Strategic Management for Competitive Advantage Report 2022

Strategic Management

Table of Contents
Introduction................................................................................................................................1
The strategy triangle in 2028......................................................................................................1
Competitive advantages (How it is trying to win the game)..................................................1
Positioning..............................................................................................................................2
Resources...............................................................................................................................3
Structure of industry in 2028......................................................................................................3
Stage of the industry in 2028.....................................................................................................3
Relevant forces for the electric vehicle industry........................................................................4
Evolving world and its impact on the industry..........................................................................5
Forecast for the industry and firm..............................................................................................5
References..................................................................................................................................6
Appendix....................................................................................................................................9
List of table
Table 1: VRIN analysis of Tesla................................................................................................9
List of figure
Figure 1: Porters' five forces analysis of Tesla in future............................................................4

Introduction
Strategic management is significant for the competitive edge of the businesses by
prioritizing business activities and resource competencies (Ansoff et al. 2018). In this
context, the present report is based on the strategic management of Tesla in 2028. For this
purpose, the future strategic management of Tesla has been assessed by considering the
current scenario. Apart from this, the future dynamics of the electric vehicle industry have
also been assessed in the report.
The strategy triangle in 2028
The goal of Tesla in 2028 is to gain a leading position through sustainable
technological products because it aims to enhance the world’s shift to sustainable energy
(Tesla, 2019). This goal will make a reputed position with high profitability. In this regard,
Porter (1996) proposed the strategic triangle which indicated that the resources such as
human, technical and capital resources are crucial to ensure the positive positioning.
However, the firm might face the restriction over the capital resources because the
convertible debt of Tesla has increased up to 2.7 billion dollars in May 2019 (The Economist,
2019). The higher debt will affect the flow of capital which consequently harms the routine
operation such as production. Further, the unpredictable demand will also create challenges
for the organization in 2028. Apart from this, the ranking of the company got declined by 39
spots in the Axios and Harris poll of brand reputation. It will make the challenges for the firm
to survive against the competitors in 2028. Although, Tesla makes the unique position in the
market by rendering the eco-friendly vehicles that have high performance. These basic
components of Tesla’ s strategic triangle including goal, resources and position reveals that
the firm can face several challenges in 2028 in terms of resources and positions.
Competitive advantages (How it is trying to win the game)
As per the sustainable competitive advantage model of Wiggins and Ruefli (2002),
the sustainable product provides competitive advantages to Tesla because its products have a
negligible carbon footprint. Besides sustainability, the products also have innovative features
like high speed and autopilot which offer the generic differentiation advantages to the
business (Forbes, 2018). In this context, Porter and Millar (1985) proposed the generic
differentiation advantages model and noted that innovativeness supports to gain consumer
loyalty despite premium pricing. However, due to some safety issues in the product, the
company lost the life of a driver which consequently decreases the market share of the firm
1

(The Economist, 2018). Although, the organization continuously innovates its products and
services that will augment the competitive edge by facilitating the safety issues for 2028.
Apart from this, several other car manufacturers like Jaguar also targets to launch the electric
SUV. It can increase the competition for the brand because other leading companies diversify
the product portfolio by launching electric vehicles which might increase the consumer
switching. In the same manner, the company face the challenges in finding new customers for
its Model 3 car which makes it even harder to survive in 2028. It depicts that increasing issue
of sustainability and positive impact of the electric vehicle may enhance the competition for
Tesla motor. However, the business would be flourished with its leading position and variety
of vehicles.
Besides the product innovation, supply chain management highly contributes to
providing a sustainable competitive edge to the business. For this purpose, the firm adopts
different strategies such as collaborating with those partners which rarely work with auto
manufacturers like battery suppliers (Tradegecko, 2019). This strategy will also support Tesla
in future by increasing the competitive advantages in manufacturing of customized products
through determining strategic supply chain (Lopez and McKevitt, 2017). Apart from this, the
company also collaborates with other car manufactures for making the low cost of a basic
component of cars. It provides cost advantages to Tesla (Tradegecko, 2019; Lopez and
McKevitt, 2017). However, as the electric vehicle industry will grow then the supply side
will also be growing which can facilitate the firm to select the appropriate supplier for the
products. Therefore, the organization may have several supply-side opportunities in 2028.
Positioning
As per the Porters’ generic strategies, Tesla occupies a strong leading position
because the firm considers technological innovation in developing sustainable products
(Tradegecko, 2019; Tanwar, 2013). It increases the self-esteem of the individuals for buying
electric cars (Groener, 2016). It will also support the businesses to attract the segments in the
future. In contemporary scenarios, Tesla is forefront in technological innovation in the
automobile sector. The continuous innovation in future facilitates to maintain the
differentiating position in 2028. Even it also facilitates to use the focused differentiation for
different narrow segments of customers. However, the consumer services provided by Tesla
are not appropriate (Salinas, 2019). For this purpose, the firm will increase its focus on
improving consumer satisfaction by rendering excellent services. Therefore, innovative
2

