Recommendations For Tesla: Automotive Industry

Recommendations for Tesla Name Institution Recommendations for Tesla Introduction In the 20th century, The Big Three (GM, Ford, and Chrysler) ruled the American car market. Customers were not only loyal to these companies but also felt the need to support their own. The Big Three were also protected by the high entry barriers which were in place back then. However, in the 1980s, foreign entrants, mainly from Europe, intensified their push in the U.S. market and The Big Three was declared dead. The truth is, the automotive industry is or seems protected mainly because cars are quite complex to build and also it is highly expensive to enter the market. Since the 1980s, there were no new entrants for a long period and any that tried never made it to the world stage. However, with the technological leaps, the world has made since the 1980s made it possible for a company like Tesla to enter the automotive industry successfully. Tesla came with a new and unique style and its dedication coupled together with its innovative technology has helped it to make a name for itself. However, as with any company, there are issues and challenges which could be detrimental to survival or future success and Tesla has several. One key challenge is competition or competitive rivalry which is extremely high in the automotive industry. The second one is the availability as well as cost of raw materials which could strain the company’s mission “to accelerate the world’s transition to sustainable energy” and vision “to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” The third and fourth issues are legal issues as well as the human resources factor. For any company, the issues mentioned above are quite significant and can heavily impact the affairs of a company even as big as Tesla. While acknowledging the impact the factors stated above on Tesla’s operations, this article seeks to go further and provide several recommendations which the company can employ to help secure its future and ensure survival in the often tumultuous automotive industry. Summary of Issues and Opinion Competition is one of the most common challenges companies face regardless of the industry one operates in. As long as an industry has more than one company, then there is competition and earning or gaining competitive advantage becomes a priority. In the automotive industry, there are several companies which are more than five times bigger than Tesla and their profits could well be even 20 or 30 times larger. With such giants in the industry, Tesla should be applauded for their resolve and resilience. The major companies in the motor industry are General Motors, Honda Motor Company, Volkswagen, BMW, Toyota Motor Corporation, and Nissan Motor Company. Each of these enjoys a huge piece of the car market and convincing their loyal clientele to shift is quite a task. While Tesla is by far the largest electric car company in the world, it is still performing dismally compared to these giants. Competition intensified the moment Tesla entered the industry, but maybe there is a way for Tesla to turn things around. Manufacturing cars is an expensive affair, and like other motor companies, Tesla has also investe...