Category: Tesla

Abstract

Tesla, Inc. is one of the leading manufacturers of electric cars in the global market. The company’s primary market is in North America and Europe. However, stiff competition in these markets has made it necessary for the firm’s management to explore other untapped markets. In this paper, the focus was on determining how the firm could make a successful entry into the United Arab Emirates’ market.

The paper has identified external environmental factors that may affect the firm’s capacity to enter the market. The local car industry in the country has also been analyzed to enable the marketing team of Tesla to understand what to expect. It is suggested that the company should start by selling its luxury cars to create a strong brand in the local market before introducing other products such as solar panels. Exporting cars manufactured in the United States to the UAE would be appropriate given the fact that the country lacks skilled labor that would enable the firm to set up its manufacturing plant overseas.

Tesla Inc., previously known as Tesla Motors, is an American electric car manufacturer that has its headquarters in Palo Alto, California. Elon Musk, Martin Eberhard, Marc Tarpenning, J. B. Straubel, and Ian Wright were inspired to start an electric company following the initial trials that had been made by GM. The team founded this company in 2003 target a new market segment that wanted environmentally friendly cars (Doeden, 2015).

Since then, the company has experienced impressive growth in the United States market and even considered venturing into the manufacturing of solar panels. Gleam (2014) explains that Tesla has always focused on environmental conservation and its products are designed to have the least possible impact on nature. As the Tesla brand continued to gain popularity in the market, the firm considered moving into the luxury cars market as a strategy to achieve growth.

These cars have gained acceptance in North America and European markets. The decision of the management of this firm to explore foreign markets is aimed at enhancing its market growth. The United Arab Emirates offers an opportunity for growth. When entering this market, the management of Tesla should understand opportunities and threats in this market to define appropriate strategies that it can use to achieve success. In this paper, the researcher focuses on how this company can make a successful entry into this foreign market despite the expected challenges. The product of interest in this report is its luxury cars.

Distinctive Features of Doing Business in the United Arab Emirates

The United Arab Emirates is currently one of the most preferred overseas market destinations for American companies seeking to expand their operations to the Middle East and parts of Africa. It is important to understand distinctive features of doing business in this country for Tesla Inc. to achieve the desired success in the market. According to Ahmed and Hamdan (2015), one of the distinctive features of doing business in the United Arab Emirates is the unique composition of its populace.

Unlike some of its neighbors, the UAE has a diversified population composed of people from Africa, India, North America, Europe, and other Asian countries that have relocated to major cities like Dubai because of employment or business endeavors. Another unique feature of this market is that the country’s legal system is governed by Islamic principles. As such, a foreign business entity would need to understand these principles to operate with ease in this country. It is also important to note that the economy is growing rapidly and government is spending significant amount of national resources to promote diversity (CIA World Fact Book, 2019).

When planning to enter the United Arab Emirates’ market, the management of Tesla should be ready to deal with external environmental forces that may have a direct or indirect impact on its ability to realize success. The business environment in the United States is significantly different from that in the UAE. It means that the business model that the firm has been using in the home country may not be appropriate in this new market.

As Turner (2015) advises, one of the first steps that a firm should take when entering a new market is to conduct an analysis of the external environment within the new country. Factors such as competition may affect the ability of a firm to achieve the desired level of success in the market. Failure to understand the level of competition in the market may have serious consequences on a firm’s operation (Information Resources Management Association, 2017). It is expected that Tesla Inc. will have to overcome stiff competition in the UAE because of the existence of other car brands in the market. PESTEL analysis would be appropriate in facilitating the analysis of this new market.

PESTEL Analysis

This marketing tool helps to understand the political, economic, social, technological, ecological, and legal environmental factors. The political environment in the United Arab Emirates is significantly different from that in the United States. In the home country, society has one of the advanced democracies in the world where the political class is expected to rule for a given period before handing over power to another party.

Doeden (2015) explains that in such a setting, the business community is often not sure about the policies of the new administration. Some of their new policies may have a significant impact on the firm. In the United Arab Emirates, a constitutional monarchy has been embraced as the appropriate form of leadership. The ruler of the country has no term limit. He has the responsibility of appointing top-ranking government officials.

The country has remained politically stable over the last several years, creating an enabling environment for the business class. Leaders of this country have been keen on promoting foreign direct investment by enacting policies that protect foreign businesses in the country. Such policies will help Tesla to achieve growth in this market. Political stability, as Turner (2015) observes, is one of the critical environmental factors that define the ability of a firm to operate in a given market.

The economic environment is another aspect that defines the firm’s potential to realize growth in a new market. The United Arab Emirates may have a smaller economy compared to that of the United States, but Doeden (2015) explains that when analyzing the economic environment of a new market, the focus should always be on the capacity of the locals to purchase goods or services of a given company. Tesla cars are high-end products that target the rich and the upper middle class.

The price for these products is significantly higher compared to other brands such as Toyota and Nissan, which are also common in the country. According to Turner (2015), although the UAE has a large population of immigrant workers whose purchasing power is relatively low, locals have the financial capacity to purchase these products. The United Arab Emirates has a GNI per capita of $ 74,410, making it the fifth richest country in the world in terms of citizen’s purchasing power (Global Entrepreneurship Monitor, 2018).

It is richer than the United States, Canada, the United Kingdom, and Germany when this economic index is used to compare these countries. The index shows that although the country may be small in terms of its population, the purchasing power of its citizens is high, making it one of the most attractive markets in the world for high-end products such as Tesla cars.

The social/demographical environment in the new market is another factor that the marketing department of Tesla should not ignore. The UAE is an Islamic country that is governed by strict Islamic principles and cultural practices (Subramanian et al., 2017). Men, who in many families control financial resources, often make purchasing decisions. They decide which cars their family should buy, the number that is necessary depending on the need and financial capacity, and when such purchases should be made.

When designing an appropriate marketing policy for such a market, care should be taken to ensure that the message is convincing to decision-makers. In cities such as Dubai, the majority of the population is composed of foreigners (Word Bank, 2018). As such, it is easy for a foreign firm such as Tesla to blend in and operate without having to deal with strict cultural practices. The majority of the population are men, especially because of the high number of economic migrants in major cities in the country. The social environment is tolerant towards the product and business model of Tesla.

Technology is becoming one of the most important environmental factors in the business community. Tesla is operating in an industry that is guided by technological advancements. In the United Arab Emirates, society has embraced technology in their ways of life (CIA World Fact Book, 2019). Online marketing is becoming popular in the country. Although customers purchasing expensive products such as Tesla cars still prefer going to showrooms to try the commodity before making their purchase, most of them rely on information available on the Internet to determine the appropriate car they need to purchase.

It means that online reviews and other information available online directly influence the purchasing decision of customers (Starr & Gupta, 2017). Technology also defines the quality of products that customers purchase. Customers prefer purchasing cars that offer them maximum comfort, safety, performance, and high cosmetic value. Every time a new technological concept emerges in the car industry, customers expect new cars to have it. The management of Tesla will have to ensure that its products are designed to meet these needs.

Ecology is a major concern in the current business environment. Turner (2015) explains that climate change and global warming are concepts that have gained popularity in recent years. Many governments are currently capping the carbon emissions that firms must abide by within a given period. Tesla may not have any significant challenge in meeting emission levels in this foreign market because its production plant is in the United States.

However, it will need to find ways of ensuring that its products are fuel-efficient. Some of the developed countries in Europe are now moving towards electric or hybrid cars as a way of reducing carbon emissions. Tesla has been at the forefront in the production of hybrid cars (Robinson, Fallon, Cameron, & Crotts, 2016). It will need to ensure that it understands the needs of the targeted market. Most of the rich families in the UAE often purchase fuel guzzlers such as Lamborghini. It means that they may not have a problem purchasing some of Tesla’s high-end cars that consume big amounts of fuel. However, that should not deter this firm from continuing on its path towards the production of fuel-efficient cars.

The legal environment is another external environmental factor that should be considered as identified in this model. According to Doeden (2015), it is not possible for a company to operate in an environment that lacks law and order. A firm needs to be protected from external stakeholders to ensure that agreements made are binding and that no party would be allowed to illegally acquire a company’s asset or cause malicious damage.

The United Arab Emirates has strict policies and laws that guide the business community. Although the government has created an enabling business environment that is attractive to foreign firms, it has laws that regulate how they should operate in the country. A good example of such policies is the consumer protection law (Rangarajan, Sharma, Paesbrugghe, & Boute, 2018). The law forbids a firm to promise customers values that they cannot deliver.

It means that when developing a promotional message in the market, care should be taken to ensure that the actual product has the exact qualities explained in the promotional campaign. When Tesla decides to enter this market, it should follow the set regulations needed to make it a legal entity in the country. It should pay taxes and other fees set by the Emirati government to avoid legal sanctions. Turner (2015) argues that in the UAE, laws and regulations guiding the business community are meant to promote economic growth.

Risk Assessment

Tesla cars have remained popular in the United States and European market. However, Turner (2015) notes that in recent times, the firm’s financial records show that it is struggling to achieve sustained success. The decision to explore the new market is crucial as the firm struggles to increase its market share and profitability. The United Arab Emirates is one of the most attractive markets that the firm can target. However, the marketing unit of this company should assess and understand the primary risks that Tesla will face once it starts its operations. The following are some of the major factors that should be considered when assessing these risks.

Political Risks

Political risks may have serious ramifications on a firm operating in the foreign market. The United Arab Emirates has remained politically stable despite the Arab Spring that affected many neighboring countries in the Middle East and North Africa (MENA) region (Wang & Ahmed, 2016). The stability is beneficial to local and foreign firms operating in the country. The warm relations between the United States and the UAE will also benefit Tesla. It will not be targeted in this foreign country primarily because it is an American firm. Doeden (2015) explains that the concept of “buy local – build local” often affects foreign firms in a given market. However, such policies do not exist in the UAE. It means that political risks in the foreign market are significantly lower.

Currency Risk

Currency risk is another factor that a firm should consider when planning to enter a new market. Gleam (2014) explains that the risk arises when there is an erratic change in the price of one currency in relation to another. It is important to note that Tesla will continue to manufacture its products in the United States. The products will then be shipped to the United Arab Emirates. When setting the price of its products, this firm will depend on the current exchange rate.

