The globalization has allowed the companies to gain access to new market areas and foster diffusion of technologies and scientific knowledge, which can be leveraged to manufacture advanced products that can improve the overall standard of living of the customers. In case of Tesla Motors, the company has emerged as a technologically advanced company that has indulged extensively into research and development to produce the most advanced form of electric vehicles and power storage systems. Technological changes in the automotive industry in the recent years have been on the grounds of development of electric vehicles to fight the increased pollution levels. Tesla Motors have excelled in this area to develop electric cars that only runs of green energy but it also yields enough torque to attract the automotive enthusiasts. Furthermore, the globalization has also allowed the company to run its operations across different nations, thereby gaining access to a larger customer base. Thus, globalization and technological development has resulted in organizational success.
The industrial organizational model discusses about how the different factors environmental factors in the industry can impact the operations of a company. The global automotive industry is highly competitive and is characterized by the presence of several well established brands. The assessment of the five competitive forces has been discussed in this following section.
Power of buyers: The customers in the automotive industry have a large number of options available for them to choose from. This as a result increases their bargaining power by reducing their switching costs. However, Tesla Motors have achieved a significantly high competitive advantage by developing technologically advanced electric vehicles which are not available from other companies in the industry. This as a result allows it to gain higher returns.
Power of Suppliers: Most of the car manufacturers are dependent on the raw materials supplied by the supplier firms. The suppliers which provide high quality internal components therefore have a higher bargaining power over the car companies. In order to reduce the dependence on the suppliers, Tesla Motors have established its own battery producing factory that allows it to achieve vertical integration in the supply chain, thereby achieving higher competitive advantage (Tesla, 2016b).
Threat of new entrants: The barrier to entry in the automotive sector is quite high, owing to the high capital investment that makes it difficult for smaller firms to enter in this sector. Thus, Tesla has low threat from the new entrants.
Threat of Substitutes: The direct substitutes for cars are public transport. However, the convenience and value provided by a personal electric car cannot be matched, which reduces the threat for Tesla Motors.
Rivalry among firms: The industry consists of several well established firms like Volkswagen, Toyota, General Motors, etc. These companies are looking out for new ways to foster competitive advantage by developing new products with attractive value proposition. However, the product line of Tesla Motors offers the customers with unique products that offer both power and electric driving, also without compromising on the aesthetic appeal. This as a result has made it quite attractive for the customers.
The resource based model discusses about the value generated by the company by using its resources and competencies. A VRIO analysis has been conducted to assess the resources of Tesla Motors.
Valuable: The brand image of the company can be considered as one of valuable resources of the company. Moreover, the company currently is valuated at $700 billion (Hull, 2015). This reflects the high financial resources of the company. The patented designs and technologies of Tesla Motors are also sources of its competitive advantage.
Rare: The unique value proposition offered by the company that includes a combination of aesthetic appeal, power and electric drive train, is quite rare in the industry. This in turn helps to create a strong differentiation in the market and to gain more than average returns.
Inimitability: One of the key inimitable resources of the company is the brand image and the associated brand elements such as the brand logo, brand name, etc. Moreover, the company patents such as designs and technologies are also inimitable as they are the intellectually properties.
Organizational Exploitability: Tesla Motors have successfully been able to leverage its existing resources to create a strong hold in the automotive industry, especially in the electric vehicle sector. This as a result has allowed the company to attract a large number of potential customers.
The industrial organization and the resource based model has clearly highlighted the company is able to generate above average returns.
The mission of Tesla is to “accelerate the world’s transition of sustainable energy” (Tesla, 2016a). The mission statement clearly indicates that the company has realized that the future is dependent on green and sustainable energy. This proactive approach taken by the company has enabled to take a first mover approach to come up as a mainstream electric vehicle company. It seeks to boost the transition of the industry from fossil fuel to green energy and to try to stand in the forefront of the transition process.
The vision of the company is to expand its business all across the world though geographic expansion and to enter in the emerging markets in the near future. Tesla Motors also seeks to expand its product line up to cater to a wider demographic range of the population. Its vision also includes increasing the production of the lithium ion cells to reduce the energy cost and to make the world a sustainable place.
