Tesla Part 3 Harvard Case Solution & Analysis

Tesla Part 3 Case Study Solution

Elon Musk is the CEO of Tesla Motors and he had shared the business level strategy of Tesla which is to enter the high end of the market, where the customers of the company are happy to pay a premium, then the market is driven down as fast as possible to the lower price and the higher unit volume with each of the successive models(Chen, 2015).

Tesla has clearly defined its business level strategy and it has aligned its strategy with the vision and mission of the company and this has provided the company with a competitive advantage. As a result, Tesla Motors has emerged as a leader within the Electric Vehicle Industry. The existing business model of Tesla is based on the direct sales to the customers through the stores owned by the company(Dyer, 2014).

However, the company needs to revise its business model in order to become conducive to the global expansion. The business level strategy of Tesla is well grounded on Sustainability and Innovation and these two crucial drivers have always distinguished Tesla Motors from all the other automaker companies(Chen, 2015). Tesla Motors is a Silicon Valley Company and the mission of the company is to accelerate the transition of the world to sustainable transport.

Tesla Motors is well prepared to launch the Model 3 which is the cheaper model by the end of 2017. The sales and manufacturing of the company are being expanded around the world. The company has been ranked as No.1 in the World’s Most Innovative Companies List by Forbes in the year 2015. The classic disruptive innovation theory emphasizes on the price sensitivity and low end customers along with inferior technology(Eccles, 2013).

According to Elon Musk, Tesla Motors make use of the high end disruptive innovation model. New products are produced by this model that perform better than the existing products of the company. After the products are produced by the company, then these are sold to the high end customers at premium prices(Gao, 2016). However, the company first targets the least price sensitive customers before targeting the mainstream target markets of Tesla Motors.

Once, Tesla enters the market with the high end products, then it waits for its acceptability and once the market accepts the product, then the company penetrates within the cost conscious market. In the year 2006, when Elon was asked about the business level strategy of Tesla Motors then he stated that the starting point strategy was to build the high performance sports cars but in the long term the vision of the company is to build cars of different types, including the low cost family vehicles(Halla, 2015).

The first model of the company was built to venture into the market and get the mission of the company out in the marketplace. The management of the company believes that the approach of the company of selling directly to the customers through its owned showrooms increases the speed of their product development and this enhances the buying experience of the customers(Eccles, 2013). Many showrooms are owned by Tesla and it also owns service plus centers and service facilities. The company also utilizes online sales method to allow the customers to make purchases online.

The business level strategy of Tesla is working well to suit the business needs and the mission of the company. Tesla has combined direct sales with the customer service centers. The owners believe that it can have a positive impact on the demand if the company has customer service centers attached to its showrooms. The company also has Tesla Rangers that can visit the customers when the customers require them(Dutta, 2016).................

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