BMO6511 Strategic Management and Business Policy Assignment Sample

• Type Assignment
• Downloads555
• Pages13
• Words3157

Criterion 3: Strategy Formulation

Tesla’s mission to accelerate the world’s transition to sustainable energy has seen it emerge as a brand in the EV and renewable energy industry. For those seeking assignment writing help, sustaining such leadership especially when new and strengthened competition is around the corner as well as other challenging shifts in the market necessitates a pragmatic strategy. With the application of Michael Porter’s Generic Strategies—mainly Differentiation Strategy, Tesla may adjust its competitive advantage and meet internal and external opportunities and threats.

Differentiation Strategy

Tesla has mainly opted for a differentiation strategy that acts as its fundamental systematic competitive edge in the highly competitive EVs and renewable energy industry. The key to this strategy is that Tesla maintains its position for being innovative, strong branding, and superior quality which has always put it in league above its competitors. The biggest source of differentiation at Tesla is the Focus on Innovation that the company exercises. Tesla’s cars have some of the finest technology as far as current automobiles are concerned; in driving, safety, infotainment, and others. These make Tesla cars more sophisticated than many of its rivals, and they are popular among technology lovers and innovators. For instance, the recent type called the 4680 battery comes with the potential of offering extended driving ranges as well as charging time. This continuous spending on technology especially on batteries enables Tesla to market its products as superior in performance and ease of use thus enhancing the company’s luxury branding. Another factor is the effective differentiation of offerings, which also supports the brand strength of Tesla. It has created a brand that is associated with sustainability, innovation, and luxury in the broad spectrum of its operations. The Telsa automobiles are not just automobiles but symbols of status, for consumers who are educated, progressive, socially aware, with a passion for the latest technology, environmental activism, and high performance(Pisano, 2019). Thus, the company’s strategic branding creates customers willing to purchase expensive products even in the marketplace loaded with cheaper comparable EVs. This loyalty is further enhanced by Tesla’s concern for environmental conservation as this brand seeks to respond to the global issue of high CO2 emissions. Apart from superior technology and strong brand appeal, Tesla has an advantage of vertical integration whereas other clients largely depend on their suppliers for their essential requirements. Tesla owns most components of the supply chain, including battery production in Gigafactories, which enhances the control of quality and development of innovation. This vertical integration is that the company can coordinate its production lines hence improving the overall operation and efficiency of its production line and avoiding being at the mercy of third-party suppliers which are common in most industries and have been evidenced by frequent disruptions of supply of important parts such as semiconductors. The differentiation strategy also applies to Tesla’s behaviour when it comes to growing its ecosystem of products and services. In contrast with other automotive industries, Tesla provides related products like solar energy products and battery products. Some of them not only widen their revenue sources but also fit into a larger concept of sustainability. The supercharger network is another competitive edge that Tesla possesses; it resulted in a convenient, reliable network of charging stations, which also contributes towards ownership satisfaction and provides additional value. However, one of the strategic approaches that Tesla has taken as a differentiation strategy is not without some protagonists. Since more automotive manufacturers are venturing into the EV market and as they go through their technological evolution, Tesla is subjected to the pressure of innovativeness(Teece, 2020). Current established players for example Volkswagen or new entrants like Rivian or Lucid are expanding their activities with new EV models therefore closing the technological gap. Also, the company has enjoyed premium pricing for its vehicles and people may resist this kind of pricing as they look for more affordable EV options in the market.

