Tesla Inc. Vs General Motor Co

Executive Summary

This report analyzes Tesla Inc. and General Motors Co. internal and external factors. In addition, this report analyzes the two company’s management styles and strategies; as well as, their comparative statistics.

Tesla Inc. and General Motors Co. Internal and External Factors

Tesla internal factors includes their strengths and weaknesses. Tesla strengths are their strong innovative process, brand, and production process. Their weaknesses are a limited market presence, limited supply chain, and most important the high prices of their product to consumers. Their external factors include the opportunities and threats. Tesla opportunities are improving global sales expansion, global supply chain expansion, and business diversification. Their threats Tesla have is the aggressive competition from other car manufactures.

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General Motors Co. internal factors includes their strengths and weaknesses. General Motors have many strengths in the car industry which are the joint ventures with Chinese automobile companies and their strong positioning in the United States car market. The company weaknesses are their dependence on the U.S for revenue, their lack of brand awareness, and their reliance on their pickups and SUV’s for profits. The external factors include the company threats and opportunities. The threats are the increased of competition, the rise of U.S. dollar exchange rate, the increasing of government regulations, and the possibility of the U.S. automotive market to decline. The opportunities that General Motors have are the low fuel prices that makes consumers want pickups and SUV’s.

Tesla Inc. and General Motors Co. Management Style and Statistics

General Motors GM brought a collaborative style to the company and management of the company. Tesla CEO brought a strong leadership style to the company. Tesla annual sales have increased from year to year beginning in 2008 to 2017. General Motors sales from 2013 to 2015 were slightly decreasing overtime. However, their sales began to rise again in 2016 before they took a little downfall in sale in the year of 2017.

Introduction

The firm is looking to invest some of the company’s profits into the stock market. They are looking to find two leading companies in the same industry decide which company they are going to invest in. The two companies that the firm will be doing research on are Tesla Inc. and General Motors Co. They both have different aspects in the automobile industry.

The purpose of this report is to analyze Tesla and General Motors internal and external factors; as well as, their management styles and strategies. In addition, this report is to evaluate both companies a statistic such as annual sales, market shares, number of employees and customers, and sources of revenue. Also, the report is to suggest which company would be best to invest in the automobile industry. The two companies are at the top of the automobile industry because of their different innovation of making vehicles. However, both companies have interested background in the automobile industry.

Tesla Inc. and General Motors Co. Company Background

The all electric vehicle company, Tesla, was founded in 2003 by engineers that had a unique thought of electrical vehicles. The company mission is to accelerate the world’s transition to sustainable energy. Tesla thinks the world would be better if car industries move to zero-emission and relies on fossil fuels. In 2008, Tesla launched their Roadster vehicle. The company sat history when they introduced the first ever all electric sedan to the market. The first electric sedan was the Model S. Tesla expanded their product line by introducing the Model X in 2015. By 2017, Tesla introduced the Model 3 vehicle which was said to be the CEO master plan. In addition to the Model 3, Tesla reveal their truck style of an electric vehicle. The truck was the Tesla Semi which was considered the safest truck ever to be produced. Tesla have a factory in Fremont, California where they produce all their vehicles. Tesla do not only produce electrical vehicles, they produce energy solution such as Powerwall, Powerpack, and Solar Roof. Tesla have a factory named Gigafactory 1 that helps them reduce the battery cost of the vehicles

General Motors Co. is one the oldest car industry in the world today. They were founded in 1908. They are also like Tesla, they think zero emission, congestion, and crashes is better for the world in the future. General Motors Co. have been in the transportation industry for over 100 years. They established their business in Detroit, Michigan and now that is where the main headquarter of the company resides at. The company does business in five different continents in the world and have about 180,000 people working in their company. In addition, General Motors is considered the first to produce an electric car. When it comes to electric starter and air bags, General Motors is the first to ever do that as well. To conclude, General Motors have a very diverse culture in their company. Among the people in the industry, there are 70 different languages being spoken the company.

Tesla SWOT Analysis

Tesla SWOT Analysis will show how the company can maintain profits in the future, as well as, how they can remain competitive in the car industry, Tesla have many internal factors that will allow them to reach those goals. To begin, Tesla strengths are their strong innovative process, brand, and production process. Their continuous rate of innovation allows them to sustain their competitiveness in the industry because they were considered the first to innovate a fully electrical sport car. Their strong brand is what makes their innovation a success because it allows them to attract new consumers; as well as, retain consumers. Tesla strong production process allows them to separate themselves from outside parties that will get involve in the company. These three strengths make the company as a whole a very competitive business against other competition in the industry.

