Background of the study
Tesla Motors Company was founded in 2003 by Mare Tarpenning and Eberhard. The company manufactured and designed high end electric motor vehicles. Tesla Roadster was the first electric sport vehicle that was manufactured by the company. Unlike other motor vehicles company in United States, the California based company decided to launch its products at a premium price (Putros, 12). The high price limited the company’s potential to expand into the target market and more so the number of vehicles sold. In the first few years after the company was launched, it failed to be profitable despite financial investment from the shareholders. As a result, the company was necessitated to embrace leadership transformation by adopting charismatic leaders who would shape up the company. Global economy recovery and charismatic leadership fueled the company’s increased vehicles demand and prosperity of the company. The research will illustrate how Tesla Motor Company manage global crisis, risk management, financial crisis and brand protection.
How the company manages global crisis
Tesla Motors Company which has failed previously due to poor leadership and global economic crisis had now adopted new marketing strategies and selling strategies. Given the California market was not performing the company management decided to open foreign markets in Netherlands in order to assist it to increase the demands of its vehicles in the European market. The company decided to merge with large companies especially those which produced lithium ion battery in the world because it mainly depended on the lithium ion battery (Putros, 16). As a major transformation, the Tesla Company changed from the use of the traditional sales strategy of selling its products through sales people and dealership to the factory direct method. In attempt to target the high end consumers of its product, the company opened factory based selling points in Canada and United States. Through the strategy, the company did not only eliminated the costs associated with dealers commissions but enabled its customers to purchase the vehicles at a lower cost.
In its move to manage the global crisis, the Tesla Motors Company partnered with other world recognized Companies. The fact that the electric vehicles technology and design were distinct a company like Toyota and Mercedes agreed to partner with the company. Moreover, in order to assist the consumers to finance their purchase process, the company decided to partner with U.S Bank and Wells Fargo. The AT& T also intervened and ensured that the Consumers of the Tesla Motor vehicles were in position to purchase the company’s premium vehicles through the internet (Putros, 9). Through the adoption of the factor based direct selling approach, Tesla Motors Company managed to attract 3 groups of customers. First, it attracted the eco-friendly consumers whose number the company would expand vigorously in the future. Secondly, Middle Upper Class Professionals who were looking for premium cars and the technologically savvy consumers who wanted to test the new technology in the market. Unlike other motor companies in the globe, Tesla Motors Company did not rely on traditional advertisement strategies to promote its products but the communication in relation to its products was disseminated through social media networks such as Facebook and Twitter. In addition, the company relied on the direct sales strategy and technological transformation to drive it sales in the global market. The better view of the company is that it was multi-functional because served all classes of consumers such: environmentalists, car lovers, designers, investors and techies. The company’s safety ratings and satisfaction were the best advertisement strategies which enabled it to solve managerial and overcome global crisis during its operation in the global market.
Tesla Motors Company risk management
The company has been based on its leadership strategies. Given that the company had failed previously it had bring into place enthusiastic and charismatic leaders who have the vision of the company at heart. In order to avoid market risks, the company decided to merge with other big companies in order to secure the market in the future. The company has also invested heavily of social media networks advertisement. The company produces all round vehicles which meets the consumers demand as well as the environmental demands. To avoid competition risk the company has ensured that the price charged for its products are affordable and reliable (Putros, 18). The company has also partnered with the financial institutions to assist the consumers in purchase of the company’s products. In attempt to avoid and solve the foreign related risks, the company has opened new distribution channels in European countries such as Canada. The company understands that risks associated with insufficient production materials can cost it a lot and it has already partnered with the Panasonic ion Lithium Company to ensure constant supply of batteries because the company vehicles mainly depend on the batteries to operate and move. The political and policy risks in the company are solved by the company by ensuring that it invest in countries which are more lenient with the operation and management of the company. Finally, the company understands that financial risks can be dangerous and harmful towards the operation of the company. As a result, the company issues stocks to new investors in attempt to raise more funds to run the company even in the financial difficult times.
The manner in which Tesla Motors Company managed financial crisis
At initial stages, the Tesla Motors Company seemed to be failing financially as there was little progress. In 2010 when the company issued its initial public offering of about $167 million it ended up losing more than $150 million a figure that was estimated to be three times more than what the company had lost in the previous year. The fact that the Tesla Motors Company was still a new business in United States and it was operating in the middle of the global financial recession the management of the company still believed that the company needed more time in order to assess its true financial position. In its attempt to solve the financial difficulties the company was facing it agreed to partner with Toyota and expand its market to Asia and Europe (Putros, 24). Moreover, in the coming year the come decided to manufacture more affordable cars which were of high class in order to attract more consumers and at the same time increase profits. Through the use of the strategic marketing and production approaches, the company was able to produce motor vehicles which were competitive in the market and environmentally friendly as a result it sold more vehicles than other motor vehicle companies. Therefore, the company’s financial strength was associated with its pricing strategies, product diversification and partnership with other motor vehicles companies such as Mercedes and Toyota.
Tesla Motors Company brand protection
Tesla Motors Company based its production strategy on environment friendly electric vehicles. Unlike other huge motor vehicles production companies which solely produced fuel consuming vehicles the company depend on Lithium ion batteries to power its vehicles. As a result, it managed to attract different consumers such as the environmentalists, techies, investors, designers and car lovers. The strategy enabled the company to sell more vehicles than its competitors. The strategy also enabled to remain competitive in the market hence forcing companies like Toyota and Mercedes partner with the company in fear of being competed in the near future (Putros, 19). The company produced sport utility vehicle model such as the Model S which was an additional model it its target market. The new model was aimed to compete with other high end brands from the companies such as Mercedes and Toyota. The management attempt to increase production velocity and to eliminate supply uncertainty of the battery Packs, the Tesla Company decided to sign a four years deal with the Panasonic batter cells which was estimated at 1.8 billion dollars. The strategy was aimed at enabling the company to produce enough vehicles which would match with the consumers demand and satisfaction.
The company also protect it brand by adopting word of mouth and direct selling strategy where it would negotiate with its consumers directly. The word of mouth was the best advertisement strategy which would uplift the customers’ satisfaction while at the same time improves the company safety rating in the global market (Putros, 26). The company adopted eco, friendly consumers, and middle upper class professional and tech-savvy consumer marketing strategy in order to ensure that it build brand loyalty to its customers. The company was interested in ensuring that the company remained competitive and attractive to the customers by partnering with the big companies and opening new selling networks in different countries in the European countries.
Conclusion
The Tesla Motor Company is such a company in the globe which has been a role model in solving financial and global crisis. Few years after its launch the company experience financial and managerial crisis which would bring it into down fall. Nevertheless, adoption of charismatic and enthusiastic leaders enabled the company to be fully transformed (Putros, 33). The company managed to build its financial muscle by marketing in foreign markets in European countries, producing high end affordable vehicles, partnering with huge companies such as Toyota and coming up into deals with Panasonic Battery producing company in order to secure its future production.
Work Cited
Putros, K. Tesla Motors: Burning up in the road to domination or doom. 2013. California publishers.
