Discussion on Tesla
Discussion on Tesla
Question one:Briefly restate for your colleagues, your conclusions regarding the decision environment
Tesla’s decision environment calls for growth and all decisions to be made by Tesla’s management should be geared towards addressing the best growth alternatives available to the company. The next five years are crucial to Tesla and may act as make-or-break for the company in terms of stamping its authority in the energy solutions market. The demand for Tesla’s power batteries has been remarkable, far outweighing the supply.Already, companies have pre-ordered batteries expected to be completed in 2016. Such a scenario clearly shows that the battery production market is huge and shows vast potential. Tapping into such a market and refocussing its efforts in the production of batteries for the mass market should define Tesla’s five-year strategic plan.
Question two:Briefly state your own decisions regarding the corporate-level and business-level strategies you believe Tesla should pursue and what led you to that conclusion
The corporate level decision for Tesla Motors should be to focus its manufacturing on providing energy solutions. Essentially, the corporate strategy should be to focus on battery production and to expand its operations into markets that are in dire need of battery power. Reaching this conclusion was based on the huge market potential the battery production business promises. The African continent, most of Asia and the middle East, as well as Southern America could benefit from a battery energy solution. Expanding electric car supplies to such markets will definitely be slower compared to batteries due to the luxury-nature of cars compared to batteries. Offering a solution that addresses a basic need is poised to be more profitable for Tesla compared to offering a luxury commodity.
In terms of business-level strategies, Tesla need to focus its technology on battery production to make the products less costly. Cost is the main deterrent that may affect its growth and penetration of new markets, especially in the developing countries where the most potential lies.Investing in research to ensure low cost production of the batteries should be on the main agenda. Another step would be to conduct preliminary studies on markets in the potential markets to determine the level of differentiating the company may need to do before marketing and eventually entering the new markets.
Question three:Discuss why you think-strategically-this is the best course of action for Tesla
Focusing its operations on low cost energy solutions is the right step towards making a difference to the world. The electric car market is just as exciting, but the impact of providing energy solutions transcends cultures and geographical boundaries. With cars, different models and different tastes may continue to affect the sales. However, with batteries, durability of the product will be the main factor. The Tesla company will not have to worry so much about enhancing the look of the batteries as the look is not really a factor in battery production and sales.
Secondly, batteries offer an eco-friendly option to the energy market. The product is not only meant to provide an alternative source of power and reduce reliance on the non-renewable sources of energy, but it is also sensitive to the current global need for companies to go green and to invest in production of commodities that are nature friendly and that make use of renewable resources (Mintzberg&Lampel,2012).
Question four:What you Think Tesla should make sure that they do to avoid being ‘stuck in the middle’
Rolling a five year plan that refocuses the company’s operation on providing energy solutions is the only way to avoid being stuck in the middle. Committing to the plan and taking active measures to actualize the plan should naturally follow the plan. Elon Musk, the CEO of Tesla is already known to be a successful businessman and who ensures that his plans come to fruition. Committing to an energy solutions market should not as hard. Elon already has a company that manufactures and supplies solar products. The company should offer Tesla a platform to use to launch itself as a leading global energy provider.
Question five:What would be the strategic ramifications of not actively selecting and pursuing a dedicated strategy-one way or the other?
A dedicated strategy means that a company commits to one line of business and desists from continually diversifying its portfolio of products without the necessity to do so. A company that does not actively select and pursue a dedicated strategy risks being thrown out of business by other companies. A dedicated strategy ensures that the company identifies its competitive advantage and takes advantage of the information in marketing and sale of its products. Engaging in too many strategies means that a company will be unable to enjoy a competitive advantage over its competitors in any given sector of the economy. A company that does not enjoy any competitive advantage can easily be run out of business by its competitors (Hrebiniak, 2013). Such a situation is not prudent for companies seeking a corporate level strategy that will ensure their companies remain relevant and that they continue to grow or maintain their market.Tesla choosing to focus and specialize in the energy solutions industry is, therefore, the best way forward or the company.
Hrebiniak, L. G. (2013). Making strategy work: Leading effective execution and change. FT Press.
Mintzberg, H., &Lampel, J. (2012).Reflecting on the strategy process. Sloan Management.