The case of Tesla Motors

The case of Tesla Motors

The case of Tesla Motors is a case of admiration of grasping opportunities which deem unreachable. The company, from its initial stage, identified the market and the customer needs that required satisfaction. The company specializes in electric automobile manufacturing. The organization was founded in 2003 by Martin Eberhard and Marc Tarpening. The name Tesla originated from the inventor Nikola Tesla who originated from Serbia. At the initiation stage, Eberhard was the chief executive officer, while Tarpening was the first one to serve as the company’s chief financial officer. The business plan was executable, and what lacked at the initial stages was the financing, and Elon Musk, the founder of Paypal, injected the organization with $30 Million. In 2007 tesla CEO, Eberhard resigned while Tarpening left in 2008, and Must assumed the CEO seat in 2010.

First car

For the next four years, the company worked intending to release their first car, and in 2008, the success of the effort was notable when they introduced electric Roadstar was put in a test, and it covered 245 miles on a single charge. The car components were comparable to the rival sports cars as they shared the same characteristics. The car acceleration in four seconds was zero to sixty miles per hour, with the capability of getting to a speed of 125 miles per hour. The primary structural material was carbon fiber, and it was an environmentally friendly car with no tailpipe emission, which contribute to environmental pollution. Lithium-ion cells, which are easily charged, were used as the main electric power. To keep up with the market, satisfy customers, and gain a competitive advantage, the company releases new products periodically. After the Roadster, the company released S sedan, which was more efficient than Roadster. The S Sedan gad different battery capacity to give different experiences. Over the years, the company continues producing new cars to take care of the expanding demands and producing superior vehicles.in 2012, in the United States and Europe, Tesla built supercharger statins aimed at charging car batteries fast (Schreiber & Schreiber, 2019)

Tesla’s mission and objectives

The organization growth is associated to the background investments put in place. The initial company mission aimed to accelerate the world’s transition to sustainable transport. However, in 2018, the organization changed its mission to accelerate the world’s development to sustainable energy, which aimed at ensuring the products fit user’s preferences while taking care of the environment by focusing on renewable energy. To accelerate means, the organizations seek to provide technologically advanced products, while the world transition means the company aims to serve the whole world while sustainable energy implies the organization’s concern on renewable energy (Rowland, 2018).

The organization’s objectives and the mission goes hand in hand, aiming at achieving success. The company’s goals include generating demand and attain high sales of electric cars. Continuity building of a long term brand that will enable the organization to manages the existing customers who will form the foundation of the company who will help the company attain new customers through referrals. The company aims at maintaining and satisfying new customers who will facilitate overall growth.

Tesla approach strategies

To ensure the company achieves the overall objectives and the strategic plan, the company provides, it engages the existing customers for referrals by delivering electric cars that are of high quality. The company uses generic strategy, which aims at using advanced technology to produce superb electric vehicles that are superior to competitors’ products like General Motor Company and Toyota. The organization uses continued improving strategy in which the new products released are better than the previously released products (Rowland, 2018).

The company uses a differentiation tool in the approach to the competition model. The different products ensure the company offers products that are different compared to electric cars manufactured by rival companies. The tesla products are superior because their approach does not only aim at increased sales, but the vehicles are environmentally friendly. Increased market research is facilitating the production of cars with unique designs, and increased consumer is driving the production costs because of product efficiency and increased customer base (Rowland, 2018).

Tesla is strategically penetrating the market, and the strategy is enabling the company to push for the increased growth and customer loyalty. The company efforts in marketing are enormous as it aims to sell more electric cars in the future. The company is maximizing sales through intensive marketing (Rowland, 2018).

Over the years, a new series of products are emerging, and intensive research is facilitating the new electric car development. In the consumer market, to capture more customers, unique and varied products are necessary. Tesla, over the years, is releasing a new series of its cars, giving consumers a variety of vehicles to choose. There is continuous improvement in the vehicles produced as the latest versions are equipped with the latest technology to attract more customers (Rowland, 2018).

Tesla products are unique and of high quality, and the organization is creating a market for the creation of new markets by diversifying their products. The company aims to produce batteries for other uses. The company aims at capturing the demand for batteries to grasp new consumers who are not interested in the company’s electric cars. The company has started solar power investment to ensure it maximizes customer service to full capacity. The solar energy is an environmentally friendly product (Snowden, 2019).

