Tesla Motors Company Analysis Essay Example

Company Analysis Assignment: Tesla Motors

Impact of the Company’s Mission, Vision, and Primary Stakeholders

The company’s mission and vision statements are focused on speeding up its innovation and production processes for the purpose of formulating a distinctive massive market for electric cars that are deemed to provide not only sustainable transport, but also, it is expected to quicken the transportation period hence leading to an efficient model of automotive industries (Daniel, 2010). Significantly, the firm enjoys a myriad of partnership with its immediate competitors and other partners in order to achieve the objective of leading an efficient and less pollute car industry. It should be noted that the company has partnered with such rival companies as Mercedes-Benz and Toyota in order to achieve its goal of becoming sustainable transport. Some of the other notable stakeholders the firm has ensured to keep a positive relationship with include its customers that are constantly made to enjoy the value for their money by way of accessing less pollute cars that use sufficient energy (Daniel, 2010). The company also ensures that the customers are able to enjoy effective pricing mechanism hence being able to access the automotive cars at an affordable price altogether. It also maintains a positive working environment with its immediate suppliers in order to ensure that car body parts are of higher quality – an element that is later passed to the customers. Subsequently, the firm ensures to pay-off its suppliers on time in order to attract huge revenue base that is later passed to the existing investors as dividends (Daniel, 2010). The firm caters for paying its owners the equities dividends as they fall due. This, in turn, has ensured that the overall objective of the firm is fairly attained. Thus, it can be seen that the firm utilizes the positive relationship it creates with its primary stakeholders and integrates it with both the mission and vision statement for purposes of attaining their immediate objective of speeding up the provision of electric cars – a sustainable means of transport that is quick and less pollute in nature.

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Five Forces of Competition

  • Threat of New Entrants

Presently, the firm is deeply engaged in the processes of innovation and production of such electric cars as Tesla Roaders Sports in order to attain its immediate objective of availing sustainable mode of transport that is quick and causes less pollution. However, other companies have also the need to enter this unexploited market in order to avail similar cars to the public to the already willing and able customers. Such company as Nissan has recently been able to produce electric cars that have seen growth and development in regards to both customer and revenue bases (Daniel, 2010).

  • Bargaining Powers of Suppliers

It is important to realize that the production of electric cars is at its growth phase, and thus, the number of suppliers that are able to provide electric-based body parts is still few hence a much lesser competition is experienced. This means that the suppliers of the electric body parts enjoy a substantial level of flexibility and thus price their products at extremely higher prices (Daniel, 2010). This has led to TM seeking for partnership with such established competitive brands as Toyota and Mercedes-Benz in order to maintain a lower level of production costs.

  • Bargaining Power of Buyers

It is important to note that the amount of buyers of electric cars is relatively small at this point in time. For instance, in the financial year ending 2012, the firm only sold a total of 2,400 electric cars (Woodyard, 2008). This means that the market for the cars is still immature, and thus, the willing and able buyers possess the capacity to determine whether or not to purchase the cars at the set prices. In this regards, the firm has continued to ensure that their electric cars are sold at affordable prices that cannot discourage potential purchases (Daniel, 2010).

  • Threat of Substitute Products or Services

Presently, electric cars being produced face a significant level of competition from the less pollute and energy efficient cars (Woodyard, 2008). Established car brands like VW, Mercedes-Benz and Toyota have continuously engaged in the intensive research and development processes for purposes of formulating efficient cars that use less energy and cause less pollution (Daniel, 2010). This is a significant threat to TM that is currently using the aforementioned objectives to attract substantial market base.

  • Rivalry amongst Existing Competitors

TM faces stiff competition from such an established brand as Nissan. The two companies are seen to have been engaged in an inter-industry level competition whereby electric cars produced by each of these companies are deemed similar in their capacities and models. This has ensured that there is a substantial customer divide in the current insignificant market leading to possible losses for both of the companies (Daniel, 2010).

SWOT Analysis

Strengths

  • The firm enjoys a substantial level of engineering and technological based R&D capabilities.
  • TM is able to raise a significant amount of funds that can be used for purposes of enhancing capital projects.
  • The company enjoys a skilled personnel base that is tasked with the responsibility of designing and, therefore, building many of the components of the cars that include power electronics as well as battery packs.
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Weaknesses

  • Tesla Motors does not have a wider customer base within the competitive car markets
  • Given that it is a smaller company, it does not enjoy economies of scale that arises out of huge sales volume
  • There are instances of supply issues with some of the components, especially in cases of a higher level of demand. This is attributed to its poor supply chain management techniques.
  • Tesla Roadster has not been on the market for long meaning that there is little or no information about the future of the company’s market niche.

Opportunities

  • The current price for oil is ever-increasing hence making the price for electric cars a lesser issue to the potential customers.
  • There are distinctive expansion opportunities for the firm in regards to the development of lithium-ion batteries and other energy based technologies by way of partnering with battery companies in order to improve on the existing battery

Technologies

There is the opportunity for shifting towards the manufacture of efficient automotive markets in the family of sedan market.

Threats

The production of Wrightspeed X1 is a direct competition to Tesla Roadster, which is also a higher performance electric car in the market.

  • There is the threat of the already established automotive car industry entering the electric car industry with much zeal. For instance, GM Volt and Toyota Prius have been engaged in the production of hybrid electric cars for some time now.
  • The instability of oil-prices that might be down in the soonest moment is a threat to the purchase of electric cars in the short run.

