliers that are faster and highly agile to ensure that it can manufacture its car faster relative to most automotive manufacturers.

Overall, Tesla has significant control of the supply chain and suppliers by careful consideration of potential suppliers that can deliver components within the shortest time possible. Besides, the suppliers must deliver custom-designed components that meet the unique features of their car models.

Factories

It is observed that Tesla has embarked on vertical integration of its factories, or possibly adopt the model used by Apple and Foxconn and supply chain strategy (Wesoff, 2014).

At the same time, the Tesla Gigafactory is designed to meet the unique requirements of the company. For instance, it is built to reduce the cost of the cell rapidly relative to the present state. In addition, by the year 2020, the Gigafactory will manufacture more lithium-ion batteries every year than all batteries manufactured globally in the year 2013 (Wesoff, 2014).

Tesla operates in low plant investment facility at Fremont (Tesla Motors, 2011). In the future, it plans to construct a large-scale factory that would result in economies of scale and cost reduction through innovative manufacturing, low logistic wastes, and processes optimization through co-location and low personnel.

Warehouses

The company does not operate large warehouses like other automobile dealers.

It is currently working on expansion programs across the world with direct sales offices.

At the same time, Tesla recognizes that there is no reason to construct, large unnecessary warehouses or hold excess inventory. Thus, it can manage to minimize wastage.

Distributors

It has been noted that Tesla does not use distributors or dealerships to sell its cars (Lemkin, 2013). In fact, it is observed that Tesla keeps resisting distribution systems for direct sales (Fung, 2014). One major reason is to keep the company brand intact (Fung, 2014). In most instances, automobile manufacturers are known to cede much control to distributors, particularly with regard to price setting and customer experience. This implies that Tesla senior executives are focused on transforming the entire auto industry through direct sales and innovative products only sold by people who understand them.

Instead, uses multi-channel approach to sale its cars, which include online stores and sales offices. Customers can book for test drives and purchase cars online while the boutique stores are designed to enhance sales and customer engagement.

Technical support centers

Tesla asserts that roadside assistance and tech support are available whenever required. Customers can place direct calls to the company anytime of the day to ask for assistance from support team. Moreover, customers with hearing challenges can contact the company through special contact channels.

Tesla states that the roadside technical support program is designed to deliver quick response, diagnosis and solution to issues facing the Models with low interference with the customers’ programs. In most cases, Tesla can resolve many technical issues over the phone or use simple software reset (Tesla Motors, 2015). If the customer requires the car to be taken to a service center, Tesla has a wide network of towing service providers who are trained to handle the vehicle properly during loading and transportation without any damages.

Engineering design

Tesla leverages the unique benefits of electric powertrain to deliver Zero Emissions and Zero Compromise cars. Besides, the advanced electric powertrain is recognized for improved performance. This innovative strategy sets it apart from gasoline internal combustion engine vehicles, which have multiple movable parts. Tesla only has one moving component, the rotor (Tesla Motors, 2015). Consequently, the car can achieve instantaneous, silent and smooth acceleration within few seconds. Thus, Tesla cars are considered transformative in the automobile engineering. Moreover, engineering approaches have also provided advanced all-wheel drive, autopilot and safety features.

Currently, much emphasis is put on longer-lasting batteries and advanced vehicle designs to enhance customer experience and warranty provided.

Sales office

Generally, Tesla sale offices are designed to engage, excite and inform customers (Tesla Motors, 2011). The storefront is transparent, engaging and inviting. In addition, the stores are located in affluent high-traffic places.

The interior of sales offices is integrated with technologies that inform customers alongside Tesla product specialists who handle customers’ queries. Moreover, vehicle display is open so that customers can sit and test the comfort.

Parking space is convenient and facilitates test drives and charging.

Communication links

Customers have access to the company through online links and direct phone calls any time of the day while customers with hearing challenges can use other contact alternatives provided. Besides, the manual, through My Tesla, contains most information customers would like to know.

The company also benefits internally because of its flat organizational structure, which ensures faster communication and decision-making (Chaika, n.d, p. 8). Thus, delays and red tape are minimized. Moreover, the leadership qualities of the CEO, Elon Musk support unique Tesla culture and drive the vision to manufacture cars for the 21^st century.

Tesla has offices across North America, Europe and Asia/Pacific to facilitate communication and customer support. Besides, there are super-fast free charging centers across cities.

Overall, Tesla Motors is currently running a value chain that supports its product development, management control of sales and growth strategies. It is expected that the company will continue to improve its value chain approaches.

References

Chaika, D. (n.d). Tesla Motor’s strategic Analysis. Web.

Fung, B. (2014). Why Tesla keeps fighting for direct sales when it could just work with dealers. The Washington Post. Web.

Lemkin, J. M. (2013). Why Doesn’t Tesla Use Dealerships To Sell Their Vehicles? Forbes. Web.

