Supply chain management strategic alliance alliance between tesla and panasonic

THE MINISTRY OF FINANCE UNIVERSITY OF FINANCE MARKETING SUPPLY CHAIN MANAGEMENT STRATEGIC ALLIANCE: ALLIANCE BETWEEN TESLA AND PANASONIC Instructor: PhD... THE MINISTRY OF FINANCE UN

THE MINISTRY OF FINANCE UNIVERSITY OF FINANCE MARKETING

SUPPLY CHAIN MANAGEMENT

STRATEGIC ALLIANCE:

ALLIANCE BETWEEN TESLA AND PANASONIC

Instructor: PhD Tô Anh Thơ Member of GROUP 4:

3 Dương Minh Gia Huy 2121003160

Ho Chi Minh City, 2024

THE MINISTRY OF FINANCE UNIVERSITY OF FINANCE MARKETING

SUPPLY CHAIN MANAGEMENT

STRATEGIC ALLIANCE:

ALLIANCE BETWEEN TESLA AND PANASONIC

Instructor: PhD Tô Anh Thơ Member of GROUP 4:

3 Dương Minh Gia Huy 2121003160

Ho Chi Minh City, 2024

THANK YOU

The group wishes to convey our heartfelt appreciation and profound gratitude to the faculty of the University of Finance and Marketing, with special thanks to the professors in the Business Administration department We are particularly indebted to Ph.D To Anh Tho, whose enthusiastic guidance in the Supply Chain Management course was invaluable during our studies and in the preparation of this report

Despite our best efforts, errors may have occurred throughout the process and in compiling this report We hope for your understanding and forgiveness We eagerly anticipate your feedback, which will help us gain valuable insights and knowledge to improve our future reports

The team sincerely thank you!

CHAPTER 1 5

THEORETICAL FOUNDATION 5

1.1 Strategic Alliance definition 5

1.1.1 Strategic alliance definition 5

1.1.2 Types of strategic alliances 5

1.2 Why is it necessary to form a strategic alliance? 6

1.3 Top effective and successful strategic alliance 7

CHAPTER 2 8

STRATEGIC ALLIANCE DEVELOPMENT BETWEEN TESLA AND PANASONIC 8

2.1 About Tesla and Panasonic 8

2.1.1 Tesla 8

2.1.1.1 Overview 8

2.1.1.2 History 8

2.1.1.3 Vision and Mission 9

2.1.1.4 Business situation 9

2.1.2 Panasonic 10

2.1.2.1 Overview 10

2.1.2.2 History and Development of Panasonic 10

2.1.2.3 Vision and Mission 11

2.1.2.4 Panasonic’s revenue and R&D expenses decreased 11

2.1.2.5 Panasonic’s competition 11

2.2 An overview of Tesla and Panasonic Supply Chain 12

2.3 Strategic alliance between Tesla and Panasonic 13

CHAPTER 3 PROPOSALS FOR ALLIANCE BETWEEN TESLA AND PANASONIC 15

3.1 Challenges and benefits 15

3.2 Vision and prospect of alliance between Tesla and Panasonic 16

CHAPTER 1 THEORETICAL FOUNDATION 1.1 Strategic Alliance definition

1.1.1 Strategic alliance definition

A strategic alliance is a cooperation agreement between companies or partners

to achieve goals of common interest It allows companies to grow through

collaboration, sharing resources to create synergy for project implementation This collaboration can bring many benefits such as higher profits, faster new products or technology development, and stronger core competencies

For example, in a strategic alliance, Company A and Company B will combine their capabilities, respective resources, and core business methods to generate mutual interests in development, manufacturing, and distribution channels

Some other definitions:

Strategic alliances are long-term agreements or short-term alliances among enterprises, which are more important than ordinary market transactions Possible forms of strategic alliances: common enterprise, licenses, long-term supply

agreements, etc (Porrte, 1990)

Strategic alliance is a voluntary agreement among enterprises including

exchange or division of product, technology or services development (Gulati, 1998)

Strategic alliance might be defined as a process when enterprise members modify basic business and change common business practices to decrease duplication

of activity and expenses; furthermore, at the same time better conditions for efficiency improvement might be created (Frankel, Whipple and Frayer, 1996)

1.1.2 Types of strategic alliances

Strategic alliances can be classified into two main types: horizontal alliances and vertical alliances:

• Horizontal alliances are formed between competitors in the same industry These alliances enable organizations to share resources, knowledge, and market insights to gain a competitive advantage

For example, two automobile manufacturers may form an alliance to jointly develop new technologies or share production facilities

