Introduction
Tesla states that it must speed up the globe to sustainable power. The corporation began its novelty in vehicle manufacturing as an alcove diversifier, giving market-distracting goods in the type of opulence electric cars (Furrier, 2020). Even though the company has succeeded in offering differentiated goods, it needs help with its strategic needs and decision-making. Hence, this paper will contain an analysis of the external and internal factors of Tesla Inc., a SWOT analysis, and strategic alternatives for the company.
Internal Factors
Business Model
Tesla generated a victorious company prototype for presenting persuasive electric cars to the market. The company built a charging station structure to settle the most special hitch facing the choice of electric cars replenishing on long excursions (Matthews et al., 2020). Tesla is committed to converting the company structure in the weighty automotive sector by vending straight to customers. Simultaneously, the present business model uses the charismatic leader of the firm Elon Musk who markets its goods and augments its fame.
Corporate Culture
Tesla’s business culture generates the human resource competence required for innovative goods in the world car industry. The latter allows its employees to scan for perfect organizations, which makes the company hang out in the car industry and the vitality age and capacity sector (Matthews et al., 2020). Through the organizational culture, Tesla rationalizes employees to implement innovative and creative practices essential to maintaining the technological novelty important to the company’s business.
External Factors
Political
Tesla Company can present the chance to strengthen its financial performance via numerous incentives provided by the government. The political ecology of any nation influences its business ecology directly and indirectly (Matthews et al., 2020). If the political environment of a nation is stable, it prompts reliability and ascends to more incredible economic action and success. Specifically, in countries where a vast share of the manufacturing net of a multinational business is located, political turbulence can prompt an interlude in the accounting system, leading to unprofitability.
Economic
Electric vehicles are becoming popular daily, primarily associated with the world economy. In 2018, the electric car market was $39 billion, which is expected to reach $1.5 trillion in 2025. Tesla’s business has expanded rapidly in the last year because of its Model X, a wholly estimated electric SUV with bird-of-prey wing entryways (Matthews et al., 2020). The sales of its SUVs have also increased with more excellent economic activity.
Social
Social requisites and patterns impact a company’s remote via workers, investors, and consumers. The interest in maintainable goods has grown as more people considers ecological security. Besides, certain geographical peculiarities need to be regarded by Tesla since there are disparities in areas and their preparedness for these kinds of goods (Matthews et al., 2020). For example, China is a promising region, while other Asian nations demand analysis.
Technological
Tesla’s car and power engineering organization improvement rely on present techs. For instance, materials establishing invention decide the productivity and cost-viability of the company’s batteries. It affects production, activities, and marketing (Matthews et al., 2020). Technological changes occur daily, and every brand races to get the newest innovation first. Tesla’s business also depends on technological development and innovation, which is a facilitator of the firm’s development and success.
Environmental
It involves the gradual degradation of the ecology preconditions, the outlook of novel demands on vehicles, and their impacts on climate change. Currently, fossil fuels have lost popularity and are criticized due to their contribution to the rise of air pollution and other environmental aspects (Matthews et al., 2020). In these conditions, the popularity of electric vehicles rises as they can replace conventional ones and satisfy demands for sustainability. This aspect contributes to Tesla’s growth.
Legal
Many states incidentally prohibited Tesla Sales directly from the manufacturer to the buyer. According to these states, the manufacturer is supposed to link with an external retailer. This legal condition can influence the Tesla car conveyance (Matthews et al., 2020). Also, having a business means more cost and fewer profits because of legal issues like patent rights and vitality use guidelines, which Tesla needs to be familiar with.
SWOT Analysis Matrix
Strengths
Firstly, Tesla is the top pioneer in electric cars because of its prominent usage of renewable power sources such as solar energy. Secondly, the market trusts and anticipates Tesla to develop clean energy and good goods because the company has gained immense fame for producing goods that use clean energy. Thirdly, Tesla is cooperating with large companies such as Yes Energy, which is assisting in enlarging the organization’s renewable energy efforts in the world market.
Weaknesses
First, Tesla is trying to establish itself in a highly competitive vehicle market while expanding internationally. Second, Tesla has gone a long way since it started, and its success relies only on Elon Musk. Most consumers buy Tesla’s goods due to its brand image (Menon, 2022). However, Musk has other businesses to manage, and managing Tesla single-handedly is a challenging responsibility. Lastly, manufacturing the best quality is expensive.
Opportunities
Firstly, Tesla’s autopilot technology has acquired popularity because of its convenience and safety (Menon, 2022). The firm’s work in autopilot is constantly growing, which makes it trustworthy to customers and the share market. Secondly, Tesla plans on producing its battery cell in-house, which can be a game-changer since it, will assist the firm in reducing its manufacturing cost (Menon, 2022). The latter will also generate more jobs, assisting the economy.
Threats
One, Volkswagen and BMW are doing heavy research to develop vehicles powered by renewable energy, which threatens Tesla. Two, it is crucial to uphold long-term sustainability for a clean energy car firm (Menon, 2022). The latter is a possible threat because of Tesla’s unstable production conditions and local EV support infrastructure in North America and different parts of Asia. Three, inventive kinds of energy are utilized in cars (Menon, 2022). Competitive pressure might result in high operational costs and reduced profit margins.
Alternative Strategies
Tesla’s strategy appears to be ineffective; thus, it is necessary to utilize alternative strategies. Tesla’s top management should make different strategies to make effective strategic alliances with multinational car firms like BMW, Ford, Lexus, General Motors, Mercedes, and Audi (Furrier, 2020). The latter will assist Tesla in tapping into novel and potential markets and will also result in more expansion of the operations, which would then augment the broad consumer base of the firm.
Tesla provides expensive luxurious cars, restricting its target market to some extent. The company only targets upper-class consumers, which restricts its sales. Hence, the firm should consider low-priced manufacturing goods so that more people can afford its products (Furrier, 2020). The company should also concentrate on the worldwide expansion of its operations since there are still many untapped potential markets, such as Spain, Japan, and other places worldwide. The latter would augment the broad consumer base of Tesla and allow it to enjoy economies of scale.
Conclusion
Tesla began its luxury vehicle alcove diversifier and is not lashing down the market with a comprehensive differentiator tactic. It has become popular due to its production of environmentally friendly electric cars. However, Tesla still faces problems, such as high competition from large firms. The company has yet to establish a market in many countries, hindering its profitability. Hence, if Tesla Inc. can use the above strategic alternatives, it will be able to overcome its strategic challenges.
References
Furrier, A. (2020). Tesla: Business model and strategic analysis. Alec Furrier Medium. Web.
Matthews, T., Hirve, M., Pan, Y., Dang, D., Rawar, E., &Daim, T. U. (2020). Tesla Energy. In Innovation Management in the Intelligent World (pp. 233–249). Springer, Cham.
Menon, K. (2022). A holistic look at Tesla SWOT analysis. Simple Learn. Web.