products and excellent services will be the main concern for Tesla in determining the
appropriate positing in 2028.
Resources
Resources are significant to streamline business operations (Išoraitė, 2014). In this
context, organizational resources contribute to enhancing the competitive edge of the
business. On this note, the VRIN model is suitable for assessing resource competencies of
the organization. In this context, it has been found that some resources may provide
competitive advantages to Tesla whereas some will be rare in 2028 (refer table 1). For
instance, human resources such as leader will be a great strength of the business in future
(The Economist, 2019). Further, the futuristic design and high performance of the Tesla car
enhances the brand reputation that encourages the customers to obtain and drive the electric
car. However, it will not be rare in future because several other brands' targets to enter into
the electric vehicle industry (refer table 1). Though, Tesla is the early adopter of electric
vehicles which will help in maintaining its leading position (Tradegecko, 2019). Apart from
this, the supercharge network of Tesla provides the appropriate services to consumers
(Shahan, 2019). However, number of consumers will be increased in future that forced to
globally expand the supercharger network. Owing to this, the difference in the market
condition in future will affect resources competence of Tesla.
Structure of industry in 2028
The electric vehicle industry structure is oligopoly because the Tesla, BMW and
Nissan are the dominant suppliers of the electric cars (Energy Sage, 2019). As per the matrix
of industry structure and available advantages proposed by the Porter and Millar (1985) that
Tesla have considerable differentiation and cost advantages from oligopoly market. In the
future, the electric vehicle industry will have monopolistic competition because the number
of players will be increased. The high competition in the market can moderate the profit of
Tesla that will be considerable challenge in future (Kumar et al. 2011). However, the firm is
the dominating player of industry and its competitors are not as innovative as Tesla that
provides differentiation advantages in current and future scenario (Schmidt, 2019). Therefore,
the structure of the industry will slightly change in 2028 which forced to adapt the strategies
accordingly.
3

Stage of the industry in 2028
As per the industry life cycle model, the electric vehicle industry is on the growth
stage because the product attracts a large market segment by improving the features of the
product. It further helps to deliver the value to the customers (Mahr, Lievens and Blazevic,
2014). Further, Tesla decreases the price to increase the demand that contributes to
generating revenue. In this context, the electric vehicle market is continuously growing and it
is expected that it will also grow in future (Bloomberg NEF, 2019). It is estimated that
electric vehicles will increase up to 27 million units by 2030. It shows that the industry will
be in the shakeout stage in 2028 because some players will be eliminated due to high
competitions and some will be merged with another to obtain high market share. It will also
force Tesla to tie-ups with other brands to increase the presence in the market for attracting
customers. Therefore, the market condition will be different in 2028 from the current scenario
that fosters the business merger.
Relevant forces for the electric vehicle industry
Figure 1: Porters' five forces analysis of Tesla in future
According to porters five forces model, the high power of buyer in 2028 will be
considerable forces for Tesla in 2028 because the number of players will be augmented with
the variety of products (Bloomberg NEF, 2019). It will increase competitive rivalries among
the competitors as well as consumer power because they have more options to purchase the
electric car (refer figure 1). However, electric vehicles are not substituted by the other
4
Competitive
rivalry (High)
Threats from
substitute
(Low)
Threats from
new entrants
(High)
Consumer
power (High)
Supplier
power (low)

