Please note! This essay has been submitted by a student.
The report has discussed or given the solution or consultancy keeping mind two strategy corporate and business strategy. For the corporate strategy it is given like the Ansoff matrix which is market development, penetration, product development and other things whereas after sheer analyses the strategy called product development is accepted due to the current situation analysis of the company. Apart from that from business strategy the three generic strategy model is used to certify or taking decision. At last recommendation is given so that it can be easier to take the decision in an improved situation. Lastly different aspects are discussed and analysed in a briefing manner so that the reader gets attached with the aim easily.
Tesla Motors is an automotive company founded in 2003 by an extensive approach of Martin Eberhard,Marc Tarpenning, Jeffrey B. Straubel, Ian Wright, and its current CEO, Elon Musk. The company mainly a processed engineering company which value the mechanised product. The companies vision is to make the use of solar energy instead of Hydrocarbon. Not only it is providing a network of super chargers, 400 stations within the United States and 2000 worldwide, that is free to use for Tesla customers. The reports aim at telling the opportunities the company has made advantage of and the core competencies that the organisation have and the strategic implementation of that things. Here talking about the corporate starategy different models have been used like Bowman’s clock. Porters five forces and BCG Matrix and so on. The report has also covers the financial growth strategy of the company which has helped them taking useful decision regarding expansion. The Ansoff Matrix and three generic studies also considered to make logical justification of the report.
Strategic decision for firms vary at different organisation level where there is critical evaluation for the company’s strategic decision and there is way for choosing and searching for appropriate matrix which can show you the better result. Here for the evaluation we are using Ansoff Matrix. This is comprising of four things which can ensure growth through distinctive areas which are Product development, market development, market penetration and the last one is diversification. Among this the company can adopt any of the four considering the financial and internal and external factor analysis. Tesla has not one but many products which is identified as the business units which include battery packs, powertrain components and vehicles. For the company or the unit’s management Tesla has separate policy makers, engineers, administrative staffs and other things who basically work individually and in a separate manner but tends to share information and knowledge together to expedite growth. The advantage is taken by the company in several ways like through integration they earn the economics of scale by using maximum productivity. The strategy is way too good for them as the US EV market are becoming the largest industry through growing public interest. The strategies are discussed below:
Justification of the strategies
Market development: Market development basically paved the way for the search of new places to sell your products or creating a demand for your product outside your target segmentation or market demographic. It requires intensive research and development work and the cost is not also less. According to the matrix this is a very good strategy which basically show the companies a way to their business expansion a broader view in the long run keeping mind the sustainability and the brand acceptance in the long run. An effective strategy could be entering into the new market. When you have plenty of customers then you can make your concentration on the primary line of business. Such as when your customer reach is good then you can make your good presence in online selling, opening other showrooms or center for retail selling or giving an advantage to the wholesaler and distributors.
Tesla will have to think of new markets for the expansion as there will be less competition there compared to the production places. For instances apart from US the Chinese and Japanese market are also proving as a new arena for expansion. They are now more developed in the automobile sector Bringing more vehicles and automotive cars than other countries. So changing the market can be a good choice but before shifting there should be enough consideration about the resources and coast as this is the primeval issue.
Becoming a global brand.
Catch up the position of the largest market shareholder within short span of time and creating further chances of expansion.
As new places so catch up with three media and creating employment chances and work with them in collaboration.
Avoiding risk in an increasing manner.
Capital with low cost for long time to be in the remote of expansion
The overall management becomes difficult after the quick expansion.
Company will have to cope with the challenged and change faces in the situation and will influenced by the environment.
Product Development (Horizontal Growth):
The thing depicted here is nothing but bringing a good change in your product that adds different value at different points and attract your consumers thus increase profit and market share. For example, a product which is in the market for long loses its attraction so bringing structural chanes is necessary. Currently Tesla is selling products which are old model so they are suffering less units sold problem but if they bring variation in the product then it can increase their revenue but this process needs a lot of investment in the R&D of Tesla.
If there is uniqueness in the product, then it creates a different value proposition which push the customer to buy the products thus resulting in increasing the brand value of that particular product.
Target segmentation in a large and distinctive measures.
Getting advantages regardless of competition and become a dominant player in the market.
The business with several strategic business units are to be very successful in the matter of risk avoidance and capital accumulation and providing financing when needed can attract buyers with different preferences, increase profitability thanks to market segmentation and, for some businesses, even out seasonal sales patterns Compete more broadly in your industry.
