Tesla Inc. is a revolutionary company that focuses on clean energy and electric vehicle production. Stemming from humble beginnings, with the leadership of its CEO Elon Musk, Tesla has projected itself as one of the most valuable companies of all time. Tesla holds a 66.3% market share in electric vehicles, and sells both luxury and mid-entry level cars. Although 2021 saw the EV market only have a 2.4% share among automobiles, it is growing from a niche community to a massive industry (Edelstein, 2021). This paper will examine the electric vehicle industry and Tesla as a company.
Challenges and Opportunities
The electric vehicle industry and markets are rapidly growing, with more than 10 million electric cars on the roads in 2020 and each year seeing renewed records for vehicles produced, bought, and registered. The positive aspect is that more markets outside the United States, such as Europe and China (and broader Asia) are adopting the electric vehicle with appropriate policies and infrastructure (IEA, 2021).
Competition in the Industry
Tesla operates in a highly competitive market of automobiles, as well as a more niche market of electric vehicles, making competition a strong force. Given the low switching costs for consumers, the competition is fierce. Even among a much smaller subniche of electric vehicles, the few firms that have produced or are in the process of producing EVs, there is high aggressiveness in terms of marketing. Tesla is currently leading the EV industry, and as that market share grows, other traditional automakers are attempting to dethrone the company aggressively (Riley, 2019).
Potential of New Entrants
The potential for new entrants is strong, as most major automotive vehicle producers have announced the development of all-electric vehicles, but very few have come to market so far. Once those cars begin to be massively produced and sold, the market may shift significantly. Furthermore, as the technology becomes more available, smaller players in the car industry may choose to produce electric vehicles, potentially at a lower quality and cost to undercut the major competitors.
Power of Suppliers
Suppliers have a tremendously strong hold on the vehicle industry in general, but for electric vehicles that is even more dependent. Car production, especially as technologically complex as electric vehicles, needs a wide variety of parts and materials shipped from all over the world to produce the larger components, that are, in turn, shipped for final production. Furthermore, a major component of electric vehicles is the battery which requires a mixture of rare or expensive metals to produce, the majority of which are difficult to source at an industrial level, giving these suppliers significant bargaining power (Rapoza, 2021).
Power of Customers
The bargaining power of consumers in the electric vehicle industry is moderate. The primary factor is that the switching costs are low, so a consumer can easily switch between automakers based on preference without much compromise as virtually all offer similar features. However, vehicle purchases for most people are a major commitment, and people commonly dedicate themselves to the brand and idea, particularly with socially active brands Tesla.
Threat of Substitutes
The threat of substitutes remains weak for the industry because there are no other viable technologies for vehicle propulsion outside of electric utilized by Tesla and others. There have been some prototypes with hydrogen engines or algae driven fuel as green replacements for petroleum, but none of the technologies have reached maturity or mass production.
Strengths
As a company Tesla has many strengths, with its brand name being widely recognized and synonymous with EVs and innovation. It has a significant lead over competition in various technologies for EVs as well as technologies such as autonomous driving. The company has been able to overcome multiple production issues and establish profitable manufacturing facilities in various countries, including producing its own batteries which is critical for EVs. The brand and the company’s results allow to attract new funding and investment making it the most valuable automotive company. It is by far the best in-class of EVs, getting greater mileage on charge and faster charging than other producers.
Weaknesses
Tesla does have a range of weaknesses, including the brand’s dependence on Elon Musk as the leader. Tesla lacks high volume production and periodically experiences manufacturing complications and delays with shipping. The company also faces some financial uncertainty, as despite being highly valued, it has only recently achieved profitability and remains deeply in debt. The firm’s dependence on batteries and semiconductors, as with most EVs, make the dependence on rare earth metals highly concerning. Furthermore, there is a limit as too how much the lithium battery can be developed, giving the opportunity for other EV makers to equalize any advantages Tesla may have eventually.
Conclusion
Tesla is operating in a challenging industry, where it is being contested by other automakers while also facing a range of other issues such as supple bottlenecks and customer demand. However, the company has benefits of being ahead in the industry, having resolved many of the technical and logistical challenges of production in years prior. Its brand name is also synonymous with electric vehicles. While Tesla does have an overreliance on its CEO Musk as well as facing some regulatory issues, it is a company known for its adaptability in the industry and market, pushing for more options for consumers.
Tesla is one of the growing numbers of American companies expanding their operations to India. The company plans to increase the number of vehicles delivered to the global market to 20 million by 2030 (Shukla, 2021, p. 121). However, the company will face a number of risks associated with the business in the Indian market. Consequently, the purpose of this report is to critically analyze these risks and develop a risk management plan for Tesla.
Occurrence of Risk in Relation to Economic and Legal Implications
Definition of Risk
In financial and economic terms, the risk is the chance that an outcome or the actual gains in investment will differ significantly from the expectations or target. The concept of risk emerged during the enlightenment era, yet calculations performed by traders to assess possible future events related to their sea journeys were common even before the middle ages (Olofsson & Zinn, 2018). Basically, the idea of risk has been steadily evolving over centuries, and today, there are entire disciplines such as risk management which study it. According to researchers, risk is an inherent element in business, and it is always linked to uncertainty and the potential gains and losses which may arise from it (Crovini, 2019). Essentially, risk can be viewed as a combination of uncertainties and outcomes related to them, which can be analyzed and assessed according to their probability. Park and Shapira argue that “a business can assign probabilities to the possible outcomes where the magnitude of the outcomes’ impacts is measurable” (2017, p. 53). Consequently, risk involves measuring the uncertainty that a business should take to realize a gain from a specific investment.
Difference between Risk and Uncertainty
Although they are related, risk and uncertainty are different terms that apply to distinct situations. Every risk is a form of uncertainty, yet its main characteristic is that it can be controlled to some extent and measured (Vincentiis et al., 2019). In other words, uncertainty always involves a lack of knowledge of any potential outcomes, while a risk implies an assessment of possible future scenarios. Businesses exist in an environment full of uncertainties which concern different spheres of their operations. Yet, once the enterprise decides to analyze an existing uncertainty and discovers its potential outcomes and likelihood, it becomes a risk. Specifically, the risk is defined as “a situation under which an organization or investor understands the decision outcomes and their probabilities of occurrence…” (Park and Shapira 2017, p. 59). On the contrary, uncertainty is the situation under which the investor or business does not have such information. Park and Shapira assert that “…while the risk is the probability of losing or winning the gain in an investment, uncertainty means that the future events are unknown” (2017, p. 59). Moreover, risks are measurable and controllable, but uncertainties are not.
Origins and Nature of Risk
The concept of risk comes from the French word “risqué”, which means “liable to shock.” In English, the earliest known use of the French term dates back to 1621, while the use of its English version dates back to 1655. In English terms, the word was used quite differently as it applied to “negative outcome as people viewed it as an activity that potentially exposes people to danger” losses (Beyzaee and Marvi, 2020, p. 589). In his “Wager,” Blaise Pascal argues that “…people wager with their lives that God exists or is not in existence” losses (Beyzaee and Marvi, 2020, p. 589). He argues that the belief in God offers people a positive expected value because if He exists, a believer will receive infinite gains and avoid unlimited losses (Beyzaee and Marvi, 2020, p. 589). John Hopkin’s definition in the modern world classifies four categories of risks- compliance, control, hazard, and opportunity risks.
Compliance risk is a potential exposure of an organization to material loss, legal penalties, or financial forfeiture due to its failure to act as per regulations, laws, or policies. Hazard risks are those that can only result in adverse outcomes, which are pure in nature and exist as insurable or operational such as theft. Control risks are those that “…give rise to uncertainty about a situation’s outcome and are frequently associated with projects” (Zhang et al. 2019, p.4). Opportunity risks are those that companies deliberately take in the marketplace in order to achieve a positive return and are speculative in nature.
Business and Society Setting
Based in Palo Alto, California, Tesla Inc. is an American corporation that manufactures electric vehicles. The company has the largest sales of battery electric vehicles and plug-in hybrids in the world at 23% and 16%, respectively (Deb et al., 2018, p. 3016). This business is relatively new, given that electric vehicles have been recently invented (Mohanty and Kotak, 2017, p. 389). The EV sector is part of the larger motor vehicle industry, but it relies heavily on technology because the products do not use petroleum products as a source of power (Diaz, 2020, p. 64). EVs and related technologies such as batteries are developed specifically for the general market, especially now that petroleum resources are declining, expensive, and the large environmental pollutants (Debnath et al., 2021, p. 216). Tesla’s primary customers, therefore, are individuals, organizations, and governments who wish to reduce the use of petroleum as well as the amount of carbon emission.
In India, Tesla is seeking to sell EVs to individuals, organizations, and governments. By estimation, the Indian motor vehicle market is the fifth-largest in the world, with more than 3.5 million units sold per year (Kumar and Padmanaban, 2019, p. 139). The EV market, however, is not popular since, according to studies, the country has only 1 million buyers of budget EVs per year, the number which, nevertheless, is expected to experience a rapid increase of over 20% per annum in the next few years (Tarei, Chand and Gupta, 2021). Consequently, India is a highly promising market for EVs, considering the large population and an enlarging middle class. Moreover, India is one of the Asian nations with the largest population of English speakers, given that its colonial history has dictated the use of the language in education and as an official language.
