Tesla EV Market

Posted: December 21st, 2022

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Tesla EV Market – Term Project

Introduction

Businesses conduct their businesses with the goal of making profits, and often engage in acts that would make the company competitive. Firms are increasingly adjusting their activities because their rivals also continuously make improvements that they believe will help them secure a significant portion of the market. The competition is so stiff such that those that cannot compete as effectively as possible face the risk of being eliminated or triumphed over by their rivals in their respective sectors. Moreover, businesses need to consider the impact of the external environment on their operations because evidence suggest that all that organizations do largely depend on the effects of the macro environment on their operations. This study pays considerable attention to Tesla, one of the leading manufactures of electric cars that has made significant strides in the electric vehicle (EV) sector. Since its foundation in 2003 by a team of engineers who sought to affirm that people need not to worry about the impact of electric vehicle arguing that this production is more fun, faster and better. The company has made significant strides over the years to and has expanded into the production of storage products and clean energy. The corporation is confident that quitting the use of fossil fuels and embracing forms that have zero-emission increases the likelihood for achieving sustainability. It is the reason why the group is committed to achieving its vision, which is to form the most appealing car manufacturer of the 21^st century by fostering the globe’s transition to electric forms. On the other hand, the group’s mission is to hasten the emergence of sustainable practice in transportation by manufacturing EVs and making them available in the market. The company’s business model is based on making direct services and sales, and not based on dealerships and franchises. The group functions as a direct-to-consumer as it makes its sales directly, thus eliminating middlemen. The study reveals that whereas Tesla has made significant strides in the EV market, it needed to consider the effects of the external environment on its operations as well as focus on activities that would improve its outcome even further.

Industry

Industry and Market Participants

The electric vehicle market focuses on the development of electricity-based cars that proponents believe will contribute towards suppressing the effects of emitting greenhouse gases on the environment. The demand for EVs has increased over the recent past, which has resulted in significant advancements in this sector. One leading factors that could be attribute to the expansion is the escalating demands for electric vehicles. The widening demand for low emission cars suggest that the sector is likely to expand going forward. Information by Markets and Markets reveals that the international electric car market is projected to account for nearly 34,750 unit sales by 2030, broadening at a compound annual growth rate of about 27% during the period of the forecast.

The Five-Force Model

Using Porter’s five forces model provides much information regarding the effects of the sector on key operators in the sector.

Driving Forces

Implications

Competition

Company

Value-Chain Analysis

All companies, especially those that seek to venture into global markets need to pay considerable attention to their value chain, which refers to the activities or processes by which a firm adds value to its activities. Some of the approaches corporations use to add value include through effective production exercises, advanced marketing techniques, and the provision of additional services. An effective approach to rely on a value chain that would improve organizational performance is to perform a value chain analysis, which is the process by which a company recognizes the main support activities that improves value to the final services and products and then analyze the operations to foster differentiation and minimize costs.

Resource-Based View

SWOT Analysis

Tesla has strengths and opportunities that could boost its operations as well as weaknesses and threats that could harm its performance. Consequently, it needs to focus on the areas that require additional improvement to achieve impressive performance in its operations. Furthermore, Tesla needs to pay more attention to the SWOT analysis because the process helps to identify and maintain core competencies of the organization and offers the chance to embrace effective strategic planning techniques. Consequently, the group should consider a SWOT analysis as a fundamental tool in its operations.

Strengths

The company has various strengths that it relies on to improve its activities. One of the strengths is that the company has significant influence in the EV sector with a market cap of approximately $1.056 trillion. The figure is far much higher compared to rival firms such as Lucid Motors, Rivian, and NIO that have $36.45, 36.35, and 31.04 billion, respectively (CompaniesMarketCap). That suggests that Tesla is the most influential operator in the EV sector.

Weaknesses

However, the firm also has weaknesses that could determine how it performs, which make it necessary for the company to embrace mitigating measures.

Opportunities

The opportunities available to Tesla could improve how the organization performs if the management pays considerable attention to the various identified areas.

Threats

Tesla will achieve more impressive outcomes if its pays more attention to mitigating the threats to its operations.

