Tesla Motors. SWOT analysis and corporate strategy


Term Paper, 2016
19 Pages, Grade: 1,3

Excerpt

LIST OF CONTENTS

I. LIST OF ABBREVIATIONS

II. LIST OF GRAPHICS

1. INTRODUCTION

2. THE COMPANY AND ITS PRODUCTS

3. MARKET DEFINITION AND POSITIONING
3.1. Customer
3.2. Market position
3.3. Competitors

4. EXTERNAL & INTERNAL ANALYSIS (SWOT ANALYSIS)
4.1. EXTERNAL
4.1.1. Opportunities
4.1.2. Threads
4.2. INTERNAL
4.2.1. Strengths
4.2.2. Weaknesses

5. CORPORATE STRATEGY
5.1. Price
5.2. Strategy

6. CONCLUSION

7. REFERENCES

8. INTERNET REFERENCES

I. LIST OF ABBREVIATIONS

Abbildung in dieser Leseprobe nicht enthalten

II. LIST OF GRAPHICS

1. Tesla’s competitors by technology type and price segment 8

2. Tesla’s Blue Ocean strategic choice 11

1. INTRODUCTION

In an era in which disruption is one of the most used words in business, Tesla Motors has been attracting media attention during the last few years, especially in North America and Europe, due to is innovative offering and the fresh air it has brought into the car manufacturing industry. This is the reason why we have decided to choose this company for our reflections on corporate strategy in the MBA.

Our methodology in this assignment will be to critically analyze Tesla’s current market approach as part of its global corporate strategy to be able to latter see how harmonized they both are and how likely they are to finally succeed given the current market conditions and competition. For this task we will firstly determine Tesla’s potential market and then we will use one of marketing’s most known tools, the SWOT analysis, divided up into an internal and external analysis of its strategic advantages and disadvantages, to get a clear picture of the company’s competing position. We will also comment Tesla’s pricing strategy using some of the pricing concepts reviewed during the MBA course syllabus. Lastly, we will adopt the role of a business analyst to make some forecasts on the company future development and recommendations based on the outcomes of our analysis.

2. THE COMPANY AND ITS PRODUCTS

Tesla Motors is an American car and battery maker founded in 2003 in Silicon Valley (CA) and inspired by Nikola Tesla’s work, whose main mission is “to accelerate the world’s transition to sustainable energy”[1] through a set of fully electric cars increasingly affordable and without compromising any of the features found in gasoline cars.

The company is currently selling its products in North America, Europa and Asia. As a consequence of this expansion, it went public in 2010 and had more than 13.000[2] employees worldwide by the end of 2015. Its current market capitalization is (in June 2016) 30,9 billion USD[3].

Seen by many as “[…] the most disruptive intersection of manufacturing, innovation and capital experienced by the auto industry in more than a century […]”[4], it currently fills thousands of newspapers’ articles as the brand becomes global and challenges the future of the car industry.

Tesla’s CEO Elon Musk, cofounder of PayPal and founder of SpaceX[5], is one of the 21st century leading visionaries who is called, in the same way Steve Jobs or Henry Ford did before, to shake up a whole industry by contributing with his vision to a cleaner environment free of fossil fuels.

Although Tesla has only launched 3 models so far (Roadster, 2008 –discontinued in 2011-, Model S, 2012 and Model X, 2015) and recently announced Model 3 (2017), the company enjoys a reputation for being innovative, future-oriented and environmentally conscious. It has not only taken the lead in bringing 100% electric cars to the market but also aims at making electric cars increasingly affordable in a near future for the mass market[6]. Its three models bring the last car technology to the premium customer wrapped in an astonishing design and a sober inside. Tesla’s customers should enjoy the newest electric driving technology while not giving up on usability, driving experience, comfort or extras found in similarly priced gasoline cars.

Tesla also sells battery-based storage systems and vehicle powertrain components.

3. MARKET DEFINITION AND POSITIONING

3.1. Customer

Tesla’s profile as premium car maker targets a middle-upper class customer of middle age and early adopter. Research had concluded that Tesla’s buyer profile is a male with with above-average earnings (>100.000$/year)[7] and college education. This potential customer is concerned about the environment and takes it into account when making its purchasing decision.

However, with the recent presentation of Model 3[8] –not being sold yet- Tesla aims at gaining new customers among the traditional buyers of cars in the price middle range who could or would have never been able to access a Tesla before given its high price. With this strategic movement Tesla will gain new users in a lower price segment which in turn should allow the company to balance its business model from an exclusive high-price/low-quantities model to another based on lower-premium price/mass-production.

