MGT604 Strategic Management: Tesla's Competitive Advantages

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MGT604: Strategic Management
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Executive Summary
The influence of strategy is the art of planning the influence on the different stakeholders of the
organization. Tesla motors have implemented many strategies that have resulted in bringing the
revolutionary changes in the company. This report mainly aims at identifying the strategic
influence on Tesla by the adoption of the strategies. Battery technology advancement is the most
effective strategy that has been adopted by Tesla and it has made it more competitive in the
global market among the automobile industry. The aggressive marketing has resulted in making
the more selling of electric cars and the company has generated good revenues through this.
Environment technology has made it a more advanced and large number of customers has get
attracted to the company by building its goodwill and brand reputation. The patent portfolio
should be adopted by the company instead of getting the additional patent for the batteries. This
will enable more manufacturing of electric cars and vehicles. Tesla is recommended to introduce
the effective technology of disruption, should make improvements in the execution of strategy.
Innovative skills should be effectively utilized; charging stations should be effectively
networked, and should make the improvements in the margin and lower down the production
cost.
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Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Aim..................................................................................................................................................5
Discussion........................................................................................................................................5
Three strategic influences of Tesla Motors.................................................................................5
The practice of the strategy and their Strategic implications for Tesla.......................................6
The strategic course of action......................................................................................................7
The strategic goal statement of Tesla and its implication............................................................7
Conclusion.......................................................................................................................................8
Recommendations............................................................................................................................8
References......................................................................................................................................10
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Introduction
Strategic influence refers to the art of establishing and planning the influence among the
customers, employees, public, or potential customers. Key for building the influence of strategy
is knowing the type of influence and presence the company want to have and accordingly
establishing and maintaining diverse relationship network for growing the influence. This report
will discuss the strategic influence which will have an impact on Tesla Motors. The
categorization of these strategies will be made towards the different factors including local,
national and international. The strategic implications of these strategic influences will be
identified regarding Tesla Motors. The strategic course of action which can be adopted by Tesla
Motors will also be identified along with the strategic goal statement that should be set by the
firm. In the end, the recommendations will be provided.
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Aim
The main aim of this project report is “to identify the strategic influence impacting together on
Tesla Motors”.
Discussion
A Tesla motor is the energy and automotive American company which is based in Palo Alto
situated in California. The specialization of the company is in the manufacturing of electric cars
and solar panels are also manufactured by it through the subsidiary solar city. The company is
engaged in the operation of the assembly plants and multiple productions. For the production of
the models of electric cars, Tesla is well-known in the market by the development of technology.
The strategic influence in the business context is the influence that is established and planned so
that it can have a positive impact on the organization's customers, employees, public, or potential
customers. The purpose of establishing the strategic influence is to know the influence that the
company wanted to have and to build the diverse relationship network so that the growth of the
organization can be made (Gimbel, et. al, 2013).
Three strategic influences of Tesla Motors
The generic strategy is applied by the Tesla Motors Incorporation for achieving a competitive
advantage in comparison to other companies in the industry of the global market. The approach
of the company is represented by the generic competitive strategy for competing in the global
market. The broad differentiation is the competitive strategy that has been adopted by Tesla
Motors (Rammile, 2015). Advancement in battery technology is one of the strategy influence
made by the company and the research team of Tesla is continuously working for applying for
the battery patent for getting a continuous advantage through this. The company has adopted an
environmentally friendly technology that has made it very competitive. The intensive growth
strategy of the company includes market penetration in which eth aggressive marketing strategy
is used by Tesla for increasing the sales revenue in the current markets. With all these strategies
together has contributed a lot in the Tesla’s positive output and has bought a revolutionary
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change in the brand and goodwill enhancement of company by which there is growth in both the
company's profitability and revenues (Reyes & de, 2012).
The practice of the strategy and their Strategic implications for Tesla
New battery products are aimed to be created by the Tesla Company for the different
applications that are non-automotive. This growth strategy of the company worked as an
intensive strategy that has significantly affected the financial performance of the company.
Mostly the focus of Tesla is on market penetration and development of the product for growing
the business energy and automotive solutions. Supercharger networks, service stations, and
battery swap stations have been built by the company. Batteries are considered as a significant
component of the electric vehicles. The patent has been obtained by the company for the battery.
These batteries are not only energy efficient but they can also be produced at the lower cost.
These batteries are made with patents and are the Tesla vehicle’s important component and are
not available for the use by the other companies (Chen & Perez, 2018).
The use of this strategy has an international impact as these batteries are used in the Tesla’s
vehicles and are sold in the global market through which the company is earning good revenue
resulting in the company’s high profitability. Continue advancements are driven by Tesla in the
battery technology through which the company has earned stronger margins and the goal of
producing 35000 dollar Model 3s. The company is also working on the production of ramping of
the storage device and energy production that will benefit from the better technology of battery.