Figure 1. Graph showing the growing volume of sales for Tesla’s EVs in the global market (Tarei, Chand, and Gupta, 2021)
Identification of Risks in the Context of Economic and Legal Implications
Compliance Risks
Entering the Indian motor vehicle market is quite challenging, especially for companies like Tesla that want to sell products developed outside the country through importation. The probability of this risk is less than 10% because the company is well aware of its tax requirements in India (Sunitha and Sathischandra, 2017, p. 56). Specifically, tax compliance is the largest risk that the company faces, given the heavy levies imposed on imported vehicles. The Indian government has a compulsory levy duty of 60% on EVs costing $40,000 or less and 100% on those with prices over $40,000 (Dhar, Pathak, and Shukla, 2017, p. 133). Consequently, complying with this tax regulation will mean that Tesla’s EVs will be too costly for Indian buyers and a sales limitation for the company. In addition, failure to comply with the duty will attract a fine of not less than 25% of the total cost of the product plus the levy itself as provided under section 112 of the Customs Act, 1962 of India (Sunitha and Sathischandra, 2017, p. 56). Therefore, the compliance risk is a major challenge that Tesla is facing in its entry strategy. Moreover, the company employs local and foreign employees in its business in India, which means that local labor laws must apply. For example, a workplace with ten employees and above must have an Internal Complaints Committee as required in the Sexual Harassment of Women at Workplace 2013 (Sign, 2017, p. 34). The probability of such a risk is quite moderate and stands at 30% because Tesla already has an experience of failing to comply with foreign laws. For instance, the company had to pay a fine of $14 million in Germany due to the poor recycling of its batteries (Hense, 2020). The possible impact is that the company will be fined due to compliance failure and will have to pay INR 50,000 and above. While the impact of such a violation in terms of budget is low, the reputation damage which will be suffered by the company is potentially high.
Hazard Risks
Fire outbreak is the third biggest risk to the operations and continuity of businesses in India. Between 2014 and 2019, India had a 300% increase in cases of fire incidents in commercial buildings and 218% in government buildings (Erbaş et al., 2018). Tesla also has had incidents involving fire in the past; for example, in 2021, a fire broke out in the company’s factory in Clermont (Kolodny, 2021). Taking into consideration the existing situation in India with fires and the prior accidents occurring on Tesla’s facilities, the probability of such a risk is quite high and can be estimated to be at 70%. Tesla stocks its inventories in established commercial buildings and showrooms, therefore, there is a high risk that Tesla’s EVs will be destroyed. As a result, the impact will be extremely high, especially if the fire gets out of control.
Control Risk
The automobile industry faces various control risks, including safety, quality, obsolescence, security, and recalling. EVs need to be safe for users and should meet high-quality standards (Deb et al., 2019, p. 272). Failure to meet these demands means that Tesla can have massive recalls due to incidents associated with the use of vehicles, such as fires, accidents, breakdowns, and others. In addition, the software and technology used in developing components of EVs should be up-to-date and functional, failure to which can result in recalls or legal suites (Capuder et al., 2020, p. 105). Tesla, as any automaker, has had problems with its vehicles in the past, some of which were extremely severe. For example, in 2021, the company had to recall more than 11,000 vehicles due to an issue with self-driving software (Alamalhodaei, 2021). At the same time, taking into consideration the fact that Tesla produces approximately one million cars every year, 11,000 vehicles is a fairly small number. Therefore, a risk involving poor quality control at Tesla factories is 10%, therefore, low. Nevertheless, the impact of such a control risk can be quite moderate considering the costs of logistics and repairs involved in managing several thousand cars.
Opportunity Risks
The main opportunity risk for the company comes from its decision to enter the Indian market, which will happen in the near future. Nevertheless, the probability of risk failure on the Indian market is rather high and stands at 70% due to several factors. In particular, the EV market in the country is about 3% of the total automobile market industry (Gujarathi, Shah, and Lokhande, 2018, p. 31). Basically, the demand for electric cars in India is low, even considering the large population of the country. Moreover, India has one of the highest import tariffs for electric vehicles, which range between 60% and 100%, which was also acknowledged by Elon Musk (Hanada, 2021). If the import duties remain at the same level, the price of Tesla cards in India will be among the highest on the planet. India is a developing country which does not have an affluent population, and new Teslas will be affordable only for a small group of people. Therefore, there is a need to conduct an adequate risk analysis before entering the market. Tesla is taking the new venture regardless of the fact that the Indian market is highly dynamic and unpredictable. If the venture is not successful, Tesla will suffer a considerable economic loss because the company will face lower sales if the risk is not controlled, therefore the impact of the risk is moderate.
Risk Management Plan
Control Measures
Tesla needs to hire an external legal consultant with thorough knowledge of Indian law, regulations, culture, and economy. The consultant should provide the company with the right and useful information about the country’s laws, regulations, policies, and work culture. With this knowledge, Tesla will ensure that it understands the local laws and regulations and their impacts on the workplace and work culture. Consequently, it will be in a position to comply with the relevant laws relating to employment, workplace, and impact on society. Labor laws, in particular, should be well understood as the company needs to have both local and foreign workers in its Indian business (Erbaş et al., 2018, p. 1023). Contracts given to foreign and local employees need to be in line with the local labor laws. In addition, the company needs to protect workers, including females, as per the Sexual Harassment of Women at Workplace Act 2013 by establishing a complaint committee in each of its outlets across the country.
In dealing with hazard risks, Tesla must comply with fire policies, both internal and those established by authorities in India. In each of its outlets and showrooms, the company needs to have fire alarms, safety doors and windows, fire extinguish equipment, automatic smoke/fire detection units (Arribas-Ibar, Nylund and Brem, 2021, p. 1319). In addition, there must be adequate and effective measures that employees must follow to prevent and deal with fire outbreaks.
Tesla’s products must meet the demands for quality, safety, and security. It is necessary that the company sell EVs that are safe for the users on roads. The products should not be prone to fire incidents, accidents, stalling, and failure of components (Wu et al., 2019, p. 402). In addition, the technology used to make their components and systems must be updated and able to meet the local demands. Furthermore, the batteries must be functional and able to retain electric energy for a prolonged period to ensure that users use them over long distances.
It is also necessary that Tesla conduct initial market research and a pilot study for the new venture. The idea is to use a third party or an internal initiative for conducting a survey of the Indian EV market to understand its strengths, weaknesses, opportunities, and threats based on such models as SWOT, PESTEL, and other approaches (Dandage, Mantha, and Rane, 2019, p. 239). In this way, it will be possible to deal with opportunity risks such as market failure. In addition, a pilot study will be effective in determining how the actual market entry strategy should be designed as it will show the areas with potentials, weaknesses, and strengths and address the notable challenges.
Corrective Actions
Tesla needs to establish an effective approach for improving its business processes to eliminate the causes of risks and hazards. First, the company needs to have an internal office that will deal with the taxation in the Indian market (Jaiswal et al., 2021, p. 121089). Such an office can be established within the finance department and will have the mandate to ensure that every EV and related components are taxed as per the import policies in India.
Secondly, the company needs to have an internal human resource HR department that will deal with compliance with labor laws. The department should continuously review laws such as on a monthly or quarterly basis. This department should be responsible for recruitment and hiring, which should be done based on the existing laws in India. The idea is to ensure that employees in all the showrooms and outlets meet the existing policies and are protected from harassment, discrimination, poor workplace environment, and poor treatment. Buildings used for offices, showrooms, sale outlets, employee housing, and others must be fireproof. These establishments need to have fire alarms, safety doors and windows, fire extinguish equipment, automatic smoke/fire detection units (Liao, 2021, p. 11). In addition, there must be adequate and effective measures that employees must follow to prevent and deal with fire outbreaks.
Tesla is known for its heavy investment in technologies and has been a leading innovator in green energy and the development of EVs and related products. It is recommended that the company use this strategy when entering the Indian market. All the technologies used in developing the products and their components must be up-to-date and functional (Habib et al., 2020, p. 302). In addition, they must be frequently updated to ensure that they meet the changing needs of users. For example, new batteries need to be developed with newer technology each time to ensure continuous improvement. This means that customers will buy a more efficient battery than the previous one each time they need replacement. It is necessary that the company sell EVs that are safe for the users on roads. The products should not be prone to fire incidents, accidents, stalling, and failure of components.
Finally, Tesla must ensure that the corrective measures for dealing with opportunity risks are maintained throughout its operations in India. In this case, the EV survey must be conducted monthly to understand its strengths, weaknesses, opportunities, and threats based on such models as SWOT, PESTEL, and other approaches (Jhunjhunwala, Kaur, and Mutagekar, 2018, p. 46). In this way, it will be possible to keep the business up-to-date and ensure continuity. Frequent pilot studies will be effective in determining how the actual market expansion strategy should be designed as it will show the areas with potentials, weaknesses, and strengths and address the notable challenges.
Record Keeping and Review Frequencies
The aim of keeping records and reviewing them frequently is to ensure that the causes of incidents are noted and rectified and mitigation strategies established to prevent future occurrences. In these records, Tesla should note the number of times and implications of breaches of labor laws and regulations. The risk register should also have this data at all times. In addition, the HR department should frequently review these records, such as annually or twice a year. Tesla should record the number of times and implications in which it experienced a fire incident in any of its outlets, showrooms, and other premises. The operations department needs to acquire all the information from every outlet and ensure that the records are frequently reviewed, such as two times a year.
Breaching of quality standards for Tesla’s EVs and related components in sale in the Indian market should be recorded and reviewed at all times. In this case, the idea is to record the number of times the organization has breached the quality standards for its products, including safety, security, product operation, and others. The information should also appear in the risk register, and the HR department should review these documents at least two times a year.
Finally, dealing with opportunity risks should also be included in the risk register. In this case, Tesla’s HR department in the Indian market should record the number of times and the implications in which it has failed to capture the potential gains of the opportunity risks. The information on the losses incurred from each incident should appear in the records as well as the risk register. Frequent reviewing should be done, such as four times every year, and the senior managers should access this information as it is necessary for decision making. It should be noted that the senior managers need this information in making decisions for expansion into multiple cities and towns in India in the next few years.