Tao, R. (n.d). Tesla created a custom-built supply chain that competes with the best, and so can you. Web.

Tesla Motors. (2011). Tesla Motors Company Overview. Web.

Tesla Motors. (2015). About Tesla. Web.

Wesoff, E. (2014). Tesla’s Gigafactory Supply Chain Vertical Integration. Supply Chain 247. Web.

Tesla Motors operates within the automobile industry that is one of the most rapidly developing markets in the contemporary world. The company specializes in the manufacturing and marketing of electric cars and power train components; it was founded in 2003 in California. The electric cars of Tesla Motors quickly gained popularity as an innovation. The company’s most recent breakthrough is the product called Model S, a fully electric sedan. However, the very first care of Tesla Motors called Tesla Roadster is the product that won the attention of the whole world for the company.

Operations Structure

Tesla Motors is a global company, and it operates all around the world. The retail offices of Tesla Motors do not have a large number of people. The company prefers to limit its international teams to a small group of trusted professionals. This is done because the quality is the major focus of operations at Tesla Motors. The main values of this work-driven personnel are the improvement of organizational excellence and innovation. The company has a major goal to acquire a leading position in the automotive industry. Previously, Tesla Motors has shown an impressive pace of growth within the industry and a high level of success beating even the most generous expectations of critics. One of the main threats the company is challenged by today comes from battery production as the current product has a significant flaw in the form of a low energy density (Braschler, 2014).

That way, one of the main focuses of the future operations plan could be the improvement and research in this field. Further, the gap between demand and supply is another threat for the company as the growing appetites of the consumers are unmet these days (Braschler, 2014). The company needs to expand its operations and manufacture more products not to lose customers. Moreover, to attract more buyers, the company needs an available product, and for now, its Model S and Model 3 are within the luxury segment and re unaffordable for a wide range of potential consumers (Hall, 2013). The operations of the company need to be rearranged to make the products more available.

Measurement of Operations

The basis for the measurement of operations is evidence that confirms that the progress in targeted spheres is achieved (U.S. Department of Transportation, 2015). Logically, the success of Tesla Motors in the aspects of business expansion, cost reduction, and customer satisfaction should be measured by practical evidence. For instance, the performance indicators for the cost reduction are the optimization of the supply chain for a purpose to save costs invested in a production of Model 3 cars, and, of course, the actual decrease of the price the vehicles are currently sold for. The performance indicators for business expansion are the new retail offices and factories built to speed up the production of new cars.

Supply and Value Chains

The supply chain of Tesla Motors is widely discussed and admired, as the company has introduced some revolutionary changes to maximize its benefits. To be more precise, several years ago Tesla Motors has transformed into a commodity organization of global character, and this change triggered the restructuration of the supply chain (Tesla’s Revolutionary Supply Chain, 2013). The main purpose of the reorganization is to take control of all the value due to the creation of the company’s own supply chain (Tesla’s Revolutionary Supply Chain, 2013).

The company produces both software and hardware and can back up its own operations by the customized operations management system. However, in 2015 the company has been dealing with a series of issues and due to that its sales decreased in some countries in Asia because of unstable shipment (Hall, 2015). As a result, the logistics and delivery costs are growing, and the company is going through a significant setback as its entire system and supply chain have been impacted by the shipment issues (Hall, 2015). The company needs alternative ways of delivery or an increase in air shipment investment (a rather costly means of transportation).

Quality Control

As a manufacturer focused on excellence, customer service, and quality, Tesla Motors has a thorough quality inspection procedure that is held separately for each vehicle the company is about to ship. At the same time, the criticisms of the products due to inconveniences and fails of various kinds keep on appearing in the customer segment, and this hurts the company’s reputation. To perfect their quality control and address the complaints of the buyers, Tesla Motors is to increase its connectivity to the consumers and survey the weaknesses of its products as perceived by the customers. Ensuring that the vehicles are in flawless condition is crucial for the company, as its cars belong in the luxury goods segment and are expensive. Besides, the rigorous check-up procedure is the privilege of Model S mainly while the other vehicles are to be tested as well.

Technology

Tesla Motors is known for its highly innovative approach to the automobile building. The company provides a variety of technologies that distinguish it from its competitors. The company manufactures batteries, wholesale vehicles, chargers – all its technologies are based on electric power. To stay on top of the market, the company is to ensure the innovations do not stop. For that, Tesla Motors is to attract new talent and resources. That way, hiring practices are to target the best specialists able to bring fresh innovative projects.

Reference List

Braschler, A. (2014). Tesla’s Biggest Obstacles. Web.

Hall, J. (2013). Tesla Builds Supply Chain in Own Image. Web.

Hall, J. (2015). Tesla Motors Extends Innovation to its Supply Chain. Web.

Tesla’s Revolutionary Supply Chain. (2013). Web.

U.S. Department of Transportation. (2015). Operations Performance Measurement. Web.