The internal combustion engine is used by many of the automobiles company but Tesla has
integrated the advanced and environmentally friendly technology. All the potential customers
are broadly attracted by this strategy of the company and are covering both the national and
international factors like the products of the company are being sold at the international level
also along with the national level. The production cost of the company is declining due to this
strategy and has also increased the brand reputation and popularity that enables the Tesla for
broadly targeting the customers in the market of the automobile (Mangram, 2012).
The Tesla Company with aggressive marketing has rolled out and sold more of the electric cars
in the U.S. through this the revenues of Tesla has been maximized from the market where the
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company currently operate. The solar panel is offered by the company and Tesla Roadster was
developed which was the first electronic sports car in the whole world. The differentiation
competitive generic strategy is supported by the tesla’s intensive strategy by making focus on
automobiles that are unique and high (Somford, et. al, 2013).
The strategic course of action
Through Bowman's strategy, clock convenient tool is provided for analyzing the industry in
which the Tesla is operating. Value-added and prices are the two factors based on which
strategies will be made. The relative strategy of Tesla is required to be analyzed with its
competitors as they are positioned on the segment of e-car and substitute products are offered.
Instead of seeking the additional protection through the patents on the company’s technology for
the electric cars, the patent portfolio strategy should be adopted by the Tesla that can be made
available to anyone who wants to make use of it. It will work as the offsetting competition basis.
The more electric vehicle will be manufactured by the company if battery technology will be
given by Tesla to other automaker companies. Recharging stations will be developed more
through the production of more vehicles of electrics which will result in making more customers
of Tesla for swapping gasoline-powered vehicles (Karamitsios, 2013).
The strategic goal statement of Tesla and its implication
Tesla should set the following goal statement which will enhance the customers of Tesla and will
make it more competitive in the global market. “To accelerate the world and transit it into
sustainable energy and provide the fast-charging stations worldwide with the supercharger
network."
With this goal, the company will make all its strategies towards this and very soon Tesla will be
known as one of the big electric cars manufacturers and battery provider. It will have a strong
customer base and a large market share. The competitive position of the company will also
improve through this and will be at the top position in the automobile industry in the whole
world resulting in making the strong sustainable development of company generating the huge
amount of investment along with the large revenues generation (Schuller, et. al, 2014).
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Conclusion
Hence, it can be concluded from the whole project report that strategies of the organization plays
a vital role in influencing the customers, potential customers, employees. All the strategies are
formed as per the goal and mission of the organization. Tesla is an automotive and energy
company and it has adopted the three strategic influences that have made many improvements in
the competitiveness of the company. Market penetration, battery technology, and environment-
friendly technology are those strategies that have been adopted by Tesla which has emerged as
eth very strong strategy for the company. There is a national impact of the environment-friendly
technology as it has made the company to focus on the environment and manufacture those
products that are friendly. Battery technology has the international nature and it has made
continuous advancement through which the company has earned a good margin of profits. Low-
cost production is ensured through this strategy.
Tesla should have its goal towards becoming the top electric car manufacturer and accelerate
world and sustainable energy transit. It should also aim at providing the charging stations with
the charging networks.
Recommendations
Tesla should improve its strategic execution by instead of the design of everything in-house; it
should outsource the work with the third-party for helping the pressure of research and
development. Innovative skills should be utilized by Tesla for bringing up new ideas to the
existing ecosystem. Future supremacy will be consolidated by working as a partner company.
Efficient network for the charging stations is required to be implemented by Tesla around the
world. In some countries owning of the electric cars is not conceivable and producers of the
gasoline cars are the competitors for Tesla. Due to this, it is recommended to the company to
lower its production cost and improve the margins(Viola & Longo, 2017).
For introducing the disrupting technology in the market Tesla will be required to produce
sufficient electric vehicles so that it can push the shift in the industry of automobile. Lithium-ion
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battery worldwide production would alone be required by Tesla as it has planned five lakhs cars
yearly production. Tesla gigafactory is seen as the light for this and should supply batteries that
are enough for supporting the demand that has been forecasted by the company. By 2020, it is
expected that Gigafactory will reach sat its full capacity and will produce more lithium-ion
batteries. The company should outsource most of its tasks of car manufacturing and only the
sensitive parts should be in-housed involving the battery. The empty spaces need to be searched
by Tesla in the market, the room that is strategic for enhancement where the cost of the industry
can be exceeded along with the value ratio. The backup for Tesla will be constituted by focusing
more on battery technology and less on electric cars. The battery technology of Tesla should be
improved by the company as this will result in making better sales for the company (Ramirez, et.
al, 2014).
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References
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In Towards a Sustainable Economy (pp. 53-69). Springer, Cham.
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analysis. Journal of Strategic Marketing, 20(4), 289-312.
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Brand Attachment. In Ideas in Marketing: Finding the New and Polishing the Old (pp.
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 Somford, D. M., Hamoen, E. H., Fütterer, J. J., Van Basten, J. P., Hulsbergen-Van de
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 Viola, F., & Longo, M. (2017). On the strategies for the diffusion of EVs: Comparison
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 Wu, J., & JaJa, J. (2012, May). Optimized strategies for mapping three-dimensional ffts
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