Ready to turn inspiration into action? Explore our Tutoring for nursing student services now and transform your vision into reality.
MBA FPX 5006 Assessment 2 Business Strategy
The increasingly complex business environment in the contemporary world means that practising the skills of formulating and executing strategies becomes essential for organisations. This business analysis investigates the business and corporate levels of Tesla, Inc., considering the strategies and assessing the efficiency and relevance of the chosen approaches. Thus, by focusing on such concepts as the AFI (Analyze, Formulate, Implement) framework, the VRIO (Value et al., Organization) analysis, and the value chain, MBA FPX 5006 Assessment 2 analysis will try to reveal how Tesla competes in its industry and how it positions itself for future growth (Rothaermel, 2021).
Based on several assumptions and recommendations from Assessment 1, this analysis is carried out when the vice President of strategy requests a detailed assessment of this company’s strategic activities. The emphasis will be made on the following aspects: the generic types of business strategies used by the company, the business model assessment, and the corporate-level strategy. This entails an evaluation of the firm’s product portfolio, geographical market coverage, and degree of vertical integration (Grant, 2020). Further, the evaluation of the business and corporate strategies at Tesla will be conducted to reveal the coherence between these configurations, and the identified information will be used to draw specific recommendations about the strategic compatibility of these strategies (Hill et al., 2020).
Generic Business Strategies for a Company
Compared to other competitors, Tesla, Inc., has received the reputation of the market leader in the EV segment due to its unique and competitive business models. Analyzing these strategies requires learning the company’s operational mode of cost leadership, differentiation, focus, and hybrid strategies. Cost leadership refers to achieving the lowest cost in an organization’s industry, thus, the organisation can offer its products or services cheaper than others. In the case of cost leadership, it has been seen in how Tesla has engaged in vertical integration and organizational technology cost reduction. Tesla has most of its supply chain in-house where it has direct authority over the production of battery cells and assembly of cars that helps it minimize on outsourcing, lower its expenses, and constantly enhance its operating capabilities (Kim et al., 2020). Also, the Gigafactories constructed for Tesla serve the purpose of mass production of batteries and cars. So, lower prices are offered when large quantities are sold because of the economic theory of economies of scale (Tesla, 2020).
Differentiation entails the provision of special goods or services that are of merit to the consumers to be sold at higher prices. MBA FPX 5006 Assessment 2 is the strategy of differentiation that Tesla is incumbent on has several key factors that make the automobile company’s direction impassable. For example, it has high-performance electric powertrains, Autopilot which refers to driver assistance systems, and over-the-air software updates familiar to this company (Mangram, 2019). In addition, Tesla has a well-defined brand image linked to technological advancement, environment-friendly vehicle manufacturing, and luxury at reasonable prices (Dutta, 2020).
Business Strategy a Company Uses in its Marketplace Approach
This paper establishes that Tesla, Inc uses a complex business strategy based on the electric vehicle market. Therefore, through innovation, vertical integration of the firm and brand equity, Tesla Motors has established a strong market position in the automobile market, thus securing a competitive advantage against rivals.
Innovation and Technology Leadership
Tesla’s strategy in the marketplace is significantly oriented toward innovation and technological supremacy. The company never ceases to innovate in electric automobiles, self-driving technology and power solutions.
Electric Powertrains: Tesla electric powertrains are some of the best you can get in the market, with better performance, range, and efficiency compared to most electric car manufacturers’ claims. For instance, Model S Plaid, a Tesla, can accelerate from a standstill to one mile per hour in less than 2 seconds (Tesla, 2021).
Autopilot and Full Self-Driving (FSD): Thus, Autopilot and full self-driving capabilities make Tesla stand out. The company offers advanced safety and comfort systems, which has made Tesla vehicles always evolving, with new features and capabilities added (Boudette, 2020).
MBA FPX 5006 Assessment 2 Vertical Integration
Through a vertical integration strategy case, the company can maintain centralised control over significant elements of its supply chain, production, and distribution channels. This approach benefits the company by cutting costs, increasing the capacity for quality assurance, and enhancing the capacity to bring new ideas to market.
