Unraveling the SpaceX Strategy-Elon Musk’s Innovative Approach to Space Exploration

Unraveling the SpaceX Strategy-Elon Musk’s Innovative Approach to Space Exploration

Elon Musk’s Motives for Creating SpaceX

Elon Musk is among the leading innovators in the space industry. According to Hill et al. (2020), innovators have technical interests and talents that drive them to develop and own new technology. Elon Musk was driven to develop and own space technology through SpaceX. Elon Musk’s motives for creating SpaceX were to modernize the space industry, create a small team to develop a low-cost rocket and take humanity to Mars. These motives influenced his decision to manufacture rockets. He decided to focus on the in-house manufacturing of the components that would be needed to create the rockets, including guidance systems and engines. Elon Musk’s motives also influenced his hiring decisions. He recruited the brightest engineers and young aeronautics engineers who would design rockets from scratch.

Elon Musk’s Strengths and Weaknesses in Creating SpaceX

One Of Elon Musk’s strengths in creating SpaceX was the availability of funds to purchase the resources required in the production process and maintain continuous production. According to Hill et al. (2020), Elon Musk funded the SpaceX projects from his personal savings, unlike other traditional aerospace companies that got funded by the government. Elon Musk ensured that even though there was a risk of running out of money, the production process did not stop until the first rocket was launched. He was also able to maintain a dedicated team of workers who were committed to meeting his specifications and successfully launching the first rocket despite working long hours and spending two years on the project. Another strength in creating SpaceX was his dedication to the project. Elon Musk demonstrated his dedication by traveling to Russia to purchase an affordable intercontinental ballistic missile that would be used to launch the rockets. He insisted on creating SpaceX even though the Russians suggested that his plan was impossible. Elon Musk’s risk-taking abilities were also a major strength in creating SpaceX because his initial investment of $100 million enabled him to create the company and begin working on manufacturing rockets.

Elon Musk’s main weakness in creating SpaceX was too much ambition. Elon Musk dismissed the opinion of experts in the space industry because he was too ambitious to launch his first rocket, resulting in massive losses because a fire broke out when the rocket was twenty-five seconds into its flight. The second weakness was rushing the planning process. Elon Musk invested $100 million to create SpaceX to start manufacturing rockets before properly planning his finances, which led to the risk of running out of money before the production of the first rocket was completed. He also began buying and inventing cheaper products to reduce manufacturing costs, which may have led to the two unsuccessfully launching Falcon 1.

SpaceX’s Uniqueness

SpaceX’s success was founded on differentiation. Differentiation includes providing unique services or products to make the product or service more desirable compared to what is offered by competitors (Aisyah, 2020). Elon Musk wanted to differentiate SpaceX from other aeronautics companies by doing things differently. One of the things that the company did differently was financing the manufacturing process. SpaceX funded its operations using Elon Musk’s savings and the money generated from other businesses owned by Elon Musk, such as Tesla. The company’s sourcing strategy was also different from other space companies. For instance, the company used in-house manufacturing to manufacture its radios, vibration sensors, and circuits, among other components, instead of sourcing them from external manufacturers. SpaceX also built its components from readily available consumer electronics instead of the equipment that was considered space-grade in the space industry. SpaceX was also willing to experiment with new technologies and designs, thus differentiating it from competitors.

The Incumbent Space Companies and Elements of SpaceX’s Model

In my opinion, the incumbent space companies will adopt elements of SpaceX’s model to increase profitability. The main elements that space companies will adopt include value proposition and distribution strategy. SpaceX’s value proposition is based on affordable access to space, reusable rockets, and the commercial deployment of satellites (Cuofano, 2023). The value proposition has enabled the company to reduce manufacturing costs because the reusable rockets minimize production costs. Therefore, space companies may consider investing in reusable rockets to increase their profit margins.

Determining Whether the Incumbents Will Survive and Jeff Bezos’s Blue Origin

I think incumbents will survive as long as they have access to the financial resources needed to purchase and invent the technology needed to manufacture high-quality rockets and other space equipment. Although Jeff Bezos’s Blue Origin could increase competition among space companies, it is not a significant threat because of its negative publicity. According to Gohd (2021), Blue Origin has been criticized for its marketing content, which suggests that space exploration is for the rich. Therefore, investors and clients may be reluctant to engage Blue Origin in any business related to space exploration.

 References

Aisyah, R. A. (2020). The effect of differentiation strategy on competitive advantage. Advances in Business, Management, and Entrepreneurship, 56–59. https://doi.org/10.1201/9780429295348-14

Cuofano, G. (2023, October 5). How does SpaceX make money? FourWeekMBA. https://fourweekmba.com/how-does-spacex-make-money/#:~:text=It%20was%20founded%20by%20Elon,and%20satellites%20for%20various%20purposes.

Gohd, C. (2021, August 27). Why Jeff Bezos’s Blue Origin is so reviled. Scientific American. https://www.scientificamerican.com/article/why-jeff-bezos-blue-origin-is-so-reviled/

Hill, C., Schilling, M. A., & Jones, G. (2020). Strategic management: Theory & cases: An integrated approach (13th ed.). Cengage Learning Asia Pte Ltd.

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In this assignment, you will review Case Study #12: SpaceX. This case describes Elon Musk’s unique approach to strategy when creating SpaceX.

Strategic Analysis of Virgin America-A Study of Success Factors and Competitive Edge

Think about the types of strategies from chapters 5 and 6 that Elon Musk utilized.
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