The Tesla's Strategy of Developing - Assignment Example

Global strategy: Tesla Motors Simpli has contributed to the Tesla strategy and what are implications of simpli Tesla Motors produces high performance cars. The company mainly deals in electric sports car. Tesla manufactures luxurious car at high price. Tesla Roadster is one of the famous cars of Tesla Motors. The company uses simple strategy of making and implementing long term plans. One of its simple long terms plan is to manufacture wide range of cars some of which will be affordable family car. Approximately three years ago Tesla manufactured only luxury Roadster. But now Tesla is adopting and implementing the simple strategies for its product innovation. Its wide range of products helps the company to capture more market share and initiate an expectation in its customers about Tesla’s product. The new product of Tesla’s car is Model S. This car is doing a good business. It is the temporary strategy of Tesla to compensate its previous loss for moving forward with its growth strategies. This strategy also focuses on the internal issues of the company, its product development process and some other factors. The company has developed a unique strategy of battery technology which is used in their cars. The battery can also be used in other purposes like storing power from solar panel. Tesla focuses on simple and different strategy because majority of its targeted customers are from upper and middle income level of the society. So the company provides creative electrical cars of high performance. It gives a lot of expectations to the customers. Their corporate level strategy the company follows is market penetration. The company is presently trying to develop its influence on its current product and current market. Tesla markets its power train electrical components to different automakers. The company is adopting and implementing the strategy of developing its domestic market. It is also continuously expanding its global market. This strategy helps the firm to achieve its goal and gain the awareness of the people. The company developed the corporate strategy of partnership with many companies. Panasonic and R&D department of Tesla motors formed a partnership for developing efficient batteries. The company also partnered with Toyota and Daimler and some other OEM manufactures for the development of motor parts, electric vehicles, engineering support and the production system of the company. Tesla is growing in the field of niche & luxury auto brands. The company is presently cutting their entry cost. It hopes to win the market of its targeted middle class buyers. The implementation of this strategy results that Tesla ranked third in selling luxury car in California. This was an extraordinary achievement for the company in successfully implementing its strategy. Tesla developed radical marketing techniques for the sale of its product. The company’s strategy of developing its brand store in good location attracted hundreds of potential customers. Approximately ten thousands of people, every single day, walking beside the showroom can see the cars. As a result it increased the sales of the cars. This strategy helped the company to get closer to its potential customers. Opening a showroom in a prosperous location is one of the ways of developing its business (Wenkart, 2013). Tesla’s secret plan (p9) was really a plan or an ex-post rationalization? Would it matter? The starting product of Tesla Motor is electric sports car of high performance. This type of car is named as Tesla Roadster. The company believes in long term plans like manufacturing wide range of cars within an affordable price. The company selected it target audience and made a detailed research of the market for launching its electric car. Before entering into the market the company conducted market research. According to the plan, Tesla initiated the concept of electric cars. The main plan of the company is to move towards solar electric economy. That is why the company manufactured electric cars. It is designed in such a way that it beats gasoline sports car like Ferrari etc. Moreover Tesla’s electric car has more energy than Prius. The development and implementation of any new technology, initially incur high cost to the company. Tesla also faced this same issue for its electric cars. It followed the strategy of entering into the high end market where its targeted consumers are ready to pay the price and then control, drive down its market as early as possible. It lowers the product price and higher its sales volume by this model. The technology of the company is fast moving which helps the company to generate more revenue. The cash flow is invested back in the R&D of the company to cut down the product cost. Therefore when someone is purchasing sports car of Tesla Roadster he is indirectly paying for the development of the family car of low cost. The battery used in the car of Tesla can be sold to other recycling companies. The battery of those cars cannot be dead. It can have less range. A common problem of electric vehicles is carbon emission. As a solution to this problem Tesla transferred the emersion of Carbon di-oxide to the power plant. As a result development of grid of grid electric power is done from various ways like wind, geothermal, hydro, nuclear, solar energies which involved in the emission of Carbon di-oxide. The recovery of natural gas is 97.5% efficient than electric grid. Natural gas transmission efficiency is more than electric grid. Tesla’s car tires, body shape, gearings all are aimed high performance than its peak efficiency. When gasoline powered car are compared with Tesla in wheel to wheel efficiency, the gasoline powered car is equal to the energy of gasoline minus