The problem arises when the local currency is devalued, which would force Tesla to increase its products’ prices. Customers may not understand the reasons why the price has to increase. The price has remained stable against the dollar for the last few years (Ratten, Braga, & Marques, 2017). As the economy of the country continues to be strong, the local currency is expected to remain strong.

Economic Risks

Economic risks may have a serious impact on this company when it starts its operations in the foreign market. As a luxury product, this firm relies on the strength of the economy to ensure that it can continue with its sales in the market. In cases of an economic meltdown, customers often avoid purchasing luxury products (Wang & Ahmed, 2016). Locals would consider purchasing basics needed for survival. The economy of the United Arab Emirates has been growing steadily and it is expected that the growth will continue in the coming years. It may not be possible to predict when a country will suffer an economic breakdown (Kumar & Bhaskar, 2014), but given that it has diversified its economy and remains one of the leading oil producers, the risk decreases.

Property Rights Risk

Property rights risk is another factor that the management of this company should consider as it makes a decision to spread its operations to this Middle Eastern country. In the manufacturing industry, it takes time to design a product that meets or exceeds customers’ expectations. As such, the property right should be protected by ensuring that no other company copies the design. In the UAE, such a threat is relatively low. All the rival companies operating in this market have their manufacturing plants in other countries. The government of the UAE is also developing punitive policies meant to discourage infringement of property rights. The firm should not worry about this risk.

Industry Risks (Porters Five Forces)

When conducting a risk assessment in the new market, the management should not neglect conducting an analysis of the industry within which it will operate in the country. Apart from the external environmental factors discussed using PESTEL analysis model, this firm will need to identify possible risks that it will have to face in the foreign market. Understanding these risks would define the appropriate business model that this firm will need to embrace. Figure 1 below is Porter’s five forces model that can help the marketing unit of Tesla to understand industry risks.

The threat of new market entrants is one of the concerns that a firm should have when planning to make an entry into a new market. According to Moreno-Gómez, Lagos, and Gómez-Betancourt (2017), the government of the United Arab Emirates has eliminated restrictions that would limit the ability of foreign firms to enter the local market. The country is keen on diversifying its economy and reducing its reliance on the export of oil and gas.

This means that while Tesla will find it easy to enter the Emirati market, it will face a serious problem because of the ease with which other rivals can enter this market. The company will need to find competitive ways of managing the rivalry that is expected to increase in the market (Kamila & Bhattacharjee, 2014). In fact, some of the top brands in the car industry are already operating in this market, something that would make it difficult for this firm to achieve rapid market growth.

The threat of substitute products is often another factor that may affect the ability of a firm to achieve growth in the market. Doeden (2015) argues that when a product has a close substitute, it has to compete against them by offering superior value at competitive prices. Tesla offers high-end cars in the market. These products do not have a similar competitor. It is possible for an individual to opt for a motorcycle, a plane, or a yacht as the preferred means of transport.

However, it is almost impossible to avoid the use of cars. A yacht and a plane may be restricted in terms of places they can be used. Motorcycles may not be appropriate for most rich clients in the United Arab Emirates. This means that it is almost impossible to find a perfect substitute for cars in this market. The threat of competitive products in this market is, therefore, significantly lower or non-existent.

The bargaining power of buyers may be a threat to the market, as Qasim (2014) observes. When customers have the capacity to decide on the terms of sales, they would ensure that they get the best deals even if a firm may end up with losses. On the other hand, if the bargaining power of buyers was low, then a firm could be assured of making favorable trade agreements that would guarantee good profits. In the United Arab Emirates, the bargaining power of a buyer can be looked at from two different perspectives.

On the one hand, the purchasing power of buyers can be considered high because of the number of other luxury car brands in the market. It means that they can choose to purchase their product from a firm that they believe offers them the best value. On the other hand, this power can be considered less when looking at what Tesla delivers to its customers. Just like other luxury car brands, such as Lamborghini, Tesla offers a unique quality to its customers which no other brand can match. When customers are looking specifically for these qualities and the unique brand name, their bargaining power is lessened. The nature of this kind of market makes it easy for a firm to negotiate favorable prices.

The bargaining power of suppliers affects a firm’s ability to make impressive profits in the market. The bargaining power of suppliers in the automotive industry, especially in the electric car segment, is relatively high. For instance, Tesla Inc. relies on Modine Manufacturing Company to provide the battery chillers it uses in its electric cars. Given that the chillers are used in an electric car, they have unique features that make them different from others used in standard cars.

The model is manufactured by a few firms, which have focused on renewable energy production and use. The high bargaining power of the supplier does not meant Tesla Inc. cannot negotiate for favorable deals that would enable it set competitive prices for its products. As Moreno-Gómez et al. (2017) observe, when the number of suppliers are relatively few, they have the power to dictate the pricing strategy in the market. Other suppliers such as AGC Automotive that sell windshields have low bargaining power because the product can be purchased from several other suppliers.

Competitive rivalry among existing firms is another issue of concern in the market. Gleam (2014) explains that when the rivalry is high, then it is possible for some firms to embrace dangerous practices such as price wars to edge out rivals. Tesla Inc.’s products target both the rich and the middle-class members of society. It means that the company has to compete against brands such as Mercedes Benz, BMW, and Porsche, which produce electric cars with similar value.

These business rivals have all developed some form of a business strategy because they have been in this market for a longer period than Tesla Inc. Competition in the electric car market is, therefore, high. However, this model of operations makes it easy for them to avoid price wars. Given that these products target the rich and the middle-class, the primary focus of the firm is to increase quality of their products beyond what rivals in the market offer. Although Tesla will not have to worry much about price wars when dealing with the rich segment of the market, there is the threat of customers purchasing products of rival firms.

When a family is planning to purchase one electric car and they purchase a Mercedes Benz, chances are significantly lower that in the same year they would consider purchasing a Tesla. The firm must ensure that it promotes its brand in the local market to deal with the threat (Hussain, Rigoni, & Orij, 2018). Tesla’s primary focus in the promotional campaigns should focus more on quality than prices. Most of the customers who purchase electric cars are sensitive about the need to protect the environment through a significant reduction in the emission of greenhouse gases. As such, Tesla should explain to its customers, through its advertisements, about the environmental benefits of using its products.

The Product and Rationale That Makes the Idea a Viable Business Opportunity

Tesla, Inc. offers electric high-end luxury cars that primarily target the mid-class to the rich in society (Chang, 2017). The products are ideal for a family unit or single individuals who want comfort and a sense of class when moving from one place to another. It is ideal for local citizens in the United Arab Emirates and foreigners who are in the country for business activities or employment. The country offers a viable business opportunity for Tesla Inc., which will enable it to expand its market share beyond North America and parts of Europe. According to Word Bank (2018), government policies, tastes and preferences of the market, environmental factors, and economic forces are in favor of the product offered by Tesla Inc.

The United Arab Emirates’ government is making deliberate effort to electric car revolution in the country. Ahmed and Rab (2014) explain that the need to reduce carbon emissions has forced the government to make steps that would encourage the use of electric cars as opposed to fuel guzzlers. In the city of Dubai, there are over 100 electric car-charging stations (CIA World Fact Book, 2019).

Most of them are strategically installed in airports, gas stations in major highways and streets, shopping malls, government offices, hospitals, near institutions of higher learning, and within residential areas. Dubai Electricity and Water Authority has initiated projects that would help increase the number of charging stations from the current 100 to 300 in the next few years (Word Bank, 2018). The government is keen on setting up these stations in other major cities across the country, especially in Abu Dhabi, Fujairah, Sharjah, and Ras Al Khaimah as a way of making it easy for users of these cars to have access to the needed energy. These stations are meant to encourage locals in the country to consider using electric cars as opposed to that which uses gasoline.

The UAE government has expressed its determination to protect the environment in different platforms. DEWA has different projects across the country, which is meant to increase the production and supply of renewable energy for domestic and industrial use (Word Bank, 2018). Tesla electric cars, which produces minimal amount of carbon dioxide gas, will help the government to promote the initiative of reducing greenhouse gases produced in the country.

Promoting this product will be easy because the government has been championing for the use of renewable energy sources for the past one decade. The promotional campaign for this product can run alongside that of government entities such as DEWA. Tesla would argue that its products are meant to help the government to achieve its vision of having a society where economic activities can continue normally without threatening the environment.

When discussing the product rationale in the new market, it is important to look at what competitors offer (Global Entrepreneurship Monitor, 2018). Mercedes Benz, BMW, and Porsche, which are the main rivals of this firm, offer limited number of electric cars. For instance, most of the Mercedes Benz cars are fuel guzzlers. It only has a small fraction of electric cars, mainly meant to test their viability in the international market. On the other hand, Tesla has always positioned itself as a company that primarily focuses on these environmentally friendly cars, which are convenient for different lifestyles and suitable for people of varying age groups.

Tesla can take advantage of the fact that it is exclusively focusing on electric cars in this country where the government is keen on protecting the environment. Its rivals are known to majorly focus on gasoline cars, and cannot position themselves as environmentally friendly car brands. The competitive edge that it has over these market rivals can enable it to create a pool of loyal customers in the UAE.

Market Entry Strategy and Specific Market Entry Plan

When making an entry into a new market, one of the most important factors that a firm must consider is the appropriate strategy that should be used. The strategy should be defined by the nature of the product, the size of the firm, its financial capacity, the nature of the new market, government policies, and the availability of skilled human resource. Hassan, Marimuthu, and Johl (2015) argue that making the wrong choice can be a costly process.

Realizing that a firm made a mistake in its market entry may force it to stop its operations in the foreign market, a move that may have devastating consequences. Sears, one of the largest retailers in North America, was forced to close its stores in Canada because of its poor market entry strategy. Wal-Mart was also forced to leave the German market because of similar mistakes (Wang & Ahmed, 2016). To avoid similar mistakes, Tesla must find an effective way of making an entry into the United Arab Emirates’ car market.

