1. Applying Industrial Models to Tesla.
Tesla is an automotive industry that mainly deals with the manufacture of electric cars. The company has the biggest market share of electric cars (Hamburg 74). Subjecting the company to the five forces industrial model reveals interesting facts about the company, and what it does to keep up with the stiff competition in the electric car market. The electric car manufacturing industry is faced with stiff competition, and a company ought to have the competitive leverage to survive. The Tesla Company has some of the most interesting strategies for keeping up with competition. First, the model requires a company to counter the threats from substitutes. Some of the substitute products for electric cars is the oil powered engine. Oil engine vehicles are the major threats to the electric car industry.
In this perspective, failure to position its products in the market, Tesla is subject to the threats of substitute goods. Moreover, competition from other automobile industries must be kept in check. Secondly, the threats posed by rivals in the industry are another key consideration for firms who aim to win the largest market share. The rivalry force mostly entails technological wars.to counter the rivalry threat, Tesla was able to develop a strategy that favors the sale of its technology. For example, Teslas’ battery technology is yet to be rivaled. The company creates the most powerful and efficient electric engine for its cars, and this makes the company stand out from its rivals regarding the battery technology. The company is thus technologically efficient, and it is the best competitive advantage that the industry looks admires. Tesla Company has the most advanced software in the electric car industries, and also convenient recharging stations. The third industrial force in the model that favors the competitive advantage for Tesla Company is the entry of new competitors in the market. The electric automobile industry is a competitive one, and the entry of new competitors means that the market share and the number of customers decline, even for a company with loyal customers. The entry of new competitors in the market also interferes with the current market forces of supply and demand. If the production of the same niche of goods increases, then the prices go down. Companies are thus in constant threats from new producers with competent innovation.
The fourth force in porter’s model is the bargaining power of consumers. Tesla Company has to keep in mind that the customer is always right, and the rule does not act for the company. Some customers possess a strong bargaining power, and careful strategies ought to be formulated to minimize the loss from bargaining. The bargaining power of customers should be considered, to enhance customer loyalty, because every customer counts (Hamburg 82). The last force that defines the nature of Tesla Company is the bargaining power of suppliers. Suppliers play a major role in determining the production cost of industries, and Tesla Company is no exception to the power wielded by suppliers. Suppliers can hoard their raw material, forcing the company to source the material at a higher cost. The bargaining power of suppliers poses a great challenge to the implementation of competitive strategies like innovation. Innovation cannot spur without inputs (Jain and Tandan 312).
Competitive advantages are subject to reliability and durability. The four functional strategies help Tesla to gain distinct competitive advantages in the industry. The competitive advantages should stand even during times of recession. The durability of a competitive advantage refers to the extent to which superior efficiency, quality and customer satisfaction and innovation may be copied or duplicated.in this accord, Tesla has put in place measures to prevent the imitation of its products, and hence maintain its superior quality of cars. The competitive advantages of Tesla Company in the current market situation are equitable. The sustainability of the competitive advantages relies on the applicability of the four functional strategies. Tesla industries possess the most competitive strategies in the market. For instance, Tesla industries have segmented their markets; market segmentation constitutes superior efficiency. The company does not produce a single product line of electric cars. They produce both high-cost and low-cost electric cars. The market segmentation strategy ensures that all groups of people, both rich and the middle-level individuals have access to quality electric cars.
In addition to market differentiation, tesla industries have also adopted competitive innovation of new goods in the market but also the change in existing processes or products. The sustainability of the competitive advantages has arisen from the contributions of different factors. For example, the company possesses an exceptional surprise for its competitors by its ability to develop new offerings. The modification of products and rebranding by Tesla Company is repelled, and this favors its competitive advantage of innovation. The strategy of innovation is known as superior innovation.
The quality of electric cars that Tesla produces is also exceptional, with attributes of superior value creation (Tesla 208). Due to the nature of its products, Tesla attracts most of the affluent market for its luxury cars. The automobile industry is highly dynamic, and the market forces are also dynamic. Competitive advantage is, therefore, a key ingredient to the success of any company in the industry. The dynamic environment pushed Tesla Company to differentiate its market. The company not only deals with the manufacturing of electric cars but also the manufacturing of oil combustion engine. In producing oil combustion engines, the company tackles the Porters’ model constraint which is threats from substitutes. The venture provides for alternatives in case Tesla performs poorly in the market.
The sustainability of the competitive advantages for Tesla Company also depends on other key strategies to maintain. For instance, for Tesla Company to maintain its current market share, it must portray attributed of superior customer responsiveness (Tesla 215). The time taken for the company to act on their request is very important. For example, if a customer’s car breaks down, the time the company takes to repair that car ad avail it back dictates the level of customer responsiveness.
Value Addition Chain for Tesla
Tesla Company adds value to its cars, to maintain customer loyalty. Value addition also provides incentives to keep the competitive advantages in play. The production of high-end electric cars is Tesla's’ value addition chain product. Tesla’s survival in the electric car industry has been facilitated by the adoption of a low-cost structure and a creation of superior goods that appeal to the eyes of the customer. The adoption of a low-cost structure creates a suitable gap between the cost of production and the perceived value.
The bottom line is, the adoption of innovative strategies, superior value creation, and the creation of an efficient system of customer responsiveness has drove Tesla Company to its highs.(Tesla 232).The company mainly adds value to its batteries which provide convenience to customers. Consequently, supercharging stations are provided to customers at convenient locations.
In conclusion, Tesla’s stakes in the car production industry is likely to hit a prospective end with its advancement in the electric car production. Besides, the company’s strategic policies on marketing and sales will complement it for a brighter future in this vast car production market. Thus, the core platform for Tesla’s operations refers to its competitive advantage attributed to the latest technology it adopts in the car production. Besides, meeting the customer tastes and scales of preferences remains a dynamic view that Tesla Company has enshrined within its production and operational platform. With these platforms, Tesla Company is slated for a brighter future in the car production market.
Works Cited
Jain, Gautam R, and Atul Tandan. Shaping organizational strategies: future perspectives, concepts, and cases.New Delhi: Response Books, 2006 print.
Tesla, s.l, Chartwell Books, 2014. Print.
Tesla. Hamburg: Dt. Elektronen-Synchrotron DESY, MHF-SL Group, 2003. Print
