Tesla Inc. Overview - Free Essay Example

Operations – Production is done globally to reduce the manufacturing and therefore selling price of a vehicle. Tariff avoidance in this manner helps keep costs down. Marketing and Sales – Direct-to-consumer sales helps controls costs by having customers order their vehicles on-line where they may also customize the vehicle (later modifications are avoided if a consumer gets exactly what they want the first time). The use of social media and word of mouth keeps costs down by not incurring additional layers in this functional area (no advertising campaigns or non-Tesla owned dealerships). Trade-ins and the sale of used Tesla vehicles are also handled in this manner and through the Tesla website. Service – Charging for life and after sale service conducted through Tesla owned service stations and charging stations adds another layer of customer value. The ability to complain to an executive instead of a call center individual gives a greater level of respect to the customer and aids in customer retention. Strengths, Weaknesses, Opportunities and Threats Strengths Innovation – Tesla continuously generates new ideas, products, updates, and improvements to stay ahead of the competition. Brand Recognition – Tesla is a brand that is easily and quickly identifiable to consumers. Product Quality – Tesla is known for its hand-crafted appeal and its 5 Star Crash Rating of Excellence making quality a major differentiation factor. Consumer Loyalty – consumers are willing to wait for the vehicle of their choice rather than pick from a lot and these same consumers will go out of their way to help Tesla deliver vehicles to new buyers. Willingness to take chances – Tesla is willing to take risks that other automotive manufacturers will not because failure could mean bankruptcy. Weaknesses Supply chain issues – production is slow due to waiting times on parts and battery components. Production facilities – not enough facility space to build enough cars or batteries to increase supply to fit the growing demand and production deadlines. Selling presence is too limited – due to state regulations and a shortage of Tesla dealerships sales are not as high as they could be if Tesla were able to enter into more markets both nationally and globally through direct-to-consumer sales. Pricing – the cost of a Tesla vehicle is still out of the reach of most consumers and until advancements are made in technology, supply chain improvements and more marketing presence the price will remain high. Social Media – social media presence is concentrated on adversarial tweets vs productive uses of social media to enhance the market presence and to ensure a better working partnership with government agencies. Opportunities Global Market Expansion – Tesla can open new facilities in China and India allowing for a greater global market presence and brand recognition when going head-to-head against European Brands such as BMW and Volkswagen. Global Sales – an increase in corporate sales figures due to the new markets reached globally. Supply Chain options – increased options for improved and shorter supply chains that will enhance production speed and lower costs thus lower the costs of the vehicles. Further Diversification – a global reach allows for diversification within the business structure allowing for profitable investments globally that cannot be attained stateside. Tariff Avoidance – global production and sales will allow Tesla to avoid costly import and export tariffs. Threats Increased State and Federal Regulations and Over-sight – New regulations requiring that all electric vehicles make a designated minimum decibel level so that pedestrians can hear the vehicle coming will add production and design costs. SEC regulations and investigations – the monitoring by the SEC over the next 3 years and the fines levied for fraud will make every move Tesla makes scrutinized for illegalities and further prosecution. Seller/Dealer regulations further regulations banning direct to consumer sales and scrutiny and/or legal fights regarding dealer claims can further minimize market presence and therefore sales. Government Incentives and IRS Deductions – the removal of all or part of the current incentives and deductions will further reduce market sales of all electric vehicles (from all producers). More flexibility of when the use the incentive (as part of the down payment) may increase the sales of electric vehicles. Increased Competition – As more automotive manufacturers join the electric vehicle market Teslas market share could slip to a lower level.