Electric Car and Tesla Motors Essay

785 Words Oct 10th, 2014 4 Pages
Building on the SCP model, Michael Porter developed the highly influential five forces model. Porter’s model identifies five key competitive forces that managers need to consider when analysing the industry environment and formulating strategy:
Porter‘s 5 competitive forces model is starting point for strategic analysis that is used for assessing the attractiveness of an industry (Johnson,et al , 2008) and discovering a desirable strategic innovation that improve the industry and company profitability (Wit and Meyer,2005)
The threats to new entrants:
The threat from new entrants is very high. Entering the electric automotive industry in 2003, Tesla itself faced the challenges of being the new entrant into the market having numerous
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One of the substitutes can be walking or biking that is very inconvenience for long distances. Moreover, mass transportation such as trains, buses, and subways are substitutes that are suitable for local and distant travelling (Dutch, 2008). However, many people prefer to have their own car that is more convenient.
The Bargaining Power of Suppliers The power of suppliers is very high due to the fact that company is highly dependent on these suppliers and any problems with components delivering will result in production disruption that negatively reflects on company image. This is due to purchasing components from over 200 suppliers over the world. Despite of building close relationships with main suppliers such as Panasonic (Tesla Motors, 2014), working together on the development of new battery cell and replacing Lotus supplier ‘s chassis with manufacturing by themselves (Tesla Motors, 2014), many suppliers stay single sources of components used in their cars (Harryson and Keller, 2013)
The Intensity of Rivalry in the Industry
The rivalry in the whole automotive industry is very competitive. However, within electrical vehicle market in which Tesla position itself, the rivalry is modest because of small number of competitors in the face of 18 different current models, the main of which are Nissan Leaf Ford Focus BEV and Chevrolet Volt

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