Discuss about the Competitive Strategy for Energy Storage Organisation.
Tesla was incorporated in 2003 as an American automotive and energy storage organisation. The company manufactures electronic cars and energy storage devices. It had revenue of US$7 billion in 2016 financial year. The worldwide sales of Tesla passed 200,000 cars in March 2017, which makes it second largest pure electronic car producer in the world. The CEO of Tesla is Elon Musk, who was one of the founders of the company. The reason for selecting Tesla is that it has changed the electronic car market by their innovations. The company uses lithium-ion batteries which have revolutionised the entire industry. Tesla has gained reputation and appraisal from peoples for making electric car popular.
According to Mangram (20102), Tesla’s strategy focuses on using lithium-ion batteries in their vehicles, which revolutionised the automotive industry and gained them a competitive advantage. The batteries hold more charge and provide high mileage, as compared to competitor cars. The performance of Tesla batteries is unmatched in the electronic car industry. The organisation also provides a huge network of supercharger locations that help owners to charge their vehicles in between their trips. The company had established a strong and distinctive value chain environment around its vehicles that motivate and provide better user experience to its customers.
The quality and ability of the software used by Tesla is several levels above its competitors. The company keeps updating their software with newer updates and keep it fresh. The marketing team has created a unique reputation of the company that motivates customers to own a Tesla car. The company serves their customers honestly, which increases their customer satisfaction rate (Hardman, Shiu and Steinberger-Wilckens 2015).
Tesla’s Model for Business
The business model of Tesla has gained them the spot of second largest electric vehicle producer. Following are the key part of their business model (Figure 1):
- The company prepared a high priced and a high-quality electric car for super-rich customers called The Roadster (2008). The quantity of such car was significantly low but its price was considerably high.
- Tesla uses the revenue of Roadster and manufactured another electric car which was for rich customers, called The Model S (2012). This car price was medium expensive, and they manufactured a medium quantity of this car.
- After that, the company used the revenue of Model S to develop a lowered price electric car for average customers, called The Model 3 (planned for 2017). The objective of the company is to manufacture electric cars for average customers.
- The company has also adopted a direct to customer sales model which significantly reduced the prices of cars by eliminating the middle man (Martins, Rindova and Greenbaum 2015).
Figure 1: Tesla Business Model
(Source: Urban 2015)
Tesla’s CAGE framework
According to Grant (2016), in order to become number one electric car manufacturers and defeat other car manufacturer companies, Tesla is required to increase their global sales. The company required to analyse the cultural, administrative, geographic and economic factors of automotive markets worldwide. Tesla sell their cars in few of the developed countries, but they are required to increase their global customers to gain a market advantage since the demand for Tesla cars has increased rapidly in past few years.
Uber Technologies Inc.
Uber was incorporated in 2009 as an American technology organisation. The company operates in transportation and delivery industry. The company has its operation is more than 632 cities and it had an income of US$6.5 billion in the fiscal year of 2016. The motive of selecting Uber is that they have revolutionised the transporting industry by their online taxi booking service. The company has gained an advantage over their competitors without investing a large capital.
Uber provides the facility of booking a taxi by their mobile application. The drivers use their own vehicles which reduce the expenses of the company. The company coordinate millions of cars without investing billions of dollars. According to Cannon and Summers (2014), no expenses in car maintenance provide Uber a competitive advantage. The company provide services such as easy booking, simple cancellation, day and night booking and cashless transactions.
The company hire highly skilled and talented mathematicians and coders to maintain their algorithm. This allows them to attract many customers with high driving time. The company provides constant offers and services to its customers, such as discounts coupons, free rides, sharing of rides, simple procedure and facilities inside cars. The customers appreciate these innovative approaches and services over simple taxi rides, giving Uber comparative advantage (Cramer and Krueger 2016).
Uber’s Model for Business
Uber provides a high standard of facilities in low price to its customers. According to Manjoo (2015), their business model focuses on enhancing the number of customers and drivers. The key elements of Uber’s business model include:
- The drives of Uber own their vehicles, which reduce the cost of investment and maintenance expenses of the company. Uber provides the facility of renting a vehicle to increase their market share. This method allows the company to increase their market share in the worldwide transportation industry.
- Uber’s mobile application is packed with features and offers which attract many customers. The application includes features such as fast transactions, vehicle tracking, cashless transaction, and discount offers. The customers can rate drivers and give a comment regarding their ride experience.
- Uber evaluate their data to decrease waiting period for taxi reservation and enhance a number of transactions. Uber highly market their features and offers to enhance their market share. This allows them in gaining a comparative advantage over their competition.
Uber’s CAGE framework
According to research of Rogers (2015), the different economic, administrative, geographic and cultural condition of countries, did not affect the business model of the organisation. Uber drivers own their personal cars which avoid the maintenance expenses of the company and the mobile application provide various services and offers to customers. The market share of Uber has raised substantially in previous years. This approach expanded the business of Uber in more than 632 cities while ensuring sustainable growth.
Cannon, S. and Summers, L.H., 2014. How Uber and the sharing economy can win over regulators. Harvard business review, 13(10), pp.24-28.
Cramer, J. and Krueger, A.B., 2016. Disruptive change in the taxi business: The case of Uber. The American Economic Review, 106(5), pp.177-182.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Hardman, S., Shiu, E. and Steinberger-Wilckens, R., 2015. Changing the fate of Fuel Cell Vehicles: Can lessons be learnt from Tesla Motors?. international journal of hydrogen energy, 40(4), pp.1625-1638.
Mangram, M.E., 2012. The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing, 20(4), pp.289-312.
Manjoo, F., 2015. Uber’s business model could change your work. New York Times, 28.
Martins, L.L., Rindova, V.P. and Greenbaum, B.E., 2015. Unlocking the hidden value of concepts: a cognitive approach to business model innovation. Strategic Entrepreneurship Journal, 9(1), pp.99-117.
Rogers, B., 2015. The social costs of Uber. U. Chi. L. Rev. Dialogue, 82, p.85.
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