transportation loss & refinement multiplied by km per gallon. The term Hybrid is often applied to cars. Those cars are just gasoline powered car with a low battery resistance. The battery of gasoline car has to be charged from the gasoline engines. So they are considered a little more efficient in gasoline powered car. Every source of fuel contains carbon di-oxide. These carbon contents affect different level of vehicles efficiency. Therefore use of pure electric is much better for the cars (Chaston, 2012). If it is assumed the average per joule of carbon di-oxide in US power production then also Tesla Roadster wins the comparison. The high amount of carbon di-oxide contained in coal when compared to natural gas results in the negligible carbon di-oxide content of nuclear, hydro, wind, geothermal, solar power. Tesla motor is very energy positive. The company will be co marketing its sustainable energy products along with its cars. One of the example of this is the company will be providing a solar panel of an affordable priced from Solar City which is a photovoltaics company. This system will generate electricity which would serve about 50 miles per day. This step nullifies the use of energy transport. The customers of these products will actually be putting more energy back to the system. This is Tesla’s secret plan which would matter in all these possible ways in regards to sustainability of energy. Therefore this can be considered as a master plan which involves building of sports car, earn revenue from that. Tesla will use that money in manufacturing affordable car. Then again the money is reused to build more affordable cars. All these things will provide in zero emission electric power generation options (Hoffmann and Manière 2013). How do you expect the industry to evolve? Identify the major challenges that can potentially impact the growth of Tesla, and propose appropriate solutions The automobile industry is experiencing a robust growth. Presently a number of manufacturers are serving in this industry. Automobile industry’s evolution model is featured by heterogeneous capacity of the firm. The increase in the revenue return is related with the company’s R&D process. It gives birth of new product. Earlier petrol was used as fuel in automobiles. But with the passing day’s battery, electricity, gas etc are also used as fuel in automobiles. Many types of cars are getting launched to satisfy people needs. Often cars are also made by customizing specific requirements of the people. The world is facing scarcity of petroleum with the increased number of vehicles. So importance is given on using of substitute resources. Customers are also becoming concerned about the price and availability of fuel. So they want something innovative in respect of these issues. This has become the main objective of the automobile company to evolve ideas and product related to these needs (Makhijani, 2007). The promises Tesla Motors have made are low fuel cost, energy independency, reduction in the emission of greenhouse gas etc. All these promises arise by the introduction of electric vehicles. But these things are considered as friction by many people which are affecting the company in some extent. The U.S. Department of Energy and the Environmental Protection Agency recently did a study on lithium-ion batteries for electric vehicles and it’s the environmental impact. They got the report that the battery has nickel, cobalt, cathodes. It also contain solvent based electrode. This possesses highest capacity of creating an impact on environment which will result in global warming, ecological toxicity, human health sufferings etc. Cobalt may cause pulmonary, respiratory, neurological problems. Lithium extraction has important social and environmental impact. Toxic chemical are required to produce lithium. Release of such toxic chemicals through air emissions harms the food production, communities etc. Extraction of lithium harms soil and cause air contamination. Electric vehicles sound very promising. But in actual fact it is not so environment friendly as its sounds. It is still not making America energy independent. Model S of Tesla’s experienced major problems of broken sunroof, prematurely worn of tires, battery replacement etc after running 18,822 miles. This problem increased more with its mileage. For this reason this model was scoring very low. Moreover Model S is also less environment friendly for its battery. This car does not meet all the requirement of "green car of the future". It shows that the company’s high stock price might become unsustainable in the long run (Wenkart, 2014). For the solution of this problems Tesla can take measures which does not pollute the environment in such large extent. It can try to change or can try to find out alternative chemicals for using in their electric cars. The company should do a detailed research on the after effects of the chemicals and find appropriate solutions for the problems which are arising for the use of chemicals. Tesla has to give attention and develop its product technology more to satisfy its customers. References Chaston, I. (2012). Strategy for Sustainable Competitive Advantage: Surviving Declining Demand and Chinas Global Development. New York: Routledge. Hoffmann, J., and, Manière, I. (2013). Global Luxury Trends: Innovative Strategies for Emerging Markets. New York; Palgrave Macmillan. Makhijani, A., (2007). Carbon-free and Nuclear-free: A Roadmap for U.S. Energy Policy. Toronto: RDR Books. Wenkart, M., (2013). The Tesla Motor ́s way: How to build a car manufacturer from scratch. Germany: BoD – Books on Demand. Wenkart, M., (2014). Why Teslas shares will cost 2.000 $ within 12 months: The car concept of the future. 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