Summary and Recommendations: Tesla: Competitive and Strategic Analysis: Harvard Strategic Management

Assumptions, Interpretations and strategic Suggestions based on strategic analysis

Tesla’s competitive market position will be determined by the end of 2018.In the case where Tesla follows its 2016 trend and increases its net income to reach substantial positive figures in 2018, the company will must expand its business by extending its activity to new locations. Nowadays Tesla factories are only located in the USA which make them relatively centralized. Opening new factories in Europe can be a real opportunity for the firm to reduce its delivery costs, decentralize its activities and better frame the European market. Indeed, in Europe Tesla Motors can see lots of new opportunities; after the merger of the German engineering business Grohmann, the giant could start think about opportunities in the UK. Indeed, Britain is known to have talented automotive engineers. People would think that after what happen in England in Jun 2016, the England market would slow down but the country remains an attractive market for new entrance, especially because its 17% corporate tax, and could be an occasion for Tesla Motors to expand its activity to another country in Europe. In the case where Tesla does not achieve to meet its demand and make a sufficient profit, Tesla will be quickly out performed by new electric models of traditional car makers. In such situation, no investment in Europe nor anywhere would be relevant. The best thing Tesla could do in such scenario is increasing its partnership strategy with car makers producing electric car to supply them core electric components and thus make a profit in other’s car sales. In both situations, Tesla could also use its transformational leadership to expand its activities in sustainable life-style services. Solar roof merger is a key strategic decision and new tiles created by both companies must be sold across the whole world. This should allow Tesla to create quick profit which could be a high competitive advantage vis-à-vis of its competitors which, for the major part, only sell cars or car-related goods.

Conclusion and short-term recommendations

Tesla is currently doing well. By investing a lot in R&D as well as in Property, Plant and Equipment, the firm correctly strengthen the ground to become from now to 2018/2020 a profitable leader in electric car manufacturing ready to climb its growth phase. Being relatively young in the car market, which could be a dangerous weakness, Tesla strategically diversify its activity to a larger market which is sustainable life- style market. This market adjustment is especially relevant concerning Tesla, mainly because its CEO Elon Musk has a great background in revolutionary companies whose long-term visions converge toward a global optimistic scenario. The next 3 years will be determinant for Tesla’s future which can be exceptional if it keeps its electric pioneer aura as well as unsatisfactory if strategic errors reduce Tesla’s advance. In both case, Tesla must keep investing in energy management services which is a solid opportunity to make the whole Tesla activity full of sense and consistency. For potential customers, to reduce worries about resale value, finally, Tesla guaranteed a resale value pegged to similar BMW and

Tesla

expanded rapidly in 2014, starting with only charging stations in Norway, the expanded to 12 countries

this year with plans to expand into the every country in Europe by 2016 .This network will have no less

than one charging station every 100 km.

Competitive sales growth and potential product growth:

Mercedes models, backed by Elon Musk’s personal fortune: which was a compelling security for current customers of Tesla.

  • Export Solar roof to as many consumers as possible. Millions of houses are built every year, tiles are often part of it and Solar roof is a simple substitute to classic tiles. More solar energy is there, more we will need to manage it smartly which occasionally could increase our Power wall sales.
  • Keep partnering with traditional car makers to provide them battery packages. If they enter the market violently with high volume produced, Tesla will be unable to follow the rhythm so it should at least benefit of this sudden competition by providing core electric components.
  • Sell a “Pro-Pack” including models III for employees and Power Pack to optimize companies’ energy consumption. Target high economic growth regions like Singapore or Dubai. Model III is accessible for companies and employees will be satisfied and more productive.
  • Trade agreements:

For example, free trade agreements make it easier to expand internationally.

Thus, a recommendation is for Tesla to globally expand its operations. It is also recommended

that the company should increase its marketing aggressiveness to increase its market share,

especially in countries other than the United States. This move could reduce market-based risk,

considering that Tesla has limited sales operations in overseas markets.

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