The following report is a type of proposal to the issues faced by Tesla in current time. The company is facing issue related to its autopilot’s inability to detect stationary objects and blind spot. The proposal is to develop a system that has sensors to detect the stationary object and alert the user. For that purpose, the value proposition had been detailed out along with a thorough discussion of business model. Also, the company’s supply chain development and competitive advantages were also elucidated in the report. Certain assumptions related to customer, technical and financial feasibility were also discussed. At last, the discussion on certain innovation tools was done in context of Tesla.
In modern world, organisations face many issues and challenges. These might be related to funds, operations, product design, HR, etc. However, these challenges can be resolved by making use of innovation in that particular area. In this report, an analysis of the issue faced by Tesla is done i.e., Tesla’s autopilot technology is poor in detecting blind spot and stationary vehicles which is leading to fatal accidents.This issue will be resolved by making use of an innovative sensor technology that identifies blind spots and stationary objects at a distance of 500 meter and alert the driver. This report is mere a business proposal that comprises a value proposition model of Tesla, business operation development, supply chain development, competitive advantage, strategic fit, and phased development plan. In addition to this, certain innovation tools are also discussed followed by the critical self-analysis.
While going for strategic planning, the business model can assist Tesla in carrying out innovation in its current Autopilot issues. If this is done properly, the company can expand sustainably (Joyce& Paquin, 2016). The business model canvas given by Osterwalder & Pigneur (2014, pp.16-41) is discussed below:-
Disciplined Entrepreneurship Canvas
In this business canvas model, the discussion of certain key elements have been done in context of Tesla’s newly designed autopilot system and cars in which it is installed. The elements are:-
Customer Acquisition:Tesla already has a high brand image across the world due to its capability to carry out innovation and product development. For its new autopilot system, acquiring the customer won’t be tough as it is related to customer safety. People would be happy to invest in the cars that has better safety system (Bickersteth, et.al 2018). For acquisition of customers, the company would be running nationwide awareness campaigns highlighting benefits of the new project.
Product Unit Economics:These include the direct cost and revenue associated with the upgraded autopilot systems expressed in per unit. These costs and revenues are important for the financial success of the system.
Scaling:The product scaling would be large and the product would be installed in large number of cars (Bickersteth, et.al, 2018).
Design & Build:Tesla is very particular about the designs and product quality. Hence, there is no doubt that the new system would not be up to the quality standards. The customers would be satisfied with the updated systems.
Overall Economics:Talking about the overall economics, this involves cost-benefit analysis. The initial cost of investment for the product development is high but in the long run, it has many benefits which can overshadow the cost.
Sales: The product would build a trust in the customers and would increase the sales of Tesla Cars.
At present, Tesla is aiming at improving the current autopilot system installed in the cars that fails to determine the location of stationary objects and bling spots. For this purpose, the present manufacturing and sales processes have been halted. Being the best in the automobile market by carrying out research and innovation in electric cars is the prime value for the company (Litman, 2017). Company is known for its innovation and unique features in the electric automobiles. With its newly proposed sensor technology, the company is aiming at gaining the same trust of customers as it used to be prior to accidents due to autopilot failures (Augsten& Marzavan, 2017).
For business operation development, it is required by Tesla that it should focus on Client’s requirements and current failures in the product design. Tesla needs to modify its pitch so as to fulfil the requirements of the customers. Innovating the current product designs and providing clients something new beyond their expectation would result in marketing by word of mouth (Augsten& Marzavan, 2017). This is the major competitive advantage for Tesla. It does not believe in mainstream advertisement for business development. Publicity via word of mouth is enough for the company.
In addition to this, Tesla is investing in new start-ups in order to get access to a latest innovation and technology for its automobiles. Apart from this, the company is forming alliances with local leaders in different countries.
In order to implement the upgraded version in its cars, the company has to bring some changes in its current supply chain (Carson, et.al, 2018). The supply chain is provided below. All that is required from the management is to change certain process in the designing process and manufacturing process as these process would help in innovating and installing the new autopilot systems, sensors, and alert system
Scope of Change in Supply Chain of Tesla
A special budget is required for carrying out modification in the current autopilot system. The cost of the project is met by value capturing process (He, 2015). For that purpose, it is important to understand the overall costing of the innovation which is shown in the table given below:-
Research and development
Purchase of Sensors
The value capture for this project is done from investors, interest gained on deposits, and some part of business revenue.
Tesla has been a renowned name in the mainstream luxury automobile industry. Tesla cars have superior performance, low mechanical complexity, and lower maintenance. These are some of the USPs of Tesla cars. It is the leader of the EV automobile market and is heavily investing in improving its battery’s performance. In addition to this, with its large supercharger network, it is reaching new heights. The new entrant may take decades to set such a huge charging network Its R&D team is exceptional and is capable of updating the current technology and resolve all technical issues related to automobile (Pakhomova, et.al, 2019).