Tesla other internal factors involves their weakness which can cause Tesla to lose their competitiveness and growth of the company. Their weaknesses are a limited market presence, limited supply chain, and most important the high prices of their product to consumers. The reason their limited market presence is a weakness is that they mainly generate their revenue from the United States and not from other countries in the world. To remain competitive with other car manufactures, they will need to start gaining a larger share of revenue from other countries beside the United States. Also, the lack of market presence in other countries makes it hard the company to grow in the industry despite their strong innovation process. Similar to their limited market presence, their limited supply chain will keep them from growing in markets around the world besides the United States. The weakness that I think that is most important to Tesla losing their competitiveness in the market is their expensive prices on their products. The high prices will drive consumers away to Tesla competitors and cause Tesla to lose their growth in the consumer-based market. Also, the high prices will cause a down fall in Tesla revenue.

Tesla have external factors that will impact them in the industry as well. To begin, Tesla have some opportunities that will help them improve their growth and performance in the market. Tesla opportunities are improving global sales expansion, global supply chain expansion, and business diversification. Tesla should focus on improving global sales where they have insignificant market presence. The can increase their revenue if they are willing to go into other countries automobile markets and present their product line to that market. If, Tesla can improve their global supply chain in other countries, they can improve their company operations just like General Motors Co. They can also improve the company performance through diversification. By having diversification in the industry, Tesla will be able to acquire new businesses from the automobile market to reduce business exposure.

Tesla other external factor involves the threats the company is facing in the automobile industry. Their threats Tesla have is the aggressive competition from other car manufactures. Also, the fluctuations in material prices and dealership regulations are threats to Tesla Inc. The aggressiveness of the other competition can cause them loss resources for batteries and solar panels because other companies are started to produce electric vehicles. The fluctuation in material prices plays a huge role in determining the company growth. The reason is that, the high cost of the material needed to make the vehicle will limit their productivity of the vehicle. Also, fluctuation in the material prices will cause them to loss their competitiveness in their innovation of their vehicles. Dealership regulation can affect the company growth as well because majority of Tesla cars are being sold directly to consumers and not through dealerships. States will start to ask Tesla to sell their cars through dealerships so that the dealerships can get into the revenue.

General Motors Co. SWOT Analysis

General Motors Co. SWOT Analysis will show the internal factors on how they can remain competitive in the car industry; as well as, the external factors that will show how the can improve. In addition, the external factors will show how threats can cause them to lose their competitiveness and revenue in the industry. To begin, internal factors such as General Motors Co. strengths can help with their competitiveness in the car industry. General Motors have many strengths in the car industry which are the joint ventures with Chinese automobile companies and their strong positioning in the United States car market. Also, they have sustainable and environmental policies, safe echo-friendly vehicles, and a strong brand. Majority of General Motors vehicles are sold in China. Their joint venture with China has allowed them to accelerate in the company’s growth. Their strong positioning in the U.S car market is what allow them to remain competitive. The reason is that, General Motors is considered the largest automobile manufacture in the United States, and they have the most market share in relations of revenue from the U.S. General Motors having great sustainable and environmental policies allows them to save energy cost and its strengths their brand. General Motors having one of the best echo-friendly vehicles allows them to remain competitive over other competitors. Their strong brand comes from selling their vehicles under different brands allowing them to attract more consumers and satisfy their needs.

Their other internal factor involves their weaknesses that can cause them to lose their competitiveness in the industry. The company weaknesses are their dependence on the U.S for revenue, their lack of brand awareness, and their reliance on their pickups and SUV’s for profits. General Motors relying on the U.S for most of their revenue can hurt their competitiveness because they will not be ready for any economic changes that may appear. This will allow other competitors to gain more customers. Their lack of brand awareness can hurt them as well because they will not have any brand recognition due to them selling their vehicles under many brands. Also, they will have to do more than other competitors to introduce new vehicles. If GM can not diversify their profits from just pickups and SUV’s it can hurt the company in the future.

General Motors Co. have external factors that will impact them as well. The external factors are their opportunities and threats. The opportunities that General Motors have are the low fuel prices that makes consumers want pickups and SUV’s. Also, their timing of new model releases and consumers demand for autonomous vehicles are other opportunities GM have. The lowing of fuel prices will have consumers wanting to buy SUV’s and pickups, so GM could take advantage of growing demand for them to increase profits. Their ability to release their new vehicles frequently instead of years from the timeframe will allow them to be position for the demand of the vehicles. General Motors ability to make autonomous vehicles will allow them to increase profits because of the high demand for them.