Exporting

Exporting would be the most appropriate strategy that this firm should consider using to achieve desired success. In this strategy, this firm will establish its shops in major cities such as Dubai, Abu Dhabi, and Sharjah. This firm needs to send some of its top marketing directors to head its operations in the country. Tesla will also employ locals to help in the sales of cars. Although this direct market entry through exportation may be costly, it will give the management of Tesla full authority to control activities in the new market. It will set up the business in a location it considers the most appropriate for this company.

It will also handle its clients based on policies that it has been using in the home market. Success will solely depend on the capacity of its own staff instead of relying on partners or other retailers. Another major benefit of this strategy is that the company will be in full control of the prices that customers are charged on the products (Choi, Jeong, & Lee, 2014). This gives the firm power over the value chain, making it easy to ensure that customers get the best value out of their purchase. Despite these benefits, this firm must be ready to incur the cost of renting the facility, paying its employees, and remitting tax and other levies to the government.

International Business Plans

When planning to expand a firm’s operation to the international market, Doeden (2015) explains that it is necessary to develop a business plan that would facilitate its operations in different countries. Gleam (2014) warns that a business plan that works well in the United States may not be effective in the Middle East because of the economic and cultural differences in the two markets. Tesla’s management must understand that strategies that it is currently using in North America and Europe may not work in the United Arab Emirates.

The external environmental analysis conducted above helps to identify unique factors within this country that would affect the normal operations of this company. When developing this plan, the management should focus on how to take advantage of the existing local opportunities while at the same time dealing with the possible threats and other challenges.

The plan is to export finished products to this country. Instead of working closely with local car dealers, the firm would open its own stores. In this plan, the firm will be aiming at having full control of the activities in the new market. As a new market, there is a certain impression that the management must create in the United Arab Emirates. The firm must convince its customers that it not only produces high-end products but also that it is concerned about its clients.

The after sales services such as free servicing of cars for a given period would help create a close relationship between the firm and its customers. Endearing itself to local buyers is crucial if this company is planning to introduce other products, especially its solar panels that are in demand in this country. Factors such as business capability, market research, market entry approach, marketing strategies, and international business administration should be considered in this plan.

Business Capability

When developing the business plan, one of the first steps that a firm’s management unit should consider is the firm’s capacity to embrace a given strategy. The chosen approach of making a direct entry into the foreign market requires financial muscle (Ahmed & Rab, 2014). The firm has to spend in hiring employees, paying rent to the premises used, and meeting other operational costs. Tesla has the financial capacity to use this strategy. The company’s revenue in the previous financial year was US$21.461 billion (Chang, 2017). It has the capacity to have two or three shops in this country as it plans to increase its products in the local market.

Market Research

According to Doeden (2015), one of the factors that make many firms fail in their international business plan is the inability to conduct adequate market research. Tesla must understand that the new market is unique. Instead of relying on stereotypical facts about people in the Middle East and their purchasing behavior, this firm should determine the truth through actual market research. It should determine what customers in this market like, factors that they consider when planning to make a purchase, their actual purchasing capacity, and their view about this brand. The information should then inform the strategy that this firm will employ in the market. It is also necessary to know that tastes, preferences, and purchasing power also change with time. These changes should be reflected in the firm’s plan.

Market Entry Strategy

Direct market entry has been selected as the most effective plan that would enable this company to create a name in the market for future expansion. In the plan, the marketing department should make a list of all the opportunities and threats in the market. A detailed strategy of how each of the threats will be managed should be provided in the plan. The management should also explain how it intends to take advantage of opportunities once it starts its operations. Such a detailed plan would be easy to implement once the firm starts its operations.

Marketing Strategy

The plan should outline marketing strategies that Tesla intends to use in the new market. Gleam (2014) suggests that social media should be given an emphasis when defining a marketing strategy. The majority of those buying luxury cars in the United Arab Emirates are young adults aged below 44 years (Ahmed & Hamdan, 2015). These people are active on social media such as Facebook, YouTube, WhatsApp, and Twitter. The firm should use these platforms to reach out to them.

It may also be necessary to use mass media to reach a wider audience within a short time, especially the elderly who are not actively using social media. Popular local television and radio channels can be used to pass along promotional messages. In these adverts, the firm should emphasize the quality of its product, features that make it unique, and why it is most appropriate for this market. The message should convince customers that this product delivers quality value to them. Adverts should also explain where customers could get this product and its current market price. Such detailed information about the product would help customers when making purchasing decisions.

International Business Administration

The administration of this firm’s overseas branches such as that in the United Arab Emirates should be defined. Most firms prefer having a parent country national heading the business with the support of top executives who are host country employees. Tesla should embrace this model of managing foreign branches. In this case, this firm will appoint one of its top executives in headquarters to go and head the new branch in the UAE as the general manager.

The firm should then identify talented locals to head its marketing, operation, and research units. The finance director can be a third country or a parent country national. The goal is to ensure that the general manager would have advisors who understand the local market. The manager can then define how to align the company’s vision, mission, and values with realities in the local market.

Summary

The United Arab Emirates offers Tesla an opportunity to expand its operations beyond North America and the European market. The firm would need to use direct market entry (exporting) as the appropriate strategy of entering the market. It is evident that the strategy has some challenges that the firm will have to address, but the main benefit is that it would grant the management of this firm full control in the foreign market. It will enable Tesla to create a close working relationship with its customers in the market. It will also help the firm form a positive image in the country without having to rely on local car dealers. The strategy was chosen because it will enable this firm to develop a strong brand that will be necessary when it decides to introduce other products such as solar panels into this market.

Conclusion

Tesla Inc. is a major manufacturer and distributor of electric cars in the global market. The firm’s financial documents show that it has been struggling to make a profit in the local market. The decision to find other markets would enable it to achieve the profitability levels it desires. The report has analyzed the external environment within the United Arab Emirates that would affect operations of this firm.

It is clear that although challenges exist, the market has no serious impediment that would bar this firm from achieving success. The analysis of the industry also identifies threats such as stiff competition and ease of entry to foreign firms. However, these are the same threats that this firm faces in the home country. As such, it is advisable for Tesla to use direct market entry to explore the new market in the UAE.

Recommendations

The ability of Tesla to achieve success in this new market depends on various factors discussed in this report. The management of this company should consider the following recommendations when entering the UAE market:

• The firm should appoint an executive from its head office to be the director of the firm in the UAE;
• Senior managers in the UAE, especially marketing and operations directors, should be host country nationals;
• The firm should use both social and mass media platforms to promote its products in the new market;
• Direct market entry through exportation of its products is the most appropriate strategy to enter this market.

References

Ahmed, B., & Rab, K. (2014). Foreign direct investment and economic growth in India: A study. International Journal of Research in Management & Social Science, 2(3), 1-5.

Ahmed, E., & Hamdan, A. (2015). The impact of corporate governance on firm performance: Evidence from Bahrain stock exchange. European Journal of Business and Innovation Research, 3(5), 25-48.

Chang, E. (2017). The life and death of tesla motors in Taiwan: Electric vehicles in the mountainous island. Chicago, IL: Routledge.

Choi, B. P., Jeong, J. G., & Lee, Y. (2014). Diversity and firm performance: An analysis of different level of management composition. International Journal of Business Research, 13(1), 87-94.

CIA World Fact Book. (2019). Middle East: United Arab Emirates. Web.

Doeden, M. (2015). SpaceX and Tesla Motors engineer Elon Musk. Minneapolis, MN: Lerner Publications.

Gleam, J. (2014). Tesla 2015: Best features buyers guide. New York, NY: Conceptual Kings.

Global Entrepreneurship Monitor. (2018). Entrepreneurial behavior and attitudes. Web.

Hassan, R., Marimuthu, M., & Johl, S. K. (2015). Diversity, corporate governance and implication on firm financial performance. Global Business and Management Research: An International Journal, 7(2), 28-36.

Hussain, N., Rigoni, U., & Orij, R. (2018). Corporate governance and sustainability performance: Analysis of triple bottom line performance. Journal of Business Ethics, 149(2), 411-432.

Information Resources Management Association. (2017). Organizational culture and behavior: Concepts, methodologies, tools, and applications. Hershey, PA: Information Science Reference.

Kamila, K., & Bhattacharjee, S. (2014). Knowledge management and knowledge society. International Journal of Research in Management & Social Science, 2(3), 126-134.

Kumar, S., & Bhaskar, P. K. (2014). Social media branding and brand image development: Concepts and cases. International Journal of Research in Management & Social Science, 2(3), 68-72.

Moreno-Gómez, J., Lagos, D., & Gómez-Betancourt, G. (2017). Effect of the board of directors on firm performance. International Journal of Economic Research, 14(6), 349-361.

Qasim, A. M. (2014). The impact of corporate governance on firm performance: Evidence from the UAE. European Journal of Business and Management, 6(22), 118-122.

Rangarajan, D., Sharma, A., Paesbrugghe, B., & Boute, R. (2018). Aligning sales and operations management: An agenda for inquiry. Journal of Personal Selling & Sales Management, 38(2), 220-240.

Ratten, V., Braga, V., & Marques, C. (Eds.). (2017). Knowledge, learning, and innovation: Research insights on cross-sector collaborations. New York, NY: Cengage.

Robinson, P., Fallon, P., Cameron, H., & Crotts, J. C. (Eds.). (2016). Operations management in the travel industry (2nd ed.). Oxford, England, CAB International.

Starr, M. K., & Gupta, S. K. (Eds). (2017). The Routledge companion to production and operations management. New York, NY: Routledge.

Subramanian, N., Gunasekaran, A., Jose, C., Jabbour, C., Yusuf, Y., & Azapagic, A. (2017). Sustainable global operations management and frugal innovative sustainable production methods: Advancing theory and practice for a truly sustainable society. Sustainable Production and Consumption, 11(7), 1-4.

Turner, D. A. (2015). It’s my pleasure: The impact of extraordinary talent and a compelling culture. Boise, ID: Elevate Publishing.

Wang, C., & Ahmed, P. (2016). The development and validation of the organizational innovativeness construct using confirmatory factor analysis. European Journal of Innovation Management, 7(4), 303-313.

Word Bank. (2018). United Arab Emirates: Economic outlook – October 2018. Web.

