Question

The company is Tesla, Inc. (Formerly Tesla Motors Inc.)

Please make an assessment and evaluation of proposed alternative strategies and course of actions.

Make sure it's Tesla again.

Thank you!

Answer 1

Introduction

Tesla and Elon Musk are regarded as the pioneers of electric vehicles across the globe. Due to the same, the company has been able to become a household name in America. The wealthy indeed have preferred to purchase the car at a hot premium price which enables them to cut down on fuel prices and at the same time, the cars are regarded as the safest options available across the globe.

Over a period of time, the company has been able to have loyal customers and earn super profits for themselves, growing at an average rate of 30-50% in some quarters when compared to previous year’s earnings.

There are numerous alternative actions available to the company such as producing only luxury goods and sticking to the elite class of people and selling them exclusive products. However the company’s current strategy looks different and the course of action it is said to take is as follows.

Alternative Strategy:-

The key alternative strategy for Tesla is to change the low end market in the consumer car industry. All previous vehicles created by the company have been in the $100k+ category which have only been accessed by the rich due to the high pricing. As a result, the company has been deemed to be a luxury company which is not the case with the strategy of the company.

The alternative strategy in the minds of the think tank is to enable themselves to earn more by selling first to the rich. This would give them with ample capital to manufacture goods for the mid and entry level segments which can be cash cows in the long run. This strategy would help Tesla in growing even further and be able to enhance their business operations to people who earlier had little or no access. The company is a hot favorite for everyone and because of the luxury feelings attached to it, amid segment car would sell with much ease.

Course of Action:-

The key course of Action which Tesla as a company is readily adopting is to start selling at a lesser rate, and make its product readily available to the mid segment buyers with a budget of 35-40 thousand dollars. Accordingly the company started offering Model 3 which costs 35 thousand dollars. This increases the revenue for the company at the mid-size segment as well. The company can continue to reap in profits from the high segment by offering additional features and still be able to sell to the masses through the marketing strategy of mid-size cars.

Further, another strategy is to take the company abroad to countries such as China and India where the population size is great but the company’s presence is limited and most customers rely on imports. This would allow for the company to sell their products in areas where population is extremely high and this expansion strategy would further give those more benefits.

Final Conclusion:-

The key aim of the company as in the words of its CEO was to first sell to the luxury segment customers and then allow for those profits to accumulate over a period of time. The company then could extend selling to those people who are tight on a budget but are high in number to increase profits at a mass scale.