Summary
This report provides a comprehensive analysis of the risks that Tesla faces and which it needs to address as it enters the Indian market. The analysis demonstrates that there are four categories of risks involved- compliance, opportunity, hazard, and control risks. Each category of risks will need special attention and focus on ensuring that the company reduces the chances of failing in the new market. The report provides the control measures that Tesla needs to use to mitigate the risks involved.
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Tesla is renowned for its innovation and leadership in the electric car industry. As its market grows, Tesla faces new quality challenges, significantly as it expands its production and sales in China. To ensure long-term success in China, Tesla needs to develop a robust quality control and customer service system that can effectively address problems with car quality.
Tesla has faced quality issues with their vehicles in China, particularly with the brakes, which has caused customers to be increasingly wary of their safety. After multiple complaints were reported in February 2021, Chinese regulators called upon Tesla to investigate and resolve the matter quickly (Sun & Goh, 2021). This anxiety was amplified when a Tesla car crushed and killed two people in April 2021 (Pietsch, 2021). The driver’s family claimed that the brakes had malfunctioned, and the crash investigation revealed that the vehicle had been traveling at an elevated speed and the brakes were not used. In light of these events, Chinese customers are now questioning the trustworthiness of Tesla’s cars.
Tesla has had to confront some issues with the quality of its batteries in the Chinese market. Customers have reported that the batteries in their cars have spontaneously ignited, resulting in considerable destruction of their vehicles. In April 2019, a Tesla Model S burst into flames in a Shanghai car park, and the occurrence quickly circulated on Chinese social media (Shaban, 2019). This accident lowered Tesla’s reputation in China.
To take care of quality problems, Tesla ought to give precedence to safety and quality in its vehicles and put money into research and development to advance the proficiency and dependability of its breaking and battery systems. Additionally, Tesla should implement more meticulous testing procedures to identify and tackle quality issues before they become widespread. For instance, Tesla could employ more sophisticated simulation tools to evaluate the robustness and safety of its brakes and batteries before they go into manufacture. Moreover, Tesla should construct a more stringent quality control process to ensure that all vehicles adhere to the maximum safety and quality standards.
Tesla has been the subject of disapproval due to their inadequate customer service in the Chinese market (Jacobs & Chase, 2014). Per the 2021 China Customer Service Index (CSI) research conducted by J.D. Power, Tesla scored the least among all luxury brands regarding customer contentment (2021 China Customer Service Index, 2021). Tesla’s rating was 573 out of 1,000, much lower than the industry standard of 651.
To ameliorate customer service, investing in training customer service representatives and providing more available pathways for customers to voice concerns about quality and give feedback could be beneficial. For instance, Tesla could create a specific hotline or email address for Chinese clients to discuss quality issues or comment on their customer service experience. Additionally, Tesla should carry out routine customer surveys to recognize customer requirements and inclinations and utilize the data to upgrade its products and services. Furthermore, Tesla could contemplate instituting a system that grants commendable customer service, incentivizing customer service reps to provide the finest service.
The subsequent problem with Tesla is related to the high costs of Tesla cars in the Chinese Market. Tesla currently imports all of its vehicles to China, which makes its cars more expensive for Chinese customers due to import tariffs and shipping costs (Bloomberg, 2021). This puts Tesla at a disadvantage compared to other electric vehicle manufacturers, such as NIO and BYD, which have local manufacturing operations in China. Tesla should consider expanding its manufacturing operations in China to reduce costs and increase its competitiveness in the Chinese market.
Ultimately, Tesla has encountered several concerns about quality in the Chinese market, which has hampered customer contentment. Those problems incorporate issues with brakes and batteries, inadequate customer service, and the absence of local production. To address these worries, Tesla should stress safety and quality in its vehicles, invest in providing training to and supporting its customer service staff, and set up a local manufacturing base in China. Through these measures, Tesla can fortify its position in the Chinese market and raise customer satisfaction, thus helping it to reach its long-term ambitions.
Tesla is among the leaders within the scope of the high-tech industry and involves a plethora of employees around the globe. Such a position implies the necessity of an appropriate HRD strategy that is a foundation for a company’s coherent and consistent business processes. Hence, the HRD strategy for Tesla is a relevant theme to develop. Below, after exploring the firm’s position in the industry and its business industry, the HRD program will be suggested. It will focus on three interrelated dimensions – training and development, organizational development, and career development, appealing to the foundations of McLagan’s human resource wheel. Then, an approach for evaluating the program – Kirkpatrick’s four-level taxonomy – will be proposed as well.
Tesla’s Industry Position
In economics and business, the situation is characterized by the emergence of new industries around intellectualized production. There is a significant expansion of the sphere of the non-intermediary economy, primarily transport, information, and financial services. The leaders of new markets understand this situation and build their businesses in accordance with the new realities. An illustrative example is Tesla Motors, which is now the undisputed leader in the electric car market. By the decision of the founder and head of the company, Elon Musk, the company made all its patents public and publicly available (Thomas & Maine, 2019). Musk is confident that he is already so far ahead of competitors in the new market in the engineering excellence of the solution that the disclosure of intellectual property is safe for the company. Moreover, it can help the development of other players within the norms set by Tesla Motors.
It is noteworthy that today the main potential competitors for Tesla are rather an information technology-oriented companies such as Apple and Google. Modern electric vehicles are more a product of IT than the result of the development of automotive technology. The Tesla Model S electric car that revolutionized is a constantly updated computer on wheels connected to the global network (Chen et al., 2019). One can be absolutely sure that further struggle in this market will unfold around software and intelligent transport systems.
Tesla uses vertical integration, directed both toward suppliers and towards end consumers. Forward-going vertical integration is manifested in the fact that the company’s cars are sold only through the company’s website, with the exception of some US states, where sale through intermediaries is mandatory. In all other regions where Tesla operates, the services of intermediaries for the sale of cars are not used. This allows one to significantly reduce the cost of personnel wages and have full control over the price level since the factor of creating value by intermediaries between the company and the consumer disappears. It should be noted that salons still exist, but they perform only the functions of a service center and showroom (Thomas & Maine, 2019). The second option for using Tesla’s direct integration is implemented through the creation of its own large network of car charging stations (superchargers). Such charging stations allow one to charge a car with a battery capacity of 100 kW/h. in about 1.5 hours (Chen et al., 2019). This is many times faster than conventional charging stations; moreover, superchargers can only be used by Tesla owners.
Tesla is focusing more on reverse vertical integration as this strategy opens up more opportunities. One of the company’s strategic goals is to reduce the cost of cars because, despite the fact that electric vehicles are becoming more popular and demand is increasing exponentially, cars are still significantly more expensive than their conventional counterparts. For example, the company now manufactures batteries in venture manufacturing with Panasonic, which significantly reduces the cost of the battery. However, to achieve better results, the company is taking steps to develop battery technologies that will cost less than they do now and be of much higher quality.
In general, the use of the vertical integration mechanism in Tesla’s activities can be seen in the following. In 2015, the company took over Riviera tool LLC, which specializes in the production of complex stamping tools for mass production (Chen et al., 2019). As a result, conditions were created for significant cost savings on production tools and an increase in the company’s profits. In 2016, Tesla acquired the German manufacturer of automated mass production systems, Grohmann Engineering (Thomas & Maine, 2019). This was done in order to provide Tesla’s automated future with the necessary technologies and reduce the cost of production.
Further, in 2017, the company acquired the private company Perbix, which specializes in the production of robots and mass-produced tools. Through these actions, the company went deeper into solving the problem of reducing the cost of production. This transaction paved the way for the development of the technological potential of the organization. In 2019, Tesla acquired the Canadian company Hibar systems, which makes various tools for different stages of development and production of lithium-ion batteries (Chen et al., 2019). This deal confirmed the company’s intention to move further into independent production of batteries, reduce production costs and move away from the venture partnership with Panasonic. Again, in 2019, Tesla bought a promising American start-up, Deepscale, specializing in software for self-driving driving systems (Chen et al., 2019). This is another direction of integration that allows one to get new technologies and potentially improve the competitive position of the organization.
It should be noted that the chosen strategy ensured the strengthening of Tesla’s strategic position. The results after 2015 became especially noticeable (Chen et al., 2019). Tesla remains the leader in terms of the price factor, which determines the company’s potential to change the price situation in the industry as a whole in modern conditions. This factor and others discussed above allow considering Tesla as a driver for the development of the electric vehicle market. In strengthening this role, successful human resource development strategies are essential as well.
Organizational Development
Given the discussed industry and business strategy of Tesla, it will be rational to found its HRD program on an innovative approach. For example, the company may appeal to the digital management system of an organization. The latter is a set of interrelated elements united by a digital platform, with the help of which the organization and implementation of activities are carried out using modern digital technologies (Elg et al., 2019). The implementation of the control object in the digital economy assumes the presence of a digital twin that allows one to digitize the main business processes and virtualize them using augmented reality technologies.
Management processes are digitalized through the introduction of semi-automatic systems for the implementation of basic management functions, such as organization, planning, analysis, and control. The digitalization of management decisions consists of the formation of possible scenarios for the development of the organization on a digital platform. The calculation of indicators for each scenario is carried out according to the principle “what will happen if…”. Managers see various scenarios online and choose the most appropriate one.
The use of artificial intelligence in digital management will make it possible to digitalize most of the functions, leaving managers only with creative work – recruiting employees, developing motivation systems, team building, and leadership. The digital platform will be able to independently develop and evaluate solutions by analyzing goals, processes, and risks (Elg et al., 2019). Managers will only need to approve the most efficient and effective development scenario.
