Strategic Group Analysis and Competition Contents in Tesla

STRATEGY AND
COMPETITION

CONTENTS
INTRODUCTION......................................................................................................................3
TASK – 1...................................................................................................................................4
1a. ..........................................................................................................................................4
Product market mission of Tesla ...........................................................................................4
Porter’s generic strategies.......................................................................................................4
Strategic group analysis .........................................................................................................5
Value chain and resource based view of Tesla ......................................................................6
Culture of Tesla .....................................................................................................................8
Stakeholders of the company .................................................................................................9
1b..........................................................................................................................................10
Importance of performance objective for the management of operations of Tesla .............10
Evaluating how supportive Operations are to the overall strategy of Tesla.........................11
Analysing how Tesla ensures it can meet its performance objectives..................................12
1c. ........................................................................................................................................13
VRIO analysis of Tesla ........................................................................................................13
Comparison with competitors...............................................................................................14
SWOT analysis and conclusion ..........................................................................................15
TASK – 2.................................................................................................................................16
Detailed stakeholder analysis of Tesla ................................................................................16
CONCLUSION .......................................................................................................................17
REFERENCES ........................................................................................................................18
APPENDICES..........................................................................................................................21

INTRODUCTION
In this fast changing business environment, each and every organization is working
with their best ability. Every day brings new challenges and turn in a particular nation and in
a global economy. It is often very hard to lift the head above the parapet and oversee outside
the organization at the things which are changing. Those firms who performs in this dynamic
environment are considered as more successful and achieves more for their beneficiaries.
This is because of the fact that carrying out strategic analysis supports the firm to becoming
more sustainable, innovative, relevant and resilient. Throwing light in relation with the
electric vehicle industry, it is achieving growth at a fast pace because the fuel prices remains
high and there is a greater concern for the environment which results in increase in the
demand for more energy efficient cars (Andrews and Johansen, 2013). Companies such as
General Motors, BMW, Tesla and Toyota are investing huge amount in research and
development of effective electric vehicles supported by the grants being offered by the
government. Thus, it becomes very necessary to carry out complete strategic analysis of the
firm and evaluate the present strategic position of the firm in this global automotive market.
In this regards, Tesla is being taken under consideration for the current research report.
Tesla is an American-multinational corporation founded in the year 2003. The
company is specializes in electric vehicles, solar panel and lithium-ion battery energy storage
manufacturing. The firm is based in Palo Alto California and is getting popularity for
commercializing electric car being empowered by high performing battery packs. In addition
to this, to complete its offers, Tesla also sells power rain components and manufactures
battery charging equipment. The main source of competitive advantage of the company
comes from its ability to make use of an existing technology in an effective manner. The firm
has distinguished their products from the competitors in the automotive industry by
revolutionizing the lithium ion batteries to hold more charge and offer better mileage in
comparison with conventional hybrid based electric vehicles (Tesla, 2016). Consequently, it
becomes very important to analyse the product market mission of the firm and strategic group
analysis by including various analytical tools such as porter’s generic, value chain, VRIO and
stakeholder analysis. Furthermore, the report will also include the relative significance of
performance objectives for the management of operations of the firm. Concerning this,
numerous theories as well as concepts related to operations management will be analysed.
The final part of the report will include a detailed stakeholder analysis of Tesla and will
throw light on the ways company satisfy all their key stakeholders.
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TASK – 1
1a.
Product market mission of Tesla
The mission of the company reflects the nature of their prominent all-electric
automobile manufacturing and other related businesses. The firm was established in the year
2003 and become profitable in the same year as well. They have continued to grow and this
clearly depicts that the market is also responding to the automotive and energy storage
products of Tesla. This situation throws light towards the suitability of the firm’s mission
statement. In essence, the corporate and product market mission gives direction to strategic
