Tesla Case Study

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time as well.

Pace of technological innovation in product introduction The pace of technological innovation in product introduction is fast within the industry. When manufacturers develop new ideas they want to get them out as fast as possible. One example of this is as fuel efficiency and fuel emission becomes more popular every day, companies want to get their solutions ideas out to the public as fast as possible so they can capitalize on the customers who are switching over from normal cars to electric cars.

Extent to which the rivals differentiate their products and/or services Automobile manufacturers heavily differentiate their products and services. Every car needs to look somewhat different or unique so that customers will somehow prefer it over a rival company’s car.

Extent to which rivals use economies of scale in:

● Purchasing

● Manufacturing

● Services

● Transportation (logistics)

● Marketing

● Advertising

● General and Administration

● Other steps in the value chain (Refer to chapter 4 for the description of the value chain.)

Extent to which the key industry participants are clustered in one geographic location The key industry participants are not clustered in one location. However, certain manufacturers may be slightly more prominent in certain countries based on the manufacturers country of origin. For example, Mercedes and BMW are German car manufacturers so there presence and sales may be slightly greater in European countries.

Extent to which certain industry activities result from learning and experience curve effects When manufacturers witness a rival launch a new service or product, they play close attention to the outcome. If it successful they will follow the trend in some way, and if it is unsuccessful they will refrain. The learning and experience curves are factors that come into play when new products or services are developed and launched.

Capacity surplus or shortage in the industry

(Capacity refers to the total manufacturing output capability for the industry. Capacity surplus would indicate that the industry has the capability to produce more products than the market demands.) There is absolutely a capacity surplus in the industry due to the amount of automobiles the industry has the capability of producing. Every car lot has hundreds of cars on it. There must be a surplus of automobiles in the industry so that consumers have the ability to pick and choose which car they will ultimately purchase.

Capital requirements and the ease of entry into or exit from the industry The ease of entry into the automobile industry is very difficult and the exit is also difficult. Unless the manufacturer is bringing a whole new idea and product to the industry, entry will be very difficult due to the amount of rivals that are already established in the industry. For example, Tesla was able to successfully enter the industry because of their success with the electric car.

Industry profitability

(The annual net profit margin for the industry.) The annual net profit margin for the car industry is around 5%.

Degree of alliances

(You can provide additional economic features applicable to the industry you are analyzing.)