But those new customers targeted through the new Model 3 will also bring new demands and expectations which do not match with those in the luxury class. E.g. customers in the middle segment are used to go to the car retailer and see or even buy the car the same day. Given Tesla’s model in which cars are produced after receiving an order, there are many challenges for Tesla’s distribution and dealership networks which will need to be addressed in the near future to be able to successfully satisfy this new customer segment in which the company does not have any experience yet.

3.2. Market position

Although it is a premium car producer and its products are therefore priced as such, it needs to be noted that Tesla’s prices would rather fall into what some people consider to be the “affordable segment” of luxury cars. It shows Tesla’s intention to keep its current car maker luxury status while still being able to target as many customers as possible within the middle-upper segment of potential car buyers[9].

As already mentioned, the market launch of Model 3 will represent for Tesla the biggest repositioning in its market approach since the company founding. Tesla was already positioned among the luxury car makers but had its own place as the only one offering exclusively 100% electric cars. It was one of its main distinguishing features and an essential part of its USP. However, its current position will shift somehow a little downwards to the middle segment through the Model 3 while still keeping the other two models in the premium segment. This repositioning will open Tesla to a new customer segment and to high car production volumes but will also bring a whole set of new competitors used to living in the middle segment and to fighting for every single customer. Which by the way Tesla had never did before in the much less populated and exclusive higher-end segment.

3.3. Competitors

Although Tesla also manufactures and sells energy storage units and home batteries, it is by far its car business unit which accounts for the most revenues and media attention.

It is necessary to distinguish between the competitors of Model X and Model S and competitors of Model 3. Although all three models could at some point have as competitors any electric or even hybrid cars offering an alternative to gasoline cars, we will segment them according to the customer they target.

Once Model 3 is finally on the market it will have to face the competition from cars like the Toyota Prius, Ford Focus Electric, Nissan Leaf, Hyundai iOniq, Honda Fit EV or VW eGolf[10] although many of those brands target customers with more reduced budgets and less technical demands[11]. The Model 3 pricing indicates that it will strategically try to compete for the same customer base with General Motors or Toyota[12].

For Model X and S competition in the premium segment continues to be reduced, as it is a segment with a few of historically well established brands. However, in such a reduced market segment, traditional luxury brands as Daimler, Jaguar, Porsche, etc. even without manufacturing 100% electric cars –or only since very recently- will continue to fight for the same customer Tesla targets with Model X, especially in Europe where markets like Germany[13] are highly demanding and have their own luxury car brands. Direct competitors in to Tesla’s two top models are: Porsche Cayenne and Macan, Mercedes-Benz R-Class, Lexus RS 450h, BMW i5 or even Porsche Mission E[14].

Abbildung in dieser Leseprobe nicht enthalten

Graphic 1. Tesla’s competitors by technology type and price segment[15]

4. EXTERNAL & INTERNAL ANALYSIS (SWOT ANALYSIS)

According to Philip Kotler the SWOT analysis is a marketing evaluation of the company strengths, weaknesses, opportunities and threads used to monitoring the external and internal marketing environment[16]. We will use it here to find out which are Tesla’s main strategic assets for the future.

4.1. EXTERNAL

4.1.1. Opportunities

1. Electric technology enjoys a positive global image
2. Governmental subsidies (Norway, Denmark, etc.) to promote non fossil fuels[17]
3. Extension of battery duration to ensure a longer driving autonomy
4. Fast worldwide expansion of the electrical recharging network
5. Electric cars bring cost savings through cheaper form of fuel[18]
6. Absence of noise pollution[19]

[...]


[1] TeslaMotors (2016).

[2] Statista (2016).

[3] Bloomberg (2016).

[4] David, S. (2014).

[5] Biography (2016).

[6] Cf. TeslaMotors (2016).

[7] Zucchi, K. (2015).

[8] Autobild (2016).

[9] Groom, N. (2009).

[10] Winton, N. (2016).

[11] Carbuyer (2016).

[12] Ford, J. (2016).

[13] Rosemain, M. (2015).

[14] Branman, M. (2015).

[15] Tesla Motors (2016).

[16] Kotler, P. & Keller, K. L. (2006), p. 52.

[17] Jolly, D. (2015).

[18] The Economist (2009).

[19] Ibid. The Economist.

Excerpt out of 19 pages

Details

Title
Tesla Motors. SWOT analysis and corporate strategy
College
University of Applied Sciences Essen
Course
Master of Business Administration (MBA)
Grade
1,3
Author
Year
2016
Pages
19
Catalog Number
V437676
ISBN (eBook)
9783668784062
ISBN (Book)
9783668784079
Language
English
Tags
Tesla, strategy, swot, marketing, electric car
Quote paper
Santiago Mas Mas (Author), 2016, Tesla Motors. SWOT analysis and corporate strategy, Munich, GRIN Verlag, https://www.grin.com/document/437676

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