Corporate government

The management and administration of Tesla is a success factor on the day of inception. The management team is success-driven with vast experience in the business world. Members of the board of directors comprise of knowledgable individuals. The members used their wealth and expertise to revolutionalize the organization. A key number is Musk, who was a co-founder of PayPal invested in over $30 Million and assumed the CEO chair as from 2010. Musk is not only a leader but also actively participates mI n ensuring the products offered are the best. For example, he oversees the company’s product strategy by providing products that are well-engineered before they are realized to the market. The whole team of directors comprises people with vast knowledge and management, which have been the key to the organization’s success. Individuals like Antonio J Garcia have over 15 years of experience in the investing field and are critical to the organization’s future investment. Each member is bringing in an experience that is helping in research and development, ending with unique automobiles to offer in the market. The extended service management is aiding consistency and gradual growth of the organization.,

External environment

The external is shaping the organization to strive towards success as it is offering hidden opportunities to the organization. The company is aiming to ensure the external environment is providing opportunities for the continuity of progress. The organization is not ignorant of the external environment and is shaping itself to maximize revenue and market share.

PESTLE analysis

The external environment is a challenge, and the organization has to outline itself to ensure it dominates the market. The external setting determines other factors that are beyond the organization’s control, and the organization need to strategize their policies to ensure they are above their competitors with electric automobile industries gaining more competitors. The following factors are important and determine the organization’s survival.

Political factors

Government policies shape and determine the way the business needs to be conducted. There are trade policies that the organization needs to take care. In the past, government policies are offering more opportunities than threats to the Tesla company. The US government is encouraging and is active in the renewable energy and electric vehicles. The department of energy provided the company with a $465 million low-interest loan to enable the company to invest more in renewable energy. The loan created an opportunity that created employment for many people and made the company more attractive to more investors. The federal government also offers a tax credit for the purchases of electric vehicles. The government is giving the company and opportunity to expand and their operations and encouraging buyers to consider electric cars (Marshall, 2019).

Economic factors

The electric automobile industry is booming daily as consumers are getting convinced of the benefits derived from electric vehicles. Government injection is creating opportunities for Tesla to thrive. The overall cost of production is decreasing, leading to the business achievement aim, which focusses on maximizing profits and minimizing losses. The market growth is increasing, and other factors are facilitating the electric automobile industry. The demand for solar energy is rising and allowing Tesla to diversify its products to cater to the broad market demand. the need for electric cars in the US is slow, but incentives like 0% financing are giving Tesla economic opportunities to grow (KISSINGER, 2019).

Social, cultural factors

The public is aware of the benefits of eco-friendly resources, and the general consumption and use of renewable products are increasing. The US citizens are approving the government to invest funds collected through tax to be used in the renewable energy industry. The public accepts the use of low carbon products and renewable energy products, giving Tesla support and market for its products (KISSINGER, 2019).

Technological factors

The research and development team in Tesla is vigorously researching new products and compartments to add to their products. Tesla has proven its consciousness of technology on its latest products when releasing to the market. Technology is the foundation of Tesla’s products, and Tesla was among the first companies to adopt efficient electric vehicles. The company is taking advantage of opportunities brought up by technology as they are focusing more on the automation business (KISSINGER, 2019).

Environmental factors

Environmental issues are becoming a global interest because of the increased pollution, which bringing adverse climate change. While the environmental issues is a threat to other organization, it has proven to give the organization for its growth. The US government is offering incentives to organizations producing eco-friendly products, and Tesla is among them. Tesla is investing hugely in renewable energy products, and the electric-powered automobiles do not emit smoke, which is a pollutant. The company’s increased investment in solar energy has the potential to grow, and thus the company is injecting funds to dominate in the section. The company electric automobiles, batteries, and solar panels are vital strengths allowing the company to grow. The company aims at driving down carbon emissions to acceptable levels. In 2017, the company released information about the carbon is released and the measures to tackle the emissions. The transparency is a marketing strategy that increases consumer loyalty Cuff, 2019).

Legal factors.

