Explanation of the Generic Strategies-Free-Samples for Students

Question: Identify and discuss the circumstances leading to the launch of the new product/service. Considering the two generic strategies of product differentiation and cost leadership, explain whether your chosen firm is adopting one or a combination of these strategies. Answer: Introduction Tesla Model 3 is an electric car which is manufactured by a company named Tesla. This is a sedan car with a range of 220 miles. The model has unveiled in the year 2016 and within a week around 325,000 people reserved the car. This model also has a self-driving hardware which the company plans to enable it in future. This study focuses on the identification of the circumstances that led to the launch of Model 3, explanation of the generic strategy, analysis of whether the company succeeded or failed in gaining the competitive advantage due to the launch of the new product (Lambert 2018). Circumstances that led to the launch of Model 3 Electric cars were never cheap to buy and it was not affordable so that the masses can buy it. Previously the Model S was the flagship product of the company that was providing more customization options, displays, acceleration, range. Model S was the safest car in its segment with an option for unlimited supercharging. Whereas, the company Tesla was unable to sell the product to the masses due to its cost. This resulted in the launching of the Model 3 which is simpler, smaller and more affordable electric care. Like the Model 3 is not the third iteration of the Tesla car line-up. Model 3 is more focused on the affordability and reach to the masses. Whereas, the Model S was designed to make it the safest electric vehicle (Tesla.com 2018a). Explanation/justification of the generic strategies For the justification or the explanation of the generic strategies, Porter's generic strategies are used for the study. The generic strategy formulated by Porter include the Cost leadership, differentiation and focus. Cost leadership includes the no-frills, differentiation is the creation of the desired services and products, and focus is the offering the specialized service in a niche market. Porter then divided the focus strategy into two different parts: differentiation focus and cost focus. The cost leadership strategy focusses on the gaining competitive advantage. In simple words, it can be said that development of an edge which will soar the sale in comparison to its competitors. this means increasing the profits by reduction of the costs, at the same time charging the industry average prices (Argyres and McGahan 2017). This strategy includes that the market share can be increased by charging low prices, this will make a reasonable profit out of reduced costs. The differentiation strategy focusses on the development of the services and the products that will be more competitive and attractive th an the market competitors. this can be done through the innovation, development and good research; the ability of the company to deliver high-quality services and products; effective marketing and sales so that the market can get the insight about the benefits that are being offered by the differentiated offerings (Tanwar 2013). Considering the Tesla company, the company itself applies the generic strategies in order to achieve or gain the competitive advantage against the other companies in the automotive industry globally. With respect to the porters generic strategies, the Tesla company focus on the usage of the advanced technologies in its related products and electric vehicles. It employs the advanced technology in its electric cars so to gain market advantage over the other companies like the Toyota Motor Corporation and General Motor Company, BMW, Nissan Motor Company, Honda Motor Company and Volkswagen. The company evolved strongly with respect other companies due to its strengths like strong control on the process of the production, highly innovative process, and strong brand (Tesla.com 2018b). The business strategies of the Tesla company and the strategies of the company CEO Elon Musk also gives it a competitive edge over other companies. The generic strategies of the company have enabled Tesla to attract the customers from all over the world along with gaining a competitive advantage in the automotive market (Sec.gov 2018). The strategy employed by Tesla can be broadly described as broad differentiation. Tesla gains the competitive edge over the other companies through the integration of the advanced environment-friendly technologies in its products. It can be understood from the fact thee the market is filled up with the combustion engines. Tesla emphasizes the uniqueness of its products with the focus mainly on the customers that would like to adopt the technology. Thus, Tesla only uses the product differentiation strategy (Tesla.com 2018b). Success or failure of Tesla The Tesla Model 3 is already a success because looking at the huge number of reservation which is around 373,000 and the CEO Elon Musk has also revealed that there is more advance reservation from 500,000 customers. The huge number of customer piling up their reservations for this electric vehicle is unprecedented and this goes to the credit of the company (Holley 2018). Conclusion From the above study, it can be concluded that the Tesla Model 3 is one of the biggest achievement of the Tesla company in terms of gaining the market advantage over its competitors. The Tesla company uses the product differentiation strategy to gain the edge over its market competitors. References Argyres, N. and McGahan, A.M., 2017. Introduction: Michael Porter's competitive strategy. Academy of Management Perspectives. 16(2). Holley, P., 2018. Heres what we know about Teslas Model 3. [online] Washington Post. Available at: https://www.washingtonpost.com/news/innovations/wp/2017/07/29/heres-what-we-know-about-teslas-model-3/?utm_term=.53cd0cc4d010 [Accessed 8 Apr. 2018]. Lambert, F., 2018. Tesla Model 3 | Electrek. [online] Electrek.co. Available at: https://electrek.co/guides/tesla-model-3/ [Accessed 8 Apr. 2018]. Sec.gov, 2018. tsla-10k_20161231.htm. [online] Sec.gov. Available at: https://www.sec.gov/Archives/edgar/data/1318605/000156459017003118/tsla-10k_20161231.htm#Item_1 [Accessed 8 Apr. 2018]. Tanwar, R., 2013. Porters generic competitive strategies. Journal of business and management, 15(1), pp.11-17. Tesla.com, 2018a. Model 3. [online] Tesla.com. Available at: https://www.tesla.com/model3 [Accessed 8 Apr. 2018]. Tesla.com, 2018b. Master Plan, Part Deux. [online] Tesla.com. Available at: https://www.tesla.com/blog/master-plan-part-deux [Accessed 8 Apr. 2018]