The other external factor that can impact General Motors Co. are the threats to the company. The threats are the increased of competition, the rise of U.S. dollar exchange rate, the increasing of government regulations, and the possibility of the U.S. automotive market to decline. The increase of new competition such as Tesla can have an impact on GM profits because of Tesla is producing electric vehicles like GM. The increase of the U.S. dollar exchange rate can hurt the company because of the converting of the foreign currency to the U.S dollar. The increase of government regulation can cause production cost to increase for the company allowing price sensitivity in the market. The decline in the automotive market will not help the company because sales will start to decline for the company because of the consumer not wanting the vehicles on the market.

Tesla Management Style and Strategies

Tesla CEO, Elon Musk, is trying to change the management structure of the company for the reorganization of the electric automaker’s operations. Musk wants the change, so it can improve communication and efficiency of the company operations. In addition, he believes the change will help with company profits. Tesla management strategy was first to build a viable product to test the automotive market. Their strategy then shifted to building luxury model vehicles to gain consumers and revenue from the market. Tesla shifted to make sure the use of clean energy and double down on autonomous vehicles. Musk wants to make the use of solar panels to be placed on Tesla vehicles.

General Motors Co. Management Style and Strategies

General Motors management followed the lead of their chief executive officer Mary Barra. She was thought to bring the company down, but with her strong leadership style she stirred the company to a financial gain. She brought a collaborative style to the company and management of the company. One strategy General Motor had was to slow down their operation in Russia in 2015.

Tesla Inc. Annual Sales, Number of Employees, and Market Share
Tesla Annual Revenue
(Millions of US $)
2017 – $11,759
2016 – $7,000
2015 – $4,046
2014 – $3,198
2013 – $2,013
2012 – $413
2011 – $204
2010 – $117
2009 – $112
2008 – $15

Tesla annual sales have increased from year to year beginning in 2008 to 2017. Their innovation of electric vehicles and energy storage products have help them with their constant increase in sales over the years. They mostly operate in the United States, China, Norway, and other international countries. Figure 1 shows the increase in annual sales and the total of the annual sales.

In 2017, Tesla employment reached 37,543 people. The people employed by them is significantly lower than General Motors who had 213,000 employees in 2012. As of September 2018, Tesla market share was 2.08 in the United States.

General Motors Annual Sales, Number of Employees, and Market Share

General Motors is one of the largest automakers in the world. They have produced some of the oldest brand of vehicles such as Chevrolet, Cadillac, and Buick. Figure 2 shows the employment from year to year for General Motors.

Figure 2 General Motors Numbers of Employees

Majority of General Motors sales comes from outside of the regions of the United States. About thirty-seven percent of their vehicles were sold the United States in the year of 2017. In 2017, General Motors market share reached about 17.6 percent. They are considered the leading automobile manufacturers in the industry worldwide. Figure 3 shows General Motors annual sales from 2013 to 2017. General Motors sales from 2013 to 2015 were slightly decreasing overtime. However, their sales began to rise again in 2016 before they took a little downfall in sale in the year of 2017.
Figure 3 General Motors Annual Sales

Recommendation and Conclusion

Tesla and General Motors are the two profound car manufacturers in the car industry today. General Motors is considered the oldest and leading car manufacturer in the industry. However, Tesla is one the rise because of their great innovation style in their company. They are becoming the leading manufacturer in producing electrical vehicles. They both have internal and external factors that will hurt or help them in automobile industry.

The car manufacturer that I would invest my money in would be General Motors Co. They are the oldest and strongest car manufacturer in the world. They have produced many brands in their operation making them a diverse company. In addition, they are the first to produce an electric car not Tesla. Therefore, General Motors have been evolving in their innovation of cars for about 100 years. Here are three main reasons why I will choose General Motors to invest my money in:
They have a strong position in the United States that allows them to stay competitive among the other car manufacturers in the industry. In addition, the strong positioning allows them to sustain their status as the largest manufacturer in the automotive industry. Along with their joint venture with China, General Motors Co. can sustain their company growth in the market.

Their consistence in their sales year by year is a major reason to invest in their company. As shown in figure 3, you can see that their sales are at a steady level with some increasing in certain years. This proves that the demand for their vehicles are high and consumers are steady purchasing the vehicles.

The high percent of market share is another reason to invest in General Motors. They had a market share of 17.6 in 2017. The high market share shows that the company is doing the right things in meeting consumers’ needs and wants in a vehicle. Also, the high market share shows that they have maintain their position in the industry as being competitive to other manufacturers.

So, if you are looking for a car manufacturer to invest in you should invest in General Motors Co. They are competitive in every aspect of the automobile industry and are continuing to grow in the market. In addition, the large number of employees allows them to remain competitive and allows them to fulfill demands of consumers producing a high level of revenue. As a result, your return from your investment in the company will be high because of General Motors standing in the automotive industry.

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