Outline
Business and corporate-level strategies are significant elements in a business organization. An organization that operates in a single geographical location does not necessarily require a corporate-level strategy for the diversification of its product. However, an organization that diversifies requires both the business strategy and the corporate level strategy to compete effectively in the market. This paper focuses on Tesla Company Business and corporate-level strategy, competitive environment, and the two market cycles, which are slow and fast.
Business-Level Strategies
A business-level strategy is an organized set of activities and commitments that the organization implements to attain a competitive advantage by exploiting its capabilities in specific product markets. This is essential because it determines its performance in the long run (1). The customer makes an essential part of the business strategy, and companies usually strive to ensure they meet their target to maintain them. Strategic competitiveness is attained when the company strives to satisfy certain people in the market (1). The main reason for the organization to satisfy their clients with their business strategy is to enable them to form long-term relationships with the clients.
Tesla Company operates in the automobile business industry and energy generation and storage. The automotive segment comprises the vehicle designing, selling, developing, and leasing of electric vehicles, automotive regulatory credit, and vehicle development (2). As for the energy section, the organization is involved in the creation of solar energy systems, solar designing, installation, leasing of energy storage devices, and manufacturing. The company also does home installation and industrial installation.
Tesla Company uses a differentiation business strategy to attain a competitive advantage in the automobile industry. The differentiation strategy is a cohesive method of producing products that the clients perceive to be different from the other products in the market (2). This strategy creates a differentiation in the market as they target clients who value being unique, thereby producing products that are different from the rest of the competitors (2). Tesla Company focuses on accelerating the global environment’s sustainable energy goals. The company produces electric cars with zero emissions because they do not use organic fuels hence protecting the environment with a quality product.
The company has focused on pushing the economy to renewable energy sources, focusing on customers who appreciate differentiated vehicles in the automobile industry, with the changing environment and reduction in fossil fuels. Many people prefer moving to unique and efficient transportation methods. The company’s high-technology vehicle serves a unique segment in the automobile market (2). This strategy makes the company compete effectively with other automobile industries. It has made the company attain a complete competitive advantage as it has succeeded in the industry because of the client’s loyalty and referrals.
The company has entered the high end of the market as the customers pay premium prices, giving Tesla a sizable market share in the vehicle industry with affordable prices for every model the company makes. The company’s marketing strategy targets a differentiated group of people where its segments constitute premium and low-price clients (2). Through this strategy, the company has increased its focus on research and development, enabling them to be innovative every year, thereby increasing the value of its products at affordable prices. Clients prefer their products because of their innovativeness, increasing their market success in the long run.
Furthermore, the company has provided clients with various products, such as premium electric sedan cars. These cars have a variety of models, including Model Y, Model Y SUV, Model 3, and Model S. The vehicles have a speed between 250 miles and 370 miles. Every vehicle has customized storage and seat, plus they have different battery performances. The company’s business promotion strategy relies majorly on the viral marketing style (2). Furthermore, the company has other methods, such as direct marketing, public relations, personal selling, and sales promotion. The viral post on social media has dramatically increased its marketing without much spending. The CEO of the company “Elon Musk” has more than 17 million followers on his Twitter account who are loyal. The company has taken this to its advantage to maximize product advertisement.
The referral program has become the main method of marketing individual products. The program has enabled the clients to purchase several kinds of tesla products. Many people find the referral program an easy way of making money so long as the referred person purchases a given type of Tesla product (2). This makes the clients enjoy the relationship with the company. The company has grown significantly in recent times because of the referral programs that it implemented.
Corporate-Level Strategies
The corporate-level strategy is a method that an organization uses to attain a competitive advantage by selecting and managing varieties of businesses that compete in various product markets. This strategy is significant for a business organization as they are able to select strategic positions that help them increase their value in the market (1). This strategy has mainly two issues which focus on the product the company should compete with and the way the corporate headquarters have to manage those businesses (1). Diversification of the product is essential in ensuring the company’s return as the organization does not have to depend on only one market.
Tesla Company uses a dominant business diversification strategy, as it generates more of its revenue from selling automobiles. The company that uses this corporate strategy has a high probability of higher returns in the market. This is because the company focuses on its capability, providing superior services that satisfy its customer’s needs. Furthermore, this strategy has minimal challenges because it involves managing one or a few businesses and promoting efficient utilization (2). The company’s products focus on maintaining environmentally sustainable goals that reduce greenhouse gas emissions. The dominant business diversification strategy has proved to be an effective strategy for Tesla Company as it widens revenue generation.
