- Describe the 5 competitive forces in the industry.
- Draw up a strategic plan for this industry. Include all major players.
- What are the key success factors in this industry?
- Which of the five generic strategies best describes the organization’s strategy? Why?
- Please provide your own recommendations for the organization.
Case #17-Tesla Motors Strategies
COMPETITIVE FORCES
Power of Customers
The bargaining power of buyers in the industry is moderate. Different automakers have reduced the switching cost for customers in the competitive market. However, differentiation is a crucial strategy for Tesla Inc to retain customers and grab new ones (Sisinternational.com).
Power of Suppliers
The power of the supplier is also moderate. Firms in the industry usually depict a strong supplier strategy. Tesla Inc depends on the supplier’s reliability and availability of material. Automakers cannot afford to make frequent shifts in the supplier strategy, as it can become a business sustainability threat.
Threats of Substitutes
The risk of substitutes is high due to availability. People can prefer public transport, as it is a low-cost alternative for traveling. Also, many companies in the automobile industry are developing a broad range of vehicles to meet the needs of several customer segments.
Threats of New Entrants
The risk of new entrants is low because new arrivals have to face high business formation costs. The cost of brand development and economy of scale is quite high, and it restrains new companies from entering the automotive market.
Competitive Rivalry
Major competitors of the company are Ford Motor, General Motor, and Honda Motor Company. Differentiated vehicles are in the limelight in the industry, which depicts customer preferences. Thus, competitive rivalry is high (DeBord).
STRATEGIC PLAN OF THIS INDUSTRY
The strategic plan of the company is to make a massive shift in the automobile market by developing electric cars. Tesla aims to reduce the environmental impact of developing alternative fuel cars. It is a critical future consideration that can help this company to gain and sustain a sustainable competitive advantage. Major competitors such as General Motor, Ford Motors, and Chrysler Automobiles are focused on product development, differentiation, and quality standards. On the other hand, Tesla is quite focused on a given new industry trend by developing EVs (DeBord).
KEY SUCCESS FACTORS IN THIS INDUSTRY
Integrating with crucial success factors in the automobile industry is an essential approach to gain success and get an edge over other major players. For instance, an organization like Tesla has increased and sustained its brand image. Environmental sustainability initiative has helped to depict the prominent brand image. Price competition is quite visible. Efficient production is a need for automakers to keep the production cost low. Better cost management can enable higher revenues and profitability. Tesla can emerge in this industry through aligning the needs of customers. Customer-oriented strategies can help to produce pertinent vehicles, and it drives customer loyalty and satisfaction (Sisinternational.com).
GENERIC STRATEGY OF THE COMPANY
The generic strategy of Tesla Inc is broad differentiation. The firm intends to make different vehicles. It seems hard for competitors to imitate the car in the competitive landscape. Tesla has justified the broad distinction by developing advanced environmental technology (Cohen). It has changed people’s perceptions, as in different regions, they are looking to contribute to a lower environmental impact. Reducing the production cost is also a part of this general strategy. Interestingly, Tesla Inc has increased the brand image and popularity (Cohen).
RECOMMENDATIONS FOR THE ORGANIZATION
Electric car development is a remarkable achievement of the company in the automobile market. However, the firm must aim to survive the business operations in different regions through initiating environmental sustainability programs. It can support the broad differentiation strategy. Also, the firm has to work on a pricing strategy. Some additional cost measures must be adopted by the company to come up with price diversity and target different customer segments. Tesla is capable of implementing these strategies. Effective implementation can enable a sustainable advantage.
Work Cited
Cohen, Steve. “Tesla’s Model 3 and the transition to sustainability.” Phys.Org. Phys.Org, 1 August 2017. Web.22 November 2018. https://phys.org/news/2017-08-tesla-transition-sustainability.html.
DeBord, Matthew. “Tesla isn’t facing a wave of competition because there isn’t any competition in the electric-car market.” Business Insider. Business Insider, 8 September 2018. web. 22 November 2018. https://www.businessinsider.com/tesla-has-no-competition-in-electric-car-market-2018-9.
Sisinternational.com. “Key Success Factors in Automotive Market Research.” SIS International Research. SIS International Research, 13 April 2017. Web. 22 November 2018. https://www.sisinternational.com/key-success-factors-in-automotive-market-research/.
+447462439809