Competitive Intelligence and Benchmarking

Tesla and the Automotive Industry

Siddhant Khanna

Netid: sk2679

Week- 4&5 Homework

Tesla

• Retail Presence: Tesla is an American car company that operates 160 retail stores in 40 US states. Apart from this the company also has a vast network of approximately 5000 Superchargers in the country.

   

• Product Offerings: Tesla produces various models of electric cars. Tesla also installs and maintains energy systems and sells solar electricity; and offers end-to-end clean energy products, including generation, storage, and consumption.

   

• Customer Experience: Tesla is known for its high level of customer service, Tesla sells its cars to consumers directly. Tesla has an incredibly strong understanding of who its customers are both as a whole and individually. Tesla sets the bar high for not only car sales, but customer experience in general.

Competitive Intelligence and Benchmarking

• Industry Analysis: Asses industry potential and risk by industry trend, competition intensity and value chain analysis to further discover the market potential, risk and trend.

• Industry Classification: 
  Sector: Consumer Discretionary
  Industry Group: Automobiles & Components
  Industry: Automobiles
  

Phase 1 

Industry Analysis

Step 1: Industry Trend

Step 2: Concentration and Competition Intensity

Step 3 : Value Chain Analysis

Step 1 - Industry Trend Analysis

• Industry Trend Analysis of Size for four sub industry in the Automobile Category. 

• Industry Trend Analysis of Profitability for four sub industry in the Automobile Category. 

• Industry Trend Analysis of Profitability for Specialty retail industry in the Automobile Category.
• Industry Trend Analysis of Size for Specialty retail industry in the Automobile Category.

Industry Trend Analysis of Speciality Retail and Automotive Industry

• We can see that Speciality Retail is bigger in size and has higher total revenue, however is almost equal to Multiline Retail, Autmobile Industry in Median Gross and Operating Margin.  

• We also notice that Proportion of Profitable companies is much high in Multiline Retail than Specialty Retail, making it a better industry. 

Step 2 - Concentration and Competition Intensity

• Market Share Analysis by Total Revenue for each industry. 

• Competition Intensity - Four Firm Concentration Ratio

Competition and Tesla KPI Analysis

• Ford and other companies have been doing really well in terms of Operating Margin. 
• Whereas looking at Tesla KPI, it is almost low on every aspect compared to others.

Step 3 - Value Chain Analysis

• Supply Chain Mapping (Net Margin) - Global

• Supply Chain Mapping (Net Margin) - USA

Phase 2 

Competition Position Analysis 

Step 1: Profit Frontier

Step 2: Enterprise Ranking

Step 3: Key Performance Indicator Examination

Step 1 - Profit Frontier 

• • Most profitable companies in each revenue class. Competition positioning in terms of Profitability.

  Actions:

  • Total Revenue vs Total Cost
  • Operating Profit vs Total Assets
  • Operating Profit vs Total Cost 
  • Operating Margin vs Revenue
  • Return on Assets (ROA) vs Liability Asset Ratio

   

Conclusion (Step 1)

Step 2 - Enterprise Ranking

• Company placement against other companies using varied metrics.

  • We will focus on Tesla Inc (TSLA), Ford Motors (F), General Motors (GM), Harley Davidson () and Toyota Motors(TM).

  Actions: (Enterprise Ranking)

  • Total Revenue (2021)
  • Net Margin (2021)
  • Return on Assets (2021)

   

Step 3 - Key Performance Indicator (KPI) Examination

• A Key Performance Indicator (KPI) examination is a process of evaluating the metrics that are critical to the success of a business or organization. KPIs are specific, measurable, and quantifiable metrics that are used to track progress towards business objectives and goals.

• A KPI examination is important because it provides insights into the performance of a business or organization, and enables decision-makers to make informed decisions based on objective data. It helps to identify areas that are performing well, as well as areas that may require attention and improvement. By focusing on the right KPIs, businesses can improve their performance, enhance customer satisfaction, and achieve their strategic objectives.

  Actions: 

  • Enterprise Comparison - KPI
  • Key Performance Indicator Examination - Tesla Inc. 

   

Phase 3 

Enterprise Diagnosis

Step 1: Strengths and Weaknesses

Step 2: Value Driver Analysis

Step 3: Breakdown Analysis

Step 1- Strengths and Weaknesses

Step 2 - Value Driver Analysis

• Value driver analysis is a business strategy tool used to identify the key drivers that impact the value of a company. It involves analyzing the company's financial and non-financial factors that affect its performance, such as revenue growth, profitability, market share, customer satisfaction, and employee engagement. Value driver analysis can help a company to identify its strengths and weaknesses, and develop strategies to improve its performance and increase its value.

  Actions: 

  • Return on Assets (ROA) and Liability Asset Ratio
  • Liability Asset Ratio and Operating Margin

Step 3 - Breakdown Analysis

• Looking at firm's COGS, SG&A Expenses, R&D, etc to compare with the industry. This could help in figuring out where a company has more spending when comparing with other companies in the same industry. (Jain, 2023)

  Actions:

  • Enterprise Breakdown - Revenue (2021)
  • Enterprise Breakdown - Detailed Assets (2021)

Conclusion

• Phase 3

  Strengths and Weaknesses:  It is clear that Tesla's high risk, high Liability to Asset Ratio, and increased long-term debt was the leading cause for the decline in profits in the year 2021. 

  Value Driver Analysis: Similar to the above analysis, Tesla has high Liability to Asset Ratio, while Harley Davidson's sudden increase in Return on assets remains a mystery. 

  Breakdown Analysis: I have done two analyses, Enterprise Breakdown on Revenue and Detailed Assets. 

Summary/Recommendations

• • Get better investments to increase return on Assets. 
  • Lot's of market share still yet to capture, improve on business relationships. 
  • A better supplier vendor management. 
  • A better Supply Chain Network is needed.