Efficient Strategy based on the SWOT Analysis

Based on the facts provided above, it is certain that Tesla Motors is positioned in a fairly competitive electric car market. This has ensured that the company faces a lot of direct challenges in regards to achieving economies of scale. Thus, the best possible strategy that the company should consider is to maintain a high-end low volume manufacturing strategy. In this way, the firm will survive the current times given that there are newer entrants into the market day-in day-out (Davis, 2010). Taking into account that such established brands like GM and Toyota are now concentrating on entering the market and thereby occupy the low-end high volume manufacturing strategy, TM should not consider continuing producing such hybrid electric cars.

Another possible strategy that the firm can undertake for purposes of ensuring that they are able to maximize on their opportunities and strengths and thereby minimize on their weaknesses and threats is by way of positioning themselves in a way that they can bought out by an established car manufacture to be their division of electric car manufacturing. In this manner, the firm will enjoy larger economies of scale and also access larger capital funds for investing in capital projects and R&D activities (Davis, 2010).

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Levels and Types of Strategies

  • First, the company can seek to adopt a differentiation strategy. This would mean that the firm is engaged in the production of electric cars that are both hybrid and sports based in nature. In this manner, the firm will be able to secure a larger section of both high and low-end markets that are needed for attaining larger economies of scale due to higher sales volume. For instance, GM produces Volt, and it is positioned within the high-end high volume alone. Tesla Motors can opt to use this opportunity to diversify its market given that it already enjoys a skilled personnel base that are able and willing to produce quality power electronics components with the existing demand (Davis, 2010).
  • Second, Tesla Motors can opt to fairly position itself within the market and thereby allow being bought by an already established car brands like GM and Toyota. This strategy is likely to affect its economies of scale positively and also ensure that the now newly created division is able to access a substantial level of resources needed for further research and innovations that will be meant to produce an even higher performance car brands (Davis, 2010).
  • Third, the firm might opt to embark on concentrating on the production of high-end low volume market since other fundamental competitors are now busy putting up resources to fund innovation into the low-end high volume market niches. In this manner, the firm will be able to create a public image as being the sole developer of hybrid and sports electric cars in the market. This will ensure that it creates a formidable niche necessary for serving specific markets alone.

Communication Plan

First, the largest investors should be sent personal mails notifying them of the impeding changes in the manner for which the company is opting to increase its competition and profitability levels. Then, the company can go ahead and release a press statement to these investors notifying them in detail about the impeding changes. It is important to note that most companies including Tesla Motors always have their investors subscribed to the company’s newsletters that are released either on a weekly or monthly basis (Barrick & Zimmerman, 2005). In the event that the above communication platforms fail to work effectively, it is important that the company calls for emergency meetings that are meant to expound to the investors on the likelihood of the firm merging with other established companies and thereby expound to them in detail on the level of profitability and competition grounds they would secure with the alterations of operations.

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Tesla Motors’ Corporate Governance Mechanisms

  • First, the company’s board of directors has set out to formulate and implement an affective code of business conduct and ethics that is meant to set higher level standards for Tesla Motors’ employee-base, officers, senior management and directors, as well (SEC, 2014). This set of code of business conduct and ethics is created to develop an operational workplace environment that is guided by necessary oversight of responsibilities at the different level of the company. Also, it is meant to ensure that the affairs of the management are deemed consistent with the higher levels of principles of intrinsic business ethics. Any possible amendments to the code of business conduct and ethics are publicized in the quickest manner possible to avoid the possibility of infringement of company’s policies within any given moment in time. This is also done in consistent with the disclosure stipulations put in place by SEC, NASDAQ or any other relevant body that requires the company to include the code in its corporate governance platform (SEC, 2014).
  • Second, the firm employs a board structure leadership model for the immediate oversight of operations. The firm’s board of directors is chaired with Mr. Musk who also doubles up as the company’s Chief Executive Officer. This leadership structure is meant to provide authority that is effective for Tesla Motors operations within the highly competitive and constantly changing technological environment (SEC, 2014). It is also meant to control the immediate activities of the firm’s CEO who doubles up as the chairman to the board of directors in order to eliminate possible chances of conflicts of interest that might be attributed to integration of the position of chairman and CEO. Some of the other duties that are executed by this model of leadership rest with raising issues with the management on behalf of the immediate company’s independent directors, annual review of nomination of committees as management performance in the prior years (SEC, 2014).

Effectiveness of Leadership

Presently, the company leadership structure is greatly influenced by the board of directors that are tasked with the responsibility of providing oversight into the company’s business operations (Sloan, 2010). This leadership model also allows the firm to enhance its risk management strategies by way of formulating an Audit Risk Committee tasked with the duties of mitigating risks in the operations (SEC, 2014).

However, the most notable aspect that needs improvement in this leadership model rests with the fact that the firm’s Chief Executive Officer, Mr. Musk, also doubles as the chairman to the board of directors (SEC, 2014). The firm should seek to separate these two functions in order to separate the element of duties that is currently burden on a single individual.

Corporate Citizenship

The company has adopted modern technological advances in the process of manufacturing electric cars for purposes of ensuring that the process is conducted taking into consideration the need to protect the environment against possible harm. For instance, the production of Tesla Roadster has been conducted while making sure that the power electronics components are sourced from suppliers that are conversant with environmental protection requirements. Furthermore the dumping of technological wastes from the manufacturing process is disposed off correctly in order to avoid the possibility of contaminating the environment.