International and Domestic Strategies of Tesla - Essay Sample

Introduction

The rising numbers number of cars especially using gasoline causes increased concerns for ecological safety is causing environmental deterioration due to smoke and pollutants emitted by gasoline vehicles. Cars are estimated to contribute to approximately 22 million tons of harmful emissions to the atmosphere discharged after consuming oxygen polluting the air and water bodies. An estimated 70% of the total car emissions are harmful emissions such as sulphur, nitrogen oxides, hydrocarbons, lead compounds, oxides, and carbon dioxide. Others include particulate pollutants, carcinogens, and aldehydes. In addition to the emissions, gasoline engines cause noise pollution and contribute to human health complications such as cancer, allergies, and human organ effects resulting from electromagnetic pollution. Electric cars present the benefit of being environmentally friendly and cost-effective as compared to gasoline. However, the electric car's batteries using precious metals present challenges of disposal after usage lifetime (Vynakov, Savolova & Skrynnyk, 9).

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In response to the above challenges, Tesla company was established in 2003 to develop and produce electric cars that are environmentally friendly through capitalizing on the inventions of Nicola Tesla. The company was started by Marin Eberhard, Marc Tarpenning, Jeffrey B. Straubel, and Ian Wright and later joined by Elon Musk in 2004 through the sale of shares. Tesla developed various policies aimed at maintaining long term production of affordable electric vehicles. These policies were meant to guide the enhancement of continuous innovation, promotion of electric vehicles to the global market, and maintain huge financial investment for the achievement of these objectives (Vynakov, Savolova & Skrynnyk, 10).

The first policy that Tesla enacted was to expressly engage in the production of full-electric vehicles. This policy was aimed at doing something different than the competitors have been engaging in designing hybrid cars which use both electric and gasoline which was viewed as a development restrain. The second policy was the in-house design and production of the main Tesla motor vehicle parts and its operating software. These parts include the engine, battery pack, charger, cooling system, and electronics (Vynakov, Savolova & Skrynnyk, 10).

The third policy was the robust infrastructure development such as charging stations of the Tesla vehicles. The fourth policy that tesla implemented was the direct sale of its vehicles without the involvement of any dealers. Also, the fifth policy was that Tesla was dedicated to the implementation of new technology in production by ensuring 90% automation and in-vehicle operations by ensuring all vehicle functions are controlled and managed using the software. Lastly, Tesla motors enacted an openness policy by allowing its patent portfolio for use by the public in order to achieve technology and standards promotion (Vynakov, Savolova & Skrynnyk, 10).

Vynakov, Savolova & Skrynnyk (11) adds that Tesla embarked on the presentation of high-class electric vehicles which contributed to the rapid growth in sales volume in the global consumer market. The vehicles produced were fashionable, stylish, and with cutting edge kitsch. The Tesla Roadster was the first model of a two-seater sports car produced in August 2006. Since then Tesla has expanded in production and market become one of the top global leaders in manufacturers of electric cars. This paper will evaluate Tesla's international and domestic market and expansion strategies.

Discussion

Tesla Domestic Strategies

After the initial production of Tesla Roadster in the year 2006 and the subsequent uptake in the market, Tesla embarked on domestic strategies to ensure maximum investment and enhanced production. Tesla targeted to start mass production of electric vehicles in the year 2007 and to achieve this they looked for new investors. These investors included Compass Technology Partners, SDL Ventures, and Valor Equity Partners. More investors included Larry Page, Jeffrey Skoll among others (Vynakov, Savolova & Skrynnyk, 11).

The amount of investment in the company increased to $105 million by the year 2007. In the year 2008, the first assembly of motor vehicles was released from the factory with the company portfolio rising to $140 million out of a target of $25 million. The company's revenues and profitability increased such that in July 2009 the company made a profit of 1 million dollars with subsequent ability to clear a US Department of Energy loan of $465 million by the years 2013 (Vynakov, Savolova & Skrynnyk, 11).

The company also diversified its vehicles range leading to the production of sports car Tesla Roadster, Model the S, crossover Tesla Model X. These cars were produced in different versions as function and purpose cars. The company has also continued to improve its vehicle esthetic features (Vynakov, Savolova & Skrynnyk, 11).

Perkins and Murman (2018) the success of Tesla in the production of an entire auto and ensure compelling customer satisfaction was not an easy task but has ultimately borne fruits. Tesla vehicles were based on flexibility, power, cost-effective ownership, efficient energy use, and the long rage of recharging flexibility without design and functionality. The initial Tesla investment was $6.5 million from Elon Musk.

The company started its innovative journey by fitting its existing cars with electric power. The company sourced highly skilled and experienced auto engineers. Besides the company improved the design of their vehicles through design choices. The company bought existing auto plants such as NUMMI from Toyota in 2009 at $42 million (Perkins and Murman, 2018).

The figure below shows the increasing tesla sales volume against time from the lowest in the year 2012 to the highest in the year 2016 (Perkins and Murman, 2018).

Tesla International Strategies

Shipley (n.p) indicates that Tesla has made tremendous growth through the innovative work of Elon Musk. The policy framework, massive investment, marketing, and continuous innovation have enabled Tesla to increase its capital. As of January 2020, the company's market capitalization had reached $107 billion overtaking Volkswagen and becoming second to Toyota.

Shipley (n.p) indicates four strategies that Tesla had implemented in order to remain competitive and to attract more customers. The first one is the development of s robust software for its hardware, that is, the cars. Telsa carries out periodic and frequent software upgrades a system that lacks other car manufacturers. The Tesla vehicle has fewer parts with most actions being software actioned leading to lower ownership costs.

The second strategy implemented by Tesla is the simplification of the purchase process for customers using the sales software. Tesla makes the buying activity simple where potential buyer selects their choice cars online, pay a deposit, and schedule a pickup point. This ease in purchase enables the company to maximize its sales (Shiply, n.p).

The third strategy is the produces technology improved batteries that are long-lasting to reduce the total cost of ownership throughout the vehicle's lifetime. Tesla engaged in the acquisition of battery manufacturing companies so that it can harness all the technology and combine it into effective batteries that are long-lasting. The fourth strategy is the company's opportunism in riding on existing global trends and needs by marketing its vehicles as environmentally friendly. The company rides on the concern of global warming and on the global trend of going green. These strategies have enabled the company to edge out competitors some of who are way being in innovation (Shiply, n.p).

Conclusion

The current global challenges of environmental deterioration have seen calls for all players in the global economy to implement mechanisms that are aimed at preventing continued damage to the environment. Tesla since it developed in 2003 has become the center stage for the development of electricity that is free of emissions. Through starategic leadership and sound policy practices, Tesla has been able to scale throughout the competition to become one of the most profitable automobile companies globally after Toyota.

Work Cited

Perkins, G. & Murman, J. 2018. “What Does the Success of Tesla Mean for the Future Dynamics in the Global Automobile Sector?” Management and organization review 14.3: 471 – 480.

Shipley, L. 2020. How Tesla Sets Itself Apart. https://hbr.org/2020/02/how-tesla-sets-itself-apart

Vynakov, O., Savolova, E., & Skrynnyk, S. 2016. “Modern electric cars of tesla Motors Company.” Automation of technological and business-processes 8(2), 9 – 18.