Tesla’s five business aims

Tesla’s five business aims

1.     Corporate social responsibility:

this refers to the concern and obligation of a business in committing to behaving ethically and responsibly towards its various stakeholders. Tesla has a corporate social responsibility strategy that focuses on the nature of the business and its products, sustainability and environmental friendliness as well as energy storage and generation.

With reference to a real-life news example of this, Tesla newest model 3 produces zero emissions utilizing green technology and benefiting the environment greatly as part of Tesla’s Corporate Social Responsibility. In 2014, Tesla announcing that it would allow all other organizations and individuals to use its inventions can also be seen as a part of Tesla’s social responsibility program.

 

2.     Profit maximization:

Private businesses will aim to maximize profit. For a company like Tesla, it has been struggling for many years, especially following the economic crisis to break even. A feat which was only accomplished very recently. Most recently, however, following the introduction of Tesla’s newest model 3, profits were reported to spike.

 With reference to the news article:

Tesla turns a profit in Q3 thanks to Model 3 production boost

Elon Musk redeems himself with better-than-expected earnings, telling investors the electric car company did what many argued was “impossible.”

3.     Revenue maximization:

Businesses will aim to maximize revenue, this is similar to the aim of maximizing profit. The main distinction is that revenue often refers to and is closely related to sales and how much of a product a business is able to sell. Unlike profit, it does not take costs into account. However, in some situations, such as the case of Tesla, increasing sales may be a far more important goal than maximizing profit as the ultimate aim may be to encourage mass consumption and use of electric cars rather than simply enlarging profit margins.

In the case of Tesla, to utilize a recent news article, Tesla’s Model 3 Revenue is #1 for US passenger cars. To quote:

Tesla Model 3 is the #1 grossing passenger car in the US in August, ahead of Toyota Camry.

Model 3 revenue in August was about $1 billion, which is ~2% of the entire US auto market revenue.

Model 3 is the #1 selling EV in the US since January and #1 in the world since July.

Model 3 is the #5 best-selling passenger car of any kind in the US, beating most ICE vehicles.

 

4.     Market share:

Companies will also aim to maximize and increase their market share. Market share refers to the portion of a market controlled by a particular company or product. Companies may value market share equally or even more importantly than profit and sales. This could be because the business is aimed at penetrating and dominating a certain market or industry, this may even be done through certain strategies that are detrimental to the business’s finance (e.g. very low prices) disregarding the costs they must bear in the process.

To link to Tesla, recently, Tesla’s market share has been reported to grow to 30% of all US plug in electric vehicle sales.

 

5.     Survival:

Businesses will also aim to survive, to survive is the state or fact of continuing to exist especially in spite of difficult conditions. Tesla has been well known to be struggling to survive in past years and has only been beginning to recover.

The following news article explains the importance of the Chinese market in relation to Tesla’s survival by bloomberg:   

Why Tesla’s Billion-Dollar China Play Is Key to Its Survival

China set to remain largest electric-car market for decades

Tesla’s high prices see it lagging local carmakers on sales

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