Impact And Influence Of Macro Environment On Tesla.
Tesla is an American motor and clean energy company with headquarters in Palo Alto, California. The company deals in electric car manufacturing, battery storage through its solar city technology. The company was founded in 2003 by two engineers Martin Eberhard and Marc Tarpenning (Tesla and Childress, 2009). Tesla derives its name from an inventor and engineer Nikola Tesla. Elon musk initially funded 98% of the project and has served as the company`s chairman and currently serves as the chief executive officer. Tesla has several assembly and production plants.
The company is a revolutionary in the world boasting as being the pioneers of solar and electric cars. The company has a mission of accelerating the world`s transition into the use of clean energy. The company has focused its mission into harnessing solar and electric energy. With the growth of towns and increased global warming, tesla sees a need to innovate for the better earth. The company has focuses on improvement of people. The company helps bring the need to for cheap and energy efficient cars to the people (Tesla and Childress, 2009). Tesla also has a mission of exceeding the expectations. The company is always ready to innovate and challenge the status quo. Tesla`s vision is to be the most compelling car company.
The company focused its effort to being a market leader. It has been on the forefront to leading other stakeholders to adopt the use of clean energy in car assembly and manufacture. It also has a vision of fully transitioning the world to electric cars. the company clearly advocates for clean energy as automobiles are the biggest emitters of carbon in the atmosphere. Tesla has quite a number of objectives it seeks to accomplish in the world. Tesla is on the frontline of an innovation the world demands right now. With every protection geared towards ensuring a good environment is protected, the world needs more innovative clean ideas to keep moving.
Tesla envisions an earth with minimal carbon emissions allowing reduction in global warming and consequently improve the world. To achieve reduction in global warming effects the company is leading people with innovations proving to be fixed on course to achieve the vision. Tesla`s objectives has not changed much from inception; they are subdivided into three major categories; Primary, secondary and tertiary objectives. The primary objectives of the company are; to increase the sales of the main product, electric cars by improving demand (Tesla and Childress, 2009). To build a brand that is recognized worldwide by increasing corporate awareness, by going public the company has attracted several investors from the world enthusiasts of the same course. The third primary objective of Tesla is to manage and expand the existing customer base. This move drives sales up and keeps the company in business.
The secondary objectives of Tesla are; to increase the company`s market share in the automobile world. The current share is 3% of the total market share. Analysis and determination of macro environment is vital for all companies, companies use the results of analysis as a basis of expansion and growth of operations. Macro environmental factors affecting the company are beyond the company`s control, they need to change to adapt to the changes. Tesla has been affected largely by the macro environmental factors both beneficial to the working model.
Analysis of macro environment affecting Tesla is by Pestle analysis and recommendations. The macro environmental factors are divided into four major parts. They include; political, economic, technological and social factors. The political factors affecting Tesla are; policies on trade limit. The government has been offering incentives on the manufacturer in the bid to reduce carbon emission of the earth. The incentives include reducing the cost of production, offer tax breaks to the production plants. The government has also ensured that the operations run smooth with introduction of affordable loans to the company for expansion to other countries.
This has had a direct impact on the growth of Tesla. The company has been on the rise since its inception expanding into Asian and European markets. The government offers the support as a way of encouraging use of clean and safe energy, in a bid to advocate for climate change. Another political aspect is new global trade agreements. The government has facilitated international trade for Tesla by signing trade deals directly beneficial to the company needs (Tesla and Childress, 2009). Strategic inter country trade agreements have seen Tesla sell the electric cars to other countries. Setting up of manufacturing plants in Europe and Asia has been facilitated by government trade agreements.
The next political aspect is political stability. Tesla has enjoyed the period of political stability in the years of operations. The company has been able to operate smoothly in the period. These smooth operations have impacted on increase of sales of cars. The company has also been able to buy subsidiary operations an example of acquisition of a solar company. Economic factors Tesla has been affected by include; reduction in cost of battery costs, economic stability and reduction of renewable energy costs. The impact to the company has been reduction of the cost of operations. This has affected the profit margin. The profit margin has increased over the years by reduction of costs.
The social factors affecting Tesla include; increase in demand of low carbon automobiles. With increased awareness of the effects of global warning, the people around the worlds are continuously seeking ways to help save the earth. Among the many options the people are resorting to electric cars moving from petrol cars. Tesla has taken the challenge up and rapidly expanding the operations to meet the demands of the masses. Technological factors are among the macro environmental factors affecting tesla. Technology is rapidly changing and the company should be innovative to the change. Failure to adopt a new technology is a big threat to the company to be put out of business. This has affected Tesla`s other plans and focus solely at technology.