The interaction of employees in the company using electronic document management, online project management systems, and modern means of communication involves the construction of a digital organizational management structure. The implementation of a digital organizational structure of management is possible with the help of modern online platforms.
The digital strategy of an organization is the main strategy for its development, implemented on the basis of modern digital technologies. It involves the digitalization of goals and activities aimed at achieving them. Achieving the set goals may become impossible due to risks that arise within the organization and in the operating environment (Elg et al., 2019). Digital transformation generates new risks, the work which requires the construction of a digital risk management system based on intelligent predictive analytics. Thus, all elements of the management system can be digitized, i.e., a digital organization management system can be built on the basis of a digital platform, which is the core of the functioning of the organization management system.
A digital platform is an integrated information system that ensures the digitalization of the relationship of all its participants. It aims to reduce transaction costs and modernize business models. The development system of an organization on a digital platform can be represented as follows. Initially, the control object is digitized, and its digital twin is formed. Further, the digitalization of the subject of management is carried out (Elg et al., 2019). The subject and object of management interact on a single digital platform, where information is generated for the owners and managers of the organization. Moreover, they can receive information, not from each other but online from mobile devices. The situation when managers give false information to owners about the state of affairs in the organization is excluded.
A digital risk management system and a system for monitoring the implementation of a digital strategy are being added to the digital platform. It provides the necessary information to the digital control panels of the employees of the organization. Each employee can see the goals, indicators, and tasks to be completed, as well as the deadlines and the target result.
Career Development
The core idea of career development processes for Tesla is to arrange its employees’ careers in such a way that the very method of advancement ensures the optimal use of motivational mechanisms and weakens the effect of restraining factors. The long-run plan for the development of careers as a significant system of interconnected actions involves the tasks of the effective use of all types of resources (Wehmeyer et al., 2019). There is also maximum adaptation to the conditions of the business environment, and the flexibility of the individual.
The launching stage within the scope of career development is the formulation of a career mission. The latter is an expression of the individual’s vision of the content and meaning of a career, its main goal. The identification of employees’ strengths and weaknesses will be considered the starting point of the process. This provides a basis for defining the mission and goals and also contributes to the development of a strategy for the career process.
The next task of planning is the identification and analysis of the workplace. This is the identification of a position or workplace, the requirements of which most fully meet the career potential of this particular individual. To resolve this problem, it is necessary to break down the available positions (for which the employee actually or potentially applies) into segments or groups united by certain common characteristics. This can be the basis for making decisions about future direction and career growth.
The next task of strategic career planning is to determine the correspondence between the profile of the workplace and the employee’s career potential. The last stage is the realization of the strategic plan (Wehmeyer et al., 2019). Thus, having formulated a strategic plan and developed tactical steps, it is necessary to periodically analyze it and make the necessary adjustments. The essence of the entire strategic plan process is career rethinking. The purpose of this is to look at a career in perspective, i.e., as a process, and not in retrospect, as a result.
Training & Development
For Tesla, the first strategic direction in terms of training and development is proposed to be coaching. The latter is recognized as the most versatile and effective way to manage personnel in order to maximize its effectiveness. Using coaching, the staff achieves the intended goals more efficiently and quickly. One of the significant goals of coaching is the formation of a team that should be aimed at organizational success. Coaching serves as a foundation for the training and development of employees in order to form a unified team (Milner et al., 2020). Team coaching helps to activate the potential of the team, get out of a temporary unsatisfactory state, and achieve a stable situation.
Next, Tesla should focus on building and managing project teams. Formed groups need to be developed to the command level and then managed, which entails certain costs. For now, team-building practices are being actively advanced in innovative design. Thanks to the emergence of new software products and their use in management, the technology of mobile project teams are being introduced (Milner et al., 2020). The very possibility of meaningful team-building contributes to the effective construction of not only professional but also interpersonal relationships. The introduction of mobile project teams into practice seriously and for a long time actualizes the importance of understanding between project participants, making it a necessary condition for success.
A new direction in team building is the creation of virtual teams, which is also relevant for Tesla, especially in the context of the digital development of an organization. They are created with the active emergence of new information technologies that have a positive impact on the socio-economic activities of companies. It can be noted that such organizational forms are very promising due to their obvious advantages (Milner et al., 2020). The main advantages include the unification of the intellectual efforts of specialists who are remote from each other and the reduction in time spent due to the possibility of constant work on the project.
Program’s Evaluation
There are many significant tools for evaluating contemporary HRD practices. For instance, in the case of Tesla, it would be reasonable to use the Kirkpatrick model to assess the proposed HRD strategy (McGuire, 2014). This model can be considered as a framework for defining the four stages of training assessment. First, it is the employees’ reactions and thoughts regarding the program. Second, it is their resulting knowledge and skills obtained from this program. Third, it is their behavioral shifts and advancement after utilizing the mentioned skills in the framework of the job. Fourth, it is the outcomes or implications of the employees’ performance on the company.
The first category of criterion is the reaction, which assesses whether Tesla’s employees will consider the program interesting, beneficial, and applicable to their work. An after-program survey that will ask the participants to rate their experiences will be the instrument to evaluate this level. It should be emphasized that focusing on the trainee rather than the trainer will be an important part of the Level 1 examination (Ardent Learning, 2020). While it is normal for facilitators to rely on the learning results, Kirkpatrick’s taxonomy prefers survey questions based on the learner’s thoughts.
Level 2 assesses each employee’s learning by determining if they have acquired the desired information, abilities, attitude, confidence, and dedication to the course. Learning may be assessed in a variety of ways, both formally and informally, and should be examined before and after learning to verify correctness and understanding (Ardent Learning, 2020). Exams and interview-style evaluations are examples of assessment methods here. In order to eliminate discrepancies, a specified, unambiguous scoring method must be developed ahead of time.
Level 3 of the Kirkpatrick taxonomy will assess whether employees will be actually influenced by the program and are putting what they have learned into practice. Analyzing behavioral changes allows one to determine not only whether the competencies were learned but also if they are logistically feasible to employ in the job. It should also be noted that examining frequently reveals problems in the workplace (Ardent Learning, 2020). A dearth of behavioral shifts may not indicate that the program will be inadequate but rather that the company’s present processes and culture are not conducive to the intended changes.
The fourth level is devoted to determining actual outcomes. This stage will give the opportunity to compare learning to Tesla’s business objectives or KPIs that will be set in place before the program. A greater rate of return, fewer work-related accidents, and a better volume of sales will be crucial indicators to consider for the organization (McGuire, 2014). The suggested tool is used to establish an executable measuring strategy that clearly defines goals, measures outcomes, as well as identifies areas of significant influence. Data analysis at each level helps companies to examine the link between every stage to properly appreciate learning outcomes, as well as to adapt strategies and alter course during the process.
Conclusion
To conclude, the HRD strategy for Tesla was developed through the prism of three dimensions – career development, training and development, and organizational development. The approach that is suggested for the company is related to the innovative strategy of HRD. Particularly, it was proposed to advance organizational processes by the digitalization of management processes, to consider career development as a coherent process with specific stages, and to appeal to modern practices of coaching and team-building. Then, Kirkpatrick’s model was utilized in order to define the way in which the mentioned program will be assessed.
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People of the 20th century saw the technological revolution, with many companies shifting from manual labor to efficient machinery that accelerated the process many times. Yet, the revolution has not stopped in the previous century and proceeded to introduce new innovations and breakthroughs that changed the lives of people and markets. Among such facilitators of innovation is Tesla Inc., which specializes in matters of renewable energy and artificial intelligence. In the past decade, the firm introduced a vast range of products that many people considered impossible. For this reason, this organization is among the highest-valued firms not only domestically but internationally. In the following years, Tesla will possibly focus on its three significant opportunities, which involve the introduction of new products, the creation of new markets, and international expansion.
Description of the Organization
First, it will be vital to give an overview of the corporation and its main scope of expertise. Tesla is a green energy and electric automobile firm run by entrepreneur Elon Musk. According to one of the biggest financial news agencies, Reuters (n.d.), the firm creates not only completely electric automobiles but provides energy production and storage equipment and distributes and rents them. The company then additionally provides services relating to the mentioned goods. The firm’s automotive sector sells automobile regulatory credits in addition to designing, developing, producing, renting, and selling electric cars (Reuters, n.d.).
Services, as well as other products, that include non-warranty after-sales automobile maintenance, used-car sales, commercial product sales, revenues by its acquired companies to third-party clients, and car insurance, are also included in the automobile category (Reuters, n.d.). In its power storage systems section, items for solar power generation, battery storage, and support products are designed, manufactured, installed, sold, leased, and subject to relevant business initiatives (Reuters, n.d.). Therefore, Tesla is not merely an organization that manufactures renewable energy goods.
For the purposes of global market presence, Tesla operates in different factories around the globe. The company has six extensive, vertically integrated facilities that it runs over three continents from the Texas headquarters (Tesla, n.d.). The teams internally create, manufacture, market, and support the goods with the help of over 100,000 workers (Tesla, n.d.). According to the business agency Fortune (n.d.), a significant achievement for the company was established in 2003 as Tesla Motors, which was the sale of its one-millionth vehicle in 2020. What is noteworthy is that Tesla produces and distributes solar panels, rooftop solar tiling, and other associated goods and services via Tesla Energy (Fortune, n.d.). In addition to being a significant operator of photovoltaic energy-producing equipment within the U.S., Tesla Energy is among the top global providers of battery power storage systems (Fortune, n.d.). Therefore, the company has subsidiaries that play a crucial role in production and marketing. As can be seen from Figure 1, Tesla’s sales have been increasing with the help of the mentioned services and products.
