Question

Chapter 04: You Decide: Tesla Tesla is a 10-year-old company that specializes in electric power technology The firm sells its powertrain components to other car companies. At the same time, it is seling a high-performance electric Roadster and the Model S and Model X luxury cars. The company is serving two customers at the same time, both with a focused differentiation strategy: high-end car buyers and car manufacturers with electric cars in their portfolio. This has a potential conflict-creating potential competitors for the end-user businesses who have deeper pockets and a wider reach, which could slow our growth to car buyers. However, your founder Elon Musk believes that electric cars should be available for everyone. Analyze the situation. Which strategy do you think Tesia should pursue moving forward to align with Mr. Musk's goals?

Answer 1

The given scenario shows that Tesla can earn maximum revenue by catering to the both types of audience that are B2B and B2C. But, indirectly, Tesla is readying the competitors that can eat away the market share and compete well will Tesla products. Besides, Tesla is also risking the competitors to develop their own technology with a basis of what Tesla is supplying them. Hence, the right strategy is to choose to sell only cars to the end user consumers only, as it maintains the product differentiation and cater the market. Here, Tesla can realize the dream of Mr Musk by increasing the level of production, hiring plants on contract that can manufacture the Tesla cars and focus on technologies to produce cars that fits the budget of common people. Besides, Tesla can license the other car manufacturers in different market where cars in the name of Tesla can be produced, tested by Tesla itself and sold in the market. It will increase the sales, make cars available to the end consumers and build global presence without loosing the competitive age.  So, the mentioned strategy is best for the Tesla Company.