Tesla ought to keep innovating in the sector if they need to achieve a global success. Technology keeps changing and they should strive to be upto date with innovative technology. The company will sell more cars to everyone in the world by using the internet. They should set up showrooms and ecommerce websites to help move more cars to meet customer demands worldwide. This will help grow the business to greater heights. They should take advantage of government funding and set up more factories in more continents to meet demands of the customers.
Tesla should also take advantage of government trade deals and expand to countries trade agreements are negotiated by the government. They should also come up with innovations that are exciting to the customers. This will attract more customers to buy electric cars enhancing the mission they hold for the world.
Tesla`S Internal Environment And Capabilities
Tesla internal environment has strengths and weaknesses of almost equal share. The company has many strengths that makes it a leader in electric car production. They include; good employer, tesla motors has been lauded as a good employer. This is according a wall street journal, tesla has a good employee retention rate compared to other companies. The company uses this strength to increase working capacity and employee on ob training. Training on job ensure the company remains a market leader by continuously training them on technological innovations that the company needs to keep manufacture of quality.
The company is a leading automobile in the manufacture of electric cars. Tesla has cemented its position by carrying out operations in the most innovative way possible. Tesla produces best in class electric cars. while other car manufacturers are struggling to keep pace with the innovations it has put across, Tesla leads the way to manufacturing quality cars. The cars have helped shape the way communities live. Tesla is also a dominant player in the electric vehicle sales. The company boasts of production and sale of carbon free cars that are revolutionizing the automobile world. The company is also a leading innovator. Being a pioneer of a new idea, the company is an innovator in the sector.
Tesla has had a fair share of weaknesses in its internal operations which threaten the company`s existence. The weaknesses the company faces are; complications in manufacturing. Tesla has had a challenge of having manufacturing challenges. Among the notable effect was delay of the famous Model X due to delays in manufacturing. The delays also men a delay in release of newer models, this is attributed to the the high innovative prowess that goes to the process. The company also faces high demand issuers.
The success of the company has led to increased demand of cras by the customers thus meeting the demand has always been a challenge to the company. The other problem is shortage of raw materials. The company uses electric batteries manufactured by other companies which leads to shortages as demands keep soaring. Tesla is also faced by a problem of being led by one person, Elon Musk. This sometimes leads to delays in production and distribution as the approvals the CEO has to make before decisions. Some delays are experienced.
There is also a problem of liability claims. A notable incident is the production of the auto pilot cars which have not been successful incase of accidents. Tesla also faces a problem of extensive competition. Automobile giants like Ford, BMW Mercedes, audi and Toyota are preparing to fiercely challenge the status quo currently being enjoyed by Tesla. All the big brands are preparing to start manufacture of lower cost self-driving electric cars. This is threatening to put Tesla out of business.
Application Of Outcomes Of The Porter`S Five Forces Model
Porter`s Five Forces is a model of business analysis that seeks to answer the competiton stability of a company. The model focuses attention on how Tesla can beat the competition against giant automobile companies such as Ford motor company. The model is used to develop a strategic position for the company (E. Dobbs, 2014, 32-45). In the event of loss of the company`s competitive advantage, the competitors will buy it off meaning it would be game over.
Tesla is an industry leader in manufacturing of electric cars which puts them at the frontline. They should be willing to put up a spirited fight for the position. Porter`s Five forces model focuses attention of five main areas. These areas are; threat of new entrants, bargaining power of suppliers, the threat of new products, rivalry among the existing competitors and the bargaining power of the buyers.
The threat of new entrants in the manufacturing sector will be a game changer for Tesla (E. Dobbs, 2014, 32-45). It would mean the entrant will have to take a position in the market which means the company will not be able tyo control the market metrics. New entrants will come along with new ways of doing business and new innovations to help them beat the competition. Tesla has to build barriers against this problem. The company should; create and innovate new products and ideas to shield the concepts. Tesla also should build economies of scale to bring their cost of production low. The company should also build research and innovation capacities to be ahead of the competition.
Tesla should master the act of negotiation with the suppliers. This will be a deal breaker and a game changer (E. Dobbs, 2014, 32-45). They should negotiate for timely delivery of materials that are needed in their processes. Negotiate with the suppliers for discounts, and credit supplies to keep the assembly industries moving. Tesla should build a powerful network of suppliers to avoid extortion by the established ones.
They should also start experimenting with other products to check suitability. Experimenting with different products from different suppliers will enable a smooth switch in case the prices of one product changes. This shields the the company from incurring unsharksavewriters.com/business-plan-for-tesla-companynecessary costs on costs. Tesla ought to develop lasting relationships with suppliers whose business depends on the company. This ensures that they stay in business not just for the money. Tesla should learn from the best companies Wal-Mart and Nike.
