Tesla Strategy Case Study

B-

Primary Needs:

The first primary need for Tesla in the line of business strategy is to be recognized as the leader in the production and selling of electric cars.

The second primary need would be to distinguish themselves by offering a product that focuses on technology advancement that is well integrated and where many updates/maintenance fixes can be done remotely.

The third primary need is to offer customers a different retail experience. Tesla is selling their cars through a different outlet from the typical dealerships models to ensure the quality service and uniformity of selling processes.

These 3 primary needs differentiate Tesla against the industry competitors and will attract more customers through the brand.

Secondary needs:

Tesla builds electric cars, to take full advantage of their purchase customers must have a significant range to get to their destination with enough energy. Internal combustion car companies build along with the petroleum companies a gas station network to support customers and give them the liberty to travel everywhere-anywhere-anytime. Unfortunately for Tesla, as the pioneers in the electrical cars segment they also must build a charging station network to support their customers. These charging stations network is essential to Tesla success. Customers will consider the brand if they meet their travel needs, to support current and future customers.

Second secondary need, Tesla need to build trust within their products. To do so, Tesla needs to guarantee the resale value of the cars after a specific period. A program has to be built to guaranty the resale value of its product’s so customers will invest into the Tesla brand.

Required needs:

First required need, Tesla is required to save production time and production cost. Tesla is required to build everything internally. Building everything internally means they can control the quality, the production times and production cost. This type of control ensures all deadlines are met to achieve production requirements.

Second required need is to build a different retail environment not dealership driven where sales people are not paid on commission, where the retail experience is premium and where customers would be attracted to premium malls. Everything in the retail stores required to be focus on technology and electric cars.

Analyst of Strategic Issues

Building retail centers for Tesla in malls can represent a significant issue to bringing units in the showroom with the current mall’s infrastructure. Where will customers get extra parts or if they need bodyshop work completed, can Tesla support their customers with these kinds of service requirements? How will the new and used inventory be managed? Do malls can carry significant amount of inventory to support their sales? Customers no longer want to wait 3 months for a car, they want it the next day. Once production ramps up and they are sitting on 3 months of inventory, they will need places to store that inventory.

How will the used inventory and customer trade-in from other brands will be handled at malls? In the premium market people will most likely pay cash for their cars. As Tesla introduce more affordable products they will need to adapt and offer financing or leasing options with appropriate residual values to support the sales of their products.

The concept of not relying on a typical dealership network is brilliant because they control the messaging, the sales process, pricing and delivery. The difficult part of controlling everything, it also means you have to manage every aspect of it. Which its time-consuming, significant liability and required an enormous overhead to support the entire country.