Gigafactories: Tesla’s Gigafactories are facilities where batteries and vehicles are manufactured in large quantities. These factories allow Tesla to maintain vertical integration in charge of essential parts like battery cells that determine the performance and pricing of automobiles (Tesla, 2020).
Direct Sales Model: Also, it differs from other car producers that use franchises and manufacturers’ agents to distribute their cars; instead, Tesla uses its retail outlets and website. It also means consumers directly have a purchasing experience with Teslsa products instead of purchasing a third party. Thus, the company can have closer contact and interaction with them, getting direct feedback. Besides, the company can offer its consumers a unique service and buying experience (Mangram,2019).
Company’s Business Model
Tesla’s main offerings are electric automobiles, battery products, energy-related solutions, and solar panels. Tesla Inc. has a vehicle collection for Model S, Model 3, Model X, and Model Y, which are currently in production. Cybertruck and Tesla Semi are models yet to be mass-produced. Besides cars, Tesla also has energy products like Powerwall, Powerpack, and Solar Roof through which it offers services in renewable energy products in line with its automotive products (Tesla, 2021).
Revenue Generation
Tesla generates revenue through several streams:
Vehicle Sales: Tesla’s major service is selling electric vehicles, as this is its main funding source. There are various advantages of differentiation regarding Tesla’s direct-to-consumer strategy, including, but not limited to, the following: Tesla has been able to avoid the costs incurred while charging dealership markups, hence can price its cars at very competitive rates and has better marginal profits.
Energy Products: Tesla’s energy earnings can be seen in the sales of solar energy products such as solar panels and solar roofs and energy storage products such as the powerwall and the powerpack. These products target residential and commercial markets, helping diversify Tesla’s revenue sources (Tesla, 2020).
Software and Services: Tesla has sidelines such as software upgrades, such as full self-driving (FSD) capability, which is a source of revenue on its own. However, revenue is further boosted for services like vehicle maintenance, supercharging, and insurance (Boudette, 2020).
Customer Value Proposition
Tesla’s customer value proposition revolves around several key elements:
Innovative Technology: MBA FPX 5006 Assessment 2 Tesla manufactured cars, energy products, and services are technologically inclined and possess higher quality than the rest in the market. This innovation is suited for the modern client base as it aims to offer the best performance and eco-friendly products (Dutta, 2020).
Sustainability: Tesla incorporates the idea of environmental conservation through the clean energy products it deals in, which is an important sale appeal. The application of solar energy solutions, energy storage, and EVs are aligned to achieve a comprehensive low-carbon approach (Huang & Tang, 2020).
Relationship Between Business Model and Strategy
Thus, Tesla’s strategic management is highly connected with its business model, cost leadership and differentiation strategies, and the mix of these two approaches. The synergy between the business model and strategy is evident in the following ways:The synergy between the business model and strategy is evident in the following ways:
Cost Leadership: Vertical integration and mastery of scale improve cost leadership strategy, resulting in lower manufacturing costs and competitive prices offered by Tesla. This is demonstrated through value-creation models such as the Gigafactories, which produce components in large quantities, bringing down costs (MBA FPX 5006 Assessment 2).
Differentiation: Tesla’s strategy focuses on developing innovative technologies and functions as an environmentally friendly manufacturer. The firm’s business model can be aligned with this strategy by consistently deploying resources in research and development and closely concentrating on advancing new products (Mangram, 2019).
Corporate Strategy of a Company
Product Scope
Though Tesla started in electric vehicles, the company’s product offering covers a vast area of commerce ranging from electric cars to batteries for energy storage to solar panels. The principal offerings of the firm are Tesla Model S, Tesla Model 3, Tesla Model X, and Tesla Model Y for budgets ranging from luxury to economy class electric cars. Also, the company possesses concepts of the Cybertruck and Tesla Semi that focuses the company on the electric trucks market (Tesla, 2021). The energy sector has the powerwalls, powerpacks, and Megapacks; these are energy storage gadgets manufactured for households, businesses, and utility companies. The Solar Roof and solar panels also complement the Tesla energy products, encompassing a clean energy solution that complements Tesla cars (Tesla, 2020). Such a wide variety of products not only help Tesla target various markets, but they also can minimize the dependence on specific products since it contributes to the growth of the company’s business model security.