vehicles which decrease the threats from the substitutes. Further, as the industry grows the
supply side will also grow that enable the business to select the appropriate suppliers and
decrease the bargaining power of supplier (Lopez and McKevitt, 2017). Apart from this, the
new player will increase the potential entrants because the high growth of industry enhances
the new startups as well as motivates the international expansion (Forbes, 2018). For this
purpose, the firm will target to gain the loyalty of customers to survive in a highly
competitive environment. Thus, these will be major forces for Tesla that affect it in 2028 to a
great extent.
Evolving world and its impact on the industry
The world is continuously evolving in different aspects as technologically,
economically and environmental protection which has a higher impact on the electric vehicle
industry (Forbes, 2018). For instance, public perception towards the eco-friendly product is
changing as they highly prefer it. It will force the Tesla to focus on developing more
sustainable products that have a zero-carbon footprint. Apart from this, increased living
standard encourages the individual to purchase sustainable products despite having a high
price (Jansson, Marell and Nordlund, 2010). However, it is significant to maintain the
pricing of eco-friendly products through which everyone can easily access it (Cheah and
Phau, 2011). On the other hand, technological advancement shrinks the global boundaries
that force the business to serve the higher consumer base. Therefore, the evolving world
creates several opportunities and challenges for Tesla in 2028.
Forecast for the industry and firm
As per the above analysis, it can be forecasted that 2028 will be highly competitive
for Tesla because of the enhancement in rivals. Further, the technological innovation in the
industry will be of a higher level for attracting the customers by offering valued products and
services. Apart from this, future conditions will shape the industry structure and stages that
force the businesses to adapt the positioning strategy as well as to consider the resource
competencies. The changing resources in future may affect the competitive edge of Tesla.
Therefore, the future of Tesla and the electric vehicle industry will be interesting because it
will provide opportunities as well as challenges.
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References
Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. and Ansoff, R., 2018. Implanting
strategic management. Springer.
Bloomberg NEF, 2019. Electric Vehicle Outlook 2019. [online]. Available at:<
https://about.bnef.com/electric-vehicle-outlook/>. [Accessed on 11 September 2019].
Cheah, I. and Phau, I., 2011. Attitudes towards environmentally friendly products: The
influence of ecoliteracy, interpersonal influence and value orientation. Marketing Intelligence
& Planning, 29(5), pp.452-472.
Energy Sage, 2019. Electric vehicle manufacturers & companies. [online]. Available at:<
https://www.energysage.com/electric-vehicles/buyers-guide/top-ev-companies/>. [Accessed
on 11 September 2019].
Forbes, 2018. Reviewing Tesla's Competitive Advantages As Jaguar Launches Well-Reviewed
I-Pace. [online]. Available at:<
https://www.forbes.com/sites/greatspeculations/2018/06/26/reviewing-teslas-competitive-
advantages-as-jaguar-launches-well-reviewed-i-pace/#55cf9e1b738b >. [Accessed on 11
September 2019].
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Groener, D.E., 2016. Framework for strategy formulation: Testing Mintzberg's positioning
school and its strategic management tools to the modern approach of strategy formulation
within different companies in The Netherlands (Master's thesis, University of Twente).
Išoraitė, M., 2014. Importance of strategic alliances in company’s activity.
Jansson, J., Marell, A. and Nordlund, A., 2010. Green consumer behavior: determinants of
curtailment and eco-innovation adoption. Journal of consumer marketing, 27(4), pp.358-370.
Kumar, V., Jones, E., Venkatesan, R. and Leone, R.P., 2011. Is market orientation a source of
sustainable competitive advantage or simply the cost of competing?. Journal of
marketing, 75(1), pp.16-30.
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Lopez, E. and McKevitt, J., 2017. How Tesla worked with suppliers to scale production from
hundreds to 50K. [online]. Available at:< https://www.supplychaindive.com/news/Tesla-
supply-chain-supplier-relationship-production/434152/>. [Accessed on 11 September 2019].
Mahr, D., Lievens, A. and Blazevic, V., 2014. The value of customer cocreated knowledge
during the innovation process. Journal of Product Innovation Management, 31(3), pp.599-
615.
Porter, M.E. and Millar, V.E., 1985. How information gives you competitive advantage.
Porter, M.E., 1996. What is strategy. Published November.
Salinas, S., 2019. Tesla's biggest problem is its customer service, according to a new
Bernstein survey [online]. Available at:< https://www.cnbc.com/2019/03/11/teslas-biggest-
problem-is-customer-service-new-bernstein-survey.html>. [Accessed on 11 September 2019].
Schmidt, B., 2019. Tesla Model 3 dominates US electric vehicles sales growth in 2019.
[online]. Available at:< https://thedriven.io/2019/08/09/tesla-model-3-dominates-us-electric-
vehicles-sales-growth-in-2019/>. [Accessed on 11 September 2019].
Shahan, Z., 2019. Tesla Supercharger Network Evolution — From 6 To 13,344
Superchargers In 6 Years. [online]. Available at:<
https://cleantechnica.com/2019/07/06/tesla-supercharger-networks-evolution/>. [Accessed on
11 September 2019].
Tanwar, R., 2013. Porter’s generic competitive strategies. Journal of business and
management, 15(1), pp.11-17.
Tesla, 2019. About Tesla. [online]. Available at:< https://www.tesla.com/about>. [Accessed
on 11 September 2019].
The Economist, 2018. Tesla is heading for a cash crunch. [online]. Available at:<
https://www.economist.com/business/2018/04/05/tesla-is-heading-for-a-cash-crunch>.
[Accessed on 11 September 2019].
The Economist, 2019. Tesla’s performance gives Elon Musk much to think about. [online].
Available at:< https://www.economist.com/business/2019/06/15/teslas-performance-gives-
elon-musk-much-to-think-about>. [Accessed on 11 September 2019].
7

