Tesla is a company that operates in the field of technology with the vision and goals of transitioning the world to a clean and sustainable life. The results show that Tesla is a leader in the electric car industry at the moment with differentiation strategies, and it will be more and more developed in the near future.
The research reasons for selecting Tesla as our case study
Introduction
SWOT Analysis
Internal Analysis
- Strengths
- Weaknesses
Tesla's strategy was to maintain the image of a premium car company while presenting premium products to a limited market. Despite the lower price, Tesla's Model 3 attracts a wider audience, but still only reaches a limited group of people.
External Analysis
- Opportunities
- Threats
The company's failure to stop losing money has a detrimental impact on investor sentiment and stock values. China is the largest EV market in the world where Tesla is currently the undisputed leader.
Summary of SWOT analysis
Three Levels of Strategy Analysis
Tesla’s Corporate Level Strategy
Tesla’s Business Level Strategy
- Competitive Business Strategy
- Sustainable Advantages & What is different to all the other
- Customers
Excellent research and development with innovative technology: Tesla's electric vehicle engine design surpasses that of other competitors in the EV category of automobiles. The cost-effectiveness of Tesla's manufacturing approaches has increased the company's competitive advantage over its rivals.
Tesla’s Functional Level Strategy
- Marketing Strategy
- Research and Development Strategy
- Finance Strategy
- Production Strategy
- Human Resources Strategy
- Sales Strategy
Tesla's strategy is to continue to innovate continuous solutions and support continuous improvements while maintaining human resource capabilities to increase growth in the global electric car market. Tesla's organizational culture has remained focused on such innovation since the founding of the business.
Strategic Map Analysis
- Providing Clean Energy Products
- International Expansion
- Customer Differentiation
- Differentiation Strategy
According to Tesla's company goal, Tesla aims to reduce fossil fuel consumption and has the grand vision of creating zero emissions in transportation around the world. Tesla's electric vehicles have become the best selling electric cars in this guaranteed that the company is on the right track. Tesla's factory in Shanghai is considered an export center as it also sells in China where there is a high demand for Tesla cars.
First, using the differentiation strategy means making Tesla's products unique and cannot be imitated by other competitors. In addition, they refer their dealers to Tesla ambassadors to provide them with an exclusive service.
Porter's Five Forces Analysis
- Bargaining Power of Suppliers
- Bargaining Power of Buyers
- Competitive Rivalry in the Electric Vehicle Industry
- Threat of New Entrants
- Threats of Substitutes
- Summary and Analyzing the industry attractiveness
- Growing industry
- Bargaining power of suppliers and buyers are low-moderate
- The intensity of competition will also grow but for now Tesla is
These brands will have more market power if they compete with new entrants. In the United States, Tesla has benefited from government programs aimed at stimulating demand for electric vehicles and helping companies adopt green technologies. At the moment there are two models of cars that use hydrogen energy and they are already available on the market.
On the other hand, Tesla could be a huge threat to the rest of the auto industry. But Tesla's leadership position may be threatened in the long term by new entrants and competitive rivalry.
Strategic Group Analysis
Red Ocean Strategy: Analyzing between Price and Geographic Coverage 52
For Volvo, there are only 5 models with hybrid cars and pure electric cars. For Tesla, there are only four models, which are SUVs, sedans, and mid-size SUVs with a pure electric system. The third group is a group whose price is similar to the second group, but there are more product lines.
However, this is more suitable for a family, because more than one person is making the decision, many choices will more easily suit their needs. Honda announced its first all-electric vehicle in 2024, so there are only hybrids and no gasoline cars.
Resources and Capabilities Analysis
Main Resources and Capabilities from Tesla
- Tangible Resources
- Physical Resources
- Financial Resources
- Intangible Resources
- Technology Resources
- Reputation Resources
For equipment on the Tesla assembly line, over 75 percent of Tesla's production line is automated today. Intellectual property rights protect Tesla's manufacturing techniques and product originality, preventing other competitive players from replicating or accessing its unique product mix, product components and inputs. Tesla's manufacturing techniques and product distinctiveness are protected by intellectual property rights, which prevent other competing companies from replicating or accessing its unique product mix, product components and inputs.
In 2021, brand value becomes one of Tesla's competitive advantages, as its ranking in the automotive industry keeps getting higher compared to previous years. Tesla's reputation and customer experience have made it possible to build a long-standing corporate reputation.
The Framework for Appraising Resources and Capabilities
- Key Strengths
- Superfluous Strengths
- Key Weaknesses
For materials and equipment, Tesla has a very strong production line generated by their innovation. And for the land, by expanding to many continents, the company also owns the land that they used to build their factories with. It is really able to generate the good perception and brand image for the outsiders because Tesla has done something that they have stated on their vision which aims to help the world to create zero emission.
Another aspect is that potential customers have to wait a long time for the delivery of their car and can be frustrated by the non-stable prices. Also, the parts for fixing may not be found in the local markets, which means that customers cannot compare prices and decide to go for the cheapest.
VRIS Analysis
Value Chain Analysis
Primary Activities
Tesla's distribution channel consists of company-owned stores that play a vital role in educating customers about the benefits of EVs. Until August 2021, the total number of Tesla stores around the world was 438, along with about 100 service centers. While many companies have invested a lot of money in marketing, Tesla tends to minimize the amount in marketing than other companies in the industry.
