Business level Strategy / Generic Strategies Assignment 2022

Business level Strategy / Generic Strategies

Business model
A firm’s business model is a system of interdepended and interrelated activities to meet the
market needs, determining the business relationship with the customers, partners, and
vendors.
The success of Tesla's business model
Elon Musk has entered a high-end automobile market where the customers can afford the
premium payment. Then he allows low pricing in his business model which drives the growth
by achieving higher unit volume. Tesla’s earning remain marginal as they provide the society
zero-emission products for reducing the side effect on the environment due to the combustion
engine of the electronic car (Amit & Zott, 2012). Tesla gives priorities to its stakeholders
based on their CSR strategy (Grijalva, 2017). They are respectively – Society/ community,
Customers, Employees, Shareholders/ Investors and Shareholders/ Investors. In order to
support the interest of their community and enhance their value, Tesla also allows other
businesses to use their patent for technologically advanced products for ecological
cleanliness. The second priority level of stakeholders is the customers who support the
income, products, and pricing of Tesla. In order to offer a more affordable price to the
customers, Tesla manages the production cost by declining the purchase of batteries from
Panasonic and gains customers' value. Tesla's Model S offers low-cost maintenance over six-
year ownership. The third priority of Tesla is employees who are directly related to the
performance. Tesla builds its capabilities with valuable resources, the staffs of the company
as they are considered the intellectual property of Tesla. In order To enhance the value of this
stakeholder group, Tesla motors offer a competitive salary, compensation benefits and
professional development skills. At the initial stage, the company was highly depended on the
shareholders or investors as they support the company with capitals or allowing cash flow.
Tesla tries to maximize the value of stakeholders’ wealth through new product development
and maintaining ecological sustainability. The activities of Tesla are highly affected by
government activities such as changing of policies and legislation act for businesses. Being a
stakeholder group government also impacted by Tesla's compliance and state economic
growth.
Volkswagen’s competition to Tesla
The risk of Telsa has been squeezed after introducing to the Niche market of Electronic cars.
The German automotive company Volkswagen creates a threat for Tesla by combatting to
Tesla’s dominance in the Luxury electronic car market. The captures the luxury niche market
by advanced technology and innovative design in their sports’ car (Cao, 2019). In response,
Tesla combats this challenging by assuring their market segments both in the Luxury and
affordable segments. Apart from that, Tesla has high volumes of products with high
scalability in US and offshore markets, including China, Australia and Europe (Nielsen &
Lund, 2018). Thirdly, Tesla is dedicated to only one Niche, electronic cars while Volkswagen
deviates into other niches.