Chapter 4 Tesla Case - Case study PDF

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Summary

Case study...

Description

Tesla Motors, Inc. Conduct a SWOT analysis to analyze internal and external conditions Tesla must consider going forward. (Please include at least 2 per category) Strengths -

Innovation, Tesla created the first ever fully electric sports car. They were the original company to make electric cars cool. This came internally through Elon Musk’s vision for Tesla and it paid off for him. They will continue to follow his innovative vision.

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Brand Name, Tesla and Elon Musk very well known throughout the United States and the world. Being well known means they are marketed well and they will continue doing so.

Weaknesses - Service and parts for the cars, because Tesla produces their own parts and keep their service on house it produces an issue when cars need maintenance in places where Tesla don’t provide service, also because of their proprietary technology is not like any mechanic can help diagnosing any problems that the vehicle might have. -

Market size, even when electric cars demand is growing the prices are higher than most competitors, also with the introduction of hybrid cars that makes it less appealing to customers. Focusing only on electric cars cause a problem when gas prices are low, mainly because they lose the incentive to make people switch to electric cars because there is no need. The market for electric cars is not big, making it challenging to provide a product at a price that will appeal to customers necessities.

Opportunities -

Global Expansion, Global sales will always create opportunity for a company. Right now Tesla is heavily based in the United States. So once they find a way to reach out to international consumers, their global sales could skyrocket.

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Business Diversification, Tesla creates some of the greatest batteries in the world. With that, they have opportunity to expand into just normal battery production. With the world becoming more and more electronic, battery demand will continue to increase.

Threats -

Material Prices, Tesla relies heavily on lithium to create these electric cars. As mining for lithium becoming more and more expensive and competitive, Tesla’s profit margins on their lithium batteries will shrink.

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Stiff competition, with the US market being controlled mostly by the 3 big car manufacturing firms (Ford, GM, and Chrysler), makes it harder for Tesla to compete on production costs, mainly because of the volume of cars that they produce compared to the other companies. Also international brand presence (like Toyota, Honda, Hyundai, BMW, Volkswagen, etc.), present an issue because of reliability concerns when compared to older manufacturing firms.

Using VRIO analysis, evaluate whether Tesla has a sustained competitive advantage. Characteristic:

Valuable

Rare

Costly to Imitate Organized to Capture Value

Elon Musk

Yes- his intellegence

Yes- his drive and motivation

Yes- very costly because you can’t train someone to have his entrepreneurial mindset

Yes- but it took a lot of time, effort, and money to find the correct person

Technology

Yestechnically innovative so its hard to imitate

No- the concept of battery operated isnt rare anymore

Yes- How they developed the product specifically is costly; a lot of research

Yes- others may try to imitate, but will not be successful

Brand Recognition

Yes, everyone knows Tesla

Yes, not every car brand can capture the “cool” effect like Tesla

Yes, the technology used in these electric cars are far beyond competitors

Yes, like any reason you would want to create value in a brand, Tesla receives value

abilities to make a cool electric car

from creating electric sports cars

Manufacturing

No- same concept as any other place

No- technology producing the cars is not rare, the car itself is

Yes- physical assets of manufacturing such as robotics and assembly lines are very expensive

Yes- they have had success lately capturing value because of all of the testing and research and prototypes.

Tesla Lithium Batteries (Technology specific)

Yes, some of the best in the world

Yes, some of the best in the world

Yes, Tesla has technology that is tough to imitate

Yes- Tesla makes some of the best batteries in the world...