Solutions to Problems Facing Tesla Incorporation
From the contextual analysis of Tesla Incorporation conducted earlier, competition from other automobile companies prevalent in the automobile industry was found to be the primary problem facing the company.
Tesla is one of the significant figures in the electric vehicle market, it ought to address external factors such as competition in order to maintain its stand and long-term competence in a market filled by big rivals such as General Motors Company, Nissan Motors and Toyota Motors(IBISWorld).
Question 1
There are several solutions which can be applied by Tesla in addressing the competition challenge; one of them is building a stronger competitive advantage. A firm is said to have a sustainable competitive advantage when its rivals are not capable of duplicating the benefits attributed to its strategies.
For Tesla, it can strengthen its competitiveness through more innovation and be increasing its market presence. This means that in regards to innovation, the company should focus more on its Research and Development (R&D) investment to surpass its competitors' pace of energy storage technology(IBISWorld). As for more market presence, the company should embark on aggressive marketing and promotion campaigns to promote its vision and mission statements.
Another viable solution to the stiff competition faced by Tesla is by improving its international presence(Yuying&Qingrun). Currently, the company's most operations are conducted in the United States but as for other motor corporations, they have multiple facilities and sales operation points in various parts of the world.
Therefore, it would be feasible for Tesla to promote its Multinational presence by opening facilities and sales outlets in high-potential developing and developed nations to promote its global growth, which in turn leverages the competition faced.
As discussed previously, one of Tesla's weaknesses is high prices for its products, a factor that reduces its competitive advantage. This, in turn, encourages the purchase of alternative cheaper EVs. Thus, as the third solution to the problem of competition, Tesla should lower the price of its products; especially the EVs with internal combustion engines in order to maximize its customer base and market share and this will help reduce competition from other firms.
Question 2
Since there are an array of solutions applicable to the competition problem faced by Tesla, determining the best one can be attained by conducting a weighted decision matrix. This is an approach applied when comparing the alternatives as per the several criteria of different magnitudes of importance. Below is the Tesla's Weighted Decision Matrix;
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Solutions to Competition faced by Tesla Incorporation
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Solution 1 (promote competitive advantage)
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Solution 2 (promote global presence
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Solution 3
(lower EVs prices)
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Prioritization criteria
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Value
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Rating
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Score
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Rating
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Score
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Rating
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Score
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Low Cost
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0.25
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5
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1.25
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3
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0.75
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4
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1
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Less complex
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0.20
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4
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0.8
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3
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0.6
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3
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0.6
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High effectiveness
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0.25
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4
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1
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4
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1
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3.5
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0.875
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Strong impact
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0.30
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5
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1.5
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4
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1.2
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3
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0.9
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TOTAL
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1.00
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4.55
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3.55
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3.375
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RANK
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1
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2
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3
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The matrix used four widely used prioritization slots for addressing competition. Companies prefer solutions which will consume fewer funds and it was found out that encouraging innovation and aggressive marketing would be cheaper compared to reducing the products services or opening of international outlets.
Consequently, solutions which are less sophisticated but with a higher effectiveness of operating while attracting strong positive impacts are desirable and as for this case, promoting competitive advantage was found to be the excellent option. Therefore, it would be viable for Tesla to promote competitive advantage because it yields better results as compared to other solutions.
Opening international sales points was found to be the second best alternative while lowering price was found out to be the least effective(Yuying&Qingrun). It is not advisable for Tesla to reduce the price of its EVs since it is currently stuck in debts and this may further worsen its financial position.
Question 3
Maximizing Tesla's competitive advantage in terms of more innovation and aggressive marketing is the best recommendation for the competition it faces. However, as per the Cost-Benefit Approach discussed in class readings, there are various tangible and intangible costs and benefits associated with this solution as illustrated below;
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Tangible Costs
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Intangible Costs
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Tangible Benefits
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Intangible Benefits
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§ The hiring of more marketers to facilitate aggressive marketing will increase the labor costs
- Finances are required to set up more innovation and research centers.
- More cash is needed to facilitate innovation and personal development training purposes.
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§ Increased advertisement and marketing expenses.
§ A bigger workforce which may result to mismanagement issues
§ The trained workforce may leave the company and join the competitors(Tesla).
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ü Increased sales as the sales are made known to many consumers
ü Increased productivity in terms of higher number of EVs produced. Innovation boost productivity
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v Reduced competition from rivals offering similar products(IBISWorld).
v wider market segment as well as bigger consumer base
v sustainable competitive advantage guarantees future success in the market
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From the table above, the benefits pose a wider positive influence on Tesla towards addressing competition as compared to costs to be incurred in the process. Therefore, fostering competitive advantage is the primary way in which Tesla can mitigate competition it faces(Tesla Debt-to-Equity).
Works Cited
Amelia Yuying., Raina Qingrun. "TESLA'S INTERNATIONAL EXPANSION STRATEGY." 10 March 2018. globalmarketingprofessor.com. 1 August 2018.
Tesla. "Welcoming New Talent to Tesla." 25 May 2018. Document. 1 August 2018.