Company Strategy

Implications

Recommendations

Tesla would make significant improvement in its operations and become more influential in the sector by considering certain effective factors that increasingly form the basis of business operations. One critical factor that would improve how the company performs is increasing focus on understanding how the external environment impact on business activities. The group would excel in this area by relying on effective models for understanding the implications of the external environment on business activities. Whereas the group seems to be on the right path based on the influence it has over other operators, paying little attention to the effects of the external environment could distract the group and possibly affect how it performs (Akpoviroro and Owututu 502). Consequently, the group should enact an effective and reliable group that would engage in regular analysis to get relevant information that would drive performance. Thus, apart from relying on Porter’s five forces analysis, the group can consider other possible options that have helped companies make considerable adjustment to how they respond to factors in the external environment. Consequently, the group may have to consider alternative frameworks such as SWOT and PESTLE that have provided considerable guidance to many companies across the globe. The team while working with SWOT need to analyze the company’s strengths, weaknesses, opportunities, and threats that are likely to impact on performance (Akpoviroro and Owututu 503). The information acquired from this analysis would help the company to improve on its weaknesses and take measures to avert possible threats, while enacting measures to improve on organizational strengths and opportunities. Otherwise, disregarding the potential implications of the external environment and paying little attention to models that would help to understand its influence could deter the group from making bold steps in its operations.

An alternative framework for understanding the influence of the macro-environment on business activities is PESTLE that requires a company to understand how political, economic, social, technological, legal and environmental factors impact on business activities. This model is particularly essential in scenarios where a company considers expanding its activities in new markets where it does not really know how it functions. Paying considerable attention to each of these areas would enable the group to make decisions on whether to proceed with the expansion or to consider alternative options, particularly if it emerges out that the group will face considerable constraints (Buye). The team while considering how political factors could impact on its operations need to consider elements such as the effects of environmental regulations, tax policies, employment laws, political stability, trade regulations, and tariffs could impact on business activities. Each of these factor could also determine whether the group ventures into other markets or not. The major factors to consider when looking at the economic factors, include but not limited to exchange and interest rates, cost of living, inflation, economic stability, individual and household income, and working hours among other determining factors (Buye). Moreover, the group would be in a better position to handle factors in the external environment if it understands how social factors such as safety awareness, various demographics, cultural and individual desires and interests in a product or service, and safety and health awareness (Buye). Social factors are essential because the group is only likely to excel in its operations in markets where buyers can relate and appreciate what Tesla offers. Technologically, it would be important for the company to adjust how it focuses on key factors such as level of innovation, emergence of new technology, and whether the forms that it uses are transferable internationally. Paying attention to the legal and environmental factors is equally important. The team should consider legal factors such as the effects of particular laws on organizational operations and how compliance or non-compliance could determine activities. Also important are the environmental factors, especially now that companies are increasingly turning their attention towards sustainable practices (Buye). The level of performance at Tesla and its ability to respond to factors that impact its activities would depend on how well the group comprehends and takes actions to address factors in the external environment.

Other than paying attention to the effects of the macro environment on business activities, Tesla needs to focus on training its workers to equip them with more effective tips on how to improve organizational operations and performance. Training workers has a wide range of benefits, which should form the basis of why the company encourages its workers to attend courses and programs that would improve how they reason and act. One of the main benefits for employee training is the process improves productivity as well as increases the quality of work because workers gain more effective tips for making their operations better and more influential on consumers (Rodriguez and Walters 207). Another reason why the group should encourage employee training is that the practice minimize possible faults that could occur at the place of work and possibly disrupt normal business operations. Reduced faults due to competent workers minimizes consumer complaints and increase the streamlining of key processes. Besides, training workers make them conversant with the use of technology that now serves as the basis of business activities (Rodriguez and Walters 207). Employees would acquire tips on how to make use of emerging technologies and be able to deal with the challenges that emerge from their use. In addition, training is important because this positively impact on staff motivation and morale, which are equally essential when running a business. Motivated employees report to their workstations as frequently as possible and try as much as they can to avoid absenteeism, and also contributes towards employee retention (Rodriguez and Walters 208). Furthermore, encouraging training fosters relations between employees and organizational leaders as well as increase worker performance. More fundamentally, Tesla should pay considerable attention to training its workers because this help to foster quality production as well as customer services. On the other hand, cases of high turnover rates, poor outcome, increased complaints, and depreciating brand value are likely to occur when the company pays little attention to training its workers. Consequently, the management should increase its focus in this area.   

