Business Strategy

Porter's Five-Forces Model

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths.

Five Forces Analysis is frequently used to identify an industry's structure to determine corporate strategy.

Porter's model can be applied to any segment of the economy to understand the level of competition within the industry and enhance a company's long-term profitability.

The Five Forces model is named after Harvard Business School professor, Michael E. Porter.

Business Goals

The market for fully electric vehicles is growing rapidly, and there are reasons behind that growth.

Which are:

• New regulations on vehicle emissions and safety
• Shifting customer expectations
• Technological advances

The main hype and acceptance for electric cars are fueled by Tesla and its business model.

Elon Musk Launched the company with a mission that aims to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.

This mission is the backbone of Tesla's successful business model.

It is about:

• Direct sales and services, and not franchised dealerships.
• Paying particular attention to rolling out charging stations as this may be the biggest obstacle to the mass adoption of electric vehicles.
• Encompassing energy storage systems for homes and businesses.

Value Chain Activities

Tesla Inbound logistics:

Receiving and storing raw materials for electric vehicles, energy storage devices, and solar panels are all part of Tesla's inbound logistics. Tesla uses a variety of rare elements, including aluminium, steel, cobalt, lithium, nickel, and copper, in addition to a normal set of raw materials. In the United States, the business receives parts from tens of thousands of vendors around the world, including its own Gigafactory in Sparks, Nevada.

Tesla Operations:

Tesla has facilities in Fremont, California, Lathrop, California, Tilburg, Netherlands, and Shanghai, China, where it manufactures and assembles vehicles. Tesla's operations can be classified into two categories:

• Automotive: Electric vehicles are designed, developed, manufactured, and sold in this segment. In 2020, the business expects to produce and distribute almost half a million vehicles. In December 2020, Tesla began production of the Model Y at the Gigafactory Shanghai.
• Energy generation and storage: The design, production, installation, and sale or leasing of stationary energy storage products and solar energy systems, as well as the sale of power generated by Tesla solar energy systems to clients are all part of this segment. Tesla installed 1584 MWh of storage and 86 MW of solar energy in Q4 2020, representing a 199 per cent and 59 percent YoY increase, respectively.

Tesla Outbound Logistics:

Tesla's outbound logistics include warehousing and delivery of the company's electric automobiles, energy storage devices, and solar panels.Tesla delivers electric automobiles to its own stores and galleries in the United States, as well as 35 other nations and areas across the world. Customers can also order electric automobiles directly from the company. Typically, the electric automaker keeps a modest number of automobiles on hand at its retail locations for instant sale. The majority of buyers choose to order their vehicles online and customise them.

Tesla Marketing and Sales:

Tesla's marketing and sales strategies are unorthodox, as are the company's other business procedures. Tesla “spends virtually no money on advertising and sponsorships, and depends mainly on word of mouth,” according to CEO Elon Musk. As a result, Tesla's marketing strategy is known as "Zero Dollar Marketing."

Tesla Service:

Tesla has had a history of high-profile customer service issues. This includes, but is not limited to, a disgruntled customer suing Tesla after the firm refused to return his calls or respond to emails regarding maintaining his Tesla car[10] and customers having to wait weeks for repairs after the release of the new Model X in 2016. Tesla's customer service methods, on the other hand, have improved in recent years. The electric vehicle firm wants to own the consumer experience, so it handles everything from production through sales on its own. Tesla does not sell through dealerships to ensure that the client experience is not influenced by a third party.