Talking about the strategic fit, the proposed solution for the current problem of Tesla, is compatible with the current operation of the company. This is because the problem is occurring with all the cars having autopilot feature. If this is not resolved properly, then the Tesla’s brand image would be at stake. Hence, it is required from the company to put this solution at priority.
Likely Side-effect/ Uncertaintiesof the Assumption
It is assumed that the proposed solution of alert system would provide better safety on roads to customer.
If this system also fails, then this would be a major setback for the brand image of Tesla. It might lose its loyal customers (Dikmen& Burns,2016).
It is assumed that the whole product designing is done in-house and the alert system would not be needing any external assistance.
If technical feasibility is not possible, this means the company is required to take external assistance and resources. This would increase the cost of product development.
The value capturing is done from internal sourcesonly. No loans would be taken from banks.
If the company is unable to arrange funds for this innovation project, then it has to take loans from banks on high interest. This would increase the development cost (Dikmen& Burns,2016).
It is required by Tesla to carry out simulation testing for collecting data related to the autopilot system. Testing would ensure that only error-free products are installed in the cars (Porter& Heppelmann, 2014).
The company should be able to make use of resources available with the firm. In case, Tesla is needing external assistance, then it should work on cost-cutting by making use of resource available in-house (Dikmen& Burns,2016).
High to medium
Arrangements of funds can be done by bringing investors in confidence and making them understand the likely benefits of the proposed autopilot design. Another option is crowd-funding from different platforms.
In order to resolve the current autopilot issue can be resolved by making use of certain innovation tools. These tools has the capacity to comprehend the issue and assist Tesla in resolving the issue:-
This assessment on innovation and sustainable development of business helped me in understanding the real-time issues that organisations face. I learned about the impact of an issue on business and its stakeholders & key partners. I learned about the significance of value preposition model and business canvas as I had no idea about what they are and why they are so important for businesses. I gain a better understanding of bringing innovation in the business operation. In the due course, I came across many innovation tools, such as market segmentation, product plan, etc. Prior to this assessment, I had a very little knowledge of these tools. I also gain an insight into the competitive advantage and how organisations can lead in their respective sector. Overall, the assessment helped me in growing my understanding of innovation and sustainable development. I am sure this knowledge would help me in future.
From the above discussion on the innovation and business sustainable development, it is very much clear that the issue faced by Tesla can be resolved by proper planning and application of tools. The overall budget for the project is set to be $180,00,000. The funds can be arranged from various sources, such as investors, interest on deposits, etc. The report talked about business operation development, supply chain development, strategic fit, and much more. In addition to this, it consisted of customer desirability, financial viability, and technical feasibility. It was highlighted that with due care, Tesla can resolve such uncertainties. At last, a self-reflection was provided discussing the overall learning from this assessment.
Appendix 1: Application of Product Plan
Significance of product for Tesla
Level of Importance
The company is developing the autopilot system that has sensors for detecting stationary vehicles.
It would provide better safety to people and would improve customer relationship with the firm.
It would increase the profitability and market value of Tesla.
Product Designing and manufacturing department.
Appendix 2: Application of MVBP
How, specifically, does your MVBP meet this objective?
The company would develop an autopilot system that would produce value to the customers and improve their safety on roads.
Based on the value, the customer would pay the right amount to the company for their products
Tesla would collect the feedback from the users and record their experience. Based on the feedback, they will improve the product.
Appendix 3: Application of Pricing Framework
Using this tool, Tesla can be able to determine the need for product development and customer preference
Nature of customer
Customers are usually belongs to elite class having high budgets.
The company is creating value by developing electric automobiles with high durability, speed, and fuel efficiency.
The company is leader in the EV fields. However, Nissan, Volkswagen, etc., are developing their own electric vehicles.
Strength of core
Tesla’s strength is its innovation and development team and technical strengths
Maturity of product
The product would be able to cater to the road and safety requirements, customer preference, and organisational goals
Appendix 4: Market Segmentation
Market Segment Name
Understanding of this would help Tesla in providing cars and products based on the demographic needs of the regions.
Understanding of this would help the company improve its operations and customer relationships.
This would help the company in improving its current models and products based on the behaviour of customers.
Understanding of this section would help Tesla in expanding globally.
Urgency of Need
Willingness to Change
Frequency of Buying
Concentration of Buyers
Appendix 5: Application of Testing Key Assumptions
Product is developed in-house
The value capturing is done from internal sources only. No loans would be taken from banks.
Funds are arranged without interest rate.
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