CORPORATE STRATEGY

Presentation Notes
Date: 20 Oct 2021
Lecture No: 8

Topic:

Specific Points Covered

Case Background In 2015 they were niche manufacturer

Problem Identification (Issues):

 Delivery of Model 3 -there are many symptoms behind

delivery
 Launching of new model
 Losing money

Strategy must be aligned with the operational function; they did not
had capabilities to address the same.

Manufacturing requires prototyping and then piloting to identify the

issues and to understand where automation and standardization can
be done. Time and motion study helps in evaluating

Purpose:

Tesla Electric Car runs on batteries rather than combustion engine. In

combustion engine as there is loss of a lot of energy

Elements of Operational Objectives :

 Efficiency
 Cost
 Flexibility

Identifying Symptoms through the following indicators:

 Cost: Digging in Financials help in finding issues. Tesla offered

premium pricing; tesla cost increased from 2015 to 2016 for
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about 4.5%. their gross margin was negative.

 Capablities- RND investment reduced from 15% to 8%
Benz increased RND Investment by 61% which is 4x of Tesla
but Benz is looking at a bigger scope whereas Tesla only
reduced during vertical comparison.
 Fixed asset-what items in value chain must be outsourced, i.e.
Seats should have been outsourced in order to minimize the
cost
 Personnels- Productivity is measured by Staff head count

Value Chain

 Perceived differentiation – eg: 14” TV in colorful packaging

generated powerful signal
 Continuous investment in Branding, Equally supported by the
value being offered

Types of Strategy:

 Narrow Market Cost Leadership may have its pits

 Best Cost Hybrid Strategy is one of the best strategies
 In differentiation strategy Value proposition is highest

Chapter 6 Offensive VS Defensive Strategy

Offensive Strategy- Price to be reduced, but lowering the price is not

only offensive strategy

Defensive Strategy- requires advertisement which help creating a

different message of quality

Strategy must be based on your market positioning:

 First Mover Advantage- Introducing a new product in red

ocean
 Fast Follower
 Late Follower

Strategic Alliances: arrangement between two companies to undertake

a mutually beneficial project while each retains its independence
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