Strategic Management AssignmentComparing Tesla And Apple’s Performance
Question
Task: How to prepare Strategic Management assignment evaluating whether it is reasonable to assert that Tesla and Apple will have comparable long-term profitability in terms of return on invested capital
Answer
Introduction
Strategic development is an important matter in the case of business expansion of a company in the competition, the current Strategic Managementassignment analyses comparative performance of Tesla and Apple. The entire discussion is done in three parts based on the strategic performance of two companies.
Main Discussion
PART A
Prepare a Strategic Managementassignment that determines if it is reasonable to assert that Apple and Tesla will have comparable long term profitability
1. Industry Structure
Oligopoly marketplaces are distinguished by a limited range of providers who are dominating the whole market. They may well be found in all nations and a range of industries. Some oligopoly markets are competitive, whereas others are significantly less. Tesla has followed an Oligopoly industry structure to develop its business in the global market (Evan Niu, 2022). Tesla has operated an Oligopolistic market structure with very minimal competition, which helps the organization to flourish its business in the industrial market. Apple is one of the biggest competitors of Tesla in the global market. As per research performed during this Strategic Managementassignment, it has been determined that Tesla has dominated other companies that aid the organization to control the balance of the market share and also makes identical products. On the other hand, Apple has done monopolistic competition with Tesla, as monopolistic competition defines that industry supplies similar products. So Tesla can provide high-quality products to their customers than Apple.
2. Strategy Execution
Tesla: Intensive Growth Strategy
As Tesla has followed an Oligopolistic industrial structure, they have limited competitors in the global market and they have served high-quality products to their customers and satisfied their clients for that reason intensive growth is very high for Tesla (Tesla. 2022). Tesla, Inc.'s recent main intense growth strategy is market penetration. This competitive strategy helps the organization to enhance its corporate growth by raising its sales revenues in the existing market.
Apple: Product Differentiation Strategy
Apple has a high market demand in the global market and it has produced high quality and completely different products for their customers, so apple has implemented a product differentiation strategy that helps the organization to enhance their market demand in the global market (Apple United Kingdom, 2022). This approach also helps the organization for making its products different and attractive to their customers and Apple utilizes the retail approach which is known as “minimum advertised pricing”
3. Vertical Integration
Tesla: Backward and Forward Vertical Integration
Tesla has recognized the extensive supply chain of automotive industries and they have modernized the complicated supply chain through a Vertical integration strategy. Tesla has vertically integrated multiple production stages, including battery manufacturing, electric motor development, self-driving techniques, and a strong central control infrastructure. Tesla has also implemented an "insourcing approach” to achieve rapid expansion. So Tesla has excessively vertically integrated compared to other automotive companies.
Apple: Vertical Integration
Apple is the king of vertical integration because the company generates Apple own A-series CPUs for their iPads and iPhones. These initiatives allow Apple to go backwards in its vertical integration strategy in the supply chain and allow it freedom and flexibility in its production capabilities.
Based on the industry cash flow, it is identified that Tesla has good performance however, Apple’s cash flow has deteriorated compared to 2020 and the industry performance of both 2021 and 2020. However, the return on invested capital of Apple (29.66%) is higher than Tesla (19%) in last few years (Apple United Kingdom, 2022). Hence, based on the comparison, it is clear that Tesla will have comparable long term profitability.
PART B
Prospective Hindsightof this Strategic Managementassignment
Tesla has served 936,172 vehicles in the year 2021 which means Tesla has grown 87% sales revenue than the previous year (The Economic Times. 2022). Elon Musk, the electric vehicle owner, has developed more than 305,000 vehicles and supplied 308,000 units to their customers in the fourth quarter. The marketer of electric vehicles has made a record that is they have made $5.5 billion profit last year. So the growth rate of Electric vehicles is very high and as Tesla has a high demanding value globally their growth will be increased. In the year 2041 technology will be more advanced and Tesla will be implemented advanced technology in their products as the intensive growth of Tesla is very high, in the year 2041 this organization will use a more advanced strategy for intensive growth in the global market and as they follow oligopoly industry strategy so they have limited competitors in the market. Tesla will implement an advanced industrial strategy, they will also design high-quality products with exclusively unique features to attract their customers and develop their supply chain system in the global market in 2041. So after analysing their growth revenue on the Strategic Managementassignment, it can be stated that Tesla will intensively grow their market value in the year 2041.
PART C
Tesla has planned a few strategies that help the organization to develop its performance in the global market. Those strategies are planning for long term operational strategy, and they are also planning to enhance their financial performance as well as fund management (The Motley Fool, 2022). They have also planned to enhance their stability in the performance. But those strategies need long term planning at least 15-20 years and this is why the plan cannot be implemented in 2021 and 2022.
Conclusion
Based on above research performed during the Strategic Managementassignment, it has been identified that Tesla has the ability to achieve huge success in the year 2041. The company follows oligopoly market structure and this would help to enhance the long term planning from 15 to 20 years.
References
Apple (United Kingdom). 2022. Apple (United Kingdom). [online] Available at:
Evan Niu, C., 2022. All the Ways Tesla Motors Is Like Apple | The Motley Fool. [online] The Motley Fool. Available at:
The Economic Times. 2022. Tesla delivers close to 1 million vehicles in 2021. [online] Available at:
The Motley Fool, 2022. Available at:
