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Research, Analysis, and Outline for Final Paper

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Introduction

The company chosen for this paper is Tesla Inc. which operates in the motor vehicle and automotive industry. Tesla was founded in 2003 and it became public company in 2010. Elon Musk is the CEO of the company and its stock have been growing over the years. Aurum (2010) asserts that Tesla remains a leader in the automobile industry and it keeps giving its customers and roll-out of new car models with unique features to increase their satisfaction. This has sharpened its competitive edge in the market. However, with the increased use of technology and growing competition in the motor vehicle industry, Tesla stands the risk of losing its top position in the industry if it does not innovate. The company has the opportunity of increasing creativity and innovation using technology. This paper analyzes the history of Tesla in its industry and in innovation, its competitors, its risks, and the opportunities available for Tesla. The paper will conclude by providing a recommendation of the strategies Tesla can implement to increase creativity and innovation while increasing its profits.

Analysis

Risk

The loss of a competitive advantage is a serious risk that many companies are staring at. With the growth in technology, companies are innovating new products and automating their systems to achieve flexibility in service delivery. This has increased competition in the business environment. Porter (2015) asserts that almost 90% of companies are after a strong competitive advantages to survive and stay floating in this age and era when technology has taken over every part of the business sector. Without a competitive advantage, a company cannot dominate the market segments and increase its performance.

Tesla must be able to produce goods and services that are better than those of its competitors and satisfy consumers to guarantee its success in the modern market. Risks of threats from existing and new competitors are high if Tesla does not have a sharp competitive edge. According to Clausen and Olteanu (2020), with the increased demand for electric vehicles, Tesla needs to be highly competitive to meet the demands of its customers. It has many competitors such Volkswagen, Ford, Nio, General Motors, and BYD. It has to maintain its competitive advantage to succeed in the automotive industry.

Tesla needs to be creative and innovate to stay highly competitive in the market, increase its sales, and achieve superior margins compared to its rivals. Every organization is after becoming a giant in the industry and without a strong competitive advantage, this cannot be achieved.

Competition

Tesla is currently facing competition from both existing and new entrants in the automotive industry. Since day one, Tesla has always remained on the top of its competitors such as Volkswagen, Ford, Nio, General Motors, and BYD. The company has turned to an innovation producer due to its ability to utilize technology more than any other company in the automotive industry. According to Clausen and Olteanu (2020), no other company in the automotive industry has been able to achieve such cutting edge technology, let alone the use artificial intelligence.

However, competitors such as Volkswagen have recognized the high demand for electric vehicles in the market and they are offering their cars to customers at cheaper prices. Volkswagen is a giant that Tesla has to watch. Companies such as Nio are focusing on the international market and producing high class electric cars that meet general consumer needs. There is also a high risk of new entrants as emerging technologies are pushing evolving companies to be more innovative and offer electric cars that meet customer demands.

To address existing competitors and new entrants, Tesla needs to increase its good attitude towards innovation in order to attract clients globally. With technology, things in the automotive industry are moving at a high rate. Tesla has to utilize technology to its advantage because all its competitors and new entrants are using technology as the main tool. Leadership in innovation is one component that will make it easy for Tesla to remain highly competitive in this technological world of business.

History and Position of the Business within the Industry

Since its foundation in 2003, Tesla has been a serious and growing force in the motor vehicle and automotive industry. The company has been growing and giving customers new models of electric vehicles that meet their needs. Currently, Tesla has taken the lead position in becoming the leading electric vehicles manufacturer in the industry. BMW has been fighting hard to take the top position in the industry but Tesla seems to be empowered enough. According to HD Auto Desk (2022), the sales of Tesla have already increased by 49% in the first quarter of 2022 and it is ahead of BMW which its main competitor.

Economically, electric cars are now connected to the economy and they are gaining popularity each passing day. Constant economic growth has contributed to the growth of Tesla over the years. The demand for Tesla’s cars has grown at a very high rate. Aurum (2021) states that “in 2020, Tesla’s vehicle deliveries alone were about 500,000 units worldwide – and it’s only planning to go further”. According to Global Newswire (2021), the electric vehicle market is expected to hit $1.5 trillion by 2025.

History of Innovation

Tesla is considered a pioneer in innovation. The founders of the company are known for their great innovative minds in the previous companies they had worked for. Tesla became a public company in 2010 and it has been expanding since then ue its great ability to innovate. The CEO of the company Elon Musk is the founder of PayPal. Investors of Tesla such as Larry Page and Sergey Brin are co-founders of Google. Tesla believes that in the modern-day world, innovation is key to sharpening the company’s competitive edge. Suroso and Asis (2015) assert that it is through innovation that a company can set itself apart from its competitors.

Tesla Motors has always worked hard to maintain its competitive advantage over the other car manufacturers by remaining active in innovation. The company has made its vehicles’ model and structures align with the traditional fuel models by effectively using technology to innovate. Tesla provides products and services that are adjacencies to expand their portfolio. The expanded portfolio has solidified Tesla’s technological advantage over its competitors.

Currently, Tesla is arguably the most innovative company in the world and by deploying technologies such as Artificial Intelligence (AI), it has become a leader in automakers. Through its numerous innovations, Tesla aims to utilize technology and innovation to change the way people travel and capture the world. No other company in the automotive industry has been able to achieve such a cutting edge technology, let alone the use artificial intelligence.

Risk Analysis

With the growth in technology, every company is working to outdo Tesla and the company is at the risk of losing its competitive advantage. In 2021, BMW surpassed Tesla and became the leader in the manufacture and sell of Electric Vehicles. Tesla is at risk of losing its superiority and it needs to introduce necessary strategies to maintain its strong competitive position in the market. “Tesla must go further in meeting customer demands” (Aurum, 2021). It needs to increase its sales and profit margins to stay ahead of its competitors.

Tesla has the opportunity to utilize the current technologies to increase its creativity and innovation. According to Kim (2020), every company is introducing new products day-in-day-out to increase their competitive advantage by meeting the needs of the customers and increasing their satisfaction. The company needs to implement a culture of innovation and get more ideas to achieve efficiency and effectiveness in its operations. All car lovers and share buyers are always on the look-out for the next great product by Tesla. The company has to innovate continuously to ensure it always has something to offer to its loyal customers.

Recommendations/Conclusions

Tesla has been a leader in the automotive industry but with the growth in technology and increased competition, the company risks losing its competitive advantage. Companies such as BMW and Volkswagen are gaining a sharp competitive edge in the industry and this is a big risk for Tesla. Even though Tesla has maintained a good attitude towards innovation, the company needs to utilize technology more, be creative, and innovate continuously to stay at the top of the game. Introducing new products with unique features that meet customer demands is key to ensuring Tesla maintains its position in the industry. It needs to possess an innovative mind to manage innovation and use it successfully to achieve company success.

Clausen, J., & Olteanu, Y. (2020). Tesla als Start-up in der Automobilbranche: Vom Pleitekandidat zum Gamechanger (No. 199). Working Paper Forschungsförderung.

HD Auto Desk (2022). Tesla Takes Lead Position in Race Top Luxury Car Brand in US. Retrieved from

Kim, H. (2020). Analysis of How Tesla Creates Core Innovation Capability. International Journal of Business and Management, 15(6), 42-61.

Suroso, E., & Azis, Y. (2015, May). Defining mainstreams of innovation: a literature review. In International Conference on Economics and Banking (iceb-15) (pp. 387-398). Atlantis Press.

Porter, M. (2015). The competitive advantage of the inner city. In The city reader (pp. 358-371). Routledge.

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