Question
In: Operations Management
What type of diversification strategy does the launch of Tesla Energy represent: related or unrelated? Explain...
What type of diversification strategy does the launch of Tesla Energy represent: related or unrelated? Explain why. Does Tesla Energy’s new business meet the three tests of corporate advantage?
Solutions
Expert Solution
Unrelated diversification is the diversification strategy that Tesla Energy represents because it is slowly moving towards shifting entirely to the energy business.
Three tests of corporate advantage
1. Tesla Energy meets the three tests of corporate advantage because the energy industry is a lucrative industry and with the advanced technologies and innovation, this industry can bloom in no time. Furthermore, reliance on battery technology will be significant.
2. Tesla Energy is considering to move from the automobile company to an energy company and this will cost a significant amount of capital for Tesla
3. The new unit will provide a new identity to Tesla and the entire company will emphasize on energy solutions.
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