Tesla Model S - Design and Development of Global Manufacturing Strategy

Executive Summary

For the purpose of this project, our group has decided to analyze and evaluate the decision to market the automobile Tesla Model S in Singapore market.

The full sized electric car Tesla Model S is manufactured by a new force in the automobile industry, which is none other than Tesla Motors. The company was founded by engineers from Silicon Valley in 2003 and headquartered in the United States. Tesla Motors possesses the design, engineering and manufacturing capabilities to build electric cars, electric vehicle power train components and renewable energy storage systems to address the environmental concerns. CEO Elon Musk envisions Tesla Motors to be an independent automaker that can offer electric cars at affordable prices to the average consumer.

Tesla Model S is the second electric vehicle that has been churned out in the Tesla Motors production line. The first electric car to top the monthly new car sales ranking in countries including Norway and Denmark, the Model S has achieved enormous success since its debut in 2012. Two years after its launch, an upgraded version Dual Motor Model S was unveiled to support a more powerful propulsion system. By the end of 2015, Global Model S sales surpassed the 100,000 unit milestone. It has won numerous international accolades, including the 2013 World Green Car of the Year, 2013 Motor Trend Car of the Year, and Best 25 Inventions of Year 2012, nominated by the Time Magazine.

Model S has several significant features in its repertoire. It has the highest safety rating in America where safety is one of the most important concerns for drivers. It is available for an electric all-wheel drive which can alleviate the environmental impacts due to car exhaust. Moreover, the powerful energy storage system of the car makes it available over 270 miles in range and it can achieve acceleration to 60 mph within a mere 2.8 seconds. All these features combined have made Model S a unique and strong contender in the automobile market.

Thus far, Model S has etched out strong footholds in the United States, followed by Norway, Denmark and other European countries including Austria, Belgium, Finland, France, Germany, Italy, the Netherlands, Sweden, Switzerland, and the United Kingdom. Within the Asia Pacific region, Tesla Model S is available in China, Hong Kong, Japan and Australia.

In early March 2016, Singapore welcomed its first Model S import into the island. The vehicle model quickly rose to fame following a highly publicized tax imposition of 15,000 SGD by the Land Transport Authority (LTA), which cited excessive pollution caused by electricity generation. The topic has aroused a wide debate over the island as Model S has in fact been named cleanest car model in the world.

When the conclusive investigations have been set forth, and the tax imposition readjusted accordingly, our group believes that Tesla Model S will have a large market in Singapore.

To market Model S in Singapore, our group has chosen five major categories including supply chain, human resource, technology management, risk minimization and competency building to ask questions in order to design a strategic pathway for launching this new automobile model.

Questions

1. Supply Chain Management

A. Demand Evaluation

1. How to effectively evaluate the current market direction for automobile ownership in Singapore and determine the suitability of the Tesla S in Singapore.
2. Based on the current market direction, how should Tesla Motors forecast the current and future demand in this new market?
3. Does Tesla Motors possess the requisite capabilities on its production front to satisfy the market demand?
4. Given the direction and demands of the Singapore market, how should Tesla Motors re-design and adjust the supply chain model?
5. What strategies should Tesla Motors take given all the aforementioned in consideration?

B. Logistics & Material Transfer

1. According to the market preferences and demand forces, is there a need for Tesla Motors to set up any additional factory to reduce the transportation cost and time delay?
2. Is there a requirement for building a new warehouse augment the existing supply chain design?
3. How would Tesla Motors reduce the transportation cost appropriately and still balance the tradeoff of ensuring that the delivery falls within an acceptable lead time, satisfying a preset service level?
4. Which 3PLs are Tesla Motors willing to outsource to, should there be an overwhelming demand for the Tesla Model S once introduced?
5. What is the inventory strategy that Tesla Motors will take in view of the new expansion of the market?

C. Supplier Selection

1. Upon what basis would Tesla Motors evaluate the suppliers it cooperates globally and regionally?
2. With the knowledge of competitors’ suppliers, how can Tesla Motors achieve competitive advantage with its existing and future suppliers?
3. How would Tesla Motors evaluate the feedback on the suppliers and share this information with the suppliers?
4. How would Tesla Motors select the suppliers it wishes to develop and what development program would be implemented accordingly?
5. In the long run, will Tesla Motor consider partnerships with suppliers in Asia Pacific region?

D. Supplier Relationship Management

1. How would Tesla  ensuring clarity around the purpose of the suppliers and define the business priorities?
2. What innovative solutions can Tesla Motors bring into play in their supplier relationship management?
3. What are some measures that Tesla Motor can take to map each set of physical, informational, financial and relationship flows?
4. According to the relationship level, what’s the method to manage different suppliers' performances?
5. What strategy would Tesla Motor use to implement differential supplier management approaches?