Figure 1. Tesla’s annual revenue in the past 4 years.
Organization’s Structure
Type of Ownership
Still, it is necessary to remember the given company’s organizational structure that additionally plays a vital part in the estimates of its success. Tesla Inc. is a public company with 21,143,862 outstanding shares (Reuters, n.d.). The company has a market capitalization of $576,131.90 billion, which makes the company among the most high-valued entities in the market (Reuters, n.d.). Therefore, such figures, notably the shares and market capitalization, indicate that the company has the confidence of both institutional and retail investors.
Organizational Hierarchy
The second essential aspect when analyzing the structure is the organizational hierarchy. Here, Max Weber’s bureaucratic management theory can be used to characterize the business management of Tesla. According to the theory, a company must have a strict hierarchy with a specific division of labor among the employees who constitute the firm (Schermerhorn & Bachrach, 2019). Here, a structured organization with elements of a hierarchical system best describes Tesla (Tesla Investor Relations, n.d.). For all company operations, covering financial administration, selling, advertising, information technologies, manufacturing, and design, as well as the C-suite offices, Tesla does employ workable units. Among the most critical people in Tesla are Elon Musk, the CEO; Zachary Kirkhorn, CFO; and Andrew Baglino, SVP (Tesla Investor Relations, n.d.). Therefore, with such strict rules and structures, Tesla can be considered a bureaucratic system
The Tesla, Inc. Board of Directors has high expectations for all of the Company’s employees, executives, and members. This concept makes the value of good company governance apparent. The Board of Directors has a duty to supervise corporate management for the organization and to act as a responsible fiduciary for stakeholders. The Board of Directors adheres to the practices and standards outlined in these policies in order to carry out its duties and meet its obligations. These rules may be modified on a regular basis as the Board of Directors sees fit in the corporation’s best interests or as necessary by relevant laws and regulations.
Business Model
The last aspect of the organization’s structure is the business model. Tesla Motors and its distinctive business strategy are primarily responsible for the general public’s excitement and adoption of electric vehicles. Elon Musk, the chief operating officer of Tesla and the company’s creator, said of the company’s mission: “Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible” (Tesla, n.d.-d). The foundation of Tesla’s lucrative business strategy is this objective. Instead of using licensed outlets, Tesla’s business strategy relies on direct product selling and servicing (Tesla, n.d.-d). Tesla’s business strategy places a strong emphasis on expanding its network of charging stations. Tesla has expanded the scope of its business model to include both residential and commercial energy storage technologies (Tesla, n.d.-d). As can be seen, the business model emphasizes the revolutionary approach to green-energy products and the introduction of such goods to the markets.
A Range of External Influences that Might Impact Growth
New Market
As for the external influences that might impact the growth of Tesla, the first is the new market. For instance, Tesla Bot is developing the next generation of automated processes, which includes a general-purpose, bipedal, humanlike robot capable of carrying out dangerous, monotonous, or repetitive duties (Tesla, n.d.-b). Furthermore, in Tesla, deep neural systems are trained on issues ranging from observation to regulation by utilizing cutting-edge technologies (Tesla, n.d.-b). These algorithms gather iterative data from the collection of millions of automobiles in real time to learn from the complex and varied events in the world (Tesla, n.d.-b). The 48 systems that make up the whole build of the Autopilot neural networks require 70,000 GPU hours to learn. At every timestep, they produce 1,000 different tensors (predictions) collectively (Tesla, n.d.-b). As a result, with the growing demand for artificial intelligence, a new market will be introduced specializing in robotics, and Tesla will be able to seize the opportunity, although not immediately.
Product Range
Another opportunity for growth is the introduction of a new product range, represented by batteries. Tesla is aiming to produce its battery cells internally, which will reduce production costs and add a large number of new employees while providing time. The Gigafactory 1 battery manufacturing facility became the world’s highest-capacity battery facility in the middle of 2018, achieving a yearly pace of around 20 GWh (Tesla, n.d.-c). Tesla’s price of battery cells will drastically decrease when the Gigafactory accelerates production owing to economies of scale (Tesla, n.d.-c). Tesla will, in the long run, expand the market for its products by lowering the price of batteries, which will enable the company to have the greatest potential influence on the shift to the planet of renewable power.
Internation Expansion
Lastly, the purpose of the firm’s cars’ design is quite well matched to the European market. Elon Musk, the CEO of Tesla Motors, stated that Tesla’s objective is to blend style, technology, and efficiency with a forward-looking direction toward renewable energy and sustainability (Tesla, n.d.-a). The organization’s most significant markets in Europe, notably Germany, Switzerland, Norway, and the Netherlands, are the most beneficial options for the business (Tesla, n.d.-a). As a result, with its emphasis on developed countries that promote green energy, Tesla will ultimately be able to relocate its sales to more lucrative regions.
Conclusion
Hence, Tesla may concentrate on its three key opportunities in the following years, which are the launch of new products, the development of new markets, and global expansion. At the moment, the company provides services and designs and manufactures goods in the vehicle and green energy industry. Tesla is a public company and has a hierarchical organizational system, and its market capitalization indicates shareholder confidence. In the following years, it will be able to seek growth when introducing the new market of artificial intelligence with its innovative robotic products, extend its product range with the development of batteries, and expand internationally.
Tesla, Inc. was founded in 2003 as Tesla Motors by Martin Eberhard and Marc Tarpenning in San Carlos, California. According to Chen and Perez (2018), Eberhard and Tarpenning connected with Elon Musk in February 2004 when looking for venture capital funding. Musk contributed the majority of the sum for the initial round of investment and became chairman of the board of directors; nowadays, Tesla, Inc. is primarily associated with his name. Tesla has overcome barriers in the development of high-performance cars, which are currently the world’s best-selling long-range pure electric vehicles with no pollutant emissions whatsoever (Analytics Insight, 2020). In addition to the flagship sedan Model S and the sports utility vehicle Model X with its Falcon-wing doors, the company offers a simpler, smaller, and more affordable Model 3. Analytics Insight (2020) states that Tesla expects Model 3 to be the model to propel electric cars into the mainstream. Moreover, not so long ago, the company started offering a full range of energy products that include storage, solar, and grid services. In other words, Tesla is at the forefront of the world’s inevitable transition to a sustainable energy platform.
In order to evaluate the company’s current business strategy, one is to primarily turn to its mission and vision statements. A mission statement is a short declaration of the purpose a company serves to its audience. Tesla’s mission statement used to be “to accelerate the world’s transition to sustainable transport”; however, in 2016, it was changed to “to accelerate the world’s transition to sustainable energy” (Tesla, n.d.). According to Rowland (2018), this change represents a small but significant shift in the company’s approach: now it wants to exploit market opportunities related to renewable energy. In a sense, Tesla’s new mission acknowledges the relevance of its energy storage products, whereas before, they seemed to be focused only on the electric vehicle market. in addition to the market for electric vehicles. Moreover, the verb ‘accelerate’ determines Tesla’s role in driving the industry towards high-tech solutions for sustainable business and products relying on renewable energy. Additionally, the phrase ‘the world’s transition’ indicates Tesla’s expectations of successful domination in the global electric vehicle and related products market.
An organization’s vision statement is the articulation of what it intends to achieve. Rowland (2018) states that Tesla’s vision statement is to “create the most compelling car company of the 21st century while driving the world’s transition to electric vehicles”. From the use of the adjective ‘compelling’, it is clear that the company aims to excel and exceed expectations. Tesla approaches it by incorporating advanced technology into its vehicles and products, constantly perfecting them. However, Rowland (2018) notes that the ‘car company’ component of the sentence points to Tesla’s primarily focusing on the design and production of cars. The significance of the reference to the 21st century is in the company’s intention to address the issues the new age brings — first and foremost, the environmental situation. Additionally, ‘the world’s transition’, just like in the mission statement, sends a message about the organization’s global goals. In other words, the phrasing of Tesla’s vision statement unfolds its aim of being the prevailing player in the global market of electric vehicles.
In terms of the operational goals of a business, these tend to be the driving force behind its corporate vision. From what can be concluded from the above, Tesla is committed to delivering high-quality electric vehicles. The 21st-century technologies will be leveraged to create a better and safer car company and promote the introduction of renewable and sustainable energy worldwide. According to Han (2021), Tesla has developed a nuanced operational strategy based on three key components to achieve all that. First of all, the company’s desire to be the best car company manifests itself in constantly wanting to improve on all fronts. Han (2021) states that, after coming last in the annual J.D. Power Initial Quality Study in 2020, Tesla decided to tackle the quality issues it had. Functional quality control mechanisms were implemented so that product problems could be better addressed. Tesla’s introduction of standardized trending and reporting for all of its plants, factories, and assembly lines worldwide resulted in its increased awareness of remedial measures. As a consequence, the company’s rankings rose in the subsequent J.D. Power 2020 APEAL Study, which evaluates both subjective and objective measures.
Moreover, Tesla tends to engage its employees and stakeholders in the implementation of critical mission-related processes. As per Han (2021), the organization’s symptom control program permits employees to help determine issues and recommend solutions. However, Tesla is very demanding and always expects everyone to work hard. Granted, guaranteeing perfection on such a high level is a challenge, but, according to the organization’s policies, anything is possible with hard work. For one, Tesla executives wanted to reach the milestone of 500,000 units in 2020 – and the company’s employees made great efforts to help achieve it in the last five days of the year (Han, 2021). This is why Tesla believes in the power of engagement: when people are motivated to work for a company, amazing things can happen.