Tesla attracts global media coverage through its high quality and unique product features. Tesla provides after-sales service, including repair and maintenance, car insurance, at its service centers along with about 100 service centers in the world today.
Supportive Activities
In this way, the company has a lot of qualified workforce that will defend the company's operations. In the first phase, Tesla is considered a unique company, as their products are the latest and groundbreaking technology in the automotive industry. Procurement in the value chain refers to the processes involved in the purchase of inputs, which may include equipment, machinery, raw materials, supplies, raw materials, and other elements needed to produce the final product.
Tesla has many suppliers around the globe and the company has maintained a good relationship with them. Materials are very significant for an entire value chain because they are essential to run the company.
Differentiation Strategy
Most of the marketing is done online and not on the typical automotive channels like TV and out-of-home ads.
BCG Matrix Analysis
BCG Analysis on Tesla’s EV Models
BCG Analysis on Tesla’s Solar Energy Products
In addition, the solar panel and solar roof as the solar energy storage business of Tesla in the US. Accordingly, we consider Powerpack and Powerwall according to the overview of each Tesla energy product to make in the BCG matrix analysis (Figure 39). in both high market growth and market share (Stars quadrant) while Powerwall has a little lower market share than Powerpack based on the information from Figure 35. However, the solar panel and roof should be in medium market share, but low market growth by placing them near the Dog quadrant.
Synergies among the SBUs
- Growth Synergy
- Marketing Synergy
- Financial Synergy
- Technological Synergy
Also, many solar panel ads and solar roof pictures on Tesla's website and social media show Tesla in front of solar homes. In particular, soon after the acquisition, the energy segment used the revenues of the automotive segment to repay loans. In the most recent quarter, the automotive segment earned 93% of Tesla Inc.'s revenue and 99% of its profit.
Especially for the battery production, Tesla can benefit from the R&D knowledge of its energy segment. About 1/5 of the 250 charging stations in California also have solar panels from the own energy generation segment and use own electricity storage for the superchargers.
Porter’s Diamond Model Analysis
Factor Conditions
- Natural Resources
- Financial Resources
- Human Capital
- Infrastructure
In the US Tesla has easy access to loans from banks and other lending companies. The factory site in Shanghai was completed with 65% less capital expenditure than was the case for US Gigafactories with the same built-up area (Bryant 2021). The US and Germany (eg, Tesla subsidiary Grohmann Automation Engineering) have science and engineering institutions that foster a highly skilled, knowledgeable, and productive workforce.
The level of education in the USA compared to the rest of the world is very high. Tesla Motors has been able to operate successfully in multiple countries and markets due to its outstanding infrastructure, which includes a physical and technological network.
Demand Conditions
- Size of the Domestic Market
- Demanding Domestic Customers
The presence of scientific knowledge will also result in frequent technological and non-technological innovation. For Tesla Motors, infrastructure is another crucial component that has helped the company's growth and expansion, not only locally but also globally. Tesla dominates the US market as it accounts for the majority of electric cars sold, including 79% in 2020, according to IHS Markit.
Sophisticated and demanding domestic sounders for Teslahave forced the company to use its resources for innovation, which led to the development of unique products for customers. Companies like Tesla have been able to realize its boxes and innovative possibilities and have used them to create products or processes to help the company expand, thanks to demanding domestic consumers.
Relating and Supporting Industry
In addition, the automotive industry in the States is also driving the growth of the steel and machine tool manufacturers as there is a high demand for automotive parts and components. Supporting the industry in the national market will not only improve the growth in an entire industry, but also allow Tesla's operation. The group of experts in car manufacturing also existed and circulated in the labor market which will facilitate the company to get the specialized labor.
In addition, Tesla cars are known as some of the most innovative cars in the world. Due to the intense competition and the high technology environment, the rival industries have put pressure on the company to continue to develop and perform better.
Firm Strategy, Structure, and Rivalry on Tesla
- Company Strategy
- Company Organizational Structure
- Company Rivals
Having a lot of raw material resources available in the country will increase the company's ability to reduce and control costs, gain economies of scale, and this trade would be another force to drive the country's economy. The top five largest technology companies in the world are Apple, Microsoft, Alphabet (Google), Amazon and Tesla, all of which are American companies. This electric vehicle milestone has definitely made an important technical breakthrough, giving people more and more ideas and innovations involved in the field of electric vehicles.
As a leading global manufacturer of one of the world's most beloved cars, Tesla has had to adapt to balance the need to market and sell with its efficient productivity and constant innovation. While Tesla continues to dominate the EV market from its local competitors in the US, its competitors are catching up to enter this growing market.
Government Conditions
- Government policies
- Government as a catalyst
Retrieved September 29, 2021, from https://www.marketingstrategy.com/marketing-strategy-studies/how-tesla-used-a-0-marketing-strategy-to-dominate-a-market/. Retrieved October 13, 2021, from https://www.wired.com/story/why-tesla-designing-chips-train-self-driving-tech/. Retrieved September 29, 2021, from https://www.supplychaindive.com/news/case-study-how-tesla-changed-the-auto-industry/517251/.
Retrieved September 29, 2021, from https://www.statista.com/statistics/1240783/customer-willingness-to-pay-more-for-clean-energy/.
