Sample Marketing Paper on SWOT Analysis for Tesla

SWOT Analysis for Tesla

Tesla Inc. is an American company operating in the automotive and energy industries. Its specialty is in the manufacturing of electric cars and solar panels, operating multiple plants across the U.S. for assembly and production (Chen & Perez, 2015; Hettich & Muller-Stevens, 2017). The following is a SWOT analysis of the company, assessing its inner strengths and resources, market, competition, and industry.

Strengths

– Ownership of own showrooms

– Rich base of investment capital

– Advantage of a pioneering enterprise in manufacture, sale of fully electric vehicles

Weaknesses

– Extremely expensive nature of business

Opportunities

– opportunities of online platform

– Sustainable transport is a focus of the future

– Governments’ policy development to reduce environmental pollution

Threats

– Narrow market

– Ever-present threat of economic downturns/recessions

 

Strengths

One key strength in Tesla’s operations concerns the use of its company-owned showrooms for the display and sale of its products. The company owns and operates over 300 showrooms in many U.S. states, allowing it the convenience of selling directly to consumers and saving resources that could have applied in the use of franchised car dealers (Valdes-Dapena, 2013). Without the ownership of these showrooms, Tesla would have had to utilize the services of the network of conventional, franchised dealers. The ownership, control, and operation of its own showrooms enhances Tesla’s industrial competitiveness by promoting lower production and operation costs, and hence lower product prices in the market. A second strength in Tesla’s operations relates to the rich base of investment capital that its relations with the U.S. government and wealthy corporate CEOs affords (Hirsch, 2015). This advantage underlies Tesla’s capacity to invest in a strategic business model with huge value in its operations and to enhance industrial competitiveness.

A third strength is that Tesla is a pioneering firm in the innovation, manufacture, and sale of fully electric vehicles (Sperling, 2018). This means that Tesla enjoys a unique advantage in the automotive industry. In the market, wide recognition of Tesla’s pioneering role in the manufacture of fully electric vehicles represents a major positive in its branding and customers’ loyalty, especially in line with the global society’s desire to address the problem of environmental pollution. The patenting of Tesla’s intellectual property affords the company a unique advantage in its internal operations to achieve and preserve industrial competitiveness.

Weaknesses

The business of Tesla in the design and manufacture of electric cars is expensive in nature. The features and appliances used in the manufacture of these products, such as batteries, are expensive, thereby pushing up the prices of the company’s products (Sperling, 2018). This nature of the business implies that Tesla has to use up a huge quantity of financial and other resources per unit of its products, which pushes up the prices of its products. This nature of the business undermines the market performance of Tesla. In the industrial setting, this problem compels Tesla to charge a higher level of prices relative to its competition in the combustion engine-powered sector.

Opportunities

Expanding use of the online platform represents a major opportunity for Tesla’s sales and marketing. This is because the convenience and broad reach of the internet across national borders is likely to influence greater and more efficient access of information about the company’s products, as well as promoting greater convenience for customers in the purchase of products (Lavietes, 2019). The growing efficiency, use, and popularity of the online platform in the global market promises Tesla a great opportunity to reach a broader market globally and enhance its brand and the size of its market. A second opportunity for Tesla concerns the focus of the society to achieve a sustainable transport model. This focus has grown with recognition of the role of human choices and activities in the growing problem of pollution and climate change (Clifford, 2018). Tesla has a great opportunity to be a leading force in this focus of the society through strategic positioning and product innovation that emphasizes on electric cars and solar panels.

Governments in the U.S. and the world have focused increasingly on developing policies and enacting consumer price incentives that can promote the production of electric vehicles, and hence reduce environmental pollution (Zhang et al., 2014; Tsang et al., 2012). This focus represents an important opportunity for Tesla. This is because of the chance to collaborate with these governments and exploit these policies to lower the costs of production for its products and promote their use as an alternative to combustion engine cars.

Threats

The high prices of Tesla’s products owing to the high costs of production imply that its market is narrow. The upper middle class represents Tesla’s principal market because of its higher revenues (Dans, 2018). Growing inequalities in income distribution around the world undermine Tesla’s ability to penetrate a broader market. In effect, the continued unaffordability of Tesla’s products for a wider market is a major threat to its market performance and business growth. A second threat concerns the ever-present threat of economic downturns and recessions in the world. This threat is a continuing risk for Tesla in its attempt to achieve target sales volumes, especially because of the high cost of its cars.

 

 

References

Chen, Y., & Perez, Y. (2015). Business model design: Lessons learned from Tesla Motors. Conference Paper.

Clifford, C. (2018, November 6). Elon Musk: Tesla’s work ‘supersedes political parties, race, creed, religion’. CNBC. Retrieved from: https://www.cnbc.com/2018/11/05/elon-musk-teslas-work-is-important-to-the-future-of-the-world.html

Dans, E. (2018, August 4). Tesla, the model 3 …… and the market. Forbes. Retrieved from: https://www.forbes.com/sites/enriquedans/2018/08/04/tesla-the-model-3-and-the-market/#357ad33177ed

Hettich, E., & Muller-Stevens, G. (2017). Tesla Motors’ business model configuration. In Strategy: An international perspective (p.759-774). London, UK.

Hirsch, J. (2015, May 30). Elon Musk’s growing empire is fueled by $4.9b in government subsidies. The Los Angeles Times. Retrieved from: https://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html#targetText=Tesla%20Motors%20Inc.%2C%20SolarCity%20Corp,data%20compiled%20by%20The%20Times.&targetText=(SpaceX%2C%20a%20private%20company%2C,not%20publicly%20report%20financial%20performance.)

Lavietes, M. (2019, April 4). Tesla’s move to online sales gives customers what they want: No car salesman. CNBC. Retrieved from: https://www.cnbc.com/2019/04/05/tesla-online-sales-gives-customers-what-they-want-no-car-salesman.html

Sperling, D. (2018, July 19). Tesla’s struggles are a threat to the future of electric cars. Forbes. Retrieved from: https://www.forbes.com/sites/danielsperling/2018/07/19/depending-precariously-on-tesla/#6cdd15763d5d

Tsang, F., Pedersen, J., Wooding, S., & Potoglou, D. (2012). Bringing the electric vehicle to the mass market. RAND Corporation Working Paper WR-775. Retrieved from: https://www.rand.org/content/dam/rand/pubs/working_papers/2012/RAND_WR775.pdf

Valdes-Dapena, P. (2013, May 20). Tesla’s fight with America’s car dealers. CNN Business. Retrieved from: https://money.cnn.com/2013/05/20/autos/telsa-car-dealers/

Zhang, X., Xie, J., Rao, R., & Liang, Y. (2014). Policy incentives for the adoption of electric vehicles across countries. Sustainability 6: 8056-8078.