Additionally, Tesla values safety and continuously advances the production processes on the foundation of the lessons learned from past experiences. New techniques are used to create improved risk management systems – for instance, the Find It-Fix It initiative encourages employees to report safety risks and rewards them for doing it (Han, 2021). Tesla also uses modern technologies to reduce injury risks in its factories and on the roads. In 2021, optimized repair services were announced: it now includes collision repairs, as well as managing of suspension, axle damage, and other disruptions (Kolodny, 2021). Access to these services can be quickly obtained through the Tesla app on one’s phone. Safety is essential for every business, but Tesla makes it evident how much it cares about it.
Among the most popular tools to analyze a company’s strategy and make strategic decisions are SWOT analysis and Porter’s Five Forces. According to Hall (2020), SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This model outlines internal and external factors that can contribute to the organization’s success and hinder it. In turn, Porter’s Five Forces helps one analyze the competitive market within a chosen industry (Hall, 2020). Its five key components are the existing competition, the potential for new entrants, supplier power, consumer power, and the arrival of substitutes.
As per SWOT analysis, strengths and weaknesses are the attributes of the internal origin that are helpful and harmful to achieving the objective. In Tesla’s case, one of the main strengths is, evidently, energy efficiency: the company is a pioneer in the electric vehicles industry because of its outstanding use of renewable energy sources. Another of Tesla’s strength is collaborations with renewable energy giants, which helps it to expand these efforts into the global market (Dutta, 2020). Moreover, Tesla is highly innovative, which is reflected in the quality of its vehicles; additionally, its brand image is strong: now, sustainable and profitable products are expected of the company. Among Tesla’s weaknesses are manufacturing complications due to such a high standard of innovation and its products being premium range, which can cause problems in terms of affordability (Dutta, 2020). Additionally, Tesla is viewed as Elon Musk’s one-man show, which puts a lot of responsibility on his shoulders.
Opportunities and Threats in the SWOT analysis model are factors of external origin that can influence a business strategy. One of the main opportunities for Tesla is its eco-friendly cars: as the world is becoming more sustainability-oriented, the demand for electric vehicles is growing (Chez and Perez, 2018). Another opportunity is autopilot technology, which has impressed the world with its safety and convenience; now, it needs to inspire the confidence of a regular driver. Moreover, Tesla’s battery cells are to be produced in-house: if implemented, their production costs are to be reduced and new jobs are to be created. In terms of threats, a major one is extensive competition: many brands are not only getting ready to launch alternative-fueled, self-driving cars as well – their prices are to be much lower (Dutta, 2020). Competitive pressure might result in high operational costs of the implementation of new technologies and lower rates of return. Additionally, Tesla has problems with maintaining long-term sustainability – which is essential for a public image – due to the instability of manufacturing conditions.
When it comes to assessing Tesla’s competitive advantages as per Porter’s Five Forces analysis, each factor is to be evaluated on a scale from low to high. For one, the threat from the existing competition is high: everyone – from start-ups to large brands – realizes the benefits of the sustainability policy. Competitors’ pricing and differentiation strategies limit Tesla’s successful market presence and profitability growth (Fortuna, 2020). The new entrants’ potential is high as well due to the lowness of barriers to entry. Chinese companies prevail in the electric vehicles start-up market, whereas Europeans and Americans dominate in the traditional marketplace, with their companies switching to electric.
Supplier power for Tesla is high because there is a limited supply of chain networks for the electric vehicle industry. According to Fortuna (2020), a disruption in the economy of any foreign supplier will have a negative impact on the company and its production. Tesla’s consumer power is low: its products are in the high-end market, and its pricing is high. Prevailing in the high-end market is easier due to a lack of competition, but to stay relevant there one must offer unique products and services. The final factor, the arrival of substitutes, is high: Fortuna (2020) notes that Tesla owns a little more than 1% of the automobile market share and around 15% of the global electric vehicle market. Bigger automakers have loyal customer bases, and the markets are becoming saturated with start-ups; if things go wrong, Tesla might lose its followers.
In general, Tesla’s current main competitive advantage is its constant perfection of technology to enable further development of electric vehicles. It is these cars that have earned the company its reputation: by consuming clean energy, they produce no pollutant emissions and contribute to the modern world’s highly-popular sustainability-oriented policy. In formulating the strategy that is to help Tesla achieve a sustainable competitive advantage, one is to determine the company’s deficiencies and address them in the strategy. The high threat of new entrants and market substitutes calls for the creation of differentiated products and services and better competition strategies. The bargaining power of suppliers demands the shortening of the chain supply network. The bargaining power of buyers, while currently low, still needs to be lowered by the diversification of the products in the popular segment. Finally, launch, production, and delivery ramp delays are to be improved: granted, this is often the case with more complicated technologies, but it is still unacceptable.
When it comes to strategy implementation, recommendations are the following: differentiating products and services are made with the expansion of technology innovation and the constant pursuit of better ideas. Flattening the company’s structure, as per Dess et al. (2021), is to improve the communication between management and, consequently, lead to the emergence of new concepts and notions. The threat of substitutes is to be eliminated by charging premium pricing in the high-end market while keeping a level of quality. The chain supply network can be shortened by constructing factories across the globe and diversifying suppliers; that way, Tesla is not to rely on the economies of other countries and supplier power is lowered. Designing more affordable models for the low-end market and making them advantageously differ from competitors will bring new customers and more profits for the company. For the ramp delays to be dealt with, manufacturing excellence is to be enhanced with the perfecting of manufacturing technologies. The best way to evaluate the success of the recommendations is to watch over time whether the company’s current problems will be solved and whether current weaknesses will stop affecting Tesla’s business outcomes.
Chen, Y., & Perez, Y. (2018). Business model design: Lessons learned from Tesla Motors. In D. Attias & P. da Costa (Eds.), Towards a sustainable economy: Paradoxes and trends in energy and transportation (pp. 53-69). Springer International Publishing.
Dess, G. G., McNamara, G., Eisner, A. B., & Lee, S. (2021). Strategic management: Text & cases (10th ed.). McGraw-Hill Education.
Tesla, Inc. is an American manufacturer that primarily focuses on the production and development of electric cars, solar panels, and devices for energy storage. In this paper, PESTEL, Five Forces, and SWOT analyses will be provided to evaluate the company.
PESTEL
The PESTEL (“Political, Economic, Social, Technological, Environmental and Legal”) analysis focuses on the macro-environmental factors that can influence the company, its strategic management, and business (Goncharuk 37). The PESTEL analysis is a part of the external analysis of the company because it analyzes external factors that need to be considered by the executive team (Goncharuk 37).
Political Factors
The government policies strive to provide more programs and technologies that will reduce the adverse influence of carbon emissions on the environment. Production and manufacture of electronic vehicles are supported by the American government with the aid of various programs (U.S. Department of Energy). Therefore, Tesla, Inc. has the opportunity to use government subsidies to improve its performance in the market.
Economic Factors
The popularity of electric vehicles, sustainable environmental strategies, and renewable energy devices are growing. It is reasonable to assume that Tesla Inc. will be able to make its products more attractive to the customers. Nevertheless, as vehicles are considered as a major investment, any economic crises and issues might lead to decreased sales. Therefore, economic instability is a direct threat to Tesla Inc.
Social Factors
Environmental considerations and issues become more alarming for consumers, which implies that greener vehicles and devices that correspond with the “healthy” lifestyle will become more popular during the next decades. The use of alternative energy sources is encouraged not only by the public but the environmental and official governmental organizations as well (Da Rosa 19). Therefore, these trends present opportunities for expansion.
Technological Factors
The main issues with technology highly crucial for Tesla Inc. are batteries’ sustainability and infrastructure for electric vehicles. First of all, batteries for electric vehicles are still too expensive to be produced for the mass market. This issue is a threat to Tesla Inc.’s expansion in the local and global markets. Second, although the USA provides the infrastructure for electric vehicles, many of the stations still need to be built to cover clients’ needs. Therefore, Tesla, Inc. is dependent on the development of infrastructure for electric vehicles.
Ecological Factors
Ecological factors present several opportunities for the company. First, the public concern with climate change positively influences the promotion of electric vehicles that the company produces. Second, the government’s focus on climate change and renewable energy provide the company with additional support in addressing environmental programs. Third, the company’s mission perfectly aligns with the existing trend towards low-carbon lifestyles and environmental awareness.
Legal Factors
The main legal factor that influences the sales and distribution of products is the ban on direct sales from the company to the client. Restrictions and bans are used as a tool to protect automobile dealers, although it is also possible that these legislations are passed because of the dealers’ lobby in some states (Stolze 293). Nevertheless, the company has the opportunity to expand itself to the foreign markets (Europe and Asia), where such restrictions are less common. Furthermore, not all states in the USA support these restrictions.
Porter’s Five Forces Analysis
The Five Forces analysis was developed by Michael Porter. It is based on five factors: competitive rivalry, bargaining power of buyers, bargaining power of suppliers, the threat of substitutes, and the threat of new entrants (Porter and Heppelmann 67).
The rates of competitive rivalry in the industry are high. Tesla Inc. has to compete with both electric and non-electric car manufacturers. Although there are not many major players, aggressive promotion and innovations of other enterprises can adversely influence the company’s ability to compete.
The low switching costs in the industry are a serious factor because it allows customers to choose between products provided by other companies (strong force). Nevertheless, there are few substitutes for Tesla Inc.’s products, which reduces customer’s bargaining power. It should also be noted that customers buy electric cars in a very limited amount: one, two, possibly three cars per purchase. A low volume of purchases also reduces customer’s bargaining power.
The bargaining power of suppliers is moderate because Tesla Inc. cooperates with several suppliers that only partially control the distribution of their products (Mangram 181). Nevertheless, one should also point out that the company highly relies on the supplies of other companies because it cannot continue the manufacture of products without these supplies. Some of the suppliers are major players in the industry, while others are not, which moderates the force.