There is no use denying the fact that being a company that tries to capture the market, Tesla Motors devotes great attention to the strategy that could help to achieve the given purpose. First of all, one of the main points of the strategy is the attraction of customers. That is why, Tesla devotes its efforts to various advertisement companies (Ottaway, 2014), trying to increase the level of customers interest and attract more people. At the same time, the company tries to exclude dealers pressure from the process of sales by providing training for sales persons, who will be able to work with customers better.

It should also be said that resting on the fact that the sphere of EV could be taken as very cost-based, it is obvious that the strategy of the company implies large investment in the production of EV. It is also obvious that these investments could lead to the short-term profit loss. It is no wonder that the company reported about $184 million loss (Sparks, 2015). Besides, it is possible to state the fact that the company counts on the long-term character of the project and depends on the increase of the level of popularity of its products. Nevertheless, despite the fact that “Tesla’s vehicle unit sales are growing at about 50% year over year” (Sparks, 2015, para. 1) and that in managed to achieve the new record by delivering 11, 507 vehicles to customers (Tesla Delivers 11,507 Vehicles in Q2 of 2015, n.d.), the future of the company remains vague as the spending should be compensated for the company not to collapse.

Another important point of the marketing strategy is the price of Teslas products which is comparatively high. As it has already been mentioned, its products are bought mainly by people with high incomes. It is obvious that the price markdown could lead to the increase of the demand for products as the current price, which is about $50 thousand is taken as high for other layers of society (Sparks, 2015). However, the price could not become lower because of the peculiarities of the project and high prime cost of EV. That is why, the nonnegotiable price should be taken as a very important part of the marketing strategy of a company.

Besides, there are several important aspects that result from the price policy of a company. First of all, it serves as the method to help the company to offset expenses because of the great investments in the process. High price of the EV could also partially compensate losses on the production of the car and help a company to develop.

Secondly, the given price could satisfy potential customers of the company by giving them the feeling of exclusiveness. High price of the product, bought by a person, indicates his/her high social status, that is why the given strategy could help the company to promote its products as the part of the luxurious lifestyle.

However, high price also creates certain limits as the majority of customers are not able to buy the EV manufactured by Tesla. That is why, it is possible to outline the ambivalent character of the given price policy. Creation of the luxurious image of the EV is vital for the future of the company and could attract new potential customers. However, high-end clients are often taken as less sensitive and the EV, which costs $50 thousand, could not be exciting enough for them. At the same time, clients belonging to some other social groups could enjoy the given EV, however, the price is too high for them. That is why, a certain problem appears. The company is not able to make the price lower because of the high costs of production of EV and the image of the car, thus, at the same time, it suffers from the aftermath of this policy being not able to attract new customers.

Thus, it should also be said that another point of the companys marketing strategy should be mentioned. The fact is that Tesla provides a great number of possibilities for customization of the EV. There is a special tool on the website that helps a customer to choose all options that are needed, starting from the engine and ending with the color (Design, n.d). Due to this very fact a customer becomes involved in the process of creation of his/her own car which could not but result in the increase of the level of interest towards the vehicle. Moreover, this option could also be taken as the attempt to give a customer choice and determine the price of the EV by his/her own. It is obvious, that the given tool could be taken as a rather innovative step that promotes the increase of the interest towards the company.

Additionally, analyzing the strategy of a company, great attention given by it to the interaction with clients and their feedbacks should be mentioned. Tesla provides the opportunity for customers to try the vehicle by using the practice of test drives as it could help to obtain customers responses and analyze the given data. Thus, due to a great number of reports made with the help of drives, the trend of increased troubles was determined (White, 2015). That is why, it becomes obvious that some further work on the model is needed.

Finally, it is possible to say that the company aims at spreading its influence and capturing new markets. According to Teslas reports “orders went up 50% year-over-year in Europe” (OHara, 2015, para.1), while this number is about 30% in the USA (OHara, 2015). It is possible to state the fact that the attempt to introduce products of a company to a great number of various countries is the part of Teslas strategy as it tries to obtain the new stimulus for the development of a company.

Resting in these facts, it becomes obvious that the current strategy of a company is comprised of several main points, which are the promotion of the image of its products, certain price policy, customization of the EV, attention to potential customers and their response and attraction of new buyers. It is possible to say that some successes have been achieved. The company managed to create the attractive and luxurious image of the car and draw attention to it. Moreover, customers are able to choose various options and become involved in the process of creation of their own car. However, at the same time, some obvious failures should also be admitted. Fits of all, it is the price policy as the EV still remains unaffordable for the majority of people. This facts introduces some limits for the further development of the company as the absence of new customers could lead to the collapse of Tesla. Additionally, the future of the company depends on sales of its products greatly as the manufacturing of EV is very expensive and the large investment, made by the company, is not compensated.

Future

It has already been stated that the future of the company and the whole project remains vague because of several problems. First of all, it is connected with the price policy and investments of the company. One should admit the fact that the existence of any organization is guaranteed by the stable demand for its products, which results from price/quality ratio. Analyzing the functioning of the Tesla company, it is possible to say that one of the components of this correlation could be taken as ambivalent. The nonnegotiable price of the products leads to the decrease of the number of potential clients. At the same time, taking into account the long-term character of the project and great investments made by the company, it is possible to say that the future existence of Tesla could be determined by the stability and increase of the demand for its products. In other words, the existing price policy could become successful only in terms of stable interest towards EV.

Thus, at the same time, the future of the company could also be determined by the developing interest towards environmentally friendly vehicles. The fact is that in last several years the sphere of green technologies has been evolving and nowadays great attention is given to technologies that could replace traditional ones, which are supposed to have the negative impact on the state of environment. Under these conditions, governments of various countries could be interested in the development of green technologies and companies like Tesla. Due to this fact some governmental financing, which could help the company to develop, could be expected.

Additionally, the unique character of the company and its marketing strategy could also have a great impact on the future of the company. It is obvious, that Tesla is not the first company that deals with green technologies and there is a great number of other companies that proclaim their adherence to environmentally friendly technologies. However, these companies just try to make traditional vehicles less environmentally unfriendly, while Tesla tends to create an absolutely new electric vehicle that could reduce emissions to zero. That is why, it is possible to say that the unusual character of the company and usage of new technologies, which are taken as the technologies of the new era, could help it to evolve and attract more attention.

Moreover, the above-motioned marketing strategy could also be taken as the factor of success of the company. It becomes obvious, that it is aimed at the creation of the positive image of EV and attraction of a great number of prosperous people, who can afford this product and promote the growth of the interest towards it. The emphasis on the work with clients could also contribute to the development of the company attracting new potential customers. Finally, Teslas orientation on the international market could help it to obtain new outlets and compensate expenses.

Resting on these facts, it is possible to say that the future of the company could hardly be predicted as it depends on a great number of various factors, which could either promoted the growth of the company or influence its collapse. However, in case of the stable increase of the level of demand for EV, Teslas future seems relatively clear.

References

Design. (n.d.). Teslamotors.com. Web.

OHara, M. (2015).International Expansion Is Crucial for Tesla Motors. Web.

Ottaway, L. (2014). Tesla owners exemplify best form of advertising in response to Iowa test drive ban. Web.

Sparks, D. (2015). A Close Look at Tesla’s Big Spending — Merited or Not?. Web.

Tesla Delivers 11,507 Vehicles in Q2 of 2015. (n.d.). Teslamotors. com. Web.

White, J. (2015). Consumer Reports criticizes reliability of Tesla Model S. Web.

History and Overview

Tesla Motors is an American company specializing in production of electric cars. It is known for achieving several important engineering and technological milestones and has a reputation of one of the most prominent contributors to the electric vehicles industry (Doeden 14). Despite the overwhelming acclaim and recognition, Tesla Motors also experienced a number of setbacks in the course of its development.

Tesla Motors was founded in 2003 by Martin Eberhard and Marc Tarpenning (Crunchbase par. 5). Elon Musk, one of the co-founders, was also among the chief investors at the initial stage, providing the majority of the required costs from personal fund (Crunchbase par. 3). Two years later, the company established its first strategic partnership by signing a production contract with Lotus Group. The result of the collaboration was the Tesla Roadster, the history’s first high-performance electric-powered sports car. Despite setting a new quality standard and presenting a technological breakthrough, the model was not a commercial success. While the amount of private funding exceeded US $100 million by 2007, the expenses were overwhelming.

In response, about ten percent of employees were fired that year, and twenty-five percent more in the following 2008, when Musk became CEO (Tesla Motors par. 14). By the end of the year, the company avoided bankruptcy by gathering $40 million in the fifth investment round. In 2009, Tesla Motors presented Model S and became eligible for the low-interest-bearing loan from Advanced Technology Vehicles Manufacturing (ATVM) Loan Program by the United States Department of Energy (Tesla Motors par. 22). The deliveries of the new model began in 2012, which became the first profitable year for the Tesla Motors. It is important to note that the company does not follow the standards of automotive industry and is thus not required to issue monthly performance reports, so the net income is sometimes derived from a third-party analysis.

However, several milestones achieved by Tesla Motors can be definitively outlined. First, the company was the first among competitors to repay the ATVM loan. Second, the electric vehicles produced by it were the first to break the 200 miles per charge range (Doeden 18). Third, aside from the EV production, the company is championing the charging equipment field and is responsible for several infrastructural milestones such as supercharger stations network coverage (Crunchbase par. 12). With the third model, known as Model 3, announced in 2016, Tesla Motors is currently among the most visible representatives of the EV industry.

Industry Analysis

The five main factors that must be considered in the analysis of the industry are the existing forces: ease of market entry, the bargaining power of suppliers, bargaining power of buyers, the availability of substitutes, and the existence of competitors.

Ease of Entry

The electric vehicles industry is a field which poses a significant technological challenge to the entrants. Up until the last decade, the progress in the field was purely theoretical and even now the profitability of the industry is hard gained, as can be seen by the numerous drawbacks experienced by Tesla Motors. In addition, to be efficient, powertrain components need to be significantly technologically advanced, which is only possible with the involvement of a number of partners from related industries. Currently, all major partners are already secured by existing companies specializing in EV production, and the new entrants will be challenged by the lack of R&D base for successful functioning. The field also differs from traditional automotive industry, which denies competitors of possible leverage. Finally, Tesla is already an established and recognized brand, which means additional challenge for the new entrants. Thus, the cost of entry is very high, and the ease of entry is thus a weak force.

