Business success is comprised of multiple components which need careful consideration and planning. With time, new components of success emerge. Tesla, as a good example of a company that strives for success in an environment of harsh technological, ideological, and economic competition, can demonstrate how different aspects of business affect organizations. Presently, globalization and technology have become the dominant factors that influence business achievements. Yet, conventional ones such as vision, mission, and stakeholders are also of significance. This paper will discuss the effects of globalization, technology, vision, mission, and stakeholders on Tesla Inc.’s operations and success.
In Tesla’s case, globalization is a force that enables the company to expand. When the company was founded, it was focusing primarily on electric cars for the high-end public. First models of Tesla cars were rather expensive but provided an immersive experience of a sports car which is driven by a full-electric engine. Yet, the market for such cars was rather small compared to one of the middle-class vehicles (Singh, 2018). The global competition with Toyota, Chevrolet, and, recently, BMW, Mercedes-Benz, and others forced Tesla Inc. to expand its model range and create Tesla model 3 which currently costs $35 000 (Steitz, 2018).
Interestingly, charging stations also became a battlefield for global competition, as in Europe and Japan where electric cars become increasingly popular, manufacturers create their own communication protocols and plug configurations for vehicles produced by BMW, Mercedes-Benz, Ford, Volkswagen, Nissan, Mitsubishi, and others (Steitz, 2018). To manage that issue, Tesla Inc. began investing in the construction of exclusive superchargers for Tesla cars. Therefore, globalization with its considerable competition forces Tesla to expand its operation grounds and evolve technologically and strategically to be successful.
Technological supremacy in Tesla has always been valued as the key sales point. Robots were used in assembly lines long before Tesla, but the company decided to make its battery production facility fully automatic. Despite some technical issues connected with its implementation that Tesla faced not long ago, this decision can potentially save Tesla millions of dollars in the long run. Artificial intelligence has also become a priority for Tesla. The company imbued autopilot options with its Model S and X to enhance driving experiences (“Tesla Model 3 Specs,” n.d.). The global trend for automation made Tesla one of the first to provide its customers with the most advanced auto-driving system. However, competitors such as Uber, Mercedes-Benz, Ford, and even Apple are already testing their autopilot hardware, which means that Tesla would have to constantly update its technology to hold its place as a trendsetter.
Industrial organization model (I/O model) is a concept that explains the relations between firm’s inner structure and performance and external forces such as industry, competitors, regulations, suppliers, etc. (Hitt, Ireland, & Hoskisson, 2012). The I/O model that seems to best suit Tesla Inc. is the production of differentiated goods for customers who are willing to pay extra for higher quality products and services. The company’s competitors are all vehicle producers that manufacture electric cars, such as Volkswagen, Mitsubishi, Mercedes-Benz, Ford, and others. On a macro level, competition makes it difficult for Tesla Inc. to enter foreign markets in which its competitors already have an established position.
On the other hand, it stimulates the company to invent innovative marketing strategies. An attractive industry for Tesla Inc. is middle-to-high price segment of an electric vehicle market (Steitz, 2018). It is the most populous market that can earn Tesla Inc. above-average returns due to increased demand for high-quality zero-emission cars. Moreover, regulation in Europe, for example, requires car producers to decrease the amount of dangerous chemicals in exhaust fumes. Tesla Inc. fits perfectly in this policy. Long-life batteries that are superior to most of their competitors can ensure better returns in this segment. A strategy for Tesla to achieve success will probably require more investment in research and development to stay ahead of other companies at least technologically.
Resource-Based model (R/B model) is a concept that helps organizations define the best way to achieve above-average returns through describing and making good use of its core resources, capabilities, and competencies (Hitt et al., 2012). Tesla’s brand and reputation are among the key resources that help it perform in the market. Tesla has long been known for producing expensive premium-class cars, which can ensure buyers in the quality of Tesla’s other products. Another advantage of Tesla is its pursuit of automation (“Tesla motors company overview,” 2011).
In comparison to manual and robot-assisted assembly and production of their competitors, Tesla Inc. could soon outperform companies of the same and bigger size due to such a unique capability as fully automated battery production line. As per Tesla’s internal structure, the company utilizes its vertical decision-making mechanism in order to make correct strategic decisions that correspond with the company’s global and domestic policies. This advantage is reinforced by strong image and strategic leadership of Tesla’s CEO, Elon Musk. This vertical structure and strong leadership seem to work well as the latest financial year turned out to be rather profitable for the company (“Tesla first quarter 2018 update,” 2018).
Tesla’s vision is “to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” (“Tesla motors company overview,” 2011, para. 3). The vision clearly sets the company to achieve the best future for humanity through utilizing renewable energy and increasing its share in the vehicle market. According to newspapers, Tesla has done a lot to popularize electric vehicles, which makes its vision indeed work for its success as the brand is now tightly associated with renewables (“The Guardian view on electric cars: They’ll change the world,” 2017).
Tesla’s mission is to “accelerate the world’s transition to sustainable energy” (“About Tesla,” n.d., para. 3). Logical stress on acceleration puts the company in front of the industry as a pioneer of sustainable technologies that will shape the future. Sustainability as a popular concept in the 21st century makes the company’s mission attract employees whose ideas are similar to those of Tesla’s executives.
One of the key stakeholders of Tesla Inc. is its customers. People’s belief in a sustainable future makes them a target audience for Tesla Inc. who are more likely to buy the company’s products. Employees and suppliers inspired by the company’s vision and mission are also responsible for Tesla Inc.’s success as they work not only for money but contribute to a sustainable future. The trust of stockholders and community is also a large portion of the company’s success due to the notion that Tesla’s share prices are also determined by attitudes of those groups towards the company.
Tesla is a technology-oriented company that strongly influences the world’s opinion of the future of electric cars. Yet, it is also subject to changes in global economic, political, and social landscape. To withstand the pressure of external factors, the company needs to emphasize its strong sides such as battery life, production quality, and automation that can help it achieve above-average returns. The analysis once again demonstrates how many facets there are to business and how globalization complicates operation and strategizing. However, it also shows how much more value one company could bring to society.
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