MBA FPX 5006 Assessment 2 Geographical Scope
Tesla Company’s range of operation is worldwide, which implies its desire to provide service to the global market and benefit from the international opportunities for expansion. The firm has large assembly centers, including the Fremont Factory in California and Gigafactory Nevada in North America. These are necessary for assembling cars and electric packs for the United States market (Tesla, 2021). Tesla’s move to Europe exemplifies its growth strategy, seen through Gigafactory Berlin, which seeks to produce battery and vehicles to supply the European market. This facility increases the company’s capacity to fulfill regional demands and address European legal requirements regarding electric cars (Huang & Tang, 2020). In Asia, the company’s Gigafactory Shanghai is centrally positioned to manufacture automobiles and battery packs for Greater China and Asia. China has the potential to be classified as a growth market because of its big automotive industry and favorable laws supporting the use of electric cars (Huang & Tang, 2020). Self’s global production plan expands its market share and resolves logistics cost and tariff issues, which are apt for its global expansion plans.
Vertical Scope
This part also reveals that Tesla has paid much attention to achieving vertical integration as part of its corporate strategy to directly manage the supply chain and production. The battery cells, electric powertrain, and vehicles are produced within the company by Tesla. This vertical integration reduces cost and increases the product quality by using more competent suppliers directly (Kim, Kumar, & Srivastava, 2020). Further, Tesla aims at locking in long-term supplies and even has plans for vertical integration by investing in mining raw materials such as lithium for batteries (Tesla, 2020). In addition to the organization’s direct-to-consumer niche of buying cars , its vertical integration strategy can be evidenced by its not relying on dealership channels. It allows Tesla to exercise more direct control on the sales side and the experience which consumers receive (Mangram, 2019). MBA FPX 5006 Assessment 2 energy sector, Tesla links its various energy products with its electric cars; a one-stop solution to energy problems. Solar panels, energy storage solutions, and EVs form an end-to-end energy solution for consumers (Dutta, 2020).
Overall Corporate Structure and Key Management
The corporate structure of Tesla’s organization is pyramidal since the major decision-making power lies in the hands of the chief executive officer, Elon Musk, who indeed steers the company’s strategic direction and overall objectives. Reporting directly to Musk, the company’s executive leadership matrix comprises subdivisions that handle vital domains such as automotive, energy products, and global affairs. This structure enhances decision-making within the company and enables it to meet all market needs and cope with operational issues, as confirmed.
MBA FPX 5006 Assessment 2 case provides evidence of the company’s diversification strategy in a good light by reviewing a broad product offering solution. While the Tesla Corporation started as an automobile manufacturer of electric cars, the company now delves into energy storage and solar power systems. This diversification strategy helps Tesla to reduce risks that are associated with the focus on a particular product and to open new sources of revenue. For example, Tesla has an energy division that offers a power wall, powerpack, and solar roof, which, in addition to the auto division, works to provide integration with electric cars. Besides, this approach increases Tesla’s popularity in the market and makes the company a more powerful player as a supplier of multi-form solutions for sustainable energy needs.
Concerning the production vertical integration strategy, the firm has significant adm in t control over several resp processes, which comprise a key part of a competitive advantage. Vertical integration is achieved by managing battery cells, electric powertrains, and vehicle manufacturing, thus decreasing reliance on outside providers and increasing control over Tesla’s innovative developments. This strategy can be best illustrated by looking at Tesla’s Gigafactories, where the company manufactures batteries and parts of electric cars on a large level to achieve economies of scale and lower production costs. Vertical integration is also incorporated within Tesla’s supply chain, where the company acquires ownership stakes and locks up agreements for raw materials (Kim et al., 2020).
Corporate Strategies of a Company and Strategic Fit Between the Business and
Its business strategy differentiates its products by innovation, premium options,s and sustainability goals, as a Tesla. This strategy includes several key elements:
Product Differentiation: Tesla is the premier automobile manufacturer that deals in electric vehicles that offer the best performance and innovation. Cars such as the Model S and Cybertruck stand out because they are unique, perform excellently in terms of power, and demonstrate environmental friendliness (Tesla, 2021). This differentiation is very important for Tesla regarding market positioning compared to competitors dealing with EVs.