Power of Suppliers

While the chief elements of the final product, such as engine, transmission, batteries, hardware responsible for charging algorithms (essentially the powertrain), and the charging stations, are for the most part developed and manufactured by Tesla Motors, many minor components of each of these are supplied by strategic partners, such as Panasonic and Lotus (Crunchbase par. 22). On the other hand, the number of suppliers collaborating with the company is high, and most of them are of moderate and small size. This allows Tesla Motors to control the supply chain. Finally, most of the suppliers operate in a competitive environment which further decreases their ability to alternate prices and thus lowers their influence on the company. Thus the power of suppliers is moderate to low.

Power of Buyers

Currently, most of the electric vehicles available to the customers share a relatively similar price range, which makes switching cost a strong factor. In addition, the EVs in their current state do not offer a decisive advantage over traditional means of transportation, including hybrid cars and public transportation. On the other hand, the volume of purchases is small (each customer most likely buys one or a few cars), which decreases the customer influence on the company. Thus, the power of buyers is a moderate force.

Availability of Substitutes

Currently, the market offers several categories of substitutes, with hybrid vehicles, gas vehicles, public transportation, and cycling being the most notable ones. The cost of switching to any of the above (with the exception of the public transportation) is relatively high, but the gas-driven cars are the least attractive in terms of environmental concerns and sustainability. The substitutes are also highly dependent on the environment conditions (e.g. the scarcity of public transportation and varying conditions for cycling in some areas). Finally, most of the substitutes are unable to satisfy the specific customers’ needs. Nevertheless, the combined influence of the substitutes is relatively high, which makes it the strongest of the marketing forces.

Existence of Competitors

Since entry is difficult, there are relatively few competitors to Tesla Motors in the market. However, all of them are major companies with significant resource and R&D bases at their disposal, such as Toyota, BMW, Daimler AG, and General Motors (Crunchbase par. 12). Thus, the competition is a moderate to strong force in the industry analysis.

Competitive advantage

The historical overview and industry analysis point to several competitive advantages of Tesla Motors. First, it possesses a reputation of a company actively involved in research and development and constantly achieving positive results. Second, the growing charging station network improves brand recognition and provides opportunities for a focused infrastructure. Third, a set of achievements (e.g. the range breakthrough) contributes to the overall image. Finally, the current strategic partnerships secure the required level of performance of the company.

External factors such as increasing gas prices and growing environmental awareness also contribute to the competitive advantage. However, the above factors only comprise a relatively insignificant differential advantage, while the cost advantage is almost non-existent. Since the latter is mostly determined by the current state of technology (e.g. the possibility to manufacture a cheap EV is low), it is recommended for the company to strengthen its technological base. For instance, by capitalizing its previous success record, it is possible to foster additional governmental support and thus gain necessary leverage to stay ahead of its competitors.

Works Cited

Crunchbase. Tesla Motors. 2016. Web.

Doeden, Matt. SpaceX and Tesla Motors Engineer Elon Musk, Minneapolis, Minnesota: Lerner Publications, 2015. Print.

Tesla Motors. Annual Report on Form 10-K for the Year Ended December 31, 2015. 2016. Web.

Tesla is most suitable for discussing such an important thing from an economic point of view as dealing with risk and uncertainty, especially given the recent crisis episodes in the global economy. Tesla Inc. is a large automotive and energy company, established relatively recently in 2003 and located in Palo Alto, California (Tesla, 2021). The main direction of the company’s specialization is the production of electric vehicles. In many ways, it can be considered, if not a pioneer in this niche, then one of the most prominent representatives for sure. Tesla is seen as a pioneer in the industry. It was one of the first to introduce advanced renewable power technology in vehicles, combining its approach with the automation and digitalization of vehicle assembly. The firm also innovated in its very choice of business model. Unlike other auto companies that distribute their products through dealerships, it has started selling cars directly to consumers, making Tesla the most productive player in its market. In the essay, risk management and issues related to risks are discussed in the context of Tesla’s recent actions.

The most serious problem that Tesla has faced in recent years is the macroeconomic changes in the market, geopolitics, and the global economy. In particular, the COVID-19 pandemic has become the company’s most important factor and problem. Having begun to actively and destructively influence the global economy at the beginning of the first quarter of 2020, the damage from the pandemic began to grow exponentially. More and more industries were affected, and the impact on the world of the pandemic was growing every month and quarter. The situation was influenced by government regulations and measures of protection from the pandemic to minimize the damage to the economy and society. Coupled with changing social behavior, protective measures have led to the restriction or complete closure of the first and secondary logistics lines. Government functions, business activities, and personal communication within the company were also affected, as well as production and general activities. In some cases, the weakening of such trends has accompanied an actual or perceived return to severe social interaction and commerce (Tesla Inc., 2021). Thus, the pandemic has become one of the main crisis risk factors for Tesla.

As a means of countering the growing impact of the crisis, Tesla temporarily suspended all related operations at all of its manufacturing plants over the past year. The suspension has affected operations worldwide, and some of the company’s main suppliers have temporarily or permanently ceased operations (Tesla Inc., 2021). The company introduced layoffs and pay cuts with a negative reputational and political effect. At the same time, Tesla’s US operations have been scaled back to minimize damage to their operations and reduce social interactions within the staff (Tesla Inc., 2021). Temporary obstacles to the administration and maintenance of the company also impeded the delivery and deployment of Tesla’s products to the market. Thus, the company’s attempt to minimize economic damage led to colossal losses in production and supply. The company’s activities affected its administrative resources and led to reputational damage for Tesla. Looking at the company’s current state, it can be judged that a tough and sharp attempt to counter the crisis led to long-term problems during the crisis, which will have consequences for Tesla in the future.

The situation in the company might be improved through the use of risk management. As such, a general methodology for improving the processes done by risk management departments provided by Hillson and Simon (2020) is sufficient for such an improvement. The first part of advice for the company would be enhancing the operation of risk identification. Namely, the team and its managers should organize regular brief meetings to discuss possible challenges. The risk department should orderly recognize the problems and describe them, mentioning all the threats and possibilities that might arise from the situation. Next, the specialists must assess the emergency and scale of impact the problem might cause; the list of risk priorities is compiled by combining these parameters (Hillson & Simon, 2020). Finally, the collateral phenomena signalizing the existence of risk are to be determined.

Furthermore, a stage of planning and reporting the problem is recommended for risk management. Namely, the company should identify the actions that can reduce risks by interviewing persons that cause or are relevant to the problem, compiling appropriate strategies, and appointing people responsible for the actions. Moreover, these actions should be budgeted; and specialists should suppose a set of expected changes and signs of success (Hillson & Simon, 2020). However, the plan should not be accessible to the managers only. They must report the information with detailed analysis, easy-to-understand preview, and evidence-based report to the stakeholders (Hillson & Simon, 2020). Thus, the important information about risks would be comprehended by persons that can influence its minimization.

Finally, the implementation is the most significant part of the process, and advice can improve it. Before all, responsible managers should monitor all the actions, budgets, persons, and changes. If new risks arise or some unexpected issues occur, the plan should be modified accordingly. Moreover, all updates must be reported to relevant offices and stakeholders (Hillson & Simon, 2020). Consequently, the process should be assessed for its impact and effectiveness to prevent further risks.

As mentioned earlier, one of the methods of countering the crisis within the company, Tesla chose staff reduction. However, it should also be noted that the reduction was carried out very sharply and not always legally and based on the economic necessity of the company. There are enough examples of such events, such as cases with the Tesla production management representatives who left the company after the first quarter. Employees of the company often cite the imbalance between personal life, especially relationships with family, and work hours as the reason for leaving. In particular, the matter is about strong reworking in the course of work, both among the production and logistics employees and the company’s management personnel (Scheiber, 2021). The company also committed acts that resulted in severe reputational damage, such as firing Richard Ortiz, a Tesla employee who was a union member.

The unions of the company’s employees have been experiencing strong discontent since 2018, but the crisis created by the COVID-19 pandemic has only exacerbated the situation. The company’s CEO, Elon Musk, is himself mentioned in the company’s report as a source of risk factors (Scheiber, 2021), and the reason for this is, among other things, offensive statements about the laid-off employees. As a result, the 2019 National Labor Relations Board ruling that Tesla illegally fired a worker involved in a union organization remains in effect today. Also, the company’s executive director, Elon Musk, illegally threatened workers with the loss of stock options if they were associated with trade unions (Scheiber, 2021). To prevent similar incidents in the future, the company needs to communicate more humanely and openly with employees and approach their dismissal without the personal motives of management. One should also consider the company’s CEO, Elon Musk, as a separate risk factor, often only exacerbating the consequences of downsizing due to the pandemic crisis with his statements and behavior.

It is also important to how Tesla deals with the moral hazard problem. In particular, one can cite the case that occurred with California resident Benjamin Maldonado and his teenage son when they were driving back from a soccer tournament. While the family was driving home on the California freeway in August 2019, a truck in front of them slowed. When Mister Maldonado turned on the turn signal, his Ford Explorer pickup was hit by a Tesla Model 3, traveling on autopilot. According to a police report, Giovani, who was sitting in the front passenger seat, was thrown from a Ford vehicle and passed away (Boudette, 2021). The company took a position of blaming the victims of road accidents, which negatively affected its reputation and led to a decrease in the company’s profits and discontent on the part of Tesla stakeholders. However, Tesla could have tried to help the victims and their families, thereby demonstrating loyalty to its customers, which positively influenced attitudes towards the company and its business activities in the future. Such a policy often positively impacts the solution of crises related to the public.

Based on some of the above factors, we can judge that Tesla’s principal-agent problem is the CEO of Elon Musk. Musk has regularly discredited the company’s activities with disrespectful, offensive, and sometimes publicly inappropriate statements and actions. This kind of behavior of the person representing the company directly impacts Tesla’s tolerance of the crisis. Earlier, there were cases when Musk’s activities led to a negative reaction from stakeholders, customers, the press, and direct from company employees (Scheiber, 2021). Thus, the company often faces crisis factors emanating directly from its CEO.

