Case Study: Elon Musk

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Elon Musk has never been shy to spend an exuberant amount of money in order to fulfill his ambition. Musk spent over $100 million in SpaceX, over $70 million in Tesla Motors, and over $10 million in Solar City upon entry into these markets without foreseeable returns (Vance, 2015). Musk dedicates large sums of money towards creating production facilities. Making up for the equipment expenditure relied on profits made from the Tesla electric vehicles and investor confidence (Vance, 2015). The companies typically faced similar issues: while employee costs were low, equipment and material costs were extremely high (Vance, 2015). During failures, such as Tesla Motors Roadster model production process and the SpaceX Falcon 1 launch, Musk was burning …show more content…
Vertical integration involves being present for multiple stages of production. The results of this integration leads to high capital costs. In order to increase profitability, Musk may be inclined to halt his never-ending pursuit towards futurism. Tesla Motors is still not a household name, it is ultimately a luxury brand and as a result, the population is still not sold on his vision for an advanced future (Vance, 2015). Musk should dedicate more of his budget away from R&D and more towards exposing his company towards domestic and foreign markets. This would quell consumer suspicions towards the energy change, and give even greater investor confidence to fund his future projects (Vance, 2015). By increasing customer demand, expectations for the company would be better tailored towards increased production of his products, an issue he already foresaw and addressed by acquiring Solar City and creating the Giga factory. The implementation of the Giga factory may reduce production costs by over 30%, addressing one of the primary issues faced by his unified field of companies (Vance, 2015). Finally, addressing the globalization concerns is key to Musk’s success. China is transitioning into clean-energy but it is an uphill battle (Korosec, 2015). However, the barriers to entry in China are much higher than in the domestic market (Korosec, 2015). Musk believes that the failure to properly establish a foothold in China stems from their perception of the charging stations (Korosec, 2015). This is because the infrastructure of China, little to few garages and multiple parking decks, does not easily support charging stations (Korosec, 2015). In order to increase profitability, Musk should dedicate more of his capital towards establishing a network of electric vehicle chargers in both the parking garages and residential buildings (Korosec, 2015). By establishing a production factory there, Musk

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