Martin Eberhard and Marc Tarpenning founded Tesla in 2003, with a goal of creating an invention of a powerful electric vehicle with zero emissions (Tesla, n.d.) . In 2004, Tesla was united by Elon Musk, Ian Wright, and J. B. Straubel turned out as the co-founders of the company. After 10 years of experience in car industry, in 2018, Tesla has ranked as the best-selling plug-in car manufacturer in the world.  About 245,240 units have distributed by the company and made Tesla gained 12% of the market share in electric segment sales (Stevens, 2019). In addition to this, the sales of Tesla vehicles in the US enlarged by 280% with the amount of 48,000 in 2017, and increase to 182,400 in 2018.

This research aim to analyze Tesla Inc. by applying three cost management strategies to suggest cost management ways to control and help improve Tesla Inc business strategies and competitiveness.

Firstly, Porter’s 5 Forces will be applied to obtained an understanding of the competitiveness of Tesla business environment and identifying the potential profitability from its strategy. Secondly, Resource-Based View will be used to consider the competitive advantage and performance inside the company. Finally, Balanced Scorecard will be used to analyze the balance of financial measures with the objectives and performance measures of the company.

Porter’s 5 Forces on Tesla Inc. of Analysis of Tesla Inc.

Figure 1 - The Five Competitive Forces That Shape Strategy by Michael E. Porter

·         Competitive Rivalry of Tesla of Analysis of Tesla Inc.

It is undeniable that Tesla Inc. operates its business activities in an extremely competitive market place. However, there are some strong intensities that Tesla has in this context such as:

-          A small number of similar companies

-          The company’s high aggressiveness

-          Low changing costs

Key competitor companies for Tesla Inc. are General Motors, Toyota Motor Corporation, Ford Motor Company, Honda Motor Company and Nissan automobiles. Tesla gets a strong position due to there are merely a small number of companies that operate a similar business as Tesla in the automotive market place. In addition to this, it seems that Tesla Inc. has been aggressively promoting its brand with excellent marketing strategies. Moreover, the low changing costs from other car manufacturers have also strengthened the position of Tesla in the automotive market industry (Ayala, 2016).

·         The threat of New Entrants for Tesla

Since Tesla’s type of business is quite difficult one to compete with, then the threat of new entrants for Tesla is quite low.

Bargaining Power of Tesla’s Suppliers 

The business activities performed by Tesla Inc. rely completely on the suppliers’ consistency. The intensities of the external aspects that generate the bargaining power’s moderate forces of Tesla’s suppliers are such as:

-          Moderate level of supply

-          Moderate forward incorporation

-          Moderate suppliers’ size

The suppliers of Tesla Inc appear to have a low level of forwarding incorporation. For instance, some of the suppliers have been using third parties to trade their materials to Tesla, meanwhile, some other suppliers have been directly making their business transactions with Tesla. In the context of Porter’s 5 Forces, this type of external aspect inflicts a moderate force on the company. Thus, in this aspect, we can assume that the bargaining power of Tesla’s suppliers identifies as the second priority of strategic management.

Bargaining Power of Tesla’s Buyers

The buyers or customers of Tesla are considered as a direct aspect that measures the sales profit of the company itself. The moderate force of bargaining power of Tesla buyers are mentioned as:

-          Low changing costs

-          Moderate alternate availability

-          Low purchases volume

The low changing costs made by Tesla might able to reduce the barriers for the buyers to purchase the vehicles from other companies. However, the availability of alternative or option which is low in the company has limited the bargaining power of the buyers. Furthermore, the low purchase volume has also reduced the buyers’ influence on Tesla Inc (Kotler & Keller, 2016).

·         The Threat of Substitutes for Tesla

Tesla Inc. has been experiencing the effect of substitutes on the automotive as well as an environment of energy solutions industry. Some factors that lead to the threat of substitution for Tesla are as follow:

-          Low changing costs

-          Moderate availability of substitute

-          The level performance of substitutes

The low changing costs which represented such as public transportation definitely enable the competition for Tesla. On the other hand, due to the moderate availability of this substitute (public transportation), along with the level performance of public transportation strengthen Tesla to attract more customers in referring to buy its cars rather than taking public transportations (Ayala, 2016).

Resource-Based View on Tesla

In a Resource-Based View of Tesla, we will analyze the tangible and non-tangible resources possessed by the company.

Figure 2 Resources Based View Model

References of Analysis of Tesla Inc.

Ayala, R. (2016). Lowering global consumption of petroleum, while increasing profit: Tesla Motors ridesharing.

Kotler, P., & Keller, K. L. (2016). Marketing Management. Pearson.

Stevens, P. (2019). Tesla’s stock is surging but some analysts found real problems with its earnings report. Retrieved from www.cnbc.com: https://www.cnbc.com/2019/10/24/teslas-stock-is-surging-but-some-analysts-found-real-problems-with-its-earnings-report.html