The motor vehicle business is one that we all will be involved in at some point in our lives. As consumers, when shopping for a car, we know we have many options when it comes to style, drive, price, etc. Because we have such a wide variety of vehicles to choose from, manufacturers face the challenge of separating themselves from one another and making their brand most desirable. Tesla Motors is a manufacturer best known for their high-tech, futuristic, battery-run vehicles.
Tesla Motors has reconstructed the former belief that electric cars are typically slow in acceleration and often awkward in appearance. In a booming industry of electric automobiles, the company hopes to stay on top of their market.
According to the article by David Hunger, in an effort to promote growth and distribute their resources, Tesla Motors began selling its battery packs and chargers separately to other manufacturers such as Daimler and Toyota. This corporate strategy is defined as concentric diversification.
Concentric diversification is basically the act of moving into new business ventures that relate back to the company’s original business, and in the case of Tesla selling their products separately from their vehicles, they are creating new business from their original business of selling battery-run cars. Another way to grow and boost profits lies in how a company competes with its competitors; it’s business strategy. One way Tesla competes is through differentiation; building an advantage by being unique. For example, Tesla has purposely separated themselves from the traditional way of selling cars through dealers.
They became one of the first manufacturers to sell their vehicles exclusively through the internet and their own Tesla stores in an effort to reduce costs and create a better experience for their customers.
Separating one’s product from all the others on the market is a very important part of business. Having distinctive competencies is what makes customers choose one product over another. The main distinctive competency that creates a large advantage for Tesla vehicles is that the electrical and vehicle engineering, software, and manufacturing is comparably far above any other electric car. Tesla automobiles also have nearly double the amount of energy of any other electric vehicle battery pack. However, according to the article, a challenge the company faces is a lack of experience in manufacturing at a high volume causing concern with efficiency and cost.
A recent challenge Tesla Motors has worked to recover from is CEO Elon Musk’s erratic tweets. According to my research, Tesla shares fell nearly 7% following Musk’s bizarre behavior on social media and as a result, Musk has been removed as chairman of the company. Tesla has also now decided to monitor all of his social media activity including his twitter use. Although it may be difficult to bounce back from such a challenge, I think Tesla has handled their situation fairly well through monitoring and controlling Musk’s social media use.
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