CASE 13: Tesla Motors: Disrupting the Auto Industry Explain the rationale for Te

Question

CASE 13: Tesla Motors: Disrupting the Auto Industry

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?

The rationale for Tesla’s strategy o The 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

Explanation / Answer

Tesla has been following the right mix of the price based and the product differentaition strategy. With a completely unique product line, that emerges from teh market reseearch and a top down approach, where the conceptualisation is transformed into a product to create a niche and create a demand in the market.

The electric vehicle market for example is growing, howvere TEsla with the highly advanced technology has taken it to an altogether different level. The self driven vehicles are a pathbreaking technology, and one of the greatest strengths of Tesla as it offers not only the first mover advantage to the maker but also the power of negotiation with the suppliers with the credibility to enter into a new market. With the right pricing, Tesla has succeded in creating the right perception, that enables the absolute capturing of the target group.

The weakness for Tesla is the obsession with the idea, thought the quick turnaround for the solutions offers a heavy advantage in comparison to competition. But with the fast evolving technology industry, it needs to be wary and not just focus on top down product design and development approach. The optimal way will be to do the right market study and use the mis of top down and bottom up approach.

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