What Tesla and Apple Both Know About Entering New Markets?
At the heart of this issue is the question of strategy, and in-part both contradictions and similarities (Johnson et al.). Tesla and Apple operate to totally separate industries (cars and hardware/software products) yet if you define industries from the point of view customer demand there are clearly similarities between the two companies (Hickey).
In terms of customer demand profile, lifestyle and behavioural characteristics, it is these factors which influence the purchase of both Apple products and Tesla cars. Whilst there is clearly a price point difference between a car and for example an iPhone, there are however many similarities between the customers who purchase both. Indeed both companies produce products, which could reasonably be positioned at the high end of the market in which they operate. This of course prompts the question should either company stray away from their chosen market, for example mid price range Tesla cars?
At this juncture it is perhaps relevant to introduce two strategic models.
The product life-cycle proposes that a product goes through a number of stages from birth through to decline over a given time period. One strategic option for a company such as Tesla or Apple is to expand internationally once the home market matures on one or more product categories, thus allowing an acceptable return of investment. Given the highly technological element within both companies, their product life-cycle is clearly very short. It is therefore clear that this strategic model goes some way to explain the rationale behind both company’s international expansion and indeed their emphasis on their largest market China.
In respect of Ansoff’s directional matrix the further a company moves away from its original product and market to new markets and new products the higher the risk and profit. The obvious new product at Apple is the iWatch which comes in three product categories. Given the cost of their solid gold iWatch and the obvious choice between that and perhaps someone purchasing a Rolex is there a lack of clarity in the strategy? Equally the press frequently comment on Tesla wanting to produce a mid priced car. All this implies the need for more international expansion requiring new markets.
Hickey, Matt. “This Apple And Tesla Thing: They Might Be The Weirdest But Sweetest Of Valentines.” Forbes, Forbes Magazine, 17 Feb. 2015, www.forbes.com/sites/matthickey/2015/02/17/this-apple-and-tesla-thing-they-might-be-the-weirdest-but-sweetest-of-valentines/#6442d6b262b4.
Johnson, Gerry, et al. Exploring Corporate Strategy: Text & Cases. FT/Prentice Hall, 2008.