Assignment on Strategic Management (pdf)
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Added on 2021-04-19
Assignment on Strategic Management (pdf)
Added on 2021-04-19
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Running head: STRATEGIC MANAGEMENTStrategic managementName of the studentName of the universityAuthor note
1STRATEGIC MANAGEMENTQuestion: 1In order to determine the competitive environment of Tesla, Porter five forces model willbe used.Threat of new entrants Threat of new entrants is low or weak for Tesla. This is due tothe reason that developing of electric vehicles involves hugecost.Market of electric vehicles is still in the primary stage. Thus,it is not economical for the new entrants to invest in thissector in huge amount.It is also important to be innovative in operating in this sectorsimilar to the Tesla (Martin 2014).Economies of scale will be high due to high cost ofinvestment and low market potential. Threats of substitutesThreat of substitutes is moderate for Tesla. This is due to thereason that substitute car models of Tesla are fewer innumbers.Small numbers of pure electric models are available in themarket (Stringham, Miller and Clark 2015).However, more car makers are introducing electric vehicles inthe market.Bargaining power of thesuppliersBargaining power of the suppliers for Tesla is high due to thereason that similar to any other car makers, Tesla also sourcedifferent car components.However, suppliers are having less control on the forwardintegration of Tesla (Bierau et al. 2016).Number of suppliers is also lower in the electric vehiclemarket.Bargaining power of thebuyersBargaining power of the buyers for Tesla is low to moderate.This is due to the reason that buyers are having low options inthe market.Switching cost is more due to the inferiority of the competingmodels of Tesla.However, having indirect substitutes such as other forms oftransportation is increasing the bargaining power of thecustomers.Industry rivalryCompetitive rivalry is high due to the presence of theestablished car makers in this electric vehicle market.Car makers are aggressive in pushing their products in themarket (Moritz et al. 2015). Disruptive innovation is required to stay ahead in thecompetition.
2STRATEGIC MANAGEMENTCurrently, there are number of electric cars launed by different brands such as NissanLeaf, Chevrolet Bolt and Toyota Prius. These cars are also attracting number of customers.However, the major competitive advantage for Tesla over these cars is their distance coverageand performance. These cars are not having the performance as Tesla. However, they are alsodeveloping their technologies and will launch more updated electric vehicles. Already Porscheand Volvo announced that they will launch high end electric cars. Thus, the competition forTesla is about to increase. Question: 2Internal environment of TeslaStrengths Innovation and latest technologies (Soliman, 2013)Positive brand recognition (Rossitor, 2014)Distinctive product offering (Kim, Im & Slater, 2013)WeaknessesLimited reach of market (Vahlne & Johanson, 2017)Higher quoted price of the car models (Davcik & Sharma, 2015)Less access to the financial resourcesOpportunitiesGlobal market opportunitiesDiversification (Kim et al., 2013)ThreatsIncrease in competitionPrice of the componentsCore competencies of Tesla include the leadership of Elon Musk due to the fact that it isleadership approach of Elon Musk, which transformed Tesla in to a branded and renowned carmaker in small period (Wowreczko, Kampker and Burggraf 2014). In addition, organizationalvalue of them of protecting the environment is also creating distinctiveness in the competition. Interms of capabilities, Tesla is having the access to the latest and most updated technologies indeveloping electric power trains among the competition. Thus, they are maintaining the status ofearly mover in the market (Schulze, Paul MacDuffie and Taube 2015). The sole concentration of
3STRATEGIC MANAGEMENTthem in developing electric power train is helping them to develop more effectively than theircompetitors. On the other hand, the investment coming from Toyota, Panasonic and other firmsis solidifying the financial capability of Tesla.Valuable The visionary power of Elon Musk is adding value for Tesla (Glauser& Holland, 2016).Access to the latest and innovative technologies of Tesla is valuabledue to the reason that Tesla is known for their innovative and one ofkind technologies in the market. Rarity Leadership skills like Elon Musk in rare in the auto industry (Dobbs,2016). The technology in electric power train developed by Tesla is rare innature (Hardman, Shiu and Steinberger-Wilckens 2015). This ishelping them to stay ahead in the competition.Imitability Not many other CEO of different car brands can match the charismaof Elon Musk.The innovation and technology of Tesla cannot get imitated by others(Johannsson et al. 2015).Organizationalcapability Elon Musk is having the capability of strategically and optimallyutilizing the available resources (Marques, 2017). Tesla is having the world largest lithium battery (Lu et al. 2013).Thus it can be concluded that the capabilities of Tesla are mainly the access to the latestand innovative technologies. This can be considered as a capability due to the reason that thetechnology advancements of Tesla enable them to overcome the natural barriers faced by othercarmakers in their electric vehicles (Stringham, Miller & Clark, 2015). For instance, Tesla firstable to portray that electric vehicles can also have faster acceleration and more distancecoverage. Moreover, another capability of Tesla is their access to larger financial resources dueto the reason that manufacturing of automobile is having the requirement of huge investment.Thus, it is enabling Tesla to invest extensively in different sectors such as building upsupercharger station. These stations can also be considered as their capabilities due to the reason
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