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Tesla strategic Management Essay

A.Background

Tesla Motors, Inc. is an American company that designs, manufactures and sells electric cars and electric vehicle power train components. Tesla Motors is a public company that trades on the NASDAQ stock exchange under the symbol TSLA. Tesla was founded in 2003 by Elon Musk, Martin Eberhard, Marc Tarpenning, JB Straubel, and Ian Wright. The headquarters of Tesla Motor located in Palo Alto, California, USA. Tesla has served in many countries, such as United States, Canada, Japan, Australia, New Zealand. Tesla Motors first gained widespread attention by producing the Tesla Roadster, the first fully electric sports car. The company’s second vehicle was the Model S, a fully electric luxury sedan. Tesla also markets electric powertrain components, including lithium-ion battery packs, to automakers, including Daimler and Toyota. Tesla’s CEO, Elon Musk, has said he envisions Tesla as an independent automaker, aimed at eventually offering electric cars at a price affordable to the average consumer.

B.Business Model

•Bread and Milk
One of Tesla’s business model strategies is direct selling to customer; basically they manufacture their own automobile production, distribute it by themselves and sold by their own people through the dealership and website.

•Franchise Distribution Channel

Since there are a lot of countries available to be penetrated, however with limited resources franchising help Tesla to distribute their product to other country. Swinging for the fences is of the factor that makes franchising more favourable.

C. Action Strategies

•Swinging for the Fences
Tesla innovative business strategy targeting high end costumers, focus on eco friendly niche market. They implement high risk business, however generate high return.

•Green Campaign

Tesla aggressively promotes go green campaign to enhance people’s green environment consciousness.

•Supercharge Network & Support Tools
In order to support Tesla car, Tesla Motor provide many Supercharge Network in every countries that Tesla car is available, such as 65 stations operating in the United States and 14 stations in Europe. Tesla designed its Model S to allow fast battery swapping, which battery swapping is one of the support tools. This feature facilitated the assembly process. Tesla announced their goal to deploy a battery swapping station in each of its stations and can be swapped around a 90-second operation. Another support tool for Tesla car is Supercharger system, which is a system to recharge for free in less time than it took to each lunch. By these two supporting features, it has increased Tesla market share.

•Unusual pricing strategy

Tesla is applying an unusual pricing strategy in the country, refusing to charge more than the car’s U.S. price plus import and sales taxes, and shipping costs–unlike many other automakers, who often add a premium. Tesla offers its customers good value for money. For example in China, Tesla cars were priced $121,000 in Chinese price tag, this will actually make the car a great deal and more affordable than many conventionally-fueled rivals,most likely making China one of Tesla’s biggest markets.

D.Key Factor in Operating Tesla Motor
The key factors in operating Tesla Motor are:

•Innovation
Tesla should always innovate new type of car with new technology which are more advanced that the other brand. New innovation will drive customer to choose Tesla as their choice. In our opinion, Tesla doesn’t have any direct competitors until now. Tesla offers a smart solution for high-end users that wants a electric and eco-friendly cars, which is a good positioning strategy in perfect timing.

•Service area
Tesla need to expand their service area, such as stores, service station, and supercharge network station, which are deliberately positioning our store and gallery locations in high foot traffic, high visibility retail venues, like malls and shopping streets that people regularly visit in a relatively open-minded buying mood. By expanding in these three services area will enable Tesla to sell more cars in more places and countries.

•Price
Tesla produce new type of car with affordable price yet it still in high end user category. For example the class as same level as BMW, Mercedes Benz, Audi, etc. By reducing the price to certain level could encourage people to buy Tesla car in affordable price.

•Perfect Timing
Tesla is not the innovator of electric car. The technology has already existed since 1959, but due to the factor related to the timing, the company had to cease its operation. The factors involve timing such as, low oil price, supplies of oil, global warming, people awareness regarding eco friendly or green environment.

Differentiation Strategy of Tesla
Sales & Marketing

Tesla use swinging by the fences strategy, which implement high risk business, however generate high return. First, we target the high end customer by producing high class product. We produce the product at the same level as Maserati, Porsche, etc. We need to make an high brand image for the brand, especially the Tesla brand is still new to the automobile industry. Telsa has this different aspect from other car nowadays, Tesla operated by battery or we could say Tesla produce electric car. After we got quite some revenue to expand our market, we will target new segmentation of customer, which lower than the above explanation. We produce a product with price range from US$ 50,000 – US$ 75,000, which has lower class than Maserati and Porshe. We use this marketing strategy to aim new range of customer, which the purpose is to increase Tesla revenue. The next step after the suceed of second strategy, we will try to produce more affordable type of electric car to enlarge our target customer by providing all kind type of car from sport car, luxury car, SUV, sedan, etc, however still focus on electric car.

The next marketing strategy for Tesla is by doing green campaign and endorse environmental issue event, which is the main image of Tesla by producing electric car to obtain better place for living on earth. We have idea to provide green area as many as posible, more trees, more park, more oxygen to the world, reduce global warming, etc. The next idea is to build eco friendly office of Tesla, by using eco friendly enviroment material, use more solar energy system, etc.

Customer Service
In according the increase of the sales of Tesla, we will provide better and better service to custome. We build supercharging network specially for Tesla brand in all over the world. By providing numoreous number of these networks will facilitate the customer need, customer do not need to be afraid if the car could not drive in long miles due to the number of supercharging network which increase in more places.

We provide more tools to support our product, for example battery swapping and super charging system. We also will open more flagship store in all over the world in addition to grab more market area, besides it we also open service station to help customer to service our product.

By improving our service field from the supercharge network, support product tools, service station, store, etc, will protect the existency of Tesla Motor Inc. We are confident that in the next years electric car will become larger and larger and one of new indusrty that has huge potential. By growing a lot number of supercharge network in all over the world will make Tesla always ahead than the competitor, which also one of our marketing strategy to monopolize the market of supercharge network. When competitor strat to begin their network, Tesla already taking hold well in the electric car industry.


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