Tesla Motor Inc. Innovation - Case Study Example

Tesla Motor Inc. Innovation Name: Institution: Date: Tesla Motors Inc. is an electric vehicle firm founded in 2003 by Elon Musk, and it is headquartered at Palo Alto, California. The company designs, develops, manufactures and sells advanced electric vehicle power train components, stationary energy storage systems and high-performance fully electric vehicles. The company has seen an expansion from the US base to global presence via the Supercharger recharge stations and the sales networks so that it can sensitize people about the introduction of the electric vehicles in the market. The firm produces electric vehicles with relatively high price, a feature that distinguishes it from the traditional manufacturers of automobiles. Tesla owns its sales and services networks with a potential business structure enabling the rapid development and launching of highly advanced electric technologies and vehicles. The business is the first one of the kind to have a commercial production of an electric vehicle that is federally-compliant, the Tesla Roadster (Klenner et al., 201). According to this background, the paper seeks provide an in-depth analysis on how Tesla’s innovation has opened up new market opportunities within the automotive industry. The essay aims to examine the response of the automotive industry to the competition brought by the open innovation from the firm. An understanding of the manner in which the new business model may affect the advancement of the automotive industry in the future and the role of government in giving protection to the already established industry and jobs, giving support to the new sustainable innovative business, or letting it rest with the market or consumer demand is brought to light (Mohr et al., 2009) Companies have come to a realization of the importance of the innovation process for survival in today’s market comprising of rapidly changing environment, and to able to develop competitive advantage. There is a quick shift in the global market from closed one to a more open one due to rising of new markets and technologies and internet revolution. There is, therefore, the need for the organizations to look for newer methods for creating value so that they can establish new areas of competitive advantage. Tesla’s ability to bringing in a cutting edge innovation in the automobile industry by applying and transferring knowledge from research to developing and relating adoptions of new applications has given the firm the ability to open up new market opportunities within the automotive industry. The need for reliance on the external knowledge in collaboration with the outside actors more than the internal knowledge makes the firm outperform its competitors (Wells & Nieuwenhuis, 2012). Consumers buy vehicles depending on their value of several characteristics. Many of them are concerned about the reliability, aesthetics, performance, among other attributes: cost is a significant factor. Tesla has put much effort in ensuring that the electric cars they produce can be compared over a wide range of features. Even though there is still significant worry among the consumers of this innovative technology concerning its reliability with respect to the traditional vehicles. The challenge, however, is bound to diminish with increased familiarity to the vehicles among the customers. From the market perspective the traditional cars have similar needs as the electric cars; nevertheless, the electric cars are considerable as new markets instead of as a revolution of the mature product (Canis, 2011). The shortcomings with the electric vehicle technologies have been reduced a great deal due to high pace of technical development as well as the incentives and regulations by the government. Many more clients are thinking of making purchase of an electric vehicle. Even though the purchasing cost may be higher as compared the existing traditional alternatives, due to the high battery costs, the vehicles attract customers since the electricity costs are relatively lower than the cost of fuels. The long run benefit is higher than the conventional vehicles. The innovation opens up new markets for the customers who are more considerate about the environment and social benefits due to the reduction in the emissions by the electric cars. Adaptation to new technologies and technical changes is a challenge. However, with the increase in the costs of gasoline in the recent past has opened the market for the alternative which is the electric cars (Wells & Nieuwenhuis, 2012). The global automobile market has extreme competition with the expectation of further growth of the various sectors of the industry in the future. The luxurious sedan models sold by Tesla are at the hem of facing stiff competition from on the segment of its market from the well-grounded brands in the automobile industry (Bakker et al., 2012). Mitsubishi, Ford, Fiat, Nissan, Daimler and BMW, among others declared entrance into the electric innovative vehicle production and have electric cars in the market today. This is a challenge to Tesla, especially because the potential and the current competitors have a greater marketing, manufacturing, technical, and financial and other important resources than Tesla can reach. These would, therefore, have much resources dedicated to supporting, selling, distributing, manufacture, developing and designing of their products (Schaltegger & Wagner, 2011). The Tesla competitors do not have an advantage over it terms of resources only but also due to worldwide image of the brands giving them global recognition. The competitors have a widespread customer base and enjoyment of reputation and industry and client relationship (Dyerson & Pilkington, 2005). With the predicted growth in demand in the near future, a fiercer competition is expected and there is expectation of several forces to have influence on who will likely to dominate the market. The factors like terms of financing, customer care, fuel economy, safety, reliability, development time and innovation, features and the quality of products will determine the market dominance in the face of stiff competition (Sierzchula et al., 2012). Tesla Motors Inc. has a precise business strategy enabling its success. The company established a long-lasting collaboration with many of the industry players to enable them come up with the most innovative technology and get a wide range of knowledge from the external environment. The introduction of the electronic vehicle, the Roadster, into the market that sold at slightly lower volume was a précises business strategy (Bohnsack et al., 2014). To provide open solutions to the customers and increase the interest of the consumers towards the electronic cars, tesla motors introduced the Model X, a mid-price car with the mid-high price vehicle, Model S, which sells at middle volumes. This decision is necessitated by different factors. The Telsa is making attempt to conform to its objectives with regard to strategic development which in turn would help it reach even further processes of development and improvement in terms of service deliveries and standards owing to the fact that this is what its competitors are already doing in other sectors. From these levels of strategic decision making their product design model allows them to focus and consolidate specific expertise around the product and not the function. This step will most likely bring in a more focused set of skills and experiences. Additionally, Tesla is able to address the constantly changing business environment in a more flexible and responsible way, as the product design model concentrates decision-making authority in a “product cell” and thus enables faster response. The market strategy of the company is, however, not primarily based on lowering the prices to be able to provide high-tech vehicles at lower prices. Innovation is the chief basis of Tesla Motors business model. It entails the methods of production and the forecasting the products into the future with the intention of manufacturing mobility that is friendly to the environment. Robotic technology equipment is the norm in the organization’s factories aiming to lower the production costs of the company’s brand. After the introduction of Roadster into the market and before replacing it with the model S, the company had no real income. Model S was sold even before its actual production, a strategy that they adapted to date (Hockerts & Wüstenhagen, 2010. The firm’s products are not sold through the common stores. Tesla sets up showrooms in the major malls though there vehicles can only be bought by their website. The business has been able to build a strong network that has enabled it to face the challenges in the industries and find new markets (Porter, 2011). The industry development has been fascinating with the introduction of well-developed technology, introduction of fascinating products making the electric vehicles hit the market. Tesla’s ability to bringing in a cutting edge innovation in the automobile industry by applying and transferring knowledge from research to developing and relating adoptions of new applications has given the firm the ability to open up new market opportunities within the automotive industry. The need for reliance on the external knowledge in collaboration with the outside actors more than the internal knowledge makes the firm outperform its competitors (Horng et al., 2016). In conclusion, the innovation by Tesla motors has opened up new market opportunities within the automobile industry. Many of the traditional and well-established automobile producers have also responded by adapting to the technological change and they have also produced electric cars. 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