The threat of substitutes is high because of the low switching costs: customers might decide to purchase a car from another manufacturer because the difference in costs is not crucial. Nevertheless, there are not many substitutes that can compete with Tesla Inc. in all factors, which weakens the threat.
The threat of new entrants is low because the industry has high entrance levels, demands serious investment, and the business in the industry is quite costly. Therefore, the company may see the threat of new entrants as low force.
SWOT Analysis
The SWOT analysis reviews the strengths, weaknesses, opportunities, and threats that the company faces (Goncharuk 36).
Strengths
The use of innovation and modern technology is a definite strength of the company. It is one of the most famous manufacturers of electric vehicles in the world. What is more, these vehicles are highly innovative and include all the technologies that customers might demand. The next strength of Tesla Inc. is the high brand awareness that allows the company to be more competitive in the market. Customers are more prone to rely on a recognizable, visible brand than on a newcomer. At last, the company takes a strict approach to the control of the manufacture, which results in high-quality products.
Weaknesses
The main weakness of the company is the high cost of its products. Many customers cannot afford these products, and the company has to focus on a limited circle of clients. Furthermore, this weakness also does not allow Tesla Inc. to expand and raise brand awareness in other countries, including the developing ones. Tesla, Inc. is mostly present in the American market, which adversely influences its ability to promote products in Europe and Asia.
Opportunities
The opportunities for the company are linked to its weaknesses. The main opportunity is to become present in the global market by promoting the products in markets that are not located in the USA. Global expansion will possibly lead to the expansion of supply chains as well (Mangram 186).
Threats
The threats were discussed above: instabilities in the economy, competitors, and legal issues linked to the dealership can adversely influence the distribution and sales of the products. It is evident that clients will prefer not to purchase expensive products during economic crises, and competition among rivals will increase. Furthermore, dealership legislations can also lead to problems with sales because customers will have limited support from the company (only via online resources in some states).
Works Cited
Da Rosa, Aldo Vieira. Fundamentals of Renewable Energy Processes. Academic Press, 2012.
Goncharuk, Anatoliy G. “Banking Sector Challenges in Research.” Journal of Applied Management and Investments, vol. 5, no. 1, 2016, pp. 34-39.
Mangram, Myles E. “The Emperor’s New Clothes: A Framework for Market-Based Management at Tesla Motors.” Journal of Strategic Management Education, vol. 8, no. 3, 2012, pp. 179-204.
Porter, Michael E., and James E. Heppelmann. “How Smart, Connected Products Are Transforming Competition.” Harvard Business Review, vol. 92, no. 11, 2014, pp. 64-88.
Stolze, Eric D. “A Billion Dollar Franchise Fee? Tesla Motors’ Battle for Direct Sales: State Dealer Franchise Law and Politics.” Franchise Law Journal, vol. 34, no. 3, 2015, pp. 293-309.
U.S. Department of Energy. “ATVM Loan Program.” energy.gov, n.d.. Web.
Tesla is an American company that deals with the manufacturing and sale of electric vehicles. It also manufactures and sells rechargeable batteries. The company has a Corporate Social Responsibility that is active. Although the company’s CSR has few shortcomings, the management has worked on a credible and sound policy.
Brief Overview of Tesla Company
Tesla Motors, Inc is an automotive and energy storage company in the United States of America. The company started operations in the year 2003. The founders, Martin Eberhard and Marc Tarpenning, financed the company before they could find other financiers. Elon Musk joined the company and became one of the leading investors in the enterprise (Fialka, 2015). The company makes designs, manufactures, and sells electric cars.
It is also responsible for electric vehicle powertrain components and battery products. It is a public company and has listed on the NASDAQ stock exchange as TSLA (Fialka, 2015). The listing enabled the company to find more capital for the expansion of its services. The Tesla Roadster electric sports car was the first major production that brought the company to the limelight. It was the first of its kind among electric vehicles because it was fully electric (Pohl & Tolhurst, 2010).
Tesla Company.
It helped the company to speed up with the development of its second car. The Model S. It was a luxury sedan. It continued with a series of new launches like the Model X and the Model 3. Its Model S won several awards and accolades as the best electric and most selling car by the year 2015 (Pohl & Tolhurst, 2010). Other products are the home and office battery charging equipment. Its cars use electric batteries that need charging as compared to other gasoline-fuelled cars.
As a result, Tesla has installed quite some high powered Superchargers (Visser, 2011). It has also partnered with several shops and restaurants to serve its customers with fast chargers. The company’s CEO foresees a situation where the company would become an independent automaker with affordable pricing for its models. The anticipation is that by the year 2017, they would launch the newer version of Tesla Model 3 with great features at an affordable consumer price (Visser, 2011).
Tesla CSR Initiatives
The models that Tesla manufactures are already environmentally friendly. They do not emit gas in the air. They also do not pollute sound. It was one of the main goals that led to the founding of the company. It would build motor vehicles that are zero pollution to the environment. Tesla did the unthinkable thing by publicizing its patents for environmental purposes. Thus, it became the best company to use as an example of what is possible in environmental concerns.
CSR Activities of Tesla
When it comes to technology, Tesla has invested heavily in Research and Development. Many companies rely on Tesla’s innovations to complete their manufacturing concerns. For instance, Mercedes-Benz uses Tesla’s powertrain, while Toyota uses its motor (Fialka, 2015). Other companies like General Motors are eager to know another new thing that Tesla would come up within the market (Fialka, 2015).
Tesla has been known to be in the right place at the right time. When the company came into being, there were other car companies. But it established its niche and had become the best company for electric devices. It won the Obama Administration’s cleantech initiative in 2010 and got the government’s $465 Million subsidies in the form of a loan (Pohl & Tolhurst, 2010). It has since repaid the loan and cleared it.
Tesla has also managed to overtake companies like Ford, which had also started to produce electric cars. Although the Roadster could not compare to Ford’s F-150, it enabled Tesla to establish in the market. It has since expanded this dream by launching Model S. Its third invention would-be Model 3, which would now be affordable for many people.
Below is the CSR rating of the company since the year 2014 in comparison with other companies;
The company has also grown because of teamwork. The company’s CEO Musk has built a team in the enterprise that is eloquent at its work. The company’s staff know their limits. They have demanding tasks. With the encouragement from the CEO and the board, they work to better the business’s vision and build their careers (Pohl & Tolhurst, 2010).
Tesla has a good network of channels. It has managed to own all its distribution channels to control its flow of business (Fialka, 2015). The desire to be in charge and make the sales move has enabled these channels to become profitable. The company has moved from years of loss-making to profitability. With the development of the Gigafactory, the company would be selling fleets of cars. It would significantly improve its ratings.
The company also faced a financial crunch in its early years. It has since become profitable after getting more finance to support the business. However, the company has won the consumers’ trust. It has been through a long journey of struggle and increased pressure. Some of its cars were involved in grisly accidents. It dented the image of the company. However, most of the accidents resulted from careless driving. The cars are durable and efficient. Even the National Highway Traffic Safety Administration has given the products a clean bill of health (Simpson & Taylor, 2013).
Tesla Motors Financial Performance (Simpson & Taylor, 2013).
Tesla CSR Issues and Strategy
Many companies keep their patents private would sue for any infringement. Not so for Elon Musk and Tesla. The CEO thinks it is important for everyone to consider keeping the environment safe for future generations (Aras & Crowther, 2009). Apart from just making a profit, the CEO and chairperson of Tesla believes that the company would not solve all the world problems alone.
Therefore, the company planned the release of its valuable patents. It would be great that every major company uses or develops what Tesla has done to promote a clean environment. The CEO wants other competitors to assist in the reduction of the emission of greenhouse gasses coming from gasoline-powered cars (Okpara & Idowu, 2013). The company believes that the process would also bring down the costs of electric vehicles so everyone can afford them. Although the shareholders were not happy at first, they saw that the reasons were valid. Tesla’s stock price per share increased by about $ 30, and it showed that he made the right decision (Aras & Crowther, 2009).
Patents sometimes hinder progress. They only enrich the legal fraternity and build dominance for a few corporations in the market. It was the best decision that enabled the company to improve its CSR. It has pushed for the auto industry to think long term by investing in the battery-powered vehicles. CSR is not just about compliance. A serious organization would provide leadership in CSR (Okpara & Idowu, 2013). Tesla has provided leadership in the decision is made. It would just need to work extra hard in matters of gender. Since electric cars are expensive, its work on Model 3 would make it all-inclusive.
References
Aras, G. & Crowther, D. (2009). Global perspectives on corporate governance and CSR. Farnham: Gower. Web.
Fialka, J. (2015). Car wars. New York, NY: Thomas Dunne Books, St. Martin’s Press. Web.
Okpara, J. & Idowu, S. (2013). Corporate social responsibility. Berlin, Germany: Springer. Web.
Pohl, M. & Tolhurst, N. (2010). Responsible business. Chichester, U.K: John Wiley & Sons. Web.
Simpson, J. & Taylor, J. (2013). Corporate governance, ethics, and CSR. London, UK: Kogan Page. Web.
Visser, W. (2011). The age of responsibility. Chichester, West Sussex: John Wiley & Sons. Web.
Tesla is a well-known brand that achieved popularity and loyalty despite being on the market for a relatively short time. The automotive industry in itself correlates with high competition among the different corporations, yet in Tesla’s case, the circumstances are more complex. The factor that drives the competition and creates unique advantages and disadvantages is the electric automotive sector, which is nuanced. For the competitive environment for Tesla to be examined, Porter’s Five Forces will be applied, and an analysis will be conducted regarding the external and internal environments of the organization.