The threat of new products and services. Tesla should be wary of new products and services that enter the market as they can disrupt the service of the company. The company should stay up to date with what is happening in the competitive market. The new products offer a threat if they offer value that is unique to the market (E. Dobbs, 2014, 32-45). Tesla should strive to be service based instead of being product based. The company should also strive to understand the core need of the customers and increase the switching costs of the customers.
The bargaining power of the customers. Customers are always in demand of new products. They can solve this problem by building a bigger customer base. This should be done by always striving to reach more people through their products. The company should also innovate new products for customers fat. This will ensure the customers always find a new exciting project to try out. The company stays ahead if the customers are satisfied and this increases chances of success. Tesla should also improve the customer service to keep the buyers happy.
Tesla has to deal with the rivalry among the existing competitors. The giant motor companies are a big threat to survival of the company. Tesla should always keep in check. Intense rivalry has an effect on sales and the overall profitability of the sector. Tesla should always strive to be the best of the competition (E. Dobbs, 2014, 32-45). They should take the competition by; building a different business model that is uniquely theirs. Unique business model will ensure that the customers prefer the new ideas to the old ones, this way beating the competition. Tesla should also seek to collaborate with competitors to increase the service delivery.
Strategic Plan For Beating The Competition.
Porter`s five forces of competition analysis was developed in 1979 by Michael Porter of Harvard (E. Dobbs, 2014, 32-45) . Strategic analysts often use Porter`s strategy to access the potential profitability of a product Porter`s five model states that for a company to survive competition, has to be up to par with the five different strategies. The company has to be prepared and know exactly to do as per the expectations to beat the competition. The model goes into detail on the different aspects of every competitive market. There are suggestions on the steps a company has to take to survive. They include; bargaining power of suppliers, threat of new entrants, bargaining power of customers, rivalry among the existing competitors and the threat of substitute products.
Bowman`s strategic clock is a competition analysis model that uses explores the concept of positioning to beat competition (Echchakoui, 2018, 138-149). Bowman`s strategy focuses on two important concepts. Price of the product and the perceived value of the product.
Tesla is a leader in the electric car mass production and to make their position known to competitors, they need to take them head on. The strategic plan for the company to go ahead and squash the competition should follow through a well guided relevant plan to achieve market dominance. Tesla has dominated and stayed at the core of electric car manufacturing long before any automobile company. With presence in the country well developed, expansion to most continents is vital. The company should;
Identify and handle key issues facing the customer base. The company should invest in market research and research on consumer needs for their products. The customers’ demands should be core of the business. Customers make the heart line of the company. Failure to address issues facing the customers they risk being outsmarted by the more dominant automobile players. Fund market research to help retain the customers to the company.
Tesla should build a niche uniquely for their business. The company enjoys the status quo being the biggest player of the electric car manufacturing sector, however, they should come up with a unique business model to suit them. Copying competitors can mean they do not have the capabilities to bring out their own. A niche will help the company focus on their products and services instead of trying to look at competition. Development of a good niche for the business mean they will compete on their terms. The company will not be distracted by competitors.
Tesla should work on pricing of their products. To be a market leader for them should mean provide the products to the customers at the cheapest price possible. To fend off competitors means beating them at pricing. Price reduction should start from getting supplies of a good quality and at a bargain price. Saving from supplies to finishing the cars is vital in determining the price of the products. Cheaper high qualiy products is a done deal to ensure they dominate the industry. The more domination can be achieved by sale of more units of cars at the best price and still getting a profit from the business.
The company should also set up research and innovation centers. Innovation to Tesla is a deal for staying up in the business. Newer innovations will always beat the competitors. They should also work on improving customer service. Good customer service to Tesla means more customer retention ensuring more sales. The company is also to expand their means this involves buying off small companies and subsidiary companies too.
Conclusion
Tesla Inc. is an American based automobile and solar company with headquarters in Palo Alto, California. The company established in 2003 by two engineers is currently breaking the limits of innovation in automobile sector. With several assembly plants spread across America and Asia, the company is growing at a rapid rate with sales of units surpassed the twenty thousand mark in less than five years of operation. Competition is threatening to tear apart the Elon Musk headed company. Large automobile companies Audi, Nissan, Benz, Ford, Mercedes, BMW and Honda all have plans to start manufacture and assembly of electric cars. Competition will be stiff in the near future. To beat the competitition Tesla has to prepare and take the automobile giants head on.
References
Echchakoui, S., 2018. An analytical model that links customer-perceived value and competitive strategies. Journal of Marketing Analytics, 6(4), pp.138-149.trategies. Journal of Marketing Analytics, 6(4), pp.138-149.
Tesla, N. and Childress, D., 2009. The Fantastic Inventions Of Nikola Tesla. Stelle, Ill.: Adventures Unlimited.
- Dobbs, M., 2014. Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.