The company has engaged in various automotive, energy generation, and storage products. The automotive sector comprises manufacturing, designing, selling automotive regulatory credits, and leasing electric vehicles. This segment accounts for most of the company’s revenue generation as it comprises approximately 95 percent of the organization’s total revenue and profits. In the fiscal year 2021, the company generated a gross profit of 13.7 billion US dollars from this section, which was an increment of about 72.8 percent compared to the previous year (2). Energy generation and storage accounts for approximately 5% of the overall revenue that the company generates. These include energy-related services, solar design, leasing solar energy generation devices, solar installation, manufacturing of solar storage devices, and selling solar devices. In the fiscal year 2021, the company experienced a loss of 129 million US dollars, which was a significant reduction from a profit of 18 million US dollars (4). However, the revenue from this segment expanded to 39.9 percent, representing 2.8 billion US dollars.
Despite the company using a dominant business diversification strategy, the company products use the same promotion strategy. This strategy ensures that the company is successful even at global levels (2). The expanded network and reputation that the company has created over the years have become its strategy in marketing. Many people who have used their products have tended to refer other people to use the same.
Competitive Environment
Tesla’s marketing strategy involves products such as solar panels, energy storage, automobiles, batteries, and electric vehicle components. The company also offers solar panels and battery installation services for home and industrial use (2). However, its main business is focused on electric vehicles as it constitutes a significant part of its market share and increased demand. The company’s marketing strategy differs from other automobile companies in that it does not spend money on marketing and advertisement (2). The strategy is identified as a zero-dollar method because their product differentiation brings clients to them.
On product pricing, the prices of their products help support their profit and the client’s perception. The company uses the premium method, which makes them different from other automobile companies. Furthermore, the company uses customized prices for automobile selection by the clients (2). The premium prices are tailored for clients who prefer high technology, which is not present in the market. The market-oriented price uses lower prices for their new car models and other energy products. The business transactions are done online, which aids in lowering the prices of their products.
The company’s distribution channel has recently upgraded to the global market. The company is coming up with new products that attract clients’ attention worldwide at affordable costs. They are opening channels and other companies to expand their venture (2). The company does not use intermediaries as they prefer using a direct-to-customer strategy, which is important because it lowers the cost and enhances service delivery. The company controls its distribution channels, such as its stores and website.
Nissan is a potential competitor to Tesla as they use geographic segmentation and demographics to identify the client’s specific needs. The company also uses the differentiation strategy to profile the clients and create products that meet the clients’ requirements (3). The company majored in comfort as it used value for money to deliver automobile services and product creation. In marketing, Nissan uses the segmentation strategy to communicate the organization’s philosophy of serving product performance on and off the roads. The company includes its reliability and luxury features in advertisements that usually take place on various mediums. These include prints, advert campaigns, radio, and television. The organization uses 360 branding promotion from ads to world car sections. It also uses high-performance messages to cover its marketing mix.
The company prices its products depending on the quality level and the type. The company has set up a moderate-high price for the luxurious vehicles as the vehicle is loaded with current technology, safety features, and premium commands from other vehicles. For example, the pricing of the Nissan 370z is different from the pricing of the Datsun, which was launched for emerging markets (3). This makes the product compete effectively with other automobile industries. The pricing of the spare parts is moderate as they vary with the configuration of the vehicle engine, trim levels, and safety features. Nissan is a global company with distribution in many parts of the world. The company has extensions across the globe, making it accessible to many. The company does not link directly with the clients as they use dealers to complete their business operations.
In the long run, Tesla Company seems to be successful as it expands daily through its referral programs. The organization has a sustainable competitive advantage as the cost of fuels keeps on changing because of many factors, such as the deterioration of fossil fuels. Furthermore, the company has majored in technology which is the direction for future vehicles in response to curbing climate change.
Market Cycles
The slow-cycle markets are markets where the rival cannot copy-paste a given firm’s long-term competitive advantage and where copy-pasting is costly. In this market, the firms can maintain their competitive advantage for a long period (1). Having a unique ability enables firms to succeed and attain a competitive advantage. The fast-cycle markets are markets where the competitor can copy-paste the firms’ capabilities that hold their competitive advantage, and the copy-pasting is inexpensive (1). In these markets, the firms lack a sustainable competitive advantage. This market uses the importance of speed to compete effectively and even dominate the market (1). In slow- the cycle market, Tesla Company will be successful in the long term because the company has a sustainable competitive advantage which is its technology. However, in the fast-cycle market, Nissan Company will be successful in the long term because the company has distribution all over the world. The company will be able to incorporate Tesla’s technology into its organization, which will help them compete effectively in this market.
Sources
Michael A. Hitt. 2020. Strategic Management: Concepts and Cases: Competitiveness and Globalization 13th ed. Cengage Learning.
About Tesla | Tesla. Tesla.com. (2022). Web.
Nissan 2023 Strategy: 12 New Models in 18 Months, Production Cut By 20%. Motor1.com. (2022). Web.
Tesla Inc. (2022). Annual report. Austin: Tesla. Web.