E. Internal Processes Development

1. What strategy would Tesla use to characterize its business framework in Internal production process?
2. What expansions in terms of customers' demand so how can Tesla manage the inventory?
3. In what ways can Tesla Motor balance the production cycle and production efficiency?
4. In what ways can Tesla Motor achieve the collaborative relationships with customers  reduce demand uncertainty?
5. While decoupling point is located toward the customer's end, how should Tesla Motors minimum order size and govern the relevance of transportation cost to the total cost?

2. Technology management

A. Capabilities & Resources

1. Despite being the world leader in electric car design and manufacturing currently, does Tesla Motor have the technological capabilities to maintain the position?
2. Given the challenges in the initial stages after founding, can Tesla Motor pull together enough resources to tide over the next round of challenges?
3. Does Tesla Motor have adequate resources and capabilities in stepping up maintenance and service especially after market expansion?
4. Given unique design and engineering features of Tesla Electric Vehicles (EV), does Tesla have tooling and retooling capability in manufacturing?
5. How should Tesla Motors boost its testing capability and quality control?

B. Research & Development

1. Can Tesla Motor provide stable financial support to continuous and extensive R&D activities? It was during its honeymoon phase that it won government funding, which is not a permanent solution. In fact, Tesla Motor is making a loss of $4,000 per Model S sold.
2. How can Tesla Motors retain and attract expert engineers and technicians?
3. How can Tesla Motors maintain an efficient product design and development cycle?
4. Given the intensive competition in automobile market, how should Tesla Motors determine the optimum frequency of new launch or modification of existing models?
5. How should Tesla Motors strengthen its patent protection of battery technology development?

C. Technological Competitive Advantage

1. What are the technological competitive advantages that Tesla Motors has among global automakers (inclusive of normal cars) as it is still quite young and a player in niche area?
2. Are the competitive advantages in terms of technology identified sustainable for the long term?
3. If yes, how can Tesla Motors maintain, expand and search for new technological breakthroughs among electric vehicle (EV) category?
4. Does Tesla EV have the technological competitive advantages to compete with other new energy cars in the future?
5. Are these technological competitive advantages identified for global competition or regional competition only?

D. Environmental Impact

1. How can Tesla Motors solve the problem of higher emissions in manufacturing than normal cars?
2. How can Tesla Motors alleviate pollution associated with power production and charging?
3. How can Tesla Motors refine its electricity grid?
4. Due to expansion of production scales and possible sales, the requirement of elements for making battery is rising in large quantity (such as lithium). How should Tesla Motors solve the problem of sourcing for raw materials and environmental issues associated?
5. How should Tesla Motors dispose of used cars, especially the car batteries which can have a serious environmental impact if disposed of in landfills?

E. Patent Protection

1. What is the frequency of technological breakthroughs and how to manage?
2. What is the current mechanism of patent protection and how to improve?
3. To what extent should Tesla Motors cooperate with other car makers and will it interfere with Tesla’s patents?
4. In 2014, Elon Musk, CEO of Tesla Motors announced removal of patent wall as a gesture to encourage open source movement. As it will infringe patent protection, how to incentivize R&D at Tesla?
5. If patents are shared with other EV makers, how to ensure the competitive advantages of Tesla cars?

3. Competency

A. Core Competency

1. What are Tesla’s competitive advantages in creating and delivering value to its customers in Singapore market?
2. What are Tesla’s unique abilities that cannot be easily imitated?
3. How can these core competencies help Tesla Motors to win market share in the competition for the Singapore market?
4. How can Tesla build trust and confidence for its first customers when entering the Singapore market?
5. How can Tesla Motors provide a consistently high level of service to customers?

B. Competition

1. Who are Tesla’s main competitors in Singapore market?
2. What are the competitors’ advantages?  
3. Can Tesla Motors value-add in areas that other automakers cannot provide or cannot provide so well?
4. What are the competitors’ weaknesses? Can Tesla find a way to beat them in these areas of weakness?
5. What are the competitors’ strategies in local market and can these be improved?

C. Value Creation

1. How does Tesla’s products value-add for customers, markets or shareholders?
2. Each company has its own intangible assets like technology, innovation, intellectual property, alliances, management capabilities, employee relations, customer relations, community relations, and so on. What are the intangible factors that drive the value creation in Tesla Motors?
3. How can Tesla Motors maximize the value created in the whole business chain?
4. How can Tesla Motors build its brand and reputation?
5. What long term perspective should Tesla Motors adopt and how should it align all of its resources toward future goals?

D. Performance Measurement

1. What measures can be taken to motivate and accurately reflect objectives targeted and enhance the competency?
2. Are there any metrics that can be defined or organized to guide and monitor achievement milestones?
3. What is the roadmap for further plans?
4. How can Tesla Motors monitor the feedbacks?
5. How should Tesla Motors ensure the plans can be executed as scheduled?

E. Continuous Improvement

1. What innovations can be appropriated to improve the speed to market of new products or new service?
2. What are the possible experiences or needs in the market(s) that can be expanded?
3. What is Tesla’s long term objective and future target?
4. What actions can be taken to build long term capabilities?
5. How can Tesla Motors develop new core competencies to achieve profitable and long-lasting growth?

