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Case Study Tesla

This document analyzes Tesla's strategy through a key issues analysis, five forces analysis, SWOT analysis, and recommendations. It identifies that Tesla needs to continue dominating the EV market as competition increases, connect more with consumers, and capture a larger audience by producing more affordable vehicles. A five forces analysis finds competitors and customers exert more bargaining power. SWOT highlights Tesla's effective leader but narrow target market and inexperience in manufacturing. It recommends Tesla invest more in innovation, expand its global market presence, and target a wider customer base with more affordable models.

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Ney J
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271 views2 pages

Case Study Tesla

This document analyzes Tesla's strategy through a key issues analysis, five forces analysis, SWOT analysis, and recommendations. It identifies that Tesla needs to continue dominating the EV market as competition increases, connect more with consumers, and capture a larger audience by producing more affordable vehicles. A five forces analysis finds competitors and customers exert more bargaining power. SWOT highlights Tesla's effective leader but narrow target market and inexperience in manufacturing. It recommends Tesla invest more in innovation, expand its global market presence, and target a wider customer base with more affordable models.

Uploaded by

Ney J
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Strategy Analysis on Tesla (22e)

Student: Neha Jadhav (21201702)

Key Issues
 Continue dominating EV market
With companies like Toyota and Nissan exploring the EV market, Tesla needs to find new technologies to
continue dominating the electronic vehicle market.

 Getting messages out


Tesla does not invest in advertisements. They should try to connect with their consumers by sharing their
thoughts and ideas and by connecting with them on an emotional level.

 Capture a bigger audience


As of now, Tesla is a luxury brand and its vehicles can be afforded by only elite groups. Tesla needs to focus its
strategy on producing budget-friendly vehicles to expand its customer base.

A Five Force Analysis


 New entrants:
Tesla is a well-known brand and it would be difficult for new entrants to match their standards. Also, the setup
cost for the automobile industry is quite high which imposes a barrier to new firms. Threat from new entrants is
a weak factor.

 Supplier
The suppliers have limited control over the distribution and sale of their products. Most of these suppliers are
moderately sized and hence have limited influence on the automotive industry.

 Substitute
Many substitutes can fulfill the customers’ needs because of their performance. This, therefore, limits the threat
against Tesla.

 Customer
Cars have low switching costs because each customer buys a car and uses it for a few years before replacing it.
This, therefore, gives the customers a considerable amount of bargaining power.

 Competitors
The automotive industry has only a limited number of competitors. These competitors are generally innovative
and promote their products. These conditions strengthen the effect of competitors.

SWOT Analysis
 Strength
 Effective Leader
Elon Musk is CEO of many successful companies like SpaceX, SolarCity Inc. Tesla can adapt
technologies from these organizations and incorporate them into the automotive industry to make
progress.

 Front Runner
Fully electric cars were first manufactured by Tesla. This has helped the company by building a loyal
customer base and brand recognition.

 Weakness
 Narrow Target Market
Tesla targets elite customers by selling only luxury cars. This customer base is too narrow to expand
and restricts Tesla’s growth.

 Lack of Experience
Frequent production delays show Tesla’s lack of experience in the car manufacturing industry. Also,
expensive battery technology leads to high production cost

 Opportunity
 Solar Market
Tesla can continue exploring the solar market to make its foot strong in that industry as well.

 New Model
Model 3 is similar to Model S and has strong performance and it will just be half the price. This will
help Tesla reach out to a wider range of customers

 Threat
 High Competition
Competitors like Nissan and Toyota are releasing their own environmentally-friendly vehicles. This in
turn is building up competition for Tesla to be ahead of everyone else.

 Regulations
Tesla doesn’t support a model that requires automakers to sell their products to Dealership. Nearly
half of the American market is based on this model. Tesla either needs to adapt this model or fight
the government legislative to expand its market.

Recommendation
 Invest in Innovation and R&D
The Five force analysis of Tesla shows that they have a huge competition. The company must prioritize its
strategic formulation to strengthen its competitiveness. Innovation helps achieve an advantage over the
stronger competition. To stop the competitors’ rate of innovation, Tesla can increase its research and
development investment.

 Make a stronger market presence


Tesla should expand globally to pursue a stronger market position. The company should boost its brand
presence in countries where the infrastructure for EV exists.

 Customer target plan


As mentioned in the SWOT analysis, the target market for Tesla is too narrow. If Tesla widens their range of
models, it can achieve a differentiation strategy. Tesla needs to find ways to be affordable so that it can have a
wider range of customers.

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