Threat of new entrants like earlier it was only the competitor in USA market but due to expansion situation will be tough to handle.
Every company has certain focuses on
Risk of changing consumer tastes or preferences
resources may be disproportionately siphoned off for slower-moving products Older models with fewer features become less desirable and eventually obsolete.
3- Stability strategy: Pause/Proceed with caution
This is basically the main movement of the company making new products are nothing but the demand of the time .This requires investment in R&D sector sometimes the company needs to go research to know the brand acceptance .Tesla is now doing fine by introducing the Model S by end of 2012, to introduce and develop new products we will need a huge investment in R&D but instead we could test the ground before moving ahead with a full-fledged grand strategy, trying to overcome previous losses as a result Tesla will be able to move on with growth strategies. So it is just a temporary strategy. Although it’s a temporary one it determines the company strategy for going up into new or multidirectional.
Enables the company to focus on its new product the Model S
Gain Some Profit to overcome previous losses
Focus on internal issues and enhancing internal processes
Possible loss of market share
Loose opportunity for potential investments for a growing industry
Delayed to cope with the rapid technology changes
4- Growth diversification strategy (Conglomerate growth)
Product diversification means the shifting of the companies into new products when the existing products are in the decline stage to ensure the growth of the companies keeping the competition fact in mind to develop new strategic implementation for the betterment of the future sustainability. Diversifying into a different industry that the current company’s operation; producing EV cars. Use its battery technology for different uses, for example, putting away power from sun oriented boards. Utilizing the utilization of basic brand name and joining assets to make new aggressive qualities and abilities (Clow, 2012).
Transferring skills & capabilities from one business to another
Sharing facilities or resources to reduce costs
Opportunities to accomplish economies of scale and degree through expertise exchanges, bring down costs, regular brand name, innovation, and so on.
Opportunities to expand product or service offerings and preserve unity in businesses fully utilize existing resources and capabilities like the Skills in sales & marketing, general management skills & knowledge, distribution channels, etc
Complexity and difficulty of coordinating different, but related businesses (e.g. Philip Morris’ General Food and Kraft subsidiaries)
Choosing the appropriate strategy
The other three strategies except product strategies seems difficult for the companies due to other reasons like cost, feasibility and acceptance etc. The discussion was on four different scenarios and after sheer analysis the suggestion is to go for Product development because no matter what the products matters most and the uniqueness and qualities determine the future existence. Recently Tesla have suffered some negative balance and aspects due to decrease sale. But taking the decision of producing electric car will give them advantage as its ecofriendly and do not use nonrenewable energy whereas the others are producing cars which are using nonrenewable energy. So the decision is trustworthy for the companies to make the company production more efficient and getting an upper hand against the competitor. For that the all total department will have to work together to bring about the success. The systems and processes are discussed below:
Follow product development marketing strategy by:
Dividing market into segments and target each segment separately, different distribution channels.
Doing marketing researches to identify customer’s needs and best areas to penetrate.
Building brand equity.
Broad Price ranges.
Research & Development:
Pioneer new products that increase buyer value.
Recruit new talents with diverse backgrounds with low pay.
Provide sufficient trainings
Implement strong information system connected globally to create connection with suppliers, retailers and customers.
Create & maintain strong, reliable & fast supply chain to react conveniently to customers demand
Prepare sufficient cash and assets needed for investments
Hold good deals with new suppliers needed for the new products providing
AS means of business strategy strategic business units are set up as the company are tends to compete in several market so product ranges or variety are necessary. It is a good decentralized initiative. According to porters there are three generic strategies that is cost leadership, cost differentiation and cost focus. Others like Richard and Bowman clock said that the thing will be just the consideration of customer wants and demands.
The business strategy is discussed below:
Low cost leadership: It provides the advantage of competitive pricing like if the raw material and other factors of production are less than it is likely to be easy to become the market leader because here you become the market leader.
Differentiation: This phase tells you to identify the uniqueness in your product that gives you a different introduction and value proposition as brands (Glynn, 2012). Cost focus: This is basically going to be the most important. Finding the lean manufacturing process and trusted supplier is the main job here. The extensive supplier search.
The strategy that the company has chosen is processed through various segments and analysis so it can be said that the report has fully given description about the company situation and company strategic decision making criteria’s. So hopefully it can be said that the company are optimized to take the decision regarding product development and if talk about the development and growth then it is seen that consultancy is given keeping in mind the financial and technical feasibility.