MBA FPX 5006 Assessment 2
Business Strategy
Business strategy is calculated on a company’s overall plan on how it wishes to attain its long-term objectives and gain competitive advantage in the targeted market. It embraces the responses that determine organizational position within a field; utilization of resources; and strategies seeking growth opportunities.
The business plan of Tesla, Inc. is based on three main ideas: of innovation and new ideas, sustainability in the environment, and the process of change. So, Tesla has emerged as a pioneer and a market leader of sorts as it was one of the first companies to venture into the production of electric cars and utilizing clean energy and providing more options to consumers in terms of energy sources and transportation (Lang et al. , 2021).
Due to the fact that the company is always in the innovation mode, vertically integrated and has a direct to consumer sale model, the company has been able to rewrite the rules in its industry and capture a big piece of the new electric car market.
Generic Business Strategies
There is one more significant criteria that defines Tesla’s marketing strategy and it is differentiation. While the company is unique in one way, it has the best electric car innovation and high-quality perfomance with a very sensitive focus on the environment.
Traditional automobiles with internal combustion engines are the ones in contrast to Tesla automobiles which have sophisticated battery systems, semi-autonomous partial control, and over-the-air alterations. Tesla of the car industry has also developed company image of advanced technology, environmental consciousness, and owning luxuryness, as mentioned by Babu and Maddhuri (2023).
This strategy has helped Tesla establish higher-than-industry-average prices for its vehicles since consumers are willing to pay more for the firm’s differentiated products.
As for the approach based on differentiation, Tesla themselves are the uniques, however, the company actively affects the minimum as they reach for economies of scale and vertical integration. Tesla has benefited because it invested in gigafactories and battery production facilities and through improving its processes for making its cars it has been able to reduce costs by a large degree since some key components are manufactured internally (Cooke, 2020).
As Zhang and Wang state that, Tesla has changed the entire demand chain plan with a direct selling method where traditional stores are not required (2023). This lowers the circulation cost and thus Tesla is able to offer reasonable prices as compared to its competitors. Tesla is also entering the car industry and attaining competitive advantage to oust rivals and outcompete them in the market through the hybrid market strategies of innovation and cost leadership.
Business Strategy Related to Marketplace Approach
One of the main strategic market targeting approaches that Tesla has embraced in the automotive industry is direct-to-consumer market strategy whereby the company has embraced creativity coupled with technological advancement to challenge the traditional approaches to executing business processes.
By this means of distribution, the products are sold directly to the consumer through internet and outlets owned by the company for sell of cars and services without involving middlemen. Tesla’s business strategy is not similar to most automobile dealership strategies; instead of a simple private store, it aims for a vast assortment of services. Rather than using the affiliate network to sell its products directly or provide services, the company’s own sites are used for sales and services.
Great part of Tesla’s strategy is a charger network because the absence of a wide charging network is viewed as one of the most significant factors that prevents many people from purchasing electric vehicles.
The Clayton Christensen’s analysis on disruptive innovation is that organisations develop new products that are initially not very effective according to traditional performance indicators, but they possess characteristics that are attractive to a specific group of consumers (Terry, 2020). Finally, as these new ideas get better, they displace the market winners which are already firmly in place.
Regarding this novel approach, it aligns with Tesla’s strategy. The company started dealing in cars with electricity, which in the beginning did not offer the level of range or velocity as the gasoline and oil vehicles; however, they were considered environmentally friendly by people who embraced them for green communication technology.
Still, Tesla cars are superior to ordinary cars in terms of acceleration, energy density, and enhanced software integration (Peng, 2024) given the firm’s continuous upgrades as well as advancements in battery systems. Structurally, MCT defines a market that it is not in direct competition with by offering valuable propositions that make competitors irrelevant based on W. Chan Kim and Renée Mauborgne’s Blue Ocean Strategy model. Direct selling, the organization’s vertical merger, and a sustainable focus are some of the other ways that the company is distinct from standard cars.