To prevent this, the company’s board of directors, both previously and recently, has tried to limit Musk’s influence on public opinion about the company. Still, Tesla has to approach this process quite carefully. The reason for this is the fact that the popularity of the company’s brand was ensured precisely by the public activities of Elon Musk, from which one can judge that the company owes him both its commercial and public success and its problems. Thus, the company’s management approach is the most optimal solution to the problem, taking into account the specifics of the activities of the company’s principal agent represented by Elon Musk.

The structure of Tesla is also important, directly influencing its activities and representing a unique combination of divisional approach and flexibility. As stated in a study on company structure, Tesla does not have a traditional governance structure. The company does not have any organizational chart or a public list of top executives, which distinguishes it from other companies in their niche and commensurate competitors (Dudovskiy, 2021). One of the important distinguishing features of the company is problems with the delegation of powers from the side of its CEO Elon Musk.

Relying on personal traits such as a declared willingness to give up personal time and productivity, Musk seeks to control micro-management directly. This negatively affects the company’s state since the organizational structure, although devoid of excessive bureaucracy, still depends on the state and personality of the only leader. To improve the situation and improve the organization of the structure of Tesla, clearer management and top management structure is needed, with the delegation of CEO powers to a separate group of managers. The company should also implement a clearer management structure while trying not to lose its main advantage, which is the flexibility of management and the absence of bureaucracy, which often inhibits the activities of employees.

Summarizing the above data about the company, you can see that Tesla’s methods of dealing with crises and recent problems that have arisen are counterproductive. Moreover, most of Tesla’s decisions negatively affect the company, both commercially and reputationally. It is safe to say that the personality of its CEO Elon Musk also harms the company’s activities to a greater extent, compensated only by his influence on the public. Musk’s influence and behavior are gaining acceptance from audiences not directly related to the company or its products, which is questionable for stakeholders. His statements to Tesla employees and victims of company product accidents only exacerbate the situation. But the most counterproductive for the company is Musk’s attempt at ubiquitous micro-management and its reluctance to delegate authority. This negatively affects the structure of a company the size of Tesla and will have repercussions in the future.

References

Boudette, N. E. (2021). Tesla says autopilot makes its cars Safer. Crash victims say it Kills. The New York Times.

Dudovskiy, J. (2021). Tesla organizational structure: Divisional and flexible. Business Research Methodology.

Hillson, D., & Simon, P. (2020). Practical project risk management, third edition: The ATOM methodology (3rd ed.). Berrett-Koehler Publishers.

Scheiber, N. (2021). Tesla employee’s firing and Elon Musk’s tweet on union were illegal, labor board rules. The New York Times.

Tesla. (2021). About Tesla.

Tesla Inc. (2021). Quarterly report pursuant to section 13 or 15(d) of the securities exchange act of 1934.

Tesla Inc. is a large automotive and energy enterprise launched in 2003 and located in Palo Alto, CA (Tesla, 2019). The company specializes in the production of electric vehicles (EVs) and may be regarded as a pioneer in this niche. Tesla is perceived as an innovator in the industry as it was among the first to utilize cutting-edge technologies, automation, and digitalization for car assembly (Tesla, 2019, para. 2). The firm also innovated in the very choice of its business model. Unlike other automotive companies that distribute their products via dealers, it started to sell vehicles directly to consumers (Righi, 2015).

However, the company is currently under the threat of significant financial loss. Collins (2019) indicates that its “profit per car dropped dramatically in the December quarter [2018]” (para. 3). It is valid to say that the main reason for such reduced profitability is the firm’s approach to the management of its operational and strategic risks. This issue will be discussed in the present paper along with Tesla’s organizational structure, adverse selection, principal-agent, and moral hazard problems and their effects on profitability.

Risk and Uncertainty Management

Tesla’s current operations are more costly than profitable and this puts the sustainability of business at risk. The focus on the production of luxury sports cars seems to contribute to such an outcome. As noted by Elon Musk, Tesla’s CEO, the enterprise’s founders were aware from the very beginning that their first product was going to be expensive in any possible form (Zucchi, 2019). Since the manufacturing of high-quality EVs is a technology-intensive process, the choice of such a pricing strategy may be viewed as logical.

At the same time, the company fails to deliver vehicles to customers on time (Collins, 2019). Moreover, the price of the final product that they will need to pay in the end may be higher than it was initially stated by Tesla (Collins, 2019). Such a situation increases customers’ perceived financial and service quality risks associated with Tesla’s brand that, in turn, can negatively affect their loyalty and trust in the company (Marakanon & Panjakajornsak, 2017). It is valid to conclude that with the reduced attractiveness of the brand, the company’s ability to generate profits will drop even more.

Nevertheless, it seems that Musk’s strategic decision to invest in SolarCity, an enterprise specializing in large-scale solar panel manufacturing, could be viewed as an attempt to increase the company’s profit margins. As noted by Furr (2019), when taking into account Tesla’s overall mission of accelerating the world’s transition to renewable energy use, by building large battery factories and promoting their output, the company may eventually make solar energy more affordable. In this way, production costs and the final prices for Tesla EVs can decrease as well, strengthening the demand for products.

Nevertheless, SolarCity itself has been losing money, which puts the attainment of this long-term goal at risk (Collins, 2019). It means that Tesla’s strategic decisions are based on “bad math” (Collins, 2019, para. 14). Besides, the statement about the company’s profit-loss was followed by a layoff notice for about 7% of subordinates (Collins, 2019). All these points at Tesla’s failure to foresee and prevent various risks and makes one question Tesla’s tactics in the realization of its vision and mission.

To improve its performance, it may be recommended for Tesla to apply a more holistic approach to risk management. The integration of an Enterprise Risk Management (ERM) system can be beneficial in this regard since it aims to evaluate operational and non-operational, direct and indirect, internal and external risks that may affect the performance of various organizational units (Yang, Ishtiaq, & Anwar, 2018). The assessment of highly diverse risks is then used to create integral strategic responses to risks and promote reasonable, evidence-based risk-taking behaviors (Yang, Ishtiaq, & Anwar, 2018).

Comprehensive risk analysis as part of ERM provides enterprises with a chance to improve competitive advantages yet, as noted by Yang, Ishtiaq, and Anwar, (2018), to maximize the favorable outcomes, top executives should be financially literate. Thus, by increasing the level of its financial competence (for instance, through collaboration with credible analysts) and by using ERM, Tesla’s management will become able to improve the company’s current position through better risk forecasting and response.

Adverse Selection and Moral Hazard Problems

An issue that could be regarded as either an adverse selection problem or a moral hazard problem is an increase in the starting price for Tesla’s Model 3. The price promised by the company was USD 27,500, which “assumed a full $7,500 tax credit removed from a $35,000 base price” (Collins, 2019, para. 7). However, customers who expected to buy their EVs for this sum can no longer do so because automakers are eligible for this tax deduction only before they sell 200,000 items (Reklaitis, 2019).

As such, Tesla’s management could be aware that by the time it will commence manufacturing the USD 27,500 Model 3, the company would already hit that number of cumulative EV sales. Therefore, there could be informational asymmetry before the deal since buyers were not aware of Tesla’s sales statistics before placing an order and making advance payment. At the same time, Tesla could undertake some changes in its initial sales strategy and realize the problem with tax deduction only after the deal. In this case, the issue can be defined as a moral hazard.

According to Hui, Saeedi, and Sundaresan (2019), both forms of information asymmetry are associated with risks of low service/product quality and deterioration of firms’ reputations. The latter is regarded as “a strategic intangible asset, using which tangible profits and an increased added value could be generated” (Zaby & Pohl, 2019, p. 2). Thus, Tesla needs to undertake effective measures aimed to deal with moral hazards and adverse selection as they may negatively affect its turnover, operating expenses, and various stakeholders’ perceptions of the company.

As stated by Bergh et al. (2019), to achieve this, companies can employ various initiatives that make the internal information flows more accessible to consumers and implementing solutions targeted at the protection of stakeholders’ interests. By reducing information asymmetries, strategies aimed to improve information transparency and accountability result in greater buyer satisfaction and improved seller performance (Hui, Saeedi, & Sundaresan, 2019). Adoption of a corporate social responsibility (CSR) strategy may be viewed as a comprehensive way to minimize the negative effects of moral hazard and adverse selection on the company’s reputation and transactions.

At the present moment, Tesla does not use good tools that would ensure the firm’s transparency and accountability. According to McMahon (2018), the company does not report on its programs and initiatives aimed to address various socially important issues and does not disclose almost any information regarding its internal processes. Due to this, Tesla may be unable to prevent the incidence of moral hazards and adverse selection.

At the same time, CSR implies that a company puts the interests and preferences of consumers and other relevant stakeholders above the commercial ones and strives to satisfy them through ethical conduct (Zaby & Pohl, 2019). Overall, CSR allows targeting a great variety of reputation-related issues and promote a favorable brand image. What is more important, by emphasizing the importance of accountability and transparency, it may be regarded as one of the best instruments for combating information asymmetries.

Principal-Agent Problem

The principal-agent problem occurs at Tesla primarily because Elon Musk plays the role of both a CEO and a major shareholder of the organization. For instance, in 2016, he offered Tesla’s board members to purchase SolarCity where he also was and remains the chairman and where his cousin, Lyndon Rive, is a CEO (Wieczner, 2016). It means that the overall profitability of Tesla is important for Musk as one of its largest shareholders. However, there is still a big risk that he may be biased in his strategic decisions and can put personal financial interests above those of other shareholders.

Changes in the corporate governance strategy may be viewed as the best way to resolve the principal-agent conflict at Tesla. For better control of the situation, the board must be comprised primarily of independent directors (Gay & Denning, 2014). They can be more capable of evaluating strategies objectively proposed by CEOs and, thus, protect the interests of the company as a whole (Gay & Denning, 2014).

Besides, it is essential to adopt policies and initiatives that would ensure the behavioral transparency of top managers and encourage them to act in a way that increases the value of the organization (Chappelow, 2019). One of the possible ways to do that is through the alignment of CEO compensation with specific profitability goals. At the present moment, there is no evidence that Tesla adheres to any of the abovementioned corporate governance recommendations.

