Please answer the following question based on Tesla Motors case from Crafing & E
ID: 418931 • Letter: P
Question
Please answer the following question based on Tesla Motors case from Crafing & Executive Strategy The Quest for Compeitive Advantage 21st eddition:
1. Describe the 5 competitive forces in the industry.
2. Draw up a strategic plan of this industry. Include all major players.
3. What are the key success factors in this industry?
4. Which of the five generic strategies best describes the organization's strategy? Why?
5. What is the financial and ethical issues?
The case is following
1-631-361-0325,e, st Banff Lane, Surp CASE 16 esla Motors in 2016: Will ts Strategy ge Defeated by Low Gasoline Prices and Mounting Competition? a connect Arthur A. Thompson The University of Alabama esla Motors began shipping its trail-blazing Model S sedan in June 2012. The Model S Model S deliveries to customers in Europe began in August 2013, and deliveries to China was a fully electric, four door, five-passenger began in spring 2014 the companmy's sales show- ktury sedan with an all-glass panoramic roof, high room in Beijing generated the heaviest traffic in efinition backup camera, a 17-inch touchscreen that early 2014 of any of Tesla's showrooms worldwide conrolled most of the car's functions, keyless entry. In early 2014 Musk expressed confidence that enon headlights, dual USB ports, t noniloring, and numerous other features that were exceed sales in the United States in two, no more tire pressure sales of Tesla vehicles in Europe and China would in most luxury vehicles. Fold-down second than three, years. Sales to customers in Australia Customer purchases of Tesla's Model S climbed ww seats were standard on the Model S: however. began in Q4 2014 uyers had the option of ordering a third seating w with two rear-facing child seats, thus providing swifty. from 2,653 vchicles in the July-December ating for five adults and two children. The Model period of 2012 o 50.332 Model S vehicles in fad a base price of $76,000-$106,000 (depend- full year 2015 (see Exhibit 11. 1n 2015 the Tesla g on which powertrain buyers selected) and, when Model S was the best-selling large luxury vehicle rgipped with options frequented selected by cus- omers, carried a retail sticker price ranging from 95000 to as much as $130,000 EXHIBIT 1 Tesla's Deliveries of the Model 5 to Customers by Quarter 012 through 2015 Model S Model SPeriod Model S Deliveries Period Deliveries 10,030 G2.2015 11.507 7032015 11,603 0.332 6.457 01 2015 1 4800 01.2014 01,2013 7579 Q22013 ,1500.2014 03,2014 ta, 2012 5,500 2400 04,2013 6892 042014 934 2.653 253 03.2013 4 9.834 042015 1719 94,2012 042019 22477Explanation / Answer
1.
Porter's five forces framework is regarded as tool for analyzing business competition. Competitive rivalry force facilitates to evaluate how severe the competition is presently in the marketplace which in fact is determined based on the capability of existing competitors. Suppliers bargaining power helps to examine supplier’s potential influence and control on prices which indeed can have an adverse impact on business profitability.
Customers bargaining power force helps to assess power of purchaser when they are small in number and there are huge number of sellers to influence pricing and quality whereas it’s easy to switch from one business's goods or services to another.
Threat of new entrants force evaluates how simple or hard it is for competitors to join the marketplace thus if it’s easier then there will be great risk of business market share being exhausted. Threat of substitute goods or services force helps to study how easy it is for consumers based on price and quality to switch over from a business goods or service to that of competitors.
2.
The initial product launch of Tesla Motors was a high performance electric sports car called Tesla Roadster where strategy indeed was to enter the high end market where consumers are prepared to pay a premium and then quickly drive down in the market with high unit volume and low priced cars with each successive model.
Tesla in their business strategy indeed have invested a huge amount of their cash flow in research and development adopting latest technology and innovation in process which in fact have helped to bring down the costs and by rolling out low priced model cars in the market indeed had facilitated to build good reputation and brand value.
3.
Technology and innovation devoting all their time and efforts in creating amazing goods and service have eventually lead to creation of masterpiece there by providing quality products have helped other car companies to rely on Tesla’s products. For instance Tesla's battery packs are used by Mercedes-Benz, Toyota etc. Thus deal from major car companies to produce various parts has proved lucrative to Tesla business.
4.
Business analysis of Tesla towards the generic strategy reflects the focus on using advanced technologies in its electric vehicles and related products facilitating to effectively compete against General Motors, Toyota, Honda, Nissan etc. Whereas Tesla’s generic competitive strategy is broadly based on product differentiation strategy which indeed helps to build competitive advantage based on the development of products that differentiate the company from other firms in the industry. Tesla, Inc. uses market penetration as its current primary intensive growth strategy. This intensive strategy enables business growth by increasing sales revenues in current markets.
5.
Concerns about Tesla’s cash positions indeed have gone worse where research analyst Moody have downgraded its debt as useless items and warned more downgrades could be coming. Standard & Poor's also has warned of the possibility of a downgrade.
Bloomberg has been tracking production by continuously monitoring the issuance of vehicle identification numbers issued by the NTSB. It estimates that production stands at 1,026 a week, a big jump from the fourth quarter but less than half the 2,500 a week target that Tesla had set for the end of the third quarter.
US government and many environmentalists view electric vehicles as key to combating climate change. But the electric-vehicles and others envision depends on an immense escalation in the world's capacity to manufacture lithium-ion batteries, and the race for the raw materials to build those batteries is creating strains for people and the environment which Washington Post investigation has found.