CASE STUDY [30 Marks]

Like many companies, Tesla has a referral program to encourage customers to get the word out about their cars. In exchange, customers get something they want or need, adding to their enjoyment of working with the company. In Teslas case, what the company offers in exchange for a referral is often evolving. Before the end of October 2015, the referral program let the person referring others get $1,000 in credit towards a new Tesla, or a Tesla service or accessory, for every purchase made from their recommendation. YouTuber Bjorn Nyland became the first person on Earth to refer 10 people to Tesla under that program, getting him an additional $10,000 bonus on top of the $10,000 he got from the referrals, plus a tour of the Tesla Gig factory, and a free Founder Edition Model X These were all rewards that match the luxury status of Tesla, appealing to its customer base, and they continued in some form or another for a while as secret rewards, only available to those who made a large number of referrals. A version of such a reward included a discount off the base price of the Founders Series Roadster when it became available for order. In an effort to correct what the company calls a conflict of interest, Tesla does not have dealerships instead, it has sales centers, which are sometimes combined with Tesla service stations, and online sales. The conflict of interest refers to salespeople at franchise dealerships who are incentivized, via commission structures, to upsell customers, rather than just get them the vehicle they need.

Tesla salespeople who work at the centers which are designed by George Blankenship, the person who also assisted Apple and created the centers to be clean, approachable, comfortable, and exciting to make buying a car more pleasant for customers, another move made to improve customer experience earn no commission from making sales, so this conflict of interest doesnt exist at the sales centers. Nor does it exist online, where consumers can also customize and purchase a Tesla vehicle. Tesla is currently shutting down many stores to make its sales program exist exclusively online. Service centers will still exist for the vehicles, but the goal is to make sales entirely digital, so you have little to no interaction with salespeople at all. By removing pushy salespersons forcing you to upgrade your vehicle in ugly dealerships, Tesla seriously differentiates itself from its competition. It removes some of the most annoying parts of buying a car, which certainly makes for happier customers. It also puts customers in charge of the buying experience, which further improves their experience with Tesla. The company also considers the levels of strategy development, theyre buying this car on their terms, from salespeople that can be purely informative and helpful, or from the comfort of their own homes. What customers dont enjoy that? And happy customers are good at passing on the word to others, so Tesla has its marketing team in the form of its buyers.

Question 1 (15 Marks)

Strategy development is the process of researching and identifying strategic options and the selection of the best way that resources should be allocated in order for an organisation to reach its objectives. With reference to the case study, study the levels of strategy development that Tesla is considering. Provide a discussion based on three (3) levels of strategy development.