4. Sales & Marketing

A. Business Objective

1. In light of the recent incident of a hefty $15,000 electric vehicle fine on the Model S, in what manner can consumer education play a critical role in convincing Singapore consumers of the benefits in owning the revolutionary Tesla Model S?
2. What key performance indexes would be requisite for the sales and marketing teams in Singapore? Provide a suitable justification for the board of directors.
3. What intermediate targets should the sales and marketing teams aim to achieve together within the initial phase of implementation of sales in Singapore?
4. If the implementation proves to a success, could Singapore be a potential Asia Pacific headquarter for the distribution of the Model S to the region?
5. How could the introduction of the Model S be a way to increase brand awareness and prestige of Tesla Motors in Singapore and the rest of the Asia Pacific countries?

B. Market Evaluation

1. Who is currently purchasing the Model S elsewhere in the world and what lifestyles do they live?
2. Which of the existing market segment are not interested in buying the car model and what is the most prohibitive factor involved? Which are the types of cars they purchase instead?
3. What general trends and pressing issues are affecting Singaporeans at the moment and how would this / would this not affect their consumer behavior pertinent to the automobile industry?
4. Are there any existing electric cars in Singapore and if so, how successful have they been in breaking into the Singapore market? What is this attributed to?
5. With the above questions in mind, what would be the decided target market segment in Singapore and what are the most useful marketing strategies in reaching them?

C. Points of Sale

1. Which car dealership(s) would Tesla intend to work with to sell the Model S exclusively, or would it be best
   to sell the model independently, and why?
2. Besides the traditional methods of car sales through visiting the car dealership and getting a test
   drive, what other new and creative methods of car sales are viable?
3. How can the Tesla S test drive be elevated to a fresh experience for any potential or interested buyers?
4. Alongside the Tesla S, what other transport models could potentially be brought into the Singapore market, to cater to the need of different market segments?
5. Are there any after sales services that could give buyers of the Tesla S the peace of mind and satisfaction with the car model to spread the word of mouth?

D. Synergistic Stratagem – Complementary Functions

1. All are aware that marketing is a cost center while sales is a profit center with commissions tied directly to customer sales. As such, how will the marketing team be fairly rewarded alongside good sales performance?
2. Oft times, there could be some blind spots that are not evident to each team. Is there an established channel for feedback and discussion between the two functions? For example, sales team can feedback customer opinions to the marketing team, while marketing team can provide input to the sales team on how to present the car model to the potential customers.
3. Would it be prudent to amalgamate the two functions into one so that they can work closely together and complement each other?
4. Otherwise, how else can the two functions work better together to create synergistic appeal to Tesla customers?
5. Besides the marketing and sales team, how can the different functions work more closely with each other? Having biannual family getaways could promote closer ties between the functions as well as employee families, promoting better working relationships.

E. Marketing Campaign

1. Pertinent to the prior media attention upon the car model previously, evaluate how has it impacted Tesla Model S’ footing in Singapore?
2. What is the ideal image for Tesla Motors and how can this be achieved by leveraging upon the previous media attention upon the Tesla Model S?
3. Which form of media is most widely used and can be utilized for properly introducing Tesla Model S and other models to Singapore?
4. Which influential locals support environmental causes and can be called upon to show support for the brand?
5. As with the Apple I Phone, the consumers of today are sold by ideas and choices more than the actual hardware. Tesla already possesses the necessary hardware. How can the marketing campaign sell the Tesla Model S as the lifestyle of the 21st century, and keep that legacy onto the future as people get increasingly environmentally conscious?

5. Risk minimization

A. Identify and Assess the Risk

1. What are the possible risks that Tesla Motors will face when entering into the Singapore market?
2. To what can these risks be attributed to?
3. Are these risks short term risk or long term risks?
4. What are the values created by undertaking these risks?
5. What are the impacts of these risks?

B. Risk Avoidance

1. Is the risk undertaken avoidable?
2. What are the factors that cause the risks?
3. Are there any backup plans to avoid the risks?
4. What are the costs involved for these avoidance strategies and is it worth the company funding?
5. Is Tesla able to avoid the risk?

C. Risk Limitation

1. Is the risk controllable?
2. What are the possible resources needed to limit the risk?
3. What are the possible measures taken that can limit the risk?
4. What are the costs involved for these mitigation strategies and is it worth the company funding?
5. Is Tesla capable of limiting the risk?

D. Risk Transfer

1. Is the risk transferable?
2. Who or which function in the business chain can possibly share the risk?
3. What are the possible measures to transfer the risks to other parties?
4. What is the cost of these mitigation strategies and is it worth implementation?
5. Is Tesla capable of transferring such a risk?

E. Risk Acceptance

1. Is the risk undertaken acceptable?
2. Does the cost of other risk management options such as avoidance or limitation outweigh the cost of the risk itself?
3. What is the likelihood of the risk occurring?
4. What are the consequences of accepting this risk without taking any risk mitigation strategy?
5. What is the trend of this risk? Will the risk grow more serious in future?

Logic Diagram

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