Cost Leadership through Innovation: Although Tesla’s cars are considered in the premium segment, the company also aims to achieve various cost advantages by advancing technology. For instance, innovations and improvements in battery production in Gigafactories lead to lower production costs that begin to affect the purchase price of vehicles, thus making EVs affordable (Kim et al., 2020).
Corporate Strategy Alignment
Tesla’s corporate strategy is centered around diversification, vertical integration, and global expansion:
Diversification: Yet, also noticed that Tesla as a corporation does not only offer electrical automobiles for private use but also sells power storage batteries and solar power products. This kind of diversification helps the firm’s business model where the company aims at encouraging sustainability and innovation of clean energy solutions. Thus, by matching its corporate strategy to the business-level objectives Tesla can expand the synergies between automotive and energy segments.
Vertical Integration: MBA FPX 5006 Assessment 2 vertical integration strategy used by Tesla Company in its business is consistent with its business model based on the production of differentiated products while at the same time establishing itself as the market’s cost leader. Tesla can also have high-quality control over certain aspects of its supply chain and various aspects of manufacturing, thereby cutting costs. To some extent, when BPMIs are performed in-house for battery cells and electric powertrains, Tesla could innovate faster and sustain competitive advantages (Kim et al., 2020). This integration aligns with Tesla’s strategy of developing quality, innovative, and affordable solutions.
Strategic Fit
The relationship between Tesla Motors’ business and corporate strategies is well demonstrated in the broad areas of product portfolios, operations management, and the company’s internationalization initiatives. Therefore, Tesla’s corporate strategy of diversification and vertical integration supports its innovation and sustainability business strategy. Investments in manufacturing technologies and global production systems improve the company’s capacity to offer unique products and increase cost efficiency.
Conclusion
In conclusion of MBA FPX 5006 Assessment 2, it can be affirmed that the business strategy and the company strategy of Tesla are well-coordinated, forming the basis for its effectiveness in the electric vehicle and clean energy industries. Tesla’s business strategy is upstream on differentiation based on innovation, sustainability, and selective high-end products. Through its emphasis on Technological advancement and implementation of energy solutions to its EV’s, Tesla forms part of the automotive industry and the energy sector. This strategy is backed by Tesla’s corporate strategy which entails product differentiation through diversification in different product lines, material control via vertical integration, and internationalization to embrace global markets. While Tesla’s general management strategy is vertical integration that guarantees the high quality of materials and components and optimally aligns costs, its business strategy is the creation of advanced and cheap electric vehicles. Expanding its international operations improves an organization’s capacity to fulfil regional needs and respond to regional conditions; thus, it contributes to attaining the goal of market dominance. Venturing globally diversifies Tesla’s technology and market front within its business strategy that prides itself in innovation and environmental protection.
References
Chen, M., & Decary, M. (2020). Healthcare Management Forum, 33(1), 10–18. https://doi.org/10.1177/0840470419873123
Journal of Healthcare Leadership, Volume 14(14), 1–4. https://doi.org/10.2147/jhl.s347987
ScienceDirect. https://doi.org/10.1016/j.jbusres.2020.10.030
Martens, C., Herssens, J., & Delcourt, C. (2019). Proceedings of the Design Society: International Conference on Engineering Design, 1(1), 927–936. https://doi.org/10.1017/dsi.2019.97
Materla, T., Cudney, E. A., & Antony, J. (2020). Total Quality Management & Business Excellence, 30(5-6), 660–681. https://doi.org/10.1080/14783363.2017.1328980
Sharma, A., Bikash Borah, S., & Moses, A. C. (2020). Journal of Business Research, 122(1). https://doi.org/10.1016/j.jbusres.2020.09.011
Healthcare 4.0: Trends, challenges and research directions. Production Planning & Control, 31(15), 1–16. https://doi.org/10.1080/09537287.2019.1702226