Tesla's Business Strategy, Competitive Analysis, and Evaluation Report

This report offers a comprehensive analysis of Tesla, examining its business strategy, competitive landscape, and market position. The analysis includes an evaluation of Tesla's strengths, such as its high product differentiation and strong marketing policies, as well as its weaknesses, including limited experience in new product development and single-source supply. The report also identifies opportunities for growth, like the increasing focus on reducing fossil fuel consumption, and threats, such as competition and currency exchange rates. It explores Tesla's strategic approach to sustainable competitive advantage, focusing on valuable, rare, and imperfectly imitable resources. The critical success factors, including product innovation and addressing customer needs, are discussed alongside campaign strategies and the company's potential as an investment opportunity. The report concludes with an assessment of the risks and future prospects of Tesla within the automotive and renewable energy sectors, referencing multiple academic sources to support its findings.

Running head: TESLA
Tesla
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Table of Contents
Introduction......................................................................................................................................2
Analysis and evaluation...................................................................................................................2
Competitors......................................................................................................................................2
Situational analysis..........................................................................................................................3
Strength........................................................................................................................................3
Weakness.....................................................................................................................................3
Opportunities...............................................................................................................................4
Threats.........................................................................................................................................4
Criteria of sustainable competitive advantage.................................................................................4
Critical success factors....................................................................................................................5
Campaign.........................................................................................................................................5
Conclusion.......................................................................................................................................5
Reference.........................................................................................................................................7

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Introduction
Tesla was founded by a south- African and Canadian- American billionaire businessman,
inventor, investor and engineer. It is a famous company spread all over the world for
manufacturing luxurious and comfortable electric vehicles. They are specialized in creating
storage in lithium- ion battery energy and residential solar panels. They have also introduced two
energy storage products, Powerwall home battery and Powerpack industrial scale battery. They
have also become one of the leaders in providing solar power systems in the US. There
improvement and growth showed that they are dedicated in operating the energy sector,
especially in the sector of renewable energy (Bettis et al., 2016).
Analysis and evaluation
Tesla is trying to initiate the battery technology into homes and industry as a part of their
elaborate plan to amend the power grid with numerous small power plants made of solar panels
on roofs and batteries. It was announced that Tesla’s expansion into the home and industry
battery market will set out another ambitious mission. Their aim is to fundamentally change the
way the energy is utilized by the world. The battery Powerwall, although made by Tesla will be
sold by other companies too, which include their partner SolarCity. The battery will be expensive
and out of reach for most of the customers. It will have a price of $3000 to $3500 depending on
the desired capacity. This can lead to the discouragement of adopting the product which has only
limited use (Eden & Ackermann, 2013).

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Competitors
Tesla is far from being the only company who is looking for profit in the rechargeable
batteries at home. For the home purpose, it is a necessary purchase because it can convert their
home to solar power. The batteries will store electricity that is generated by solar panels which
can be utilized at night or during peak grid times for saving money on electricity. The batteries
can also be used to charge electric vehicles and that is why most of the automakers are now
selling their own units (Chen, Delmas & Lieberman, 2015).
Situational analysis
Electricity storage is largely regarded as one of the most important technological
breakthrough that would happen in the near future and change the complete scenario in which
power system operates. The ability by which energy is stored at scale will bring a revolution in
the operation of electricity grid. Tesla, instead of relying on the power of base load, can be
increased depending on the peak demand. There is a move to generate power wherever used and
stored when it is not needed. The rising of storage technologies including battery storage like
Powerwall and Powerpack is expected to take off in the coming years and will be able to
compete with the traditional power stations (Collings, 2014).
Strength
Tesla’s home batteries are the best way to solve the solar energy issue. They have high
product differentiation and electric power train technology. They have related diversification in
product portfolio and powerpack applications. Their strong marketing policies can improve
customer base. The integrated battery manufacturing is done at Gigafactory.

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Weakness
The weaknesses of Tesla batteries include single source of supply cells for battery
powerpacks. Limited experience in new product development and handling multiple models can
be a challenge. Little profitability and increased assets and debt liability will be considered as
hurdle in their path of success (Ethiraj, Gambardella & Helfat, 2016).
Opportunities
Increased attention towards reducing fossil fuel consumption and expansion of the
ecosystem to explore the related market opportunities can be regarded as factors of growth and
development for Tesla powerwall and powerpack.
Threats
BREXIT, i.e. exit of UK from European Union, limited supplier network base, foreign
currency exchange rates and huge competition are the major threats for these products. They will
have to consider these threats in order to make an impact on the newly implemented products.
Criteria of sustainable competitive advantage
Valuable resources- the batteries allow the company Tesla to improve their efficiency and
effectiveness. But the changes in customer demand, competitors’ products and technology can
make a valuable product less valuable; Rare resources- as the batteries Powerwall or Powerpack
are not controlled by other competitors, it is required to retain a competitive advantage;
Imperfectly imitable resources- the products are to be very costly or not possible to imitate; Non-
substitutable resources- the products are highly valued, exceptional and imperfectly imitable. No
other companies can replace or manufacture such products of a same value or competitive
advantage.

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Critical success factors
The exceptional product innovation of Tesla in the form of renewable energy products
are classified as those products that can address the customer needs and can change the price
value of the market. The home and industrial batteries are the current as well as emerging needs
for many customers. It is a type of global innovation by Tesla that is concerned about the un-
served customer section. These new products focus on the company’s product innovation system
which has been capable of delivering sustainable profit and growth and development much ahead
of the industry norms and standard.
Campaign
They will keep a focus on their campaign to access the middle to upper class society.
Their pricing strategy reflects a high income so it will be centralized to on the customers with
high annual income. They will place their advertisements in a variety of medium like magazines
and those that have online components. They will also place their ad in the TV to connect with
the target audience. They will also use social media approach by associating with the popular
accounts (Bettis et al., 2015).
Conclusion
Tesla can be considered as the investment opportunity but with a good amount of risk.
Due to the fierce competition in the automobile industry as a result of other sources of energy are
also taken as risks. It is also a matter of concern if the company can take increase their
production quickly for meeting the demand. If costs are kept high, it can be expected that debt
and equity offerings can increase the production ramp.

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