Rivalry Among Competitors
As mentioned prior, the electric vehicle market is yet to be fully developed. Nevertheless, Tesla’s rivals are the automotive brands that manufacture electric cars alongside fossil-fueled ones. The biggest rival for Tesla Model S, for example, is the BMW i4 (Graham & Brungard, 2021). However, Tesla is the only corporation offering only EVs, which gives the organization a competitive advantage.
The threat of New Entrants
The threat of new entrants is relatively low, which is facilitated by the high cost of creating a company specializing in cars and electric vehicles specifically. Extensive investment in research, technology, manufacturing, and marketing creates challenges for potential entrants. As a result, the potential negative impact on Tesla is minimized.
The Threat of Substitute Products
The threat of substitutes is higher than the threat of new entrants, yet the lack of opportunities for new companies to be established minimizes the current factor. However, Tesla encounters the aforementioned threat because multiple corporations operating in the automotive industry are investing in EVs. Thus, moderate risks correlate with the appearance and development of substitute products.
Bargaining Power of Buyers
The number of suppliers is relatively low to the number of buyers, which puts Tesla at a favorable competitive advantage. Moreover, as an electric vehicle company, Tesla is often promoted through governmental implementations that allow consumers to access vehicles more easily through tax cuts and subsidies. Thus, from this perspective, buyers do not have extensive opportunities to impact their dependence on the brand.
Bargaining Power of Suppliers
The bargaining power of suppliers is relatively high as electric vehicles are relatively new technologies requiring raw materials and elements that are not as widely available. Researchers mention the batteries that Panasonic manufactures for Tesla compared to the more affordable Chinese alternatives that BTW incorporates in its EVs (Jiang & Lu, 2018). In this case, suppliers provide raw materials and elements for vehicles from all over the world, which means different regulations apply. The vast number of actors within the supply chain as well as the global environment impose a relative threat regarding supplier bargaining power.
Strengths
Tesla’s main strengths are its nuanced approach to the task environment and business strategies. The company has created a name that individuals associate with innovation, comfort, and uniqueness. It is the only company that manufactures exclusively electric cars and has revolutionized the business sector. Needless to say, such approaches facilitate interest among potential consumers and loyalty toward Tesla products.
Weaknesses
Two weaknesses that can be highlighted are the price and the distribution channels. Tesla offers luxury cars that cannot compete in affordability with fossil-fueled automobiles. Moreover, researchers point out that the company sells products online and through exclusive stores (Chen & Perez, 2018). Car dealerships cannot offer Tesla models, which limits sales.
Conclusion
Tesla’s competitive advantage regarding its external environment includes low rivalry among competitors, the threat of new entrants or substitute products, and the bargaining power of buyers. On the other hand, supplier power of bargaining is a potential limitation since sourcing raw materials involves multiple actors, the industry is relatively new, and affordable alternatives are challenging to acquire. In regards to the internal environment, Tesla’s strengths include innovation, intellectual capital, and uniqueness, while the high price and limited distribution channels are weaknesses.
Tesla, Inc. is among the most successful businesses nowadays, not least due to the reputation of the electric cars it produces that are considered super-efficient worldwide. However, it is even more challenging to attract potential purchasers, which requires developing a successful business model through strategic planning. In the case of Tesla, the model involves working in several directions at the same time, both in terms of marketing and product design.
SBU in the BCG Matrix
Identifying an SBU
An SBU, which stands for a Strategic Business Unit, is a separate unit of a company, whose activity can be planned independently from the company’s general performance. A division, a product line, or, in some cases, even a particular product or brand can be a separate strategic business unit (iEduNote). Therefore, each model of Tesla electric car, for instance, Model 3, may be regarded as an SBU, as its production is apparently autonomous from that of any other model.
BCG Matrix
The BCG matrix is a widespread business analytical tool designed by the Boston Consulting Group. Notably, it “helps in analyzing the position of a strategic business unit and the potential it has to offer” (Morgan, 2018). The process of analysis involves placing the SBU on a two-dimensional chart, whose Y-axis represents the future market growth, and X-axis – the relative market share of the SBU. The latter is computed as a proportion of the SBU’s market share to that of its closest competitor.
Through the analysis, the SBU can position itself in one of the four quadrants the chart is additionally divided into, specifically, Stars, Cash Cows, Question Marks, or Dogs. Those are the conventional names of four different combinations of future market growth and relative market share, depending on which of the two variables is high or low (iEduNote). In this paradigm, a high-growth and high-share product is classified as a star, which is a metaphor for a profitable business. According to Loveday, the above-mentioned Tesla Model 3 is currently the world’s most popular electric car, which presupposes a stably increasing demand (2020). Eventually, the growth will become slower and downgrade the model to a cash cow, but at the given stage, it is a star.
Growth Strategies the Company Uses for the SBU
The primary growth strategy of Tesla involves intensive market penetration, and Model 3 is apparently not an exception. The most probable objective of such an approach is “to grow the company through aggressive marketing to increase sales revenues” (Grades Fixer, 2019). Product development occupies the second position, notably, Tesla design and implement new products such as solar panels, charging stations, or electric sport vehicles. The novel goods meet the demands of a broader audience; in addition, the company focuses on environmental sustainability, which is highly topical in modern society.
Also, Tesla is known to enter brand new, rising markets and then adjust the products to the new types of customers they find there. A strategy of that kind does not purely enable a sales increase but also illustrates the corporate mission statement: “to accelerate the world’s transition to sustainable energy” (Grades Fixer, 2019). Finally, diversification is also worth mentioning in the list of the growth strategies Tesla use, which lies in designing different products and further expansion.
Ideas to Influence Consumer at All Stages
The buyer decision process has five stages, at each of which the customer may theoretically change their mind. Therefore, it is critical to develop methods of influencing the customer throughout the procedure in order to continue them, not simply attract them in the initial phase. The five stages are actually as follows: need recognition; information and alternatives search; evaluation of alternatives; purchase decision; post-purchase behavior.
The early stage requires the introduction of electric vehicles as such since they apparently remain a brand new category of goods. Here, it is most suitable to demonstrate the customer how possession of a vehicle would increase their mobility and how that of an electric one would make them independent from fuel prices. At the following stages, it is reasonable to offer as many options as possible, which Tesla actually does by means of product development and market penetration. Finally, the cars have to be of sufficient quality to satisfy the customer’s needs and encourage them to cooperate with the company in the future.
Marketing Channels
Tesla, Inc. employs several channels for promoting their products, due to which their approach to communication is referred to as the promotional mix. Thus, the company invests most intensively in viral marketing, although this is “unusual in the automotive industry” (Kissinger, 2018). This channel apparently improves brand awareness, hence strengthens the association of an electric car as such with Tesla. Traditional channels, such as personal selling or public relations, enable a closer connection with consumers.
Positioning Map
The below diagram illustrates the position of Tesla, Inc. according to their target audience with a reference to Dudovskiy (2021). The statistics show that over 80% of all electric car buyers are older than 30 (Statista, 2018). In addition, it has been mentioned above that Tesla focuses on new markets, which requires competitive prices. The two factors allow assuming that Tesla’s main rivals could be plotted in the same quadrant.
Model 3
Value Offering
The actual product is Tesla Model 3, a mid-size electric vehicle with, optionally, one or two engines. The core product, by definition, “conveys the underlying benefits,” which include powerful batteries and a comfortable interface that simplifies driving significantly (Dymond, 2020). Finally, the augmented, or extended, the product is the umbrella term for the features and attributes. In the given case, those are the relatively low price and several modifications of the model that have different technical characteristics.
Life Cycle Stage
The product life cycle has four stages, notably, introduction, growth, maturity, and decline. The above-mentioned fact that Model 3 has become the world’s most popular electric vehicle places it in the position of growth. Normally, it is followed by a sales rate plateau and that a gradual downward trend. Lyyra and Koskinen, however, argue that “any product can be open-ended and continuously in the making” (2018). The most relevant strategy to enable that involves constant updates and introducing new modifications, which Tesla, Inc. actually does.
Marketing Channel System
Considering the parallel use of several marketing channels that are described above, Tesla’s marketing system is apparently multi-channel. As long as Tesla, Inc. prefers personal selling and other ways of direct communication with consumers, the only intermediary is the internet provider responsible for viral marketing (Kissinger, 2018). Both schemes, with this intermediary and without it, are shown in the map below.
Conclusion
Tesla, Inc. is intensively developing, notably, producing new goods and occupying new markets, due to its multi-dimensional marketing. Specifically, the company uses several marketing channels, both traditional and digital ones, the most essential among which is viral marketing. In addition, Tesla tries to avoid intermediaries in their interaction with customers, which allows for maximal awareness of consumer needs. The variety of models and modifications is another important reason why Tesla electric cars have gained their current popularity.
References
Age distribution of respondents who were likely to purchase an electric vehicle in Southeast Asia as of January 2018. Statista. Web.
BCG matrix: Definition, chart, explanation with examples. (n.d.). iEduNote. Web.
Dudovskiy, J. (2021). Tesla segmentation, targeting and positioning: Overview. Business Research Methodology. Web.
Dymond, R. (2020). Did you know that every product has 3 dimensions? Dymond Digital. Web.
Four growth strategies used by Tesla Motors. (2019). Grade Fixer. Web.
Kissinger, D. (2018). Tesla, Inc.’s marketing mix (4Ps) analysis. Panmore Institute. Web.
Loveday, S. (2020). Tesla Model 3 is the world’s most popular electric car by far. InsideEVs. Web.
Lyyra, A., & Koskinen, K. (2018). How Tesla is changing product life cycle in the car industry. LSE. Web.
Morgan, S. (2018). BCG matrix and VRIO framework for Tesla Motors. Case48. Web.