The company has to follow the laid outlaws in its production and distribution of automobiles and renewable energy products. The sets of laws shape how the management shapes its operations to ensure there are no conflicts with the regulations. The company has the opportunity to expand its services internationally. Some states in the US have different rules on the sales and distribution of electric automobiles. For example, Michigan prohibited Tesla from hiring salespeople and offering test drives. Interested buyers were ordered to their vehicles online, but after legal battles, Tesla can now sell their automobiles and provide a test drive to the consumers (O’Kane, 2020).

Natural environment

Physical resources

Tesla shares physical resources with other companies, and the battery production ensures that the company uses lithium. The availability of lithium determines the company’s existence and plan in the long run. By 2020, the company plans to assemble over 500,000 vehicles meaning a lot of lithium will be used, and to secure the supply, the company entered a contract with Vancouver based pure energy minerals for the supply (DeBord, 2015).

Wildlife

Pollution is a vice to the survival of the wildlife. The company products are eco-friendly due to fewer emissions to the environment. The company plans to reduce the on-road accidents by ensuring they equip with bumper airbags but will only apply to big animals due to size (Hemenway, 2020).

Climate

There are global climate changes caused by pollution. The company is conscious of the vices caused by emissions from motor vehicles. The company products are eco-friendly to the environment due to fewer emissions. The eco-friendly products are one of strength factor to the company. The company automobile is electrically technologically modified to ensure fewer emissions are released to the environment. The company is focusing on solar energy, which is ecofriendly. The products are designed to provide that the company cares for the climate (Christoff, 2013).

Task environment

The threat of new entrants (weak force)

The consumers are adapting and increasing the demand for electric cars. Many companies that did not produce cars are ensuring that they are building cars vehicles to serve their customers. One advantage associated with electric vehicles is the cost. The overall cost of electric automobiles is low, and many people can afford the cars leading to the desire of many entrants. Even the world-known car brands like BMW, Ford, and Toyota are producing electric cars to maintain customers. But, Tesla is building electric cars that are superior to high batteries that last longer. The overall assessment is Tesla has the power over new entrants, making it a weak force (Dudovskiy, 2018).

Power of buyers (strong force)

There is no switching cost for customers to switch to their rivals. The absence of switching costs makes the buyers have the bargaining power to control the working of the organization. The emergence of many companies in electric cars manufacturing is another factor that may trigger tesla top lower its selling cost for its automobiles due to the competition from rivals who assemble the vehicles and sell them cheaply. The power of the buyers makes it hard for the company to control the industry and must conform with the buyers’ preferences making the buyers have the ability to control (Dudovskiy, 2018).

The threat of substitutes (moderate force)

At commencement, Tesla was among the first companies to invest in the electric automobile industry. As time passes existing and new companies are producing the electric cars and ensuring that tesla products are not the only preferred electric cars. Even companies like BMW and Toyota that did not provide electric vehicles are now producing them, and Tesla should strategize well to ensure they maintain market dominance. The power of threats is caused by low switching costs (KISSINGER, 2019).

Power of suppliers (moderate force)

The success of Tesla in the distribution of its products relies on the reliability of supplies. The supplies pose a moderate force. The company suppliers deal with the company directly or through third parties. Most of its suppliers have less influence in the automobile industry. In the renewable section, the raw materials are naturally given, like the sun for renewable solar energy (KISSINGER, 2019).

Rivalry among competitors (strong force)

The company operates in a highly competitive industry. Consumers are divided into two for those who prefer electric cars, and those prefer internal combustion vehicles. Companies like Toyota, which is a world supplier of vehicles, is now engaging in the two types of motor vehicles, increasing the competition to Tesla. Tesla must position itself to ensure that its relevance remains in the industry. The company has less power in the competitive industry and should ensure that it strategizes to makes its products more attractive by considering factors like prices (KISSINGER, 2019).

Power of other stakeholders

The company commands in the electric automobile industry, and its power and history ensure it has control over other stakeholders. For example, the government is investing in the company’s renewable energy operations by offering low-interest loans. The company is able to control the activities, making it attractive to external investors.