• Vertical alliances, on the other hand, are formed between organizations across different tiers of the supply chain These alliances involve collaboration

between suppliers, manufacturers, and distributors to improve efficiency,

reduce costs, and enhance customer satisfaction

For instance, a manufacturer may form an alliance with its parts supplier to streamline the product design process and ensure timely delivery of high-quality components

1.2 Why is it necessary to form a strategic alliance?

Strategic supplier partnerships offer numerous benefits for organizations By working closely with suppliers, companies can:

• Achieve Cost Savings: By working closely with suppliers, organizations can identify cost-saving opportunities, such as bulk purchasing, process

improvements, and economies of scale

 This can lead to reduced production costs and increased profitability

• Improve Quality and Consistency: Strategic supplier partnerships often lead to higher product or service quality Suppliers are motivated to maintain

consistent quality standards, as any issues can affect their reputation as well as the one of the buying organizations

• Strive for Innovation and Improve Product Development: Collaborative

partnerships encourage knowledge sharing and innovation Suppliers may offer insights, technologies, or new ideas that can enhance product development and lead to competitive advantages

• Increase Supply Chain Efficiency: Close coordination with suppliers can result

in a more efficient supply chain Timely deliveries, reduced lead times, and better inventory management

 can lead to cost savings and improved customer satisfaction

• Increase Risk Mitigation: Suppliers can help organizations manage risks by providing backup sources of supply, sharing market intelligence, and

cooperating in risk assessment and mitigation This is particularly important in the face of supply chain disruptions

1.3 Top effective and successful strategic alliance

Here are a few examples of successful strategic alliances and the benefits they achieved:

Apple and Foxconn: Apple's long-standing partnership with Foxconn, a major

Taiwanese multinational electronics contract manufacturer, is a prime example of a strategic alliance Foxconn manufactures many of Apple's products, including the iPhone and iPad The partnership has allowed Apple to achieve economies of scale, maintain quality control, and meet the high demand for its products

McDonalds and Coca-Cola: McDonald's and Coca-Cola have maintained a

longstanding partnership where Coca-Cola serves as the exclusive beverage provider for McDonalds restaurants globally This alliance has been a significant source of revenue and brand synergy for both companies

Apple and Taiwan Semiconductor Manufacturing Company (TSMC):

Instead of just being suppliers, TSMC and Apple work closely to develop advanced chip technology This partnership has enabled Apple to introduce innovative products and maintain its market leadership, while TSMC benefits from a long-term and

mutually beneficial relationship

CHAPTER 2 STRATEGIC ALLIANCE DEVELOPMENT BETWEEN TESLA AND

PANASONIC 2.1 About Tesla and Panasonic

2.1.1 Tesla

2.1.1.1 Overview

Tesla, Inc is a technology and automotive company headquartered in Palo Alto, California, USA Founded in 2003 by Martin Eberhard and Marc Tarpenning, the company later saw the involvement of Elon Musk, who became the main financial contributor and the famous CEO of the company Tesla is renowned for designing and manufacturing electric vehicles (EVs), but the company also operates in other sectors such as renewable energy and energy storage solutions

Figure 2.1: Tesla’s logo

Source: Tesla

2.1.1.2 History

In July 2003, Marc Tarpenning and Martin Eberhard founded Tesla Motors The company name pays homage to electrical engineer and inventor Nikola Tesla Elon Musk became the company’s largest stakeholder with a $6.5 million investment made in February 2004 In 2008, he started serving as CEO

Tesla, according to Musk, seeks to speed up the switch to environmentally friendly energy and transportation, with solar energy and electric cars serving as the main sources The Roadster sports car, which was Tesla’s first vehicle model,

commenced manufacturing in 2009

Model S cars first appeared in 2012, followed by Model X SUVs in 2015, Model 3 sedans in 2017, and Model Y crossovers in 2020

In 2021, Tesla sold 936,222 vehicles worldwide, a growth of 87% over the year before, and by the end of the year, its total sales were at 2.3 million vehicles Tesla became the sixth corporation in American history to have a market valuation of $1 trillion when it did so in October 2021

2.1.1.3 Vision and Mission

Tesla's vision statement is “To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles” (Tesla Canada, n.d.) This effectively describes their goal of being an automotive industry leader through their electric vehicle design and production Tesla can strengthen this

statement by incorporating their focus on non-automotive sustainable energy products, aligning well with their mission statement

Mission in 2016, Tesla changed their mission statement to, “accelerate the world’s transition to sustainable energy” from the previous “to accelerate the world’s transition to sustainable transport” (Tesla Canada, n.d.) The change demonstrates a shift in their focus from sustainable transport to renewable energy, which is proven through their diverse product offering In line with their vision state

