Question 1 Tesla's challenges The ecstatic reviews of the Model S suggest that Tesla Motors has mastered electric car technology. But business requires more. For Tesla to continue leading in what founder and CEO Elon Musk sees as the future of driving, it must sell enough electric vehicles at a sufcient prot, something other start-ups failed to do. Therefore, Tesla is innovating in marketing distribution, and access to recharging stations. Initial orders for the Model S arrived faster than Tesla could make them. Emphasising luxury and performance, rather than eco-iendliness, created excitement justifying a premium price (around $70,000). Currently Tesla makes about 55,000 Model S cars a year in its Fremont, California factory a vacant auto plant acquired at far less than the cost of building new. Next, Tesla must persuade more drivers to go electric. The federal government helped with a tax credit of $7500 on the purchase of an electric vehicle (it also loaned Tesla $465 million). Still, to broaden its customer base, Tesla needs a more affordable vehicle. By 2017, after its introduction of the Model X sport utility vehicle, Tesla intends to offer a car for abOut half the price of the Model S. As a start-up in a mature industry, Tesla needed a plan for getting cars to consumers. Instead of approaching auto dealerships, Tesla opened stores in upscale shopping centres. Each store lovingly displays a Model S surrounded by exhibits about its features. At touch screens, shoppers can learn what they can save on gas by driving a Model S, as well as select options and see an image of their car. Tesla pays salespeople a at rate, not commissions to motivate them to develop customer relationships, not just move merchandise. However, dealer franchises have sued Tesla for violating state franchise laws, so Tesla is spending money to defend its stores state by state. Where it loses, drivers must travel elsewhere to see the car (they can order one online). Another roadblock to adoption of all-electric vehicles is that stations for recharging a car are few, and fully recharging can take hours. Tesla developed battery technology that takes a car farther about 240 miles in the case of the Model S. It also is building a network of Superchargers, which deliver free recharging; 20 minutes will charge the battery halfway. Today, the company offers nearly 2,5000 Superchargers in most U.S metropolitan areas with plans to add several more by 2016, conveniently sited near roadside diners and shopping centres. 3 Page 2 of 4 Nilai University/Academic/Set l 3. Explain FIVE (5) business operational challenges faced by Tesla. (10 marks) b. Evaluate TWO (2) advantages and TWO (2) disadvantages to Tesla Motors in being a technology leader? (10 marks) b. Evaluate TWO (2) advantages and TWO (2) disadvantages to Tesla Motors in being a technology leader? (10 marks) e. In addressing the business operational challenges you have identied in Qla above, some organisational changes may be needed. Describe TWO (2) types of organizational change that could occur?I How would you minimise resistance to these changes? (10 marks) d. Propose FIVE (5) strategies for Tesla to be creative as the company grows? (10 marks)