MBA FPX 5006 Assessment 2 Business Strategy
Tesla has been good at aiming for its top position in this competitive car business through its effective Business Model Innovation. Tesla has a competitive advantage in terms of the money it invests in research & development as well as in distinct technologies and hall-marks or patents.
for instance, has advanced its battery development by inventing high-energy density lithium-ion cells and battery systems. These have enabled longer range and faster charging times for cars thus differentiating them from competitors (Wen; Tao; Yang & Zhang , 2020). Relative to the dynamic powers framework, the(model has noted that Tesla has continued to innovate and adjust to market conditions in order to overcome competitors.
Luxury electric cars maker Tesla has associated itself with green technology and environment brand. Based on the brand resonance model, Tesla has achieved brand Growth by making its customers very loyal and active in the brand. Tesla has established an army of consumers who resonate with its cause of action and ethos overtime due to its primarily direct selling model and proper consumer relations (Tsai, 2021).
Tesla being a recognised brand, can afford to sell its cars cost more expensively as it targets the luxury hybrids market between people who are eco-conscious and have a good deal with technology.
Business Model of Company
The firm’s principal products are electric vehicles (Passenger Cars and Heavy Trucks) and methods of energy storage. Tesla Motors has several models namely; the Model S car, the Model X SUV car, the Model 3 sedan car and the Model Y crossover car (Lang et al. , 2021).
Tesla’s Powerwall and Megapack are among the energy storage products for home and commercial use. That is the primary product, but the company also offers solar cells and solar roof tiles.
Currently, the primary source of generating revenues at Tesla is through sales of automobiles and products with energy storage capabilities. The company does not outsource its products to tertiary shops because it retail its cars directly to consumers as well as on the internet and through its own showrooms and outlets, as well as service stations (Axsen et al. , 2022).
The company also earns revenues by trading in government credits, such as Zero Emissions Vehicle (ZEV) points, with auto manufacturers that fail to conform to pollution standards.
First of all, Tesla provides buyers with new, high performance electric cars that have unique technologies, and the method of creating vehicles that is new and environmentally friendly. New cars from the company have impressive speed, a more extended battery range, better innovative features for semi-autonomous driving, and the opportunity to update the car’s software via the Internet (Rasib et al. , 2021).
Tesla’s sales model which involves its first-party dealers and strong customer support for its cars also coupled with increasingly expanding Supercharger station network for charging convenience also makes for an elevated owning experience.
The strategy that by which Tesla wants to make money is cost leadership where economies of scale and vertical integration lead to a low price point and hence higher margins. Investing a great deal of money into its Gigafactories has given the company an advantage of easing, and speeding up the production of batteries, cars, and energy storage goods.
Moreover, one cannot find usual dealerships in Tesla’s case because it offer direct purchase of cars to the consumers and thus it eliminates the need for their transportation (Liu, 2022). The automotive giant anticipates to expand more its profit margins and aim to be profitable in the long-run with rising production rates while reducing battery costs.
Relationship Between Model and Strategy
The particular business model of Tesla can be inextricably related to the overall business strategy of Tesla. This is an example of how Issuu needs to have its strategies aligned for it to sustain its competitiveness.
This is evidenced by its main products which include electric automobiles and renewable energy systems, which are a threat to ordinary internal combustion engine vehicles and fossil-based sources of energy respectively, therefore signaling that the company is ideas based, sustainable, and is into technologies that can revolutionalise markets.
Tesla has done away with the usual middlemen by selling its cars directly to the consumer instead of dealing with third-party stores cutting on its overhead costs and being able to have control over buyers experience which is in line with its positioning of an exclusive, high-end product (Myles, 20293).
Therefore, addressing cost leadership and efficiency, Tesla’s plans to become a vertically integrated company and recent investments into manufacturing facilities such as Gigafactories are beneficial for the company.
This means that the company can continue to realize economies of scale as production rates increase through consequent enhanced revenue generation (Terry, 2020). Tesla’s business plan and strategic objectives linked to innovation, sustainability, and change objectives are aligned at the company. This has enabled the company to keep abreast with the requirements of the car and energy industry markets that are dynamic.