BMO6511 Strategic Management and Business Policy Assignment Sample

Liked This Sample? Hire Me Now

Michael White 9 Years | PhD

Strengthening Brand Loyalty and Expanding Markets

The key strategic initiatives for Tesla to deepen markets and customers’ commitment include using brand equity, improving the value proposition, and exploring new geographical and product domains. Shares of brand loyalty with customers are an essential pillar of Tesla’s brand, which the company strengthens by making further improvements to the pillars. To make this loyalty even more solid, Tesla centres its efforts on steady interaction with its clients through differentiation in both products and services. The various software updates delivered over the air, for example, not only enhance vehicle operations but also give customers a perception that their cars are becoming newer hence increasing satisfaction without having to buy new vehicles. Furthermore, a customer referral program included in Tesla’s strategy helps existing car owners promote the brand and build a loyal community. Another way through which the company is developing brand loyalty is through the use of Superchargers. In doing so, Tesla quite effectively and efficiently addresses one of the key concerns that dominate the consumption of electric vehicles: range-extended anxiety. The fact that this network is available only for Tesla owners strengthens the customer experience thus making owning a Tesla even more appealing(Aghion & Jaravel, 2019). New markets are also crucial to the growth strategy of Tesla Motors Company since they will help the company increase its market share and sales. in geographic terms, Tesla has been recently expanding into new locations, specifically Asia and Europe following its new strategy of building Gigafactories to manufacture its products locally and thus cutting operational costs. These Gigafactories also help in skipping tariffs and supply chain management thus making Tesla’s automobiles more affordable across global markets. This local presence enables Tesla Company to increase its market share and target areas that are experiencing rapid electrification of vehicles because of incentives set by the governments and the promotion of clean environment features. In addition to geographical diversification, the firm is expanding its product lineup as well. The core product offering of Tesla has been electric vehicles however it has expanded into energy in the form of solar roof tiles and energy storage wall, Powerwall. These products are also intended to offer the consumer a complete sustainable energy solution hence strengthening customer loyalty since Tesla products are not restricted to automobiles alone. Last, Tesla should be able to sustain its cash wind due to the tradition of unleashing more technological car models in the market, including an alleged $ 25,000 model. If the company makes its technology available to a larger pool of people, then it will be able to reach out to other market segments hitherto it could not afford due to high costs, while at the same time retaining its core loyal clientele(Zhou & Wu, 2020).

Leveraging Technological Innovation

Technological strategy in Tesla starts with a systematic approach to research and development (R & D) and strategic foresight. It begins with the assessment of the new market trends and the probable future technological demands, which majorly involves the study of data and customer feedback. Currently, Tesla’s R&D has the responsibility of tracking new ideas and innovations in the EVs and renewable energy markets. In this respect, Tesla outplays its opponents by forecasting market deficiencies; hence, it devises innovations that reflect consumers’ increased expectations regarding performance, efficiency, and environmentally friendly vehicles. The next stage of the process therefore is to ensure that these findings are incorporated with the Tesla Inc. mission and vision of transitioning the global world towards sustainable energy. When these technologies are found to have shown great promise, Tesla performs a study to see whether they can be integrated into its manufacturing line at a reasonable scale and cost. This step is critical to protect Tesla’s brand of offering only the very best and most innovative electric vehicles which are also market-ready. These technologies are researched across the company by cross-functional teams of engineers, product designers, and software developers who then incorporate them into Tesla’s products(Gruber & Talke, 2021). For example, one of Tesla’s key strategic offerings such as autonomous driving features, batteries, and artificial intelligence interfaces are developed with hardware and software solutions in congruence. Further on, the strategy is iteratively prototyped and tested, to enhance it. Tesla Innovation Centre creates models that in idea and compare versions in test areas to evaluate their strength, effectiveness, and safety. These technologies are then adjusted based on feedback from such tests before they are optimized for manufacturing. Resource allocation is the last component of the formulation process that provides resources in the formulation of strategies. One of Tesla’s major spending is in the procurement of talent, protection of intellectual property, and manufacturing volume. By linking these resources with the technology, there is a guarantee that Tesla’s innovation-based strategy is well formulated for the sustenance of long-term business growth and domination of the market(Lopez & King, 2022).

Managing External Threats

The automotive industry, in which Tesla competes, is characterized by a very intense and volatile environment. Market competition from moneyed conventional car manufacturers and electric car challengers is another concern to the overall market share of Tesla. Players like Rivian and Lucid Motors are planning to launch electric vehicles with similar features and affordable prices that may decline Elon’s dominance. Further on, it should be pointed out that the Tesla company still faces several regulatory and legal concerns. These factors are not completely within the company’s control like risks associated with government policies that affect the sales of EVs where policies such as car incentives could be reduced. Also, existing legal cases over the efficiency of Tesla’s autopilot system as well as battery fires may lead to profound fines or a negative image of the firm. To address these threats, Tesla needs to manage regulatory risks by entering other markets, where there is superior government support for electric cars. Tesla must sustain relations with the policymakers in the U. S, Europe, and China since it would enable the company to be on the right track with the set regulations and assure it to gain future incentives for generating sustainable energy products. Further, Tesla has to spend on legal and safety processes to deal with probable legal suits and regulatory fines mainly concerning its self-driving capabilities(Furr & Dyer, 2020).

