Overview of Tesla:
Tesla is an American company founded in 2003 that creates electrical vehicle and energy storage. It aims to create cars that run on sustainable energy, guided by Elon Musk the CEO. The flagship electric car has seen increases in demand from changes that could viably sustain current pollution crises.
Tesla is following their mission statement “to accelerate the world’s transition to sustainable energy”. This can be evidenced through Tesla’s electric concept whereby it purely operates on electricity generated by the wheel rotation. Enhancements such as the new built in design of solar panels has encouraged innovation and scope of this renewable energy, making it suitable for daily use which has seen 300,000 vehicles being produced.
Get Help With Your Essay
If you need assistance with writing your essay, our professional essay writing service is here to help!
Tesla is following their vision statement by attempting to be the most compelling car industry of the 21st century. This is conceptualised whereby Tesla dominates one of its competitors Nissan evidenced by its electric cars requiring 8 hours charging giving an output of 135km, Tesla electric cars are more innovative and efficient which requires 5 hrs to charge giving an output of 480 km evidencing Tesla is currently a market leader in the automotive industry. It purely runs on electricity and no fuel making it a worldwide phenomenon manifesting it being the most compelling car industry in the 21st century
Tesla attempts to achieve its set values, this is signified through Tesla‘s continuing testing and innovation of its electric cars, this has resulted in more economical benefits for people and the environment through its recent testing in 2016 that showed that it required less charging of about 5 hrs and gave higher output 480km. Additionally Tesla’s electric vehicle is a core purpose of protecting the environment. Tesla respects the environment through the use of electric cars which require no fuel however this can be seen in a different context as it powers on electricity and the creation of it results in burning fossil fuel which is harmful for the environment and secondly the electric car must be light. In order to satisfy this, light and rare metals are required which are mined leads to land degradation and resource scarcity. Hence Tesla on its part follows its vision statement except that environmental benefits may be overstated by its electricity creation and mining for light/ rare metals.
Value Net Analysis
(A)
The value net analysis is a tool which combines business strategy and game theory developed by Nalebuff and Brandenburger that can be used to examine its external operating environment and industry. Firstly identifying its players which all interrelate: Customers, competitors, complementors, suppliers, and competitors.
- Tesla’s customer base has been constantly increasing as trends indicate that customers prefer moving towards a more economical way to travel which has led to a decline of 4.3% in revenue in the automotive industry. To further subcategorise this, Tesla customers are also business executives who are city dwellers that are also tech-savvy and wealthy. This prompts increased customers and revenue for Tesla electric automotive industry. In addition the complement of motor vehicles is petrol which has seen as increase in prices adding to on road cost that has also prompted customers to turn to the Tesla electric car hence Tesla has an increasing customer base illustrated by its revenue growth of 5%.
- Tesla’s Complementors denotes when a customer has your product and another product than yours is more favoured. This is evident whereby the major players of Tesla such as Toyota, automotive holding group, Mazda Australia and GM Holden have experienced declining revenue that is evidenced from the declining range of 4 % to 12.3 % because of their inefficient vehicles that cause pollution thus this shows that consumers are moving away from motors that are not environmental friendly and are moving towards electric cars.
- Tesla Australian suppliers that supply electric cars to the Australian market are importing electric cars from a Tesla owned factory in California that builds the car and makes most of its parts that are incorporated into an electric cars. This is because of rising labour cost Tesla has strategically imported electric cars to save cost as well as other automotive companies that have started importing accounting for 18.8% which has led to a decrease of local manufacturing.
- Tesla’s competitors denote when a customer has your product and another product there product is more favoured. Even though there is a strong demand and trend of people moving towards electric cars because of environmental sustainability. This is not entirely evidenced; the fact is an electric car loses more value than hybrid cars which makes it unfavourable to own an electric car. In addition the high uncertainty of the driveability makes people still use the hybrid cars as they are highly established which is demonstrated through 0.1 % of people are using electric cars and 99.9% are using hybrid cars . A possible cause of a slow uptake of electric cars in Australia includes higher import taxes, limited government incentives thus Tesla electric cars in Australia are still far too expensive. Thus this proves that even Tesla electric cars are becoming more known and demanded, it still shows that people are still not ready to move to electric cars because of practicality and cost thus when viewed between Tesla electric cars and Hybrid cars , they are more favoured hence major players such as Toyota, automotive holding group, Mazda Australia and GM Holden are still acting as competitors towards Tesla in the short run however future trends such as higher wage growth and lower import taxes indicate higher growth in electric cars and a necessary re-analysis of tesla’s competitors in the future.
(B) PARTS
Players: In the above value net model, customers and complementors are used to critically analyse the following parts as seen in the above value net analysis model. Customers are an important player for Tesla as they use Tesla Electric cars which generate higher revenue /market share for Tesla. Complementors are seen as important players as it helps Tesla analyse the automotive industry to identify if customers value there product more than its competitors. It also aims to cooperate within the value net analysis by disengaging the theory of be killed or not be killed mentality instead increasing the size of the market through cooperation and benefiting all competitors as increasing the industry itself. Yet customers as a player always assess the added value before a purchase. This is seen through low cost and environmental sustainability trends.
Find Out How UKEssays.com Can Help You!
Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.