Finally, Tesla would be able to compete more effectively if it elevates its marketing practices. Effective and appropriate marketing is necessary because embracing appropriate forms in this area expands the market. Furthermore, appropriate marketing exercises enhances exchanges in the possession and ownership of services and goods, and also strengthen the brand’s reputation and position in the local and international markets. However, the group may have to increase its focus on the marketing techniques that it uses to appeal to consumers. Evidence suggest that the group still uses some traditional marketing approaches such as making TV adverts, erecting billboards, using print materials, and use of word-of-mouth. These approaches are effective but the impact would be immense if the group explored digital media that is increasingly gaining prominence. Digital marketing according to Desai is the formation and transmission of generated content via digital media avenues such as mobile apps, email, social media, and websites (196). A team while using digital marketing promote its products using a variety of options, encompassing pay-per-click, search engine marketing (SEM) andsearch engine optimization (SEO) among others (Desai 197). Particularly, social media marketing, which entails use of social media platforms to reach out to consumers and inform them about the products and services the firm offers is increasingly gaining prominence among large corporations because it offers the chance to access consumers across the globe and indulge them in the marketing exercise. The groups should also pay considerable attention to marketing theories that help businesses to plan and improve their promotional exercises. A suitable framework for Tesla is the marketing mix model commonly referred to as 4Ps. The plan requires the company to consider how it sets its price while ensuring that it offers products if high quality. Moreover, the model urges the group to make the products accessible to consumers by taking them to places where they can easily access, and to engage in constant and appealing promotional exercises. Nonetheless, Tesla would not make significant strides in its operations if it fails to improve its marketing activities.

Conclusion

Tesla is an influential player in the EV sector that is committed to maintain and even improve its influence. However, various factors in the external environment impact on its operations both positively and negatively. Thus, knowing how the macro environment determine its performance would help it make significant strides in all that it does. It is the reason why the company needs to be familiar with some of the effective frameworks that enable an organization to understand how factors in the external environment could determine whether it excels or fails. Moreover, the paper illustrates the importance of coming up with a structure that would allow the company to compete more effectively bearing in mind that other operators in this sector are equally developing forms that would attract more consumers. The team needs to understand the strengths and weaknesses of its rivals and be able to rely on a strategic group mapping that would guide the group as it tries to expand its operations in a market where competition is stiff and how well a company performs depends on the strategic plan it deploys to suppress competition and appeal to consumers. Consequently, Tesla should rely on structures that would provide the chance to understand how the external environment impact on business performance. Some of the effective frameworks include SWOT analysis and PESTEL that enable the group to understand its strengths, weaknesses, opportunities, and threats, and the effects of political, economic, social, technological, environmental, and legal elements on business activities. In addition, the company should facilitate the training of its workers as well as embrace effective marketing techniques that would improve how the group appeals to consumers in both the domestic and international markets. Keenly adhering to the proposed factors would allow Tesla to make significant improvements in its operations while ensuring that the group maintains its influential position in the EV sector.

Works Cited

Akpoviroro, Kowo and Sabitu Owututu. “Impact of External Business Environment on Organizational Performance.” IJARIIE, vol. 4, no. 3, 2018, pp. 498-505.

Buye, Ronald. “Critical Examination of the PESTLE Analysis Model.” ResearchGate, 2021, https://www.researchgate.net/publication/349506325_Critical_examination_of_the_PESTEL_Analysis_Model. Accessed 15 Apr. 2022.

Desai, Vaibhava. “Digital Marketing: A Review.” IJTSRD, 2, 2019, 196-200.

“Largest Electric Vehicle Companies by Market Cap.” CompaniesMarketCap, 2022,

https://companiesmarketcap.com/electric-vehicles/largest-ev-companies-by-market-cap/.  Accessed 15 Apr. 2022.

“Electric Vehicle Market by Component, Vehicle (Passenger Cars, CV), Propulsion (BEV, PHEV, FCEV), Vehicle Drive Type (FWD, RWD, AWD), Vehicle Top Speed (<125 mph, >125 mph), Charging Point, Vehicle Class, V2G, Region-Global Forecast 2030.” Markets and Markets, 2022, https://www.marketsandmarkets.com/Market-Reports/electric-vehicle-market-209371461.html.  Accessed 15 Apr. 2022.

Rodriguez, Joel and Kelley Walters. “The Importance of Training and Development in Employee Performance and Evaluation.” World Wide Journal of Multidisciplinary Research and Development, vol. 3, no. 10, 2017, pp. 206-212.