Criterion 4: Strategy Implementation 

Tesla’s differentiation strategy which includes product innovation, brand identification, vertical integration, and technology advancement is the key element of its competitive positioning in the automobile and renewable energy segments. However, converting the strategy into tangible goals, measures, and steps, needs a properly designed and developed implementation plan to facilitate the realization of the intended result. This places Tesla strategically at the forefront of the EV market by their successful approach in the generation and continuous provision of value to consumers through innovation and sustainability, as well as streamlining of efficient operations. It is thus important for Tesla to ensure that it continues to leverage these strengths while at the same time dealing with external factors through the implementation of this strategic plan(Furr & Dyer, 2021).

Operationalizing Technological Innovation

The most important strategic innovation strategy that Tesla has adopted is based on technological implementation that consists of batter and autonomy elements and artificial intelligence system interfaces. Strategy one entails incorporating advanced technology into Tesla’s production lines and its products in a way that is consistent with the company’s vision and goal of making sustainable energy mainstream across the globe. The first step towards implementation involves raising the amount of investment in research and development (R&D) to improve on the existing products in Tesla’s production line as well as the future market demands. This is done by the company’s Tesla Innovation Centre. This makes sure that because innovations are tested in prototypes, they are ready for the market and as well, are competently reliable as Tesla practices. In an attempt to operationalise the focus on innovation, Tesla needs to keep on funding its Gigafactories which are crucial in the production of some parts such as batteries. These factories also help Tesla make sure about the quality of its products and finally, it helps in cutting down the amount of dependence on other suppliers which is quite good for its differentiation strategy. The recent release of the 4680 battery is a perfect example of how Tesla incorporates such a technological advantage. Hence, Tesla can engineer constant production innovation while keeping it internal are less reliant on third-party suppliers. As a result, ensuring that these factories can satisfy the growing global demand for EVs and other products will be key in the strategic execution of Tesla. Moreover, the ability to use data for future product development is one of the essential factors that help Tesla to stay an industry leader. Through customer feedback and market analysis in the value chain, Tesla is in a position of being able to meet the needs of the customers. For example, Tesla’s over-the-air software updates are the manifestation of this approach; these updates add new features to the Autopilot system, as well as future full self-driving capabilities, among others. Therefore, Tesla has to stay on top of data collection techniques and incorporate real-time data management into the company in order to adapt to the advancing technologies required by the market for this system to be expanded(Graham & Dodd, 2020).

Scaling Brand Loyalty and Customer Engagement

Brand identity with its customers is crucial to Tesla, with its competitive advantage being amplified by the sales strength enjoyed by the company. To improve the sustainability of this loyalty, it is necessary to put into practice new measures that are well aligned with the goal. A common example of how Tesla does this is through its customer referral program through which existing consumers are encouraged to get others to purchase the company’s cars. One component of scaling this programme includes ensuring that customer experiences are increasingly enhanced across Tesla and through the company’s value adds like Supercharger. In making the Supercharger network accessible and dependable, Tesla strengthens its strategic differentiation by eliminating range issues which are primary to consumers of electric cars. So, to strengthen loyalty to the Tesla brand, attention should also be paid to successful customer interaction through software updates and services. These updates avail new features, and improvements of the functionalities in the vehicle, thus creating an impression to the existing customers that, their vehicles are constantly changing. Applying this strategy at large entails timely and effective distribution of software updates on each of the Tesla vehicles and constant feedback from the customers. Tesla may improve on the identified growth opportunities by improving its customer service offer across the globe and in markets where it sells its cars. Another important factor, incorporated into this implementation, concerns the use of customer-centric feedback loops(Shen et al., 2020).