Corporate structure

The company operates interestingly without a formally adopted structure with no organizational chart, but the functionality is divided departmentally. Thus, we can categorize it as a divisional structure. The main divisions are energy, HR, communication, legal, finance, sales and finance, and engineering, and production. Each division works towards the overall success of the business, and the divisions are interrelated. The divisions are led and supervised by a vice president . the interrelationship between the divisions ensures there are timely communication and decision making. For example, the HR department and engineering work closely together when hiring engineers to ensure that individuals employed bring value to the organization (Dudovskiy, 2018).

Corporate culture

The organization’s objectives and mission act as bondage to the organizational culture, which creates a conducive environment. Te culture also ensures that the company has the necessary foundation to necessitate the production of superior goods. The company’s management comprises of individuals with vast experience, which helps and shapes the company’s culture. The culture has values that lays out the the rules that employees must follow and help them in innovation process. The innovation culture is helping the organization to strive in the multiple business structures of electric automobiles, solar energy, and batteries. The innovative culture is helping the company in the advancement of its products. The company has six cultural pillars, which include moving fast, don the impossible, consistently innovate, reason from “first principles,” think like owners, and we are ALL IN (MEYER, 2019).

Corporate resources

Marketing

Marketing is vital to the success of the organization, and many organizations prefer advertising as a way of reaching their consumers. Tesla, on the other hand, perfected their marketing with no advertising at all. The organization incurs zero costs on advertising. One factor as to why the company planned no advertising is because they were the more prominent market players at that time and dominated the electric power automobile industry. The organization’s marketing strategy is by word of mouth, where it lets its consumers discuss, criticize, appreciate, and rejoice their products. The company has no marketing department due to its strategy. Maybe in the future, they need to establish a marketing department because more companies are joining the electric automobile industry (Zart, 2014).

Finance

The finance department in the organization is one of the strengths of internal control. The department stability is seeing the organization’s strides towards future security and support expansion structure. The department is facilitating the organization’s diversification of its operations to reduce bankruptcy chances and increasing the assets. Payment method includes cash, self-arranged financing, Tesla partner financing, and self-arranged lease. Customers can purchase the automobiles on credit through two distinct modes. In hire purchase, the customer makes a 20% deposit and fixed interest rates, which runs up to 5 years. The second method is called a balloon loan. The customer deposits a minimum of 20%, and the customer chooses either two or four years to settle the balance.

Research and development

Tesla releases electric automobiles with distinct characteristics as a way to entice new consumers and satisfying the existing customers. The research and development department is critical as it has to ensure that the new products are uniques and offer more utility compared to competitors’ products. The company expenditure is on the rise to ensure products are superior to other products in the market. The budget for the department is rising. In 2008, the research and development expenses amounted to $54 million, and in 2018, it was $1,460. Which is an over 2703% increase is an indication of the efforts to stabilize in the industry (Macrotrends, n.d.).

Operations and logistics

The company has adopted to operations and logistics coordinator, which focuses on inventory, order management, and customer notifications. The coordinator is a link between the organization’s sales team, management, and customers. The department ensures that all orders are processed, and shipment is released on time. The company uses a sales team to deliver its products to customers. Customers make their orders on the company’s official website and company-owned stores.

Human resource

The company’s department at ensuring internal strength is maintained, and the best employees are recruited. Individuals at Tesla must possess an innovative mind, as that is the culture of the company. The company owns an innovative team because the company’s existence relies on its unique products. Human resource ensures that individuals recruited to possess leadership and communication skills (Everwise, 2019).

Information system

Tesla is a leader in the electric automobile industry and has employees with different capabilities and innovation strength. The company is investing in artificial intelligence in its quest to dominate the market. The company is currently working on its own AI hardware, which will facilitate the company’s autopilot software. The company has adopted cloud computing as a method of data storage. Information stored in the cloud includes all vehicle data and the driver controlling the vehicles. The information system such that It can pick details on how the driver is placing and controlling the car (Marr, 2018).

In conclusion, the tesla company business model broke the stereotypes of how to manage a business. The organization analyzed the market, and an opportunity was present to innovate electric automobile in a field that was not utilized. The establishment was not a drive for profit only but also producing ecofriendly products. They dropped the traditional method of marketing through advertising saving on advertising expenses.