Corporate Strategy of the Company
Tesla’s strategic management map involves the automotive segment, product segments – electric and energy storage, and energy segments, such as green energy. Over the years, it has expanded from manufacturing only luxurious electric cars and produces much more than that today.
Thus, to satisfy the needs of millions of users, Tesla has been offering suitable models like SUVs, wagons, and much more affordable vehicles today (Sharmelly & Ray, 2021). Tesla has also expanded into the energy section by offering Powerwall and Megapack items, solar cells, and solar roof tiles. This is in the company’s medium term strategy where it intends to diversify in order to capitalize on the rising market demand for clean sources of power.
The auto as well as energy-company has expanded to many of the world’s largest markets as part of a strategy for growth worldwide. Originally, the company was focused principally on the US, but now it serves Europe, China and some other countries.
This is due to its flexibility to adapt to regional requirements and policies through alteration in its offerings and approaches (Bridge & Faigen, 2022). It is true that Tesla foreign growth has been aided by such splendid partnerships still as the one with Panasonic in Gigafactory Nevada and the ones made in local factories and warehouses.
In the production process of its products, Tesla has been known to employ the ‘vertical integration model,’ whereby the company directly handles significant processes involved in their production. The business has invested heavily in research and styling so that it could design and develop its means of operations like battery cells, electric motors and self driving systems that can make cars drive on their own.
Tesla also assemble parts such as battery packs and electric drive trains at the Gigafactories. This ensures that whenever the company requires these parts, they are easily available and not entirely dependent on outside demands (Cooke, 2020). Similarly, standard stores do not apply to Tesla since it has established its own outlets of direct selling stations and service centers where it does not need to operate along with standardized stores.
With the above approach of vertical integration, Tesla can obtain more value from its supply chain, operate the business effectively, and prevent supply chain mediocrity on its products and services.
Corporate Structure, Management Systems, and Strategic Approaches
A flat management structure also shows that Tesla’s company organization is somewhat restrained so it is simple to make decisions. This systematic adaptation is well aligned to the company’s creative and flexible approach of doing business by allowing it to respond appropriately to the dynamics of the market.
But it has also led to emerging concerns like a considerable amount of power being in the hands of a few people and potential employee burnout (Bedford et al. , 2022). Flexibility, productivity, and quality are the key indicators that define Tesla’s essential management procedures, focusing on consistent development and lean manufacturing.
Looking at the business models employed at Tesla, the firm has actively pursued vertical integration strategy as one of the key pillars of its strategy. The business has spent a lot of money acquiring influence over various links along the value chain, including research, nurturing, manufacturing and marketing.
This strategy of vertical integration has supported Tesla in being able to maintain high quality within the organization and gain more money from within while having to rely on other sources less. Moreover, the management of Tesla has given primary concern to the aspect of internationalisation in its strategic plan (Rasib et al. , 2021). The business has evolved being already present vast majority of the largest countries in the world including United States, Europe, China and many others.
Leveraging on smart relationships and partnerships, Tesla has engaged other suppliers, manufacturers and government agencies that have enabled it to expand globally as observed by Ding and Lee (2023). For instance, Panasonic has held an extremely significant role in ensuring Tesla has a constant source of supply of battery cells for the electric cars through the Gigafactory Nevada (Qin, 2022).
Conclusion
The feasibility of the business taps on the ability of Tesla to properly integrate the business strategy with the business model, as well as integrate the company strategy into one seamless and adaptable business plan. The strategic concepts of innovation, sustainability, and change apply to Amtrak both in terms of core products and revenue and in income generating strategies oriented toward development, global expansion, and vertical integration.
Tesla’s idea for differentiation is delivering outstanding electric vehicles and energy products. It is able to do this through its direct to consumer approach to its business and investments made in technologies that belong to the company itself. On the same note, the integration of the company, with attempts to build the organization as a lowest-cost provider through scale and scope advantages, enhances competitiveness.
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