Tradegecko, 2019. Tesla Supply Chain - Custom-build World Class Supply Chain. [online].
Available at:< https://www.tradegecko.com/blog/supply-chain-management/tesla-custom-
built-supply-chain >. [Accessed on 11 September 2019].
Wiggins, R.R. and Ruefli, T.W., 2002. Sustained competitive advantage: Temporal dynamics
and the incidence and persistence of superior economic performance. Organization
science, 13(1), pp.81-105.
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Appendix
Table 1: VRIN analysis of Tesla
Resources Valuable Rare Non-
imitable
Non-
substitutab
le
Competitive
advantagesCurr
ent
202
8
Curr
ent
202
8
Curr
ent
202
8
Curr
ent
202
8
Current 2028
Leader Yes Ye
s
Yes Ye
s
Yes Ye
s
Yes Ye
s
Competit
ive
advantag
es
Competit
ive
advantag
es
Location Yes Ye
s
No No Yes Ye
s
Yes Ye
s
Tempora
ry
competiti
ve
advantag
es
Tempora
ry
competiti
ve
advantag
es
Futuristic
design
Yes Ye
s
Yes No Yes Ye
s
Yes Ye
s
Competit
ive
advantag
es
Tempora
ry
competiti
ve
advantag
es
Highly
efficient
operation
Yes Ye
s
No No Yes No No No Competit
ive parity
Competit
ive parity
High
control
over the
componen
ts
Yes Ye
s
No No Yes No No No Competit
ive parity
Competit
ive parity
Superchar
ger
Yes Ye Yes No Yes No No No Tempora
ry
Competit
9

network s competiti
ve
advantag
es
ive parity
10