Tesla's Generic and Diversification Strategies

Tesla: Strategic Report
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Tesla: Strategic Report
Tesla’s Generic Strategies
Broad differentiation is Tesla's generic competitive strategy. This approach creates a competitive edge for the organization based on creating unique goods. Since most vehicles today are powered by internal combustion engines, Tesla Inc.'s products have an advantage in the marketplace since they include cutting-edge environmentally friendly technology. Customers are more interested in ecologically friendly items due to the company's generic competitive strategy.
Tesla's general approach to competitive advantage is to concentrate on distinctiveness. While emphasizing the distinctiveness of its goods, the corporation adopted the differentiation emphasis approach to target high-end electric car adopters. Affluent clients are the most likely to buy new items when released. Tesla's generic competitive strategy has moved to wide differentiation now that the firm is well-known and manufacturing costs are dropping (Rowland, 2018). The corporation can reach a wider audience in the vehicle industry because of lower manufacturing costs and increased brand recognition.
Tesla, Inc.'s general strategy necessitates using appropriate strategic goals to guarantee that the company remains competitive. Regarding R&D, one of the company's strategic goals is to boost investment in R&D to create new products that meet market demand for increased renewable energy solutions, such as batteries for diverse uses (Rowland, 2018). Another goal of Tesla's generic competitive strategy is to increase sales and brand recognition by expanding the company's market reach.
Tesla, Inc.'s current major intense growth strategy is market penetration. Increased sales revenues in existing areas are the primary goal of this aggressive approach. In the US, for example, the business plans to advertise and distribute its electric automobiles aggressively. In this manner, the company can optimize income from its present markets. By increasing market share, this approach aligns with Tesla's overall goal of building a competitive edge. Marketing efforts are important to the company's plan to increase sales income.
Tesla Inc.'s secondary growth strategy is product development. The company's growth is fueled by developing new goods that produce new revenue. As a result of this approach, the firm develops new goods using cutting-edge technology that has little effect on the environment. One of Tesla's many products is the Tesla Roadster, the first all-electric sports vehicle on the market when it was initially introduced in 2007 (Furrier, 2022). Tesla Inc. may sustain its differentiating generic competitive approach by concentrating on high-tech vehicles and associated items that appeal to a niche market. As a result, one of the strategic goals of this aggressive expansion plan is to sustain large spending on R&D.
Market development is a tertiary growth method used by Tesla, Inc. This strategy entails entering new areas to increase sales and expand the company's worldwide footprint. By building additional offices and facilities throughout the globe, for example, the corporation is steadily expanding its global market reach. Currently, just a few nations offer the company's products, but this will likely change soon. Tesla's mission and vision statements emphasize worldwide leadership in the automobile industry with energy solutions for transportation and other sectors, and this comprehensive plan helps Tesla achieve those goals. New markets may be opened by providing unique items that draw in consumers as the firm expands its business. A strategic aim of the market development enthusiastic approach is to grow Tesla Inc.'s international business by forming partnerships with other firms that make it simpler to enter new markets.
Diversification Strategies of Tesla
The CEO of Tesla said in 2016 that the business intended to buy SolarCity, which was a significant step forward for Tesla's diversification plan. The ultimate goal of the company's diversification plan was to realize its long-term vision of turning the globe into a solar-powered society. This was the primary driver behind the project. The enhanced capacity to hedge its portfolio, the preservation of its capital, and the reduction of risks on investments are some of the primary benefits Tesla has reaped as a direct result of its adoption of a diversification approach (Blue, 2016). Because of the company's desire to encourage sustainable energy use, Tesla has won the loyalty of a client base that spans the globe. As a result of global warming, unfavorable weather patterns are presently being seen worldwide. The production of motor vehicles is one of the industries responsible for the largest amount of greenhouse gases being emitted into the environment (Cuyjet, 2021). As a result, Tesla's choice to increase its investment in sustainable energy generation has been a significant factor in the company's success in building its brand.
Tesla has gained a competitive edge as a result of the strategy that it has implemented, which has enabled its goods to access a larger market pool. The efficiency levels of Tesla's batteries and solar panels are a notch above all the others currently available on the market, which leads analysts to predict that any customer who buys an electric vehicle from Tesla will most likely also purchase batteries and solar panels from Tesla. This has also been a significant factor that has led to the high sales the firm has recorded over the last several years. Tesla's marketing prowess has been improved because of the diversification approach that the company uses. The corporation has built a name for itself by producing items that have sophisticated appearances and call for innovative marketing strategies. For instance, even before its manufacturing had begun, the Model 3 had already received more than 300,000 orders. This phenomenon came about directly from the fantastic marketing done for the product in conjunction with the effectiveness of the ones that came before it.
One of the most significant drawbacks that Tesla has encountered as a direct result of its strategy of diversification is that it has generated returns that are below average. Although this has not been required by a reduction in the quality of their products, many analysts believe that previous experiences of businesses that sought to diversify often reduce investors’ appetite to buy a company's stock. This is even though this has not been necessitated by a reduction in the quality of their products. For instance, the value of Tesla's shares saw a large decrease in 2013, immediately after the announcement that the company had decided to acquire SolarCity. Other vari...