decisions of Tesla like analysing the things needed to achieve business effectiveness
(Holland, 2007). Further, the firm was also successful in global electric automobile market
because of its strong brand image and increasing popularity. In addition to this, satisfaction of
the product market and corporate mission serves as an indicator of operational effectiveness
and business development of Tesla.
The main mission of the firm is to accelerate the world’s transition to sustainable
energy. The business of Tesla addresses market opportunities for renewable energy. The
market mission of the firm is to recognize the relevance of batteries and related energy
storage products of the firm in market additionally to the electric vehicle market. At the initial
level, the product of the firm was a high performance electric sports car being known as Tesla
Roadster. But, the long term plan of the company is to manufacture a wide range of models
that will significantly include affordable priced family cars. This is pertains to the fact of
overarching purpose of Tesla to support expedite move from mine and burn hydrocarbon
economy in the direction of solar electric economy (Hitt, Ireland and Hoskisson, 2014).
Porter’s generic strategies
For the purpose of achieving a competitive edge over the others firms in the global
automotive market, Tesla has significantly applied generic strategies. A generic competitive
strategy being developed by Michael Porter’s represents the approach of the firm to compete
in the market and achieve competitive edge over rival businesses. This business ts focuses on
making use of advanced technologies in its electric vehicles and related products as a way of
competing against BMW, General Motors, Toyota Plc, Honda, Nissan and Volkswagen
among other automobile manufacturer. Further, the generic strategies of the company
empowers them to maintain competitive advantage and attract early adopters in the global
automotive market. The conforming intensive strategies will help in the growth of the firm on
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the basis of increasing sales revenue from present market here the firm carries out their
business operation (Tanwar, 2013).
The generic competitive strategy of Tesla is broad differentiation. It helps in building
competitive advantage on the basis of development of products that entirely distinguishes
from the products which have been offered by rival organisations. For illustration, the
product of Tesla are quite competitive, as they have integrated advanced environmental
friendly technology by taking into consideration the fact that vast majority of automobiles
today makes use of internal combustion engines. By seeking help from differentiation
strategy, the firm was able to attract all potential customers who have interest in environment
friendly products. At the primary level, the firm have utilized differentiation focus for
attaining competitive edge (Glazer, 2009). With this strategy, Tesla focused on the
uniqueness of its products and also paid attention in early adopters in the high end market for
electric vehicles. All these early adopters are wealthy customers who purchases newly
introduced products regularly. But, now that This Company have established them in the
market, the production costs are decreasing, the competitive strategy of Tesla has shifted to
broad differentiation. The justification of the same is that this business have achieved
economies of scale and reputation in the market which permits this business to target more
number of customer than before. The generic strategy of the company needs appropriate
strategic objectives to make sure competitive advantage. For instance, one of the strategic
objective of the firm is to increase investment in research and development so as to create
new products that contends the market demand for enhanced renewable energy solutions like
batteries for numerous purposes etc. One more strategic objectives related with the generic
competitive strategy is to reinforce competitiveness by extending share in the market for
generating more sales and to support brand popularity (Alex and Mustafa, 2007).
Strategic group analysis
Seeking help from the strategic group analysis, the firm will be in a position to
determine organizations which have similar features that likely compete with each other in
the same market. Relating with the present case, the analysis will emphasize on electric
vehicle market with the major competitors of Tesla being placed deliberately relative to the
conditions of the market in which the company operates (Clausen and et.al, 2012). There are
numerous firms which are giving competition to Tesla and are related to the position of the
company.
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Figure
1: Strategic Group Analysis
(Tesla strategic audit, 2018).
As given in the below figures, automobile companies such as Nissan, Toyota, Ford
and Chevy all are competing closely with each other. They all are providing consumer based
electric vehicles alternatives that are reasonably priced yet share similar weaknesses like
limited performance, lack of range and irrelevant interruption of the status quo. Further, on
the other hand of the figure, Tesla as well as BMW are competing for the premium end of the
electric vehicle market with Model S and X and Tesla Roadster leading the pack. The market
and group analysis will alter though, since the firm achieves its vision of developing more
customer friendly care with model 3. The company will begin to move stealthily into market
which is being dominated by large automobile producers. The model 3 of Tesla will compete
with Chevy Volt, Toyota Prius, Nissan Leaf and Ford Fusion Hybrid significantly (AFDC,
2016).
Value chain and resource based view of Tesla
Value chain analysis
According to Porter, value chain analysis is being defined as a set of activities being
performed by the firm in an industry in order to deliver products and services for the
customers. Unlike competitors, all the support as well as primary activities of Tesla is
controlled and managed internally.
Primary activities Inbound logistics – Company designs as well as manufacturers all important parts
internally and thus, control inbound logistics and decreases the waiting times.
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