Tesla’s Strategic Framework
Tesla Motors Incorporation is a start-up automaker company located in California. It is mostly famous for making a revolution in the auto industry by introducing hi-tech and fuel-free automobiles that can be driven by autopilot. Even though Tesla’s business strategy seems to be risky and aggressive, it proved effective as well as helped the company to increase its profits and gain lots of new customers.
Since its founding in 2003, Tesla has always been operated as a start-up enterprise with the innovative approach in both production and managing processes. As W. Knight explains, “Tesla has been aggressive in its use of technologies that are just emerging” (2006) and realized how profitable it could be to produce electric cars that would be not only be useful but also appealing for the customers. Another key thing to remember is that automobile industry is relatively old (about 100 years) and hard to break into, especially for a start-up. Thus, Tesla ruined this myth by “exploiting technology trends more aggressively than other carmakers are willing or able to do” (Knight, 2016).
Below, there is the financial performance chart that demonstrates the company’s growth.
First of all, Tesla focuses its generic strategy on the differentiation. As C. Rowland explains, “this strategy builds the competitive advantage based on the development of products that differentiate the company from other firms in the industry” (2016). For instance, this enterprise considers itself as the producer of environmentally friendly vehicles that makes it stand out among the majority of carbon-based automobiles manufacturers present on the market. Tesla’s CEO – Elon Musk – makes an emphasis on the uniqueness of the products and constant declining of their costs, as the technology to produce these cars becomes cheaper each year. One of the company’s objectives for the growth strategy has always been to “maintain extensive investments in research and development (R&D)” (Rowland, 2016). The firm applies new technologies with minimum environmental harm.
Secondly, the start-up “uses market penetration as its current primary intensive growth strategy,” as Rowland puts it (2016). It helps the firm to work on its business growth by enhancing sales revenues in the market. This year, Tesla was sticking to 90,000 cars, and one of its large-scale goals is to sell 500 000 cars by 2018. However, manufacturing up to 500,000 cars annually might be the biggest challenge the company yet faced. Moreover, the company pays a lot of attention to the product developing process, as it is one of the customer’s expectations.
Thirdly, the company plans to expand the number of countries where it sells its cars and batteries. It is continually opening new offices and facilities all over the world. Tesla performs its intensive strategy according to its mission and vision, in which the firm highlights the concept of being the leading company in the automotive industry. Furthermore, company’s “differentiation generic strategy enables market development by creating unique products that can attract customers when the company enters new markets” (Rowland, 2016).
The company always aims at achieving outstanding goals and surprising its clients. Elon Musk made automobiles seem like computers or smartphones. Tesla’s cars can be repaired remotely and are capable of crossing the continent without a driver. Moreover, they receive updates every few months.
In conclusion, Tesla’s business strategy has been highly successful for all 13 years of its existence. As a start-up, this company achieves more than some of its competitors that have been present in the car industry for decades.
DeBord, M. (2016). Elon Musk just made a totally mind-blowing change to Tesla’s strategy. Retrieved from http://www.businessinsider.com/tesla-mind-blowing-change-strategy-2016-5
Knight, W. (2016). Tesla’s strategy is risky and aggressive, but it has worked. Retrieved from https://www.technologyreview.com/s/601876/teslas-strategy-is-risky-and-aggressive-but-it-has-worked/
Rowland, C. (2016). Tesla Motors, Inc.’s generic & intensive growth strategies (An analysis). Retrieved from http://panmore.com/tesla-motors-inc-generic-strategy-intensive-growth-strategies-analysis