Project Deliverable 4: The Organization’s Response to Change Due Week 9 and worth 150 points From the same case that you have chosen for Deliverables 1 to 3, you will advise the CEO on how best to pos

Project Deliverable 4: The Organization’s Response to Change Due Week 9 and worth 150 points From the same case that you have chosen for Deliverables 1 to 3, you will advise the CEO on how best to pos
Running head: innovation and competitive analysis 0 Innovation and Competitive Analysis Introduction Tesla Motors is an eminent name in the US automobile industry. The company was originated in 2003 and managed to gain a strong impression in the Industry. The company’s lucrative period began with its launch of the electric car, Tesla Roadster, which had its customers in more than 30 geographical countries (Mangram, 2012). The car brought many sales and consumer attention to the company, which ultimately resulted in the company taking over General Motors, representing a legacy in the automobile industry. The market capitalization of Tesla is $90 billion, while General Motors lags at $50 billion. This paper thus analyses the company’s position in the Industry by using Porter’s five forces model. It also elaborates on certain innovative advances in the automotive industry. The paper will also discuss some essential resources and capabilities of the company and give the opinion about the organizational structure, whether it supports or impedes its ability to innovate and succeed. Porters Five Forces Analysis The Porters five forces analysis is as follows; Competitive Rivalry The automobile industry of the US represents a stiff competition from major players like General Motors, Ford. Although Tesla motors achieved significant market capitalization, General Motors had managed to create its brand name through iconic models and legacy cars (Stringham, Miller, & Clark, 2015). The number of competitors might be minimal for Tesla, their agility adds to the rivalry. Also, the Industry’s switching cost is low, where people can easily switch to other manufacturers, which further strengthens the Industry’s competition. Therefore, competitive rivalry is a strong force for Tesla to consider its strategic efforts. Buyer Power Tesla’s costumers have a substantial impact on the company’s sales and revenues. Therefore, the company experiences a moderate force from buyers as there are reasonable substitutes for the company, and the volume of purchases is low. The low cost of switching to other options for buyers creates a hurdle for the company. The overall impact of this force is moderate on the company. Supplier Power Tesla experiences a moderate force from the suppliers because of simple forward integration. Only a few suppliers interact directly with the company, while significant suppliers exploit third party companies. Also, the size of suppliers is not very large to have an impact on the industry environment. The supply level is also moderate, which ultimately renders the company useful from the suppliers in the environment. Therefore, the aggregate impact of this force is moderate on the company. Threat of Substitution In the market, the higher threat of substitution occurs when competitors present more attractive and low-cost products. The threat of substitution in the automotive Industry is also moderate. The options available for customers may be public transport or availability of recent trends like Uber. Such substitutions may cause hurdles for the company, but the ultimate value of owning a car always extends the substitutes available for customers. The Threat of New Entrant For Tesla Company, the threat of new entrants in the market is negligible due to the high investment required to create a brand and positioning in a highly competitive market. Tesla not only manages a secure brand value, but CEO Elon Musk also holds a reputable name, which is a significant strength for the company. Therefore, the company is at a nominal threat from new entrants. Innovative Trends in the Industry The automobile industry has undergone various shifts and changes which make these products energy-efficient and smart. Various companies offer cars and models that bring innovation to their customers and meet their needs and wants. Major trends include; Electric Vehicles Tesla company has received appreciation for launching an electric car, thus reducing the dependence on fuel. This innovation by Tesla brought a revolution in the automobile industry. Many competitors also followed the way paved by Tesla and considered manufacturing electric vehicles. General Motors aims to launch electric cars (Chen & Perez, 2018). The innovation of electric vehicles in the Industry has led to an environment-friendly approach to vehicles and attention from the buyers. Although this is the right approach for the environmental aspect, it may reflect battery issues, maintenance problems, and high costs that should be considered by companies launching EVs. Autonomous Vehicles Another major innovation in the market is the concept of autonomous vehicles that offer AI services to guide the vehicles for regular transport. This idea involves the latest technologies and sophisticated sensors that ensure better safety (Mangram, 2012). This trend will cause an impact in the public domain by lowering the accidents caused by human fatigue or negligence. The use of technology has been witnessed by several players, which is feasible majorly for public transport to reduce costs, downtime, and have a sophisticated infrastructure. Key Resources and Capabilities Tesla Company has managed to gain quite an impressive reputation and brand name within a short period. The newly created company overtook several competitors and gained a brand value based on the following resources and capabilities. The essential resources include tangible assets, including human knowledge that made the company pioneer of EVs. The company is now worth $90billion, which speaks of its outstanding financial resources. The top-notch product line, impressive management team, and reliable brand name are resources that create a unique position for the company (Kauerhof, 2017). With an influential, innovative culture, the company reflects its capability in revolutionizing the automotive Industry. The company can gain higher success rates and market capitalization by exploiting its capabilities. It will assist the company in sustaining fierce competition like General Motors. Organizational Structure The company holds a functional structure where the entities are grouped based on each group’s functional specifications. Major functional groups of the company include sales, technology, engineering, and finance. This grouping reduces complexity and makes assessment and control easier. In addition to this structure, the company does not follow a rigid hierarchical structure, which ensures better communications among the team members. This communication culture plays a significant role in the company’s innovative role and its success in the Industry. A flexible structure where everyone is allowed to communicate with each person in the team promotes innovation and generation of ideas. Therefore, the organizational structure of Tesla promotes innovation and plays an influential role in the company’s success. Conclusion Tesla holds a reputable name in the Industry, but according to porter’s model, it faces stiff competition from its competitors because of its aggressive approach to innovation. The company must strive for innovation to keep up with the competition and sustain its position in the Industry. Tesla being a newcomer, grasped impressive hold over the market through its innovation and revolution in the automobile industry. However, its success may be impeded by competitors who have been dominating the Industry for years. General Motors, Ford, BMW are strong brands that may overtake Tesla’s market share. Conclusively, the company faces a strong force from its competitors, and it can only sustain its position by ensuring sophistication and innovation in its products. References Chen, Y., & Perez, Y. (2018). Business Model Design: Lessons Learned from Tesla Motors. Towards a Sustainable Economy Sustainability and Innovation, 53-69. doi:10.1007/978-3-319-79060-2_4 Kauerhof, A. (2017). Strategies for Autonomous, Connected, and Smart Mobility in the Automotive Industry. A Comparative Analysis of BMW Group and Tesla Motors Inc. Munich: GRIN Publishing. Mangram, M. E. (2012). The globalization of Tesla Motors: A strategic marketing plan analysis. Journal of Strategic Marketing, 20(4), 289-312. doi:10.1080/0965254x.2012.657224 Stringham, E. P., Miller, J. K., & Clark, J. (2015). Overcoming Barriers to Entry in an Established Industry: Tesla Motors. California Management Review, 57(4), 85-103. doi:10.1525/cmr.2015.57.4.85