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Running head: PESTEL
Feb 21, 2019
Tesla Inc. is a multinational company which develops and design high-performance electric
vehicles, and energy generation and storage system, and also installs and maintain such
systems and sell solar electricity. Tesla’s clients include those customers who are willing to
adopt electric vehicles .As currently, the price of the different electric car models lie from
$42,000 to $1, 37,900, therefore, the client will include individuals who belong to the uppermiddle-class category and have income higher than $80,000.Tesla is currently considering its
expansion in either South Korea or Russia. The objective is to select the best country so as to
run the business sustainably with ease.
The government of Russia has its own system and responsible for taking charge of all roles of
the Soviet Union in different international organizations. The political opportunity includes
its low corporate tax rate compared to other countries. South Korea has a presidential
republic form of government with Seoul as its capital city. The political opportunity for Tesla
is the presence of a strong stable government who are equally motivated to bring new
innovative technology in the technology and have concerns for factors creating
environmental pollution. The political threat of Russia includes the following corrupt
government policies and the inefficiency of the state bureaucracy. There are chances of
political unrest in the past because of strikes by students to overthrow the president in the
The economic opportunity for Tesla for establishing its business in Russia include its
high value of nominal GDP and purchasing power parity. However, the economic
opportunity of South Korea is more favorable which include low-interest rate, unemployment
rate, and inflation rate. Russia economic threat includes its dependency on the oil market.
Since the oil market is highly unpredictable, therefore, the growth rate of Russia can be
fluctuating. The economic threats of South Korea include its low level of imports and
declining level of FDI. Also, the FDI policies are not streamlined which will make it difficult
for Tesla to establish its business. There is a necessity for clear policies with respect to FDI.
The socio-cultural factors affecting the company’s business are individuals with
diverse race, religion, and ethnic backgrounds. Russia total population is close to 142 million
with a population of South Korea being 50 million. Despite the huge reserve of the nonrenewable source, Russia is emphasizing more on the transition to using renewable source or
energy. On the other hand, South Korea has a high population density of 505 people per
square kilometer. South Korea has a high degree of urbanization with major cities such as
Busan, Incheon, Daegu, Daejeon, and Gwangju. The socio-cultural threat for South Korea
includes its low fertility rate and aging population. For Russia, the threat exists because of the
declining trend in the working population (15-64 years).
Russia is a country with a strong emphasis on expenditure on science and technology.
The government expenditure on science and technology is increasing, and currently, it
represents 1% of the total GDP of the country. South Korea has a highly educated workforce
with well-equipped infrastructure facilities which can prove advantageous for Tesla. In South
Korea, the gap between innovation and commercialization is very less. Further, both Russia
and South Korea are increasingly concerned about environmental regulations. These
countries are strict in terms of following environmental regulations. The South Korean
government has adopted several measures for controlling pollution in urban areas and
locality. Russia has made laws which make no difference between national and foreign
investors. Further, the South Korean government adopt the most attractive regulatory
incentives for industrial development. The analysis of opportunities and threats of South
Korea and Russia shows that South Korea is best suited for making a foreign expansion.
Tesla Inc. is currently considering its expansion into a foreign location. The two
different foreign locations selected for the study are South Korea and Russia. The objective is
to select the best country based on opportunities and threats posed by these different
“Tesla Inc. is an American multinational company which develops and design highperformance electric vehicles, and energy generation and storage system, and also installs and
maintain such systems and sell solar electricity” (Tesla, Inc. Annual Report). The company
was founded in the year 2003 with its headquarter located in Palo Alto, California, US.
Currently, Elon Musk is the CEO of the company. Tesla Motors was founded with the
objective to promote electric cars usage compared to cars using gasoline as a fuel. The
mission is to promote the use of technology that would use sustainable energy. The past fiveyear share price shows an increasing trend with the current price being (Feb 06, 2019) being
$317.22.However, the company does not pay dividends to its shareholders as the company
believes in retaining all future earnings to finance future grow...