View our academic writing services
Added Values: This demonstrates what extra incentives/benefits Tesla provides compared to other competitor that differentiates it from its competitors. Tesla’s added value is seen through its electric cars currently having advanced autopilot, a special feature of the Tesla Model X. It provides automatic parking and lane change. Additionally Tesla has also removed stamp duty for users of the Australian Capital Territory which makes on road cost much cheaper. Tesla could focus on having a loyalty scheme that rewards customers that have been with Tesla for a given period in order to increase incentive and market share of customers which are one of the important 4 players in the value net analysis model, in addition buyers have a lot of choice and bargaining power shown in porters 5 forces
Rules: The rules of this game is currently in Tesla’s control as a new entrant to the game denoted by Porter’s five force analysis that has emerged into the automotive industry. The rule of devising an eco-friendly vehicle is Tesla’s advantage which allows it to control the game as increasing trend of 300,000 electric vehicles and counting indicates Tesla is controlling the game through its manipulation of rules. Other players such as complementors can change or control these rules by attempting to create electric cars as it is not deliberately patented/copyrighted by Elon Musk as a way to encourage more creation of electric cars as a way of increasing his CSR. Rules that govern the whole industry include car sizes. Cars need to be small and efficient and follow the Australia regulation rules. Controlling the rules, Tesla could create smaller electric cars which would reduce restrictions of big cars in certain area and easier for parking.
Tactics: The tactics of this game are extremely important within the value net analysis. It helps Tesla gain an upper advantage against its competitors such as Holden and Toyota in gaining customer base. Tesla’s electric cars implore Tactics of creating an electric car which purely runs on energy being eco-friendly. This tactic is extremely useful as it indicates a shift in electric car usage and mass production of electric cars. Within this value net model Tesla has to view its competitor’s tactics of having low prices for cars. Tesla must mass produce to economies to scale and source cheaper raw material in order to overcome this tactic from its competitors.
Scope: The scope of the game refers to the boundaries of the games. Players who can control the scope of the game through tactics, added value and rules will be able to increase market share and revenue. The current scope of the game in the automotive industry involves Tesla increasing the scope and changing the rules through its innovative electric car that runs on electricity which other competitors fail to incorporate in their car model which has seen it growth in the automotive market. Other competitors such as Toyota or Holden who fail to recognise this increased scope will endure reduced sales hence revenue. Since the entering of Tesla and the increased scope, Tesla has the bargaining power and rights against the rules, tactics and added value and this had caused a change in competitor‘s processes.
Role of Business in society assessments
Tesla engages seriously with these four perspectives which are profit maximisation, CSR, CSV and SE. All these four perspective are crucial help Tesla display its orientation for society reflected through the obligation and high standards of environmental sustainability and people. CSR will be extensively assessed with regards to Tesla’s orientation. Through CSR this leads to higher recognition leading to higher sales and profit maximisation by meeting stakeholder interest.
- Customers are an extremely important stakeholder and are interested in product quality such as the recent Model S release at reasonable pricing that ultimately affects Tesla’s revenue. Tesla imposes CSR that is evident such as reducing cost for consumers through recent 2017 battery changes whereby Tesla attempted to manufacture its batteries instead of buying it from Panasonic. Additionally Tesla has also responded to consumer demand and convenience by expanding its network of charging station across Australia
- Employees are also an important stakeholder that affects business productivity and performance. Tesla imposes CSR which is evident by Tesla offering high compensation and high career advancing jobs through collaboration with its partnering firm in Australia that allow an employee to advance further during their career. However this can be criticized as Tesla fired 700 employees in 2017 after an annual performance reveal with little notice that left 700 employees job less.
- Shareholders are also an important stakeholder that fund Tesla‘s project and development, are interested in higher dividend yield. In order to act in the best interest of this stakeholder Tesla must increase revenue which would allow for higher dividend yield for shareholders. Tesla electric car is meeting the sustainability and environmental standards which is in current social cultural trends which will lead to higher business growth. The action of Tesla allowing other companies to use its technology patents would lead to an increase of electric vehicles which would allow growth and awareness of Tesla electric cars. On the other hand differently if this were to happen this may cause Tesla to move from a monopolistic market to a oligopolistic market leading to higher competition leading to lower price if supply exceeds demands, this will reduce revenue for Tesla hence reduce dividend yield thus reduce shareholder confidence and a failure to adopt CSR for this stakeholder
References
Blogs
- Rowland.C.(2018 January 25).Tesla,Inc’s mission statement and vision statement[Blog Post]. Retrieved from http://panmore.com/tesla-motors-inc-vision-statement-mission-statement-analysis
- “To accelerate the world’s transition to sustainable energy.”(Musk 2016 )
- “To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.”(Musk)
- Greenspan.R(2017 February 21). Tesla,Inc’s. Corporate Social Responsibility, stakeholders [Blog Post]. Retrieved from http://panmore.com/tesla-motors-inc-stakeholders-corporate-social-responsibility
- D.kathryn(2018 February 6). The big problem of electric vehicle resale prices compared to petrol, diesel and electric cars[Blog Post]. Retrieved from http://www.abc.net.au/news/2018-02-06/electric-vehicle-resale-price-compared-to-petrol-diesel-hybrid/9380186
- “The thing is people don’t know how long you can drive them for so they have concerns over the driveability, the cost of the battery, what happens if things go wrong.( Kathryn)
- W.Lizzie(2016 March 31) Tesla Electric cars aren’t as green as you might think[Blog Post] Retrieved from s://www.wired.com/2016/03/teslas-electric-cars-might-not-green-think/
- “But those rare metals come from somewhere—often, from environmentally destructive mines”(Lizzie)
Websites
- About Tesla. Retrieved April 10 2018 from https://www.tesla.com/en_AU/about
- Vehicle Incentives. Retrieved April 10 2018 from https://www.tesla.com/en_AU/support/incentives
Journal Article- Peer reviewed
- Lendel.V.(2015 February 8).The Value Net Retrieved from https://www.researchgate.net/publication/266166223_THE_VALUE_NET
Company and Industry Reports
- T.James(2017).IBIS industry Report XX0014.Retrieved from IBISWORLD database
Cite This Work
To export a reference to this article please select a referencing style below:
