SCP model Strategy Essay Example for Free

SCP baby-sit Strategy EssayBuilding on the SCP model, Michael gatekeeper developed the highly influential five forces model. Porters model identifies five key competitive forces that managers need to consider when analysing the industry environment and formulating strategy Porters 5 competitive forces model is starting point for strategic analysis that is used for assessing the attractiveness of an industry (Johnson,et al , 2008) and discoering a desirable strategic innovation that improve the industry and participation profitability (Wit and Meyer,2005) The little terrors to new entrantsThe threat from new entrants is very high. Entering the electric automotive industry in 2003, Tesla itself faced the challenges of being the new entrant into the mart having numerous financial troubles that required high capital investments, building the brand and distributions channels. However, for established manufacturers with considerable economic power to enter this market is relativel y unkept due to their capabilities and governmental program support for developing electric vehicle (Shirouzu, 2011). There is a relatively low barrier to entry due to the high demand for environmental friendly vehicles and with other outlets for available technology for lithium-ion batteries, it is a level of playing field where any company can replicate (Shirouzu,2011). This is an orthogonal threat that Tesla faces because this technology is easy to imitate by competitors.The bargaining power of BuyersOverall bargaining power of buyers is modest. According to Tesla Annual Report (2014), they rely on their relationship with Daimler and Toyota (Brown, 2013). The partnership is very important for Tesla, because supplying these companies constitutes the high share of their profit and thus, they cannot lose them, making their power considerably high. However, they also sell their cars to person customers, and many government incentives give potential customers tax credit deduction (Ministry of Transportation, 2010). These programs stimulate the demand of electric cars that makes bargaining power low.Threat of SubstitutionThe threat of substitutes is considerably law in automotive industry, because there are only few choices in the substitution of car. One of thesubstitutes can be walking or biking that is very inconvenience for long distances. Moreover, mass transportation such as trains, buses, and subways are substitutes that are suitable for local and distant travelling (Dutch, 2008). However, many spate prefer to have their own car that is more convenient.The Bargaining Power of SuppliersThe power of suppliers is very high due to the fact that company is highly parasitical on these suppliers and any problems with components delivering will result in production disruption that negatively reflects on company image. This is due to purchasing components from over 200 suppliers over the world. Despite of building close relationships with main suppliers such as Panasonic (Tesla Motors, 2014), working together on the development of new battery cell and replacing white lotus supplier s chassis with manufacturing by themselves (Tesla Motors, 2014), many suppliers stay single sources of components used in their cars (Harryson and Keller, 2013)The Intensity of Rivalry in the IndustryThe rivalry in the whole automotive industry is very competitive. However, within electrical vehicle market in which Tesla position itself, the rivalry is modest because of small number of competitors in the face of 18 different current models, the main of which are Nissan Leaf Ford Focus BEV and Chevrolet Volt (Insideevs.com, 2014). However, this market is very attractive and expanding fast, therefore more companies, including BMW, Audi and Volkswagen, has entered it recently with their plug-in models (White, 2013). In addition, every company is trying to create their niche, developing many alternatives in term of environmentally friendly cars, including hybri ds, small performance turbo diesels and biodiesel cars. Thus, in future, the rivalry will be more intensive and companies will need to keep innovative, improving and making better cars.Brown, N. (2013). Daimler Wants Increased Cooperation With Tesla Motors. online CleanTechnical. Available at http//cleantechnica.com/2013/11/07/daimler-wants-increased-cooperation-tesla-motors/ Accessed 6 April. 2014 Harryson, S. and Keller, S. (2014). Tesla Motors Case II From Technology Start up to Commercialization Vehicle.CIEL.online Available at http//ciel-lab.dk/wp-content/uploads/2013/04/Case_Tesla-Motors-Part-II.pdf Accessed 1 April. 2014 Insideevs.com, (2014). February 2014 Plug-In Electric Vehicle Sales Report taunt Inside EVs. online Available at http//insideevs.com/february-2014-plug-in-electric-vehicle-sales-report-card/ Accessed 3 April. 2014 Ministry of Transportation, (2010). Newsroom Ontario Paves The Way For Electric Vehicles. online Available at http//news.ontario.ca/mto/en/2010/ 06/ontario-paves-the-way-for-electric-vehicles.html Accessed 4 April. 2014 Tesla Motors, (2014). About Tesla Tesla Motors. online Available at http//www.teslamotors.com/about Accessed 20 April. 2014 Wit, B. and Meyer, R. (2005).Strategy synthesis. 3rd ed. London Thomson Learning.