CASE 13: Tesla Motors: Disrupting the Auto Industry Grant, Robert, M., 2016, Con
ID: 356439 • Letter: C
Question
CASE 13: Tesla Motors: Disrupting the Auto Industry
Grant, Robert, M., 2016, Contemporary Strategy Analysis, 9th Ed, John Wiley & Sons Ltd.,
Case Analysis Guidelines
Case Questions:
What is the strategy of Tesla Motors? How does its business model differ from that of the leading automakers?
In the market for plug-in electric vehicles, how do the resources and capabilities of Tesla compare to those of the established automakers?
Explain the rationale for Tesla’s strategy. To what extent does this represent an optimal response to Tesla’s strengths and weaknesses relative to the established automakers?
Assess Tesla’s decision to make available its patents to other companies.
At the end of 2015, Tesla’s shares are trading at $240, giving Tesla a market capitalization of $30 billion (General Motors market cap was $54 billion). Would you buy or short Tesla’s shares?
Case Analysis and Discussion:
What is the strategy of Tesla Motors? How does its business model differ from that of the leading automakers?
The principal features of Tesla’s strategy
We can compare Tesla’s oval approach and configuration of activities, i.e. its business model, with that of other auto makers
How do the resources and capabilities of Tesla compare to those of the established automakers?The key advantages of the major automakers derive from their:
size and scale,
their range of technical capabilities,
and the fact that most of them have been involved in developing electrical vehicle technologies for much longer than Tesla
However, in the market for electric vehicles, Tesla does possess some distinctive resources and capabilities as: …
The rationale for Tesla’s strategyThe key to Tesla’s strategy is utilizing its relative strengths:
Tesla’s “top down” approach
Tesla’s ability to sustain its development and growth is the changing competitive structure of the industry.
The future growth in the market for all-electric vehicles
Tesla’s decision to make available its patents to other companies
Tesla’s motives
Tesla’s technology strategy
Tesla’s innovations in electric cars
What advantages might accrue to Tesla as a result of others utilizing its patents?
Would you buy or short Tesla’s shares?To assess Tesla’s prospects for profitably over the long-term you need to assess the following:
Will Tesla survive its development phase?
Will growth in the market for electric cars be sufficient to meet the optimistic sales projections that Tesla has made? In
Will cars powered by fuel cells displace PEVs?
Will Tesla be able to establish competitive advantage in the market for electric cars?
Conclusion:
You need to summarize your main ideas about the case given your responses to the above questions.
Explanation / Answer
Tesla Motors is considered as one of the best cultures available in the car industry. Motors culture is directly developmental and their corporate culture as well as system is directly a definition of interaction between all of the components between the company. Tesla has a traditional approach to its culture and it is very limited to the product facility development. For the exaggerated control of the organisation they also implement new strategies as well as manage their specific strategies through their organisational structure.
Some issues regarding the current culture of tesla Motors are as follows.
Hierarchial issues
Global hierarchy is one of the main characteristics of the specific culture in Tesla. Involves multiple offices as well as people across the globe who have International as well as domestic operations. Companies main aim is to maintain their operations across the globe but in the current scenario company is very limited to its original place. Company does not so much diversity as it is directly placed are the origin.
Less diversity
Company has very less diversity as the company's organisation structure is not very old. People from across the globe are merely a part of the organisation and company is very origination centric. This is specific approach reduces the overall diversity of the company hence tesla faces cultural barriers inside their organisation.
Centralised approach
Tesla directly works on the centralised approach which is sent out globally. This is specific term directly reduces the overall efficiency of the system as each and every team even if it is equal or not is considered as equal. And toughness of the task is defined on the basis of the centralised approach. It doesn't even support the autonomy over its regional Overseas offices. All the decisions are directly made from the tesla headquarters which lacks the overall situation analysis for the specific region.
Limited reach
Tesla has a very limited reach and mostly limited to the countries like United States, china, norway and some other main countries which reduces the overall efficiency regarding the same market. as Tesla is making electric cars , sending out the specific electric cars into the different countries is difficult as they don't have the manufacturing units in each of the country. Company is a US centric and has a very little scope for business in other countries.
Rigidity of the culture is one of the major disadvantages of the corporate culture of Tesla. Centralisation limits the ability of the specific company for the Overseas offices to respond to the critical issues they experience and their specific regional markets. Tesla has to Reform their organisational structure to fight back this is specific change add to fight back the with the help of decentralization to create competitive advantage over the local firms in the market.
Making the patents available for other companies shows ethics and dedication towards the sustainable resources of Tesla. This approach directly provides an idea of sustainability thinking of Tesla. By properly following the ideology of being sustainable, tesla is developing a hole in a structure of business which is very beneficial for the organisation.
Tesla has been a developing their market structure according to their policy of dealing in electric vehicles. Definitely buying short Tesla shares is a beneficial thing as Tesla is growing prominently in the market and has not shown any kind of drop since it was developed. Buying shares for Tesla would be beneficial for an individual. Cars powered by fuel cell would not be able to surpass the cars powered by electrical batteries. This is specific situation needs proper identification of market opportunities which would definitely increase the overall level of shifting from Electronic vehicles to fuel cell operated vehicles.
Tesla has been very successful in developing a competitive advantage in the market as it is providing diverse range of vehicles in a grid pricing scheme with superpower.
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