Managing Innovation

Running head: MANAGING INNOVATION
MANAGING INNOVATION
Name of the student
Name of the university
Author note

1MANAGING INNOVATION
Table of contents
Question 1........................................................................................................................................3
Can Tesla give strong competition in to the others automobile brands?.........................................3
Question 5........................................................................................................................................5
Why Tesla has opened R&D lab in a “technologically peripheral” location like Greece?.............5
Reference list and bibliography.......................................................................................................9

2MANAGING INNOVATION
Question 1
Can Tesla give strong competition in to the others automobile brands?
Analyzing the traditional automobile industry, it has been identified that after the great
recession of 2008, the UK economy has brought huge impact on the automobile industry
(Rothaermel 2013). After 2016, the US automobile market has started recovering the situation. In
this situation the demands for big cars have been increased. In the year 2003, the automotive and
Energy Company namely Tesla was founded by a group of engineers. In the words of Mangram
(2012), the company has gained strong market position based on its technological innovation
strategies. In order to gaining competitive advantage, in the year 2016, in the month of March,
Model 3, the latest electronic car has been introduced by the company. Analyzing the features of
Model 3, it has been identified that with 75-kilowatt hour battery backup and 0-60 accelerate
facility within six seconds, it has become the highly innovate car (Moritz et al. 20915). With the
increasing promotional activities, the product has got high popularity in the market. However,
due to negative promotion regarding the internal working situation in Tesla, negative brand
image of the company has been developed.
Analyzing the US automobile industry, it has been identified that it is really very tough for a new
organization to enter in the US automobile sector (Laney 2017). Brand loyalty as well as gaining
the manufacturing abilities can create complex situation for the new entrants in the market. based
on the research in US automobile industry it has been identified that world’s most valuable
brands including Mercedes-Benz with an estimated brand value of $34 billion, Toyota, with an
estimated brand value of $45 billion, BMW with $31 billion, Audi with $14 billion and Honda
with $26 billion are ruling the market. Largest expenditure has been done by these organizations

3MANAGING INNOVATION
for making the acquisition between 2006 and 2016 (Laney 2017). The raw materials of
automobile business practices are being collected from the more than 7 million suppliers. The
supply chain business in automobile industry is highly fragmented. It is true that based on the
analysis, it has been identified that due to availability of three tiers of suppliers in the market,
bargaining power of the suppliers is low in all over the globe. The major competitive key factors
of Tesla are most notably, growing sales and lowering the cost to build battery packs, which has
made it stronger.
Analyzing the availability of car buyers in the US market, it has been identified that near
about 113 million registered passengers are available (Whalen et al. 2016). The rate of car
retention in US market is also very high. However analyzing the rate of driver licensing numbers
in 2014, it has been identified that the rate has been dropped from 92% to 77%. Thinking process
of people has been changed, which has mainly focused on MP3 players, satellite radio,
navigation system and mobile integration. In this situation it can be said that changing needs of
the customers has increased the bargaining power. Although Tesla has developed its strong brand
image in the market, but it cannot be denied that analyzing the complex situation in US
automobile business environment, it can be said that it will be tough for the company to gain
competitive advantages.
Analyzing the position of Tesla plants in US, it has been identified that the company has
major contribution for bringing the technological innovation in automobile industry. Tesla has
introduced different automobile manufacturing plants, among which California and South
Fremont plant have strong contribution in its productivity. In the east industrial area of South
Fremont, the large plan has been developed by the company, in which near about 10000 people
have been employed in 2018 (Laney 2017). In order to gain the positive net income Tesla has