Organization Structure

Tesla Inc. consists of multiple organizational departments, including energy, sales, engineering, production, and so forth (Dudovskiy, 2018). Each of them is managed by a few vice presidents who are directly accountable to Elon Musk (Dudovskiy, 2018). The company’s structure was more hierarchical just a few years ago but, nowadays, the CEO aims to flatten it to facilitate inter-division communication and enhance flexibility (Dudovskiy, 2018).

The shift from a traditional bureaucratic structure may be viewed as a step towards greater profitability. Besides removing information flow barriers, such a structure is characterized by greater employee productivity, creativity, and autonomy, as well as reduced budget costs due to the elimination of middle management positions (Rishipal, 2014). Moreover, flat organizations are normally more focused on customers than on tasks (Rishipal, 2014).

Therefore, by pursuing further flattening of Tesla’s structure, Musk will be able to increase both customer satisfaction and employee satisfaction. The latter can be achieved since workers will be provided with more independence in terms of task completion (Rishipal, 2014). Considering that motivated and satisfied employees tend to be more productive, there is a great potential to improve profitability in this way.

Conclusion

The analysis revealed that Tesla Inc. currently faces many problems in terms of risk management. The fact that the company does not make money, experiences delays in production, and fails to deliver on the promise about product prices indicates that it has no effective risk management strategy. Besides, it lacks transparency and efficient agent controls, which increases the chance that information asymmetry may affect its transactions and reputation negatively. To improve profitability, it is recommended for the enterprise to adopt ERM, as well as effective CSR and corporate governance strategies. These solutions will help Tesla to manage the identified threats and uncertainties better.

References

Bergh, D. D., Ketchen, D. J., Orlandi, I., Pursey P. M. A. R. Heugens, & Boyd, B. K. (2018). Information Asymmetry in management research: Past accomplishments and future opportunities. Journal of Management, 45(1), 122-158.

Chappelow, J. (2019). Principal-agent problem. Investopedia. Web.

Collins, J. (2019). Tesla’s profit warning is further evidence that Elon Musk’s math does not add up. Forbes. Web.

Dudovskiy, J. (2018). Tesla organizational structure: divisional and flexible. Research Methodology. Web.

Furr, N. (2019). Tesla’s business strategy is not chaotic – it’s brilliant. The Conversation. Web.

Gay, S., & Denning, C. (2014). Corporate governance principal-agent problem: the equity cost of independent directors. SSRN Electronic Journal. Web.

Hui, X., Saeedi, M., & Sundaresan, N. (2018). Adverse selection or moral hazard, an empirical study. The Journal of Industrial Economics, 66(3), 610-649.

Marakanon, L., & Panjakajornsak, V. (2017). Perceived quality, perceived risk and customer trust affecting customer loyalty of environmentally friendly electronics products. Kasetsart Journal of Social Sciences, 38, 24-30.

McMahon, J. (2018). How Tesla scored a zero on climate management. Forbes. Web.

Reklaitis, V. (2019). Tax-credit expansion sought by Tesla, other EV players is among tax breaks getting lawmakers’ attention as year ends. Market Watch. Web.

Righi, B. (2015). Tesla brings driverless technology—and cybersecurity concerns—to the masses. Risk Management Monitor. Web.

Rishipal, Dr. (2014). Analytical comparison of flat and vertical organizational structures. European Journal of Business and Management, 6(36), 56-65.

Tesla. (2019). About Tesla. Web.

Wieczner, J. (2016). Why Tesla and SolarCity have an Elon Musk problem. Fortune. Web.

Yang, S., Ishtiaq, M., & Anwar, M. (2018). Enterprise risk management practices and firm performance, the mediating role of competitive advantage and the moderating role of financial literacy. Journal of Risk and Financial Management, 11(35), 1-17.

Zaby, S., & Pohl, M. (2019). The management of reputational risks in banks: Findings from Germany and Switzerland. SAGE Open, 9(3), 21-15.

Zucchi, K. (2019). What makes Tesla’s business model different?Investopedia. Web.

Introduction

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

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

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

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

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

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

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

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

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

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

Situational Analysis Summary

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

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

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

Factors Affecting Willingness/ Ability to Buy

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

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

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

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

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

Relevant Market Definition

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

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

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

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

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

Target Market Identification

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

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

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

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

Selective Demand

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

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

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

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

Segmentation

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

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

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

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

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

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

Competition

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

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

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

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

Strategic Considerations for Determining the Strategic Route

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

Market Measurement Workings

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

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

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

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

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

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

Market Share Position

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

Pioneering Advantage

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

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

Likelihood of Competitor Reaction

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

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

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

Nature of Market Opportunity

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

Resources and Capabilities

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

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

Life Cycle Analysis

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

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

Recommended Strategic Route

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

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

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

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

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

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

Recommended Primary Demand Strategies

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

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

Non-Users

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Existing Users

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

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

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

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

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

Recommended Selective Demand Strategies

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

Expanding the Existing Market

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

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

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

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

Acquisition of Competitors’ Clients

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

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

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

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

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

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

Retaining Demand or Expanding it Within Existing Customer Base

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

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

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

Conclusion

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

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

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

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

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

Reference List

Baumgartner, W., & Gross, A. (2000). The global market for electric vehicles. Business Economics, 35(4), 51-56.

Blakeslee, T. (2013). Fueled vs. Electric Cars: The Great Race Begins. Web.

Cain, T. (2013). Large Luxury Car Sales Figures In America – May 2013 YTD. (2013). Web.

Electric Drive Transportation Association: Electric drive vehicle sales figures (U.S. Market) – EV Sales. Web.

Gilbert, D. (2002) The American Class Structure: In An Age of Growing Inequality. Belmont, CA: Wadsworth.

Hill, J. (2013). New Nissan Leaf offers faster charger. Web.

Leitman, S. (2013). Why do we need more electric cars on the road? Web.

Loveday, E. (2013). Tesla Model S Grabs 8.4% of Luxury Vehicle Sales in US in First Half of 2013. Web.

Marchetti, N. (2013). Connecticut gets over 50 new ev charging stations. Web.

Rodriguez, J. (2013). Tesla patents next-gen electric car battery that gets 400 miles on a single charge. Web.

Tesla Motors: Model S. (2013). Web.

The Tesla Motors company is one of the pioneer developers of cars running on electric power. Incorporated in 2003, it became the leading producer of electric cars in the world, yet it does not present much competition to other companies. The demand for green energy in the society is still small, and this makes the company develop unique strategies for surviving in the automotive industry.

Marketing Strategy

Target Market

Tesla cars cannot be considered as affordable to most people. Nor it is a family choice vehicle, either as a first car or another family vehicle. Tesla Motors mainly targets the customer group of working adults who have been working from few years to several decades. This is the group which possesses the largest income and is willing to spend it on a more expensive car. The target customer group is broken down into three subgroups. Firstly, the company targets people who are concerned with the current ecological state of the planet. The greenhouse effect raises severe debates in the society, and responsible citizens are searching for the ways they could improve their impact on nature. The second target audience is people who wish to buy a luxury car, but do not have enough finances to do it. Tesla Motors offers such vehicle affordable to customers who have a stable job but who have not achieved any high positions yet. Finally, the Tesla cars combine comfort with unique technology. It may be a benefit for customers who are interested in the technical side of a vehicle, making it their priority for purchasing. Thus, these customers make up the third target group of Tesla Motors.

Product

As it was mentioned above, the Tesla cars are unique since they run on electricity. Currently, the company offers two model lines, including Model S and Model Z. Apart from the green technology, the Model S cars have several other features. Mainly, it is the focus on safety. The cars have the lowered center of gravity, steel railing on the sides, and the increased amount of the safety air bags (“Model S” par. 4). The vehicle also has a touchscreen as a navigation tool. The Model Z has the similar approach to safety. This model is bigger, having seven seats and being suitable for companies. The vehicle is positioned as a sports car, and the design is corresponding, offering the so-called falcon wings and corpus elements designed for better aerodynamics. Tesla Motors company also plan to produce the Model 3 vehicles in the next few years, which would be more affordable.

Price

The prices on the Tesla cars cannot be considered as low. The planned Model 3, which would be the company’s cheapest option, would be offered for about $35,000. The existing two models come at the starting price of more than $50,000 and $75,000 respectively. These numbers prove that Tesla vehicles belong to the luxury segment of the car market.

Place

In the case of Tesla Motors, the place element would include the selling points and other platforms, where the company communicates with potential customers. Firstly, it is the official website of Tesla Motors. People may use it not only to review the vehicles’ features but to order them as well. The website has the option to choose a country and order a vehicle when a customer can define the overall car modification and decide on the payment options, whether it is a lease, loan, or cash. Secondly, Tesla Motors also has its own stores and service centers, which mainly play the role of only presenting the cars to customers, while they still would need to make an online order.

Promotion

Tesla Motors has several approaches to their promotional campaign. The primary source of information reaching customers is short video commercials and clips. Customers can view them directly on the company’s website or the other resources like Youtube. The focus of these videos is to show stories of Tesla cars’ owners, to which customers could relate themselves. People featured in the videos usually talk about their experience with Tesla vehicles. The company also implements the ideas of the viral content, supposing that their target audience would receive the information through the social media. Apart from videos, Tesla Motors uses its stores and service centers for promotion as well.

Industry analysis

Competition and Development

The primary competitors of the Tesla Motors cannot be identified within the same technology principle. There is no such company which is as well-known for its green energy cars as Tesla. This way, the main competitors are all the rest of the car making corporations. For instance, in the USA those are Ford and Chrysler corporations. The competition is solely among the green technologies and the gasoline running cars.

As more and more people become concerned about the ecological issues, the need for green technologies grows each year. Moreover, the government is also interested in these technologies, especially in California, as they respond to the climate change threat (Baker 1). Thus, there is a potential for the company’s further growth through customers and the governmental support. Besides, since it is the most well-known company that makes vehicles running on electricity, its market share in this particular industry is covering almost every position.

Economic Outlook

Nowadays, American car production companies suffer from competition imposed by the Asian automobile industry. Japan and China have the cheaper labor force, so the final product price is lower than the price of Western products. Thus, Asian cars are more appealing to the major part of Americans. The event of mass import of Japanese and Chinese cars in the past century has led to the Chrysler corporation experience the desperate economic situation, and the city of Detroit, which used to be a home to several automobile factories, has become bankrupt.