Leveraging Technological Innovation

In line with Tesla’s formulated strategy of advancing technological innovation, attention will be given to a focus on scaling up Tesla’s R&D initiatives, improving production processes through Gigafactories, and improving data-driven operations. Tesla’s R&D focus will be on battery, self-driving, and energy products, as these are focal points of differentiation to all the products. Tesla also needs to invest more heavily in R&D so as to be able to sustain its competitive advantage and come up with new technologies for production such as the 4680 batteries as well as enhancing self-driving technology. The first is scaling the Gigafactories which is critical in the implementation of the innovation strategy. These factories also facilitate vertical integration so as to minimize cost and ensure that Tesla manufactures most electric components such as batteries. New Gigafactories for battery production shall be established in already inhabited areas globally and in progressively independent regions like China and Germany, in countries over the U. S(Kim & Lee, 2021). This expansion enables Tesla to build and sell its vehicles and energy products cheaper with more market share. This strategy also requires the integration of data in the process of its execution. Currently, Tesla vehicles capture a great deal of data which is used to enhance new car features and make the necessary changes to owners’ vehicles through software updates. This makes it possible for Tesla to improve its Autopilot and Full-self-driving systems and make changes in real-time depending on the feedback received from the users and regulators. Further, Tesla AI and Machine Learning will remain a priority to analyse the supply chain and production lines to improve the company’s efficiency and to predict the market(Porter, 2019).

Managing External Threats

As part of Tesla’s plans to operate effectively in the external environment, it will direct its attention towards regulatory compliance, market diversification, and legal risk management. The major impact of the government policies will be addressed by building and maintaining a good rapport between Tesla and its key regulators in its major markets including the US, Europe, and China. This focuses on advocacy with policymakers for creating the right regulations and structuring the right incentives for electric vehicles (EVs) and sustainable energy products. Tesla will also keep a lookout for changes in regulations, especially those of the environment and safety to ensure that its products conform to the regulations. Market diversification is critical when it comes to managing external constraints together with the threats that may be present in them. Tesla will increase operation in new areas where electric vehicles are increasingly popular with such emphasis on regions where state policies support green energy. With the existing Gigafactories and distribution centres in Asia, Tesla has an opportunity to decrease its exposure to particular regions and the negative effects of economic cycles that could arise within those areas. In legal risk management Tesla will seek to upgrade its self-driving technologies batteries safety Autopilot that is efficient to respond to a concern that Autopilot contributes to battery fires. Also, by improving the legal and safety sections, Tesla will reduce the threats of litigation, and manage negative outcomes or negative media coverage, while the company’s image is preserved(Wang et al., 2022).

References

• Aghion, P., & Jaravel, X. (2019). Knowledge spillovers, innovation and growth. The Economic Journal, 129(623), 85-109.
• Furr, N., & Dyer, J. H. (2021). The Innovator's Method: Bringing the Lean Start-up into Your Organization. Harvard Business Review Press.
• Graham, M., & Dodd, D. (2020). "Risk Management and Corporate Governance in Automotive Firms." Journal of Risk and Financial Management, 13(4), 89-104.
• Gruber, M., & Talke, K. (2021). Managing innovation and entrepreneurship. Sage Publications.
• Kim, H., & Lee, Y. (2021). "Autonomous Vehicles and the Law: Exploring Regulatory and Safety Challenges." Journal of Transportation Law, Logistics, and Policy, 50(2), 215-234.
• Lopez, M., & King, A. (2022). Technology, innovation, and competitiveness: New challenges for firms in the 21st century. Journal of Business Research, 138, 120-130.
• Pisano, G. (2019). Creative construction: The DNA of sustained innovation. PublicAffairs.Porter, M. E. (2019). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.
• Shen, W., Li, X., & Zhang, L. (2020). "The Development of Electric Vehicles in China: Policies, Practices, and Impacts." Energy Policy, 137, 111-125.
• Teece, D. J. (2020). Dynamic capabilities and entrepreneurial management in large organizations: Toward a theory of the (entrepreneurial) firm. European Economic Review, 127, 103463.
• Wang, B., Zhang, S., & Yang, J. (2022). "Energy Storage Systems in the EV Market: A Case Study of Tesla’s Gigafactories." Renewable and Sustainable Energy Reviews, 145, 111-137.
• Zhou, K. Z., & Wu, F. (2020). Technological innovation, firm capability, and firm performance: Perspectives from dynamic capability theory. Journal of Management, 46(3), 633-662.