Overview
Since its inception in the year 2003, Tesla Motors has managed to make considerable inroads in the market of electric vehicles. However, Tesla is facing some challenges that are highly likely to determine its progress and future survival in the car manufacturing industry. Over the last couple of years, Tesla was able to release the Model S vehicle. This model belonged to the family of sedan vehicles. This family of vehicles represents the firm's initial foray into a crucial segment of the market. Over the last couple of years, there has been a shift in consumer demand concerning trucks, SUVs, and larger cars in the United States' automotive industry. This shift has been attributable to the changes that have been experienced concerning gasoline prices. Presently, Tesla can take just a limited number of orders for the production of a particular model of vehicles (Mangram, 2017). As such, there is a need to develop strategic choices that would be crucial in addressing the challenges faced by Tesla Motors. This begins with the identification and description of the difficulties experienced by the company that is expected to be solved. The problems are further analyzed before identifying various options that may be suitable for findings solutions to the existing concerns. Then the best options are selected based on their appropriateness and effectiveness in acting as strategic measures in solving the current problems as identified.
Explanation of the firm’ s problem
The problem that needs to be solved in this case is the one involving Tesla's manufacturing challenges. There is a need to develop a strategy that will guide the firm towards raising its production levels. The other problem that could be solved for the Tesla Company is that emanating from stiff competition that it experiences from both local and foreign companies. This is because several car manufacturers have steadily been making entry into the United States market over the last couple of years ( Rothaermel & King, 2017).
Delegate your assignment to our experts and they will do the rest.
Furthermore, Tesla has been trying to match the competence of international car manufacturing companies majorly from countries like German, Korea, and Japan. Part of Tesla's problems includes finding effective ways of dealing with production runs as well as supply chains associated with Model 3 of the vehicles that it manufactures. The company is also facing challenges of developing appropriate strategies that will be useful in driving down the cost of Model 3 while focusing on enhancing its quality. Moreover, the company is faced with the dilemma of ensuring it markets and sells Model 3 at a competitive price while remaining cautious not to create a situation where this particular model does not cannibalize Model S, which is highly prized on the market. The achievement of autonomous driving and legal approval also remains a significant challenge for Tesla owing to the resultant fatalities (Bruijl, 2017).
Analysis of the Problem
A significant part of the problem facing this company is how to find effective ways of maintaining standards of high quality in the production and supply of electric vehicles it manufactures. Tesla Motors is expected to produce high quality cars like Model S. This can be achieved through a careful design and implementation of new processes with the objective of meeting high standards of quality in the production of vehicles such as Models S. The addition of new models in its production line such as Model 3 has the potential to cause an increase in the complexity of associated with the management of the manufacturing process involved in the production of different vehicles (Bruijl, 2017). Presently, the manufacturing problem faced by Tesla Motors is the difficulty in trying to ensure the existence of a reliable supply chain with the ability to meet the production demand for Model 3 vehicles. Recently, Tesla was unable to meet the demand for the Model 3 vehicles, which stood at 1500 quantities and only managed to produce 260 quantities (Mangram, 2017). The firm attributed this inability to meet the demand to production bottlenecks. There is a need to push for changes in the state and federal regulations regarding the use of autonomous driving technology by Tesla as one of the key stakeholders affected by such regulations. This is because more customers who are acquiring electric car models manufactured by Tesla are concerned about their security features.
Identification of Options
A number of options may be used in solving the problems identified in Tesla. In finding an appropriate solution to the problems in its manufacturing department, Tesla will be able to direct a significant amount of its resources towards expanding its manufacturing centers and hiring more qualified manufacturing personnel. Moreover, the federal government has previously demonstrated its commitment towards offering economic incentives to cay vehicle manufacturing companies to encourage both the manufacturing and ownership of electric vehicles ( Rothaermel & King, 2017). The other available option for Tesla to handle the stiff competition coming from its rival companies is to work towards increasing its investments in the building of more charging stations for electric vehicles across the United States. This will encourage more people to own electric vehicles thereby increasing its revenues substantially. In the regard, Tesla would be in a better position to strategically improve its charging infrastructure with supercharging stations that allow for charging without a for its electric car models including Model S, Model X and Model 3.
Selection of the best Option
In solving the problem and challenges associated with stiff competition and reduced revenues, the best-selected option is an expansion of manufacturing centers and hiring more experts as well as qualified manufacturing personnel. The company should develop a strategic system that ensures the maintenance of higher quality standards in its manufactured models while being able to meet the customer expectations and demand (Mangram, 2017). Furthermore, Tesla needs to demonstrate its considerable commitment towards venturing into the manufacture of electric vehicles for it to be in a better position to compete effectively with its local and international rivals. This is partly because the Federal Energy Regulatory Commission and the federal government in the United States have been working towards setting out standards for the adoption of the smart grid by firms in the manufacturing industry in the future ( Rothaermel & King, 2017).
Guidance of Implementation
As part of the provision of clear guidance concerning solving the challenge of cannibalized sales faced by Tesla, it is advisable for the company to increase the production of long-range Model 3. This will ensure that the long-range of Model 3 competes effectively with Model S regarding sales thereby eliminating the issue of cannibalized sales for Tesla. Additionally, it would be crucial for this firm to enhance the quality of its service delivery alongside its maintenance services as it seeks to venture into a quick expansion of its production capacity. As a strategic measure towards solving the existing challenges, the focus of Tesla ought to be more concerned with enhancing the production of Model 3. This production should be aligned with the firm's goal of ensuring a weekly production of 5000 units ( Rothaermel & King, 2017). Moreover, the firm needs to have in place a strategic competition system that places it in a better position to realize a mass production of lithium-ion batteries. This would go to the extent of significantly addressing some of the production challenges that were previously faced during the production of early models of X and S. The customers' expectation should be dressed and met in a manner that ensures the incorporation and prudent management of the Federal tax deductions applicable to the process and production expenditure (Bruijl, 2017). Further, it would be critical for the firm to work on ensuring that the number of it charging outlets is significantly increased to cope with the increasing number of Model 3 owners.
Summary
According to the explanation of the firm's problems namely competition and low production, it has been established that there is a need for several strategic measures and interventions. This demonstrates the need to develop effective strategies that will guide the firm towards raising its production levels. Other challenges include stiff competition from the rival companies of Tesla Motors. In this case, the firm is faced with the dilemma of ensuring it markets its Model 3 vehicle at a competitive price while being careful not to create an additional problem where this particular model does not cannibalize Model S, which is highly prized in the market. One of the strategic measures includes focusing on finding a solution to the existing challenges. The focus of Tesla is expected to be more concerned with the enhancement of the production of Model 3. This production ought to be aligned with the firm's goal and objectives in ensuring that it meets its weekly production target. Results have demonstrated that part of the problems experienced by Tesla includes struggling with ways of finding effective strategies of dealing with production deficits as well as supply chains connected to Model 3 of the vehicles that are manufactured by this firm. To that extent, the firms need to position itself in such a way to deal with the challenges of developing appropriate strategies that can be useful in driving the cost of Model 3 while placing more emphasis on its quality.
References
Bruijl, G. (2017). Tesla Motors, Inc.: Driving Digital Transformation and the Digital
Ecosystem. SSRN Electronic Journal . doi: 10.2139/ssrn.3053142
Mangram, M. (2017). The globalization of Tesla Motors: a strategic marketing plan analysis.
Journal Of Strategic Marketing , 20 (4), 289-312. doi: 10.1080/0965254x.2012.657224
Rothaermel, F. T & King, D. R. (2017). Strategic Management . McGraw-Hill.