The current GDP review of the USA shows that the automotive industry, more specifically the motor vehicle production sums up to almost 700 billion dollars (Lyndaker et al. 13). This industry nowadays has a high potential for solving the unemployment issue. As more and more people and businesses wish to end the manufacture processes’ outsourcing, new jobs may be created in this sector. Of course, such industry requires the newest technologies, which can be extremely expensive. However, with the Tesla’s case, the government along with several privately owned companies are interested in the corporation’s development, so the financing should not be a problem.

Conclusion

Tesla Motors company offers a product, which is supported by the developing demand from the society on green technologies, thus creating an opportunity for the further growth. As government and society start to recognize the importance of ecology, Tesla corporation has growing chances for success in the future. Nevertheless, there is a chance that the company will stay as a choice for luxury options instead of affordable vehicles.

Works Cited

Baker, David R. “8 States Sign Deal to Boost Electric-Car Sales.”SFGate, 2013, Web.

Lyndaker, Amanda, Edward Morgan and Jeannine Aversa. “Gross Domestic Product by Industry: Second Quarter 2016 Annual Update: 2013 through First Quarter 2016.” US Bureau of Economic Analysis, 2016, Web.

“Model S.” Tesla, Web.

External analysis

PESTLE Analysis

Political

Tesla Inc. can avail the opportunity for strengthening its financial performance through various incentives offered by the government. The political environment of any country influences its business environment directly and indirectly. It can directly affect the economic environment of the country and in this way the degree of economic action and business as well. The political environment influences the administrative environment as well (Ali & Ahmad, 2014).

On the off chance that the political environment of a country is steady, it likewise prompts economic dependability and offers to ascend to higher economic action and flourishing. Particularly in nations where an enormous piece of the production network of a global business is found, political disturbance or bedlam can prompt interruption in the inventory network and afterward business misfortune. Geopolitical issues and psychological oppression can likewise disturb businesses and challenges in political connections between countries can likewise make business between the two troublesome.

Economic

Electric cars are gaining popularity day by day which is mostly connected with the global economy. Worldwide economic development is relied upon to stay at 3% in the year 2019 and 2020. In 2018 the electric vehicle market was $39.8 billion which is relied upon to reach $1.5 trillion by 2025 (Personal Electric Vehicle…, 2019). This economic factor is an incredible open door for Tesla to underwrite. Economic powers have a significant job in the business world and can influence the fortune of businesses in different manners. Tesla has seen its business rising quickly in the previous year. This has happened because of a few reasons.

Notwithstanding, expanded economic movement since the downturn is a significant factor that has influenced this development. Since the downturn has passed, the economic movement has aroused all-inclusive (Pratap, 2018 ). Tesla’s Model X is a fully estimated electric SUV with bird of prey wing entryways. The sales of its SUVs have additionally expanded with higher economic action the world over.

Social

Social conditions and trends affect a firm’s remote through employees, customers, and investors. Social factors are similarly as significant as different factors and in some cases, they can impact the interest and supply of specific products. These factors sway how certain products are seen in specific social orders and the degree of acknowledgment they can pick up in explicit cultures. The interest for supportable products has aroused universally and maintainability is certainly not a passing trend. Presently more individuals need products that are useful for the environment. The environment is ideal for feasible brands (Pratap, 2018 ).

The interest in maintainable products has developed in the 21^st century as more individuals’ are currently considering environmental security. Moreover, some geographical peculiarities should be considered by Tesla as there are differences in regions and their readiness for products of this sort. For instance, China can be taken as a promising area, while some other Asian states demand additional analysis (Kumar, 2018).

Technological

The advancement of Tesla’s automotive and energy solutions business depends on available technologies. For instance, materials building innovation decides the productivity and cost-viability of the organization’s batteries. It influences a few things in the business world. From production to activities and marketing, in each office innovation assumes a significant job in business. Technological changes happen each day and each brand is in a race to embrace the freshest innovation first. Tesla’s business additionally relies upon innovation and technological development implies sales development in the 21st century. Reasonable innovation is stunningly better since its fame has become exceptionally quick in the cutting edge period (Pratap, 2018 ). This factor becomes a serious facilitator of the company’s development and rise.

Environmental Factors

The gradual degradation of the environment preconditions the appearance of new demands on cars and their effects on climate change. Today, fossil fuels have become less popular and face some criticism because of their contribution to the increase in the level of air pollution and other environmental factors (Kumar, 2018). Under these conditions, the popularity of electric cars increases as they can replace traditional ones and meet demands for sustainability. As far as Tesla emphasizes its environmentally friendly character, this aspect can contribute to the company’s growth.

Legal factors

Law is a very important force affecting businesses all over the globe. Legal factors have grown in importance in the 21st century. From work guidelines to environmental and other sorts of business guidelines, the law can directly affect businesses. The numerous States incidentally hindered the Tesla Sales directly from maker to purchaser. As per these states, the producer is required the connect with an outside vendor. This legal prerequisite can influence the Tesla vehicle conveyance. Besides, having a business implies more cost and less gainfulness. There are other legal issues like patent rights and vitality utilization guidelines. Tesla needs to consent to laws and guidelines to easily maintain the business exercises (Pratap, 2018 ).

Industrial analysis

Tesla is forcing the auto industry to rapidly change. Large established automakers now are making fully electric and hybrid-electric cars. Automakers are starting to explore and include artificial intelligence (AI) in their cars. Not exclusively did Tesla Chief Executive and Chief Product Architect Elon Musk exhibit that shows could be resisted, he did it in an industry with 100-year-old customs, standards, and procedures. The vehicle industry has enhanced previously, however, Tesla, which was established in 2003, has pushed the envelope past what most automakers thought conceivable.

As for the electric vehicles industry, in 2017, the market size was valued at about $118.856 million and is expected to reach about $567,299 million by 2025 (Kumar, 2018). The given numbers evidence the fact that the given sector becomes more popular and attracts new actors. Important factors impacting the sphere include environmental degradation, economic advantages, and technological advancements (Kumar, 2018).

The unsustainable character of fossil fuel and its high price facilitate the fast growth of the industry and its profitability. Modern consumers have an increased level of awareness regarding electric cars and demonstrate intentions to use them. This factor attracts new companies and increases the attraction of the industry. The potential areas of the expansion include Asia, Latin America, the Middle East, and China as one of the major manufacturers of electric vehicles. In 2017, the state produced about 200.000 cars, which constitutes about 5% of global production (Kumar, 2018). In such a way, the electric car industry is on the rise today and offers multiple opportunities for investors.

Competitor analysis

Tesla has had a competitive advantage over auto industry rivals in design innovation since day one. The organization decided to switch up the inventory network and obtain from the electronic manufacturing services model of production that is standard practice in the shopper hardware industry. In this regard, Tesla is nearer to being an innovation organization than a conventional car producer. The EMS model is extending in the automotive industry and any semblance of Foxconn, and Jabil are working with brands including Chrysler, General Motors (GM), Daimler, Jaguar, Ford, and Volkswagen.

Tesla’s main competitors in the given sphere are Nio, BYD company, and Volkswagen. The given corporations also recognize the increased demand for electric vehicles and offer their products to customers (Birk, 2015). Nio manufactures high-class electric cars for the international markets and has its target audience that provides the company with stable revenue (Kumar, 2018). BYD is one of the world’s fast-growing auto companies that also want to occupy the niche and benefit from the creation and sales of electric cars (Kumar, 2018). Finally, Volkswagen is a giant in the auto industry that initiates a new line of vehicles that can be interesting to clients. These brands should be considered by Tesla as the main competitors. Moreover, there is a high risk of new entry as evolving companies will try to attract customers by offering electric cars to meet their demand.

Internal analysis

Business Model

Tesla didn’t develop the electric vehicle or even the extravagance electric vehicle. What Tesla invented was a fruitful business model for carrying convincing electric cars to the market (Serrat, 2017). Some portion of the methodology was building a system of charging stations to settle perhaps the best snag confronting the selection of electric vehicles refueling on long outings. Tesla is determined to changing existing business model inside the heavy automotive industry by selling directly to buyers (Boudette, 2019).

At the same time, the current business model employs the charismatic leader of the company Elon Musk who promotes its products and increases its popularity (Birk, 2015). Moreover, the model emphasizes the fact that the brand is an auto-maker, tech company, and hardware supplier which forms its canvas and contributes to the creation of a recognizable image (Birk, 2015).

Corporate Culture

Tesla’s organizational culture creates the human resource competence necessary for innovative products in the global automotive business. An association’s organizational or corporate culture speaks to the traditions and qualities that characterize laborers’ practices and choices (Ioannou, 2009). Tesla’s organizational culture enables its workforce to scan for perfect arrangements that make the business hang out in the automotive industry and the vitality age and capacity industry. Through the organizational culture, Tesla has encouraged the board to streamline workers to adopt inventive and imaginative practices. These practices are fundamental to keeping up the technological innovation that structures some portion of the organization’s establishment. The basic elements of the corporate culture are the following:

1. Move fast.
2. Do the impossible.
3. Constantly innovate.
4. Reason from “first principles”.
5. Think like owners.
6. We are all in (Birk, 2015).

The existence of given postulates contributes to the creation of a specific organizational culture and unites workers around a particular idea that is central to the company. It also helps to generate a competitive advantage and create a recognizable image.

References

Ali, H. A., & Ahmad, S. Z. (2014). Etihad Airlines: growth through successful strategic partnerships. Emerald Emerging Markets Case Studies.

Birk, D. (2015). Tesla Motors, Inc. Market analysis and definition. Web.

Boudette, N. E. (2019). nytimes. Web.

Ioannou, P. (2009). MAR402 STRATEGIC MARKETING. Academic Journals.

Kumar, R. (2018). Electric vehicle market by type (battery electric vehicle, hybrid electric vehicle, and plug-in hybrid electric vehicle), and vehicle type (passenger car, commercial vehicle, and two-wheeler) – global opportunity analysis and industry forecast, 2018-2025. Web.

Personal Electric Vehicle… (2019). Web.

Pratap, A. (2018 ). notesmatic. Web.

Serrat, O. (2017). Learning in Strategic Alliances. springer.