2.1.1.4 Business situation

Tesla has seen a significant boost in financial performance, driven by the U.S market Since recording a net income in 2020, the company has experienced notable year-over-year growth despite rising costs In 2023, Tesla's revenue from automotive sales exceeded $78.5 billion, highlighting it as the core of their business The company has steadily increased research and development spending, focusing on artificial

intelligence and connected vehicles

In 2023, Tesla's charging connectors were adopted as the North American Charging Standard by many competitors, enhancing the expansion of its Supercharger network This network, soon to be available to a wider range of electric vehicles, aims

to attract more customers Additionally, Tesla ranked among the top ten manufacturers with the largest market share in the U.S automotive market, solidifying the United States as its most important target market

2.1.2 Panasonic

2.1.2.1 Overview

Panasonic Corporation, originally known as Matsushita Electric Industrial Co., Ltd., is a multinational electronics company headquartered in Kadoma, Osaka, Japan

It was founded in 1918 by Konosuke Matsushita Over the years, Panasonic has grown

to become one of the largest and most diverse electronics manufacturers in the world

• Founding Year: 1918

• Founder: Konosuke Matsushita

• Headquarters: Kadoma, Osaka, Japan

• CEO: Yuki Kusumi (as of the latest update)

• Employees: Approximately 240,000 (as of 2023)

2.1.2.2 History and Development of Panasonic

• 1918: Establishment of Matsushita Electric Housewares Manufacturing Works

• 1927: Introduction of the "National" brand

• 1955: Launch of the "Panasonic" brand

• 1977: Release of the VHS format for video cassette recorders

• 2008: Name change to Panasonic Corporation

• 2013: Partnership with Tesla for lithium-ion battery production

• 2018: 100th anniversary celebration

2.1.2.3 Vision and Mission

We will work to resolve society’s issues, helping create healthy, comfortable lives and societies and achieve a sustainable world by integrating and further

advancing our air-quality and air-conditioning technologies

Mission: Life tech & ideas for the wellbeing of people, society and the planet Vision: Leading the industry with air and water technologies that secure a comfortable and sustainable new world

2.1.2.4 Panasonic’s revenue and R&D expenses decreased

In the fiscal year 2023, Panasonic generated almost 60 billion U.S dollars in revenue, while Panasonic’s total assets amounted to over 57 billion U.S dollars, a decrease of about five billion U.S dollars from the previous fiscal year In FY 2023, Panasonic employed 233,391 people worldwide However, the number of Panasonic employees has experienced a decline from 2019, when the company had more than 270,000 thousand employees worldwide Moreover, Panasonic is among the

companies with the most U.S patents granted, and yet the company’s investments

in research and development has decreased since 2010, amounting to around 3.3

billion U.S dollars in the most current financial year

2.1.2.5 Panasonic’s competition

Panasonic Corporation is one of the largest consumer electronics companies in the world, with sales of roughly 65 billion U.S dollars in 2022 However, the

company faces many competitors, and not only in the consumer electronics market There, LG Electronics and Sharp are among Panasonic’s biggest rivals Furthermore,

LG Chem and the Chinese company CATL are strong competitors in the lithium-ion battery market, of which Panasonic occupies around 14.7 percent Finally, since 2021, Panasonic has been playing a bigger role in the automotive telematics control market, controlled by LG and Continental, which hold over 35 and more than 25 percent of the market, respectively

2.2 An overview of Tesla and Panasonic Supply Chain

Panasonic is indeed a supplier of Tesla In 2009, Panasonic and Tesla initially entered into a supply agreement This partnership deepened in 2010 when Panasonic invested $30 million in Tesla, fostering the growth of the electric vehicle industry As part of this collaboration, Panasonic supplies automotive-grade lithium-ion battery cells to Tesla These cells boast the highest energy density and industry-leading

performance, thanks to Panasonic’s nickel-type cathode technology The agreement ensures that Tesla has access to enough cells to meet its production ramp-up and fulfill existing Model S reservations

In 2014, Tesla and Panasonic announced their joint venture to build the

Gigafactory in Nevada This massive facility produces battery cells, modules, and packs for Tesla vehicles The Gigafactory significantly increased the scale of their collaboration and allowed Tesla to achieve economies of scale in battery production Tesla’s approach to vertical integration involves close collaboration with suppliers like Panasonic By working together on cell design, production, and quality control, they optimize the entire supply chain This integration allows Tesla to maintain control over critical components and reduce dependency on external suppliers