1.2 Discussion: Tesla's Secret Strategy
Getting Started
Chapter 1 of the textbook is an introduction which defines strategy and competitive advantage. This will set the stage for our further study of strategic management. This assignment is designed to help you critically evaluate what you have read in this chapter.
Upon successful completion of the course material, you will be able to:
• Explain the role a company’s strategy has in its quest for a competitive advantage.
Resources
• Textbook: Strategic Management (4th ed.)
Background Information
At the heart of strategic management theory is the question, “How and why do some companies outperform others?” The challenge to managers and leaders is to determine a strategy or series of strategies that result in an ongoing sustainable competitive advantage for their company. In order to do this, managers ought to focus on two fundamental questions:
- How should we compete in order to create competitive advantages in the marketplace?
- How can we create competitive advantages that are unique, valuable, and difficult for competitors to copy or substitute?
Instructions
- Read Chapter 1 of Strategic Management. Pay particular attention to the Chapter Case 1. On pages 5-6 and pages 21-22 of the textbook
- Navigate to the threaded discussion, respond to the following:
a. Based on your understanding of strategy and competitive advantage, does Tesla have a good strategy for maintaining a competitive advantage?
b. Explain why you believe they do or explain why you do not believe they have a good strategy. - Your initial response should be 250 to 300 words in length, include two academic resources that are properly cited, and is due by the end of the fourth day of the workshop.
PART 2
Now conduct a critical analysis of a posting by two of your classmates by the end of the workshop.
a. The topic of your discussion response should be your classmate’s posting and should be written as if you were reviewing their posting in an academic journal. Your discussion response should therefore answer the following questions as applicable:
i. Were the arguments of your classmate articulate and logical? Were their facts correct?
ii. Was the interpretation your classmate provided reasonable and consistent with experts in the field? Was your classmate consistent with both the substance and intent of their references?
b. The focus for your critical analysis is not whether or not you agree with your classmate, but how well was their position presented. Each response should be at least 150 words EACH in length and cite two academic sources. Please strive to make your discussion responses ones that cause iron to sharpen iron.
Tesla has a bright future
Kristen Brown
It appears that Tesla’s strategy and competitive advantage are both solid even if it has encountered some barriers along the journey in finance and production. Tesla’s strategy to deliver the first vehicle in the luxury market as a way to gain some quick operational cash flow was risky, but in the absence of economies of scale became the only feasible option (Zucchi, 2019). Tesla is by no means the inventor of electric vehicle technology; however, the competitive advantage lies in the design. By striving to design a battery that allows for faster acceleration and recharging, the vehicles become increasingly appealing to more of the population. On the journey “to accelerate the advent of sustainable transport,” Tesla also acquired ownership of some other technologies and business interests. Thus, it is difficult to assess whether they are a competitor for cars, financial services, or technology (Zucchi, 2019, pp.14).
Tesla’s strategy so far is paying off. Through diversification, the company has consistently gained capital and market share even if it is not consistently reporting profitability. Recently, Tesla announced the acquisition of Maxwell Technologies, thereby increasing access to the manufacturing of battery components and ultracapacitors. (Infinity Research, 2019). This capability expands Tesla’s advancement toward better battery performance. Further, with the ultracapacitor technology, Tesla can pursue expansion into the semi-truck marketplace. Companies such as UPS have already placed large orders for these new trucks. The future for Tesla appears to be a bright one as long as it remains true to the strategy and continuously nurtures the competitive advantage gained.
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References
Infinity Research. (2019, February 06). Tesla's largest competitive advantage. Seeking Alphaa. Retrieved from https://seekingalpha.com/article/4238584-teslas-largest-competitive-advantage
Zucchi, K. (2019, August 20). What makes Tesla's business model different? Investopedia. Retrieved from https://www.investopedia.com/articles/active-trading/072115/what-makes-teslas-business-model-different.asp
Discussion - Ben Wright
Benjamin Wright
Regarding my understanding, I imagine strategy as a riverbed pointed toward the ocean as it curves around obstacles. I picture the market demand as the water and the product or service as a boat. The boat (product) will not move unless there is water (demand) inside the riverbed (strategy). And to prevent the objectionable, the riverbed (strategy) has edges (values) that prevent it, the water (demand), and the boat (product) from causing harm. The vision is to navigate the riverbed (strategy) as far as possible to the ocean (future state), and that will occur by navigating entire river-legs (missions) as the boat (product) passes waypoints and locks (goals).
Does Tesla have a good strategy? We first need to explore what ‘good strategy’ means. Rothaermel defines strategy as “the set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.” Also, he defines a good strategy as one that “…enables a firm to achieve superior performance….” (2019, p.6). In essence, this can be done by gathering data, analyzing it, and then integrating decisions.
In my opinion, Tesla’s strategy is a good one because their vision is of a more sustainable future and they are accomplishing their missions regardless of a deeply structured oil-based economy.
Tesla is working toward a future noble state, a “solar electric economy” (Musk, 2006). They are not yet there and it would only partially put the economy at a technology level seen on day 3 of creation when God made plants and photosynthesis (Answers in Genesis, 2019). Nevertheless, it is a better future state than our current energy economy.
Tesla has also accomplished their 2006 missions of “Build sports car”, “Use that money to build an affordable car”, “Use that money to build an even more affordable car” (Musk, 2006) because the 2008 Roadster was built, then the 2012 Model S, the 2015 Model X SUV, and then the more affordable Model 3 (~$33k) (Tesla Model 3, 2019).
Tesla’s strategy is not without challenges, especially around finances and production as they seek growth (Lopez, 2019). But a river does not flow straight to the ocean; it adapts to changes in the geography; it curves, makes new paths and can flow backward, but it is always flowing down to the ocean. As long as Tesla can remain change-capable by continuing to collect data, analyze it for competitive advantage, and adapt their missions and goals, then they should eventually reach their future state.
References
Answers in Genesis (2019). Creation Week: Day 3. Retrieved from https://answersingenesis.org/kids/days-creation/creation-week-day-three/
Lopez, L. (2019, May 21). Nothing Elon Musk has done has stopped the bleeding at Tesla — and things look like they're going to get worse. Business Insider.Retrieved from https://www.businessinsider.com/tesla-problems-getting-worse-2019-5
Musk, E. (2006, August 02). The Secret Tesla Motors Master Plan (just between you and me). Retrieved from https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me
Rothaermel, F.T. (2019). Strategic management (4th ed.). New York, NY: McGraw-Hill Irwin.
Tesla Model 3. (2019). Tesla Model 3: Design Your Model. Retrieved from https://www.tesla.com/model3/design#battery
Please Use APA format properly https://owl.purdue.edu/owl/research_and_citation/apa_style/apa_formatting_and_style_guide/reference_list_articles_in_periodicals.html