Tesla Motors Case Solution
The company’s biggest challenge or conflict is setting up its own distribution network. For a company to set up its own distribution channel, it takes substantial amount of investment. Whereas, the other manufacturers such as Ford and General Motors teamed up to sell their cars through third parties (Dealers).
Prioritization of needs
Gaining finances: Tesla Motors is an emerging company in a market where the clients are limited and its main competitive advantage depends on its capability to innovate highly advanced cars. Moreover, an organization’s innovation capacity depends on its spending on research and development projects, therefore Tesla must secure finances by engaging in mergers with different companies, which will potentially benefit the organization in its mission and vision. It could do so by acquiring bank loan with minimal interests rate, which it would be able to pay off in the future without compromising on its facilities or growth.
Electric power stations:Tesla manufactures electric cars as the country is dominated by consumers of gas with gas filling stations around every corner, as a result providing ease to the conventional car users. Hence, Tesla needs to build electric power stations in the U.S to provide quick charging capabilities to bring ease to its customers when driving electric car for longer distances.
New facilities:As the international market presence is small, Tesla needs to expand in the markets of the developing countries. Moreover, it can open new facilities in the emerging economies of the 21st century such as China in order to increase its market presence globally and to attain higher revenues by increasing their sales.
Customer Acceptance:As Tesla is involved in a relatively new technology and the customers are of the mindset that they believe conventional cars are more reliable then electric cars, therefore Tesla needs to highlight its core value of providing emission free electric cars which have huge benefits on the environment as well as they are cheaper than conventional cars.
Inventory management:It should use JIT inventory management system and record the costs of inventory as they are transferred to production. This in turn will help the company to avoid holding cost associated along with storing large quantities of inventory.
Government Legislation:As electric cars are beneficial to the environment, various governments provide different tax credits and tax right-offs to the companies producing the electric cars and to the people using electric car. It also adds to the factor which affects the appeal of the electric cars to the customers, thus Tesla needs to ensure whether the government of the host country offers such types of tax credits and right-offs.
Human Resource management:Human resource is important to any organization engaged in manufacturing or production business, however the real benefit comes from effectively managing these resources to their fullest potential. Hence, Tesla needs to incorporate effective human resource management strategies so that it can add value to the organization.
Strengths and weaknesses of Tesla Motors
In lieu of the strategy formulation and implementation, the strengths and weaknesses of Tesla Motors are given below.
Strengths:The strengths of Tesla Motors are:
- It is one of the strongest players in the market for the manufacturing of electric cars.
- It possesses a strong customers base and loyalty
- It has one of the highest innovative processes in the market.
- Strong brand image recognized for its ingenuity in the manufacture of electric cars.
- Its model S won the award for being the trendiest car in 2013.
- Model S got a 5 star rating in safety in the U.S national highway traffic safety administration.
The following strengths led the company to gain competitive advantage over its newly formed competitors. In the limited demand for electric cars in the market,Tesla introduced first fully electric sports car in the world because of its innovative processes. The company’s technical and operational advancement has differentiated it from its competitors where its customers prefer Tesla over other electric cars present in the market…………………
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