Business Homework

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Exam practice

(a) Define a competitive environment.

A competitive environment is the dynamic external system in which a business
competes and functions. The more sellers of a similar product or service, the
more competitive the environment in which you compete.

(b) Explain one way in which Tesla aims to compete the global car market.
Develop a market niche or improve personal service. In the competitive market Tesla
could make a USP for Its electric cars, due to electric cars are still a question mark in the
market. By the reach the product like electric cars can have a large increase on sales
next few years. So, tesla may sell by word of mouth, achieve a good reputation in quality
and service.

(c) Discuss how the size of competitors in the car industry might affect Tesla.
The size of competitors can have an important influence on the level of competition in
the car market. The car market is huge, there are a lot of huge companies have long
history and good reputation, for example Benz and Volkswagen. If tesla wants to
compete with these companies by selling general motors, it might be difficult, large
company can be very powerful they can take on large scale contracts that smaller rivals
could not hope to manage. However, small rivals pose less of a threat in business than
larger ones, small competitors are quite impossible to compete others expect they have
better ideas or actions.
In total, the advantage for Tesla are their electric cars. Electric cars have been a topic of
frenzied discussion for almost a decade. The chatter has greatly intensified as Tesla has
grown and at times become the most valuable US automaker by market capitalize. True,
there are quite a few more electric vehicles coming to market in the next few years than
have been in the market for the past 10, but Tesla is still the leader of electric car
market. From the text we know in 2017 tesla sold just 25418 cars, they sold more
electric cars than any other car manufacturers. It shows Tesla could continue selling
electric cars to compete other big companies, on the other hand, it also should improve
their technique to achieve better quality.

(d) Assess how the behavior of competitors in the car industry might affect Tesla
Tesla is a company which based on selling electric vehicles, nowadays it’s a niche market
due to most people still prefer general motors. The change of competitor behaviors may
give Tesla a hug effect. As we know now, Tesla’s competitive advantages for this
strategic goal include a superior electric vehicle technology and recharging infrastructure,
brand recognition, a first mover market position, and a strong network of strategic
partnerships. However, since the company entered the industry in the premium sport
and luxury sedan vehicle niche segment, it has a resource disadvantage in regards to
know-how, large-scale manufacturing processes and model line-up when it comes to the
mass automotive market.
There is a large number of existing premium manufacturers in this space, several of
which already enjoy major manufacturing and economies of scale advantages that will
make this endeavor highly costly and risky. However, the combination of Tesla’s
competitive advantages and aggressive marketing could result in the capture and
sustainment of a significant percentage of market shares in the mass automotive
segment. Clearly Tesla wants every drive electric car in the future, but a huge problem is
electric cars are expensive with low production rate. Tesla’s competitors like Mercedes-
Benz and BMW wants to challenge tesla with the efficiency of production, they are trying
to produce better electric cars too. When other big companies want to exceed tesla in a
long term of production, the demand of customers may decrease. Analysts said the
major automakers face less pressure than Tesla as they build up and begin sales of their
electric vehicle fleets, relying on their core gas-powered models to pad profits if
necessary while absorbing losses on the electric vehicle side. But as Tesla’s business
expands and vehicle production scales into the hundreds of thousands, the costs will
grow too and could wear out investors’ patience. In my opinion, Tesla, has the
bestselling luxury car in the United States and is working hard to reduce the price so it
can take over a large market segment that is being abandoned by Ford and GM. It
should keep their advantages now and use it to make sure other companies can’t
overcome it in a period of time. From a strategic perspective, therefore, the real
innovation that is possible from the emerging Tesla business model will not materialize
for a while. In the meantime, Tesla must continue to survive by leveraging its
comparative advantage in the short term, while continually adapting and inventing in
order to thrive in the longer term.