Evaluating the External Environment Industry five forces and PESTEL

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Assignment Overview: Now you will turn to country level analyses to find countries (South Korea & Russia) with positive opportunity for your client (Tesla), and trends and threats that your client (Tesla) would need to mitigate if it entered that country (South Korea & Russia). Use the PESTEL framework to analyze the POLITICAL, ECONOMIC, SOCIAL, TECHNOLOGY, ENVIRONMENTAL AND LEGAL opportunity and threat factors and trends in the external environments of South Korea & Russia. Resources: · PESTEL and SWOT articles in Required Readings · How to write an Executive Summary. · Research Databases listed in Required Readings: Assignment Objectives: Your objective is to compare PESTEL Opportunity factors for your client (Tesla) and Threats to your client in two country markets (South Korea & Russia); specify trends in those Opportunity and Threat factors that are likely to affect the country's business and economic environment over the next 3-5 years; and recommend one country as the better new market for your client (Tesla). Notes on Data analysis: 1.The data you collect and analyze should be clearly relevant to your client. For example, if the mountainous nature of the country is not relevant to your client, leave it out; otherwise, describe what that terrain means for your client (e.g., there will be high costs of distributing the products across country). 2. Compare the same Opportunity and Threat factors/trends for each of the countries (South Korea & Russia) and ensure that any ratings, rankings or aggregate measures you use are measuring the same underlying factors in both countries (South Korea & Russia) . 3. Whenever you use a country rating from a source, include a brief summary of the main country conditions (PESTEL factors) that contribute to the ratings. For example: . "Business Environment" may be rated more favorably in one country. But what specifically is being measured: the POLITICAL, ECONOMIC, SOCIAL, TECHNOLOGICAL, and/or LEGAL indicators are more informative and may be more relevant to your client than the summary measure would indicate. Similarly, if you use a “Risk” Rating (e.g, "Political" risk) based primarily on government regulations a higher risk rating may not be as important as the types of risk that are being aggregated into a summary ranking (e.g, lack of contract law or unreliable legal system). Know the components of the rating summary so you can determine their relevance to your client. For example, if "Business Environment" or "Risk" is rated better in one country primarily because of legal protections for IP (which shape the overall better rating), but your client has no IP to protect in its expansion, then the more favorable ranking in one country is not relevant to your client, and both countries might be considered equally attractive IN SPITE of the better overall ranking of one.. Assignment format and requirements: The Introduction to this paper should consists of (a) your statement of purpose; and (b) a description of your client company and industry (from your team's W2 analyses); (c) a description of the kinds of BUYER your client will need for its product/service, as you identified in your company profile, (e.g., high income buyers for luxury items; positive attitudes towards green technology if your client is selling that kind of product/service; (d) a list of your company NEEDS to operate in country; e.g., what kind of infrastructure, any intellectual property protection, characteristics of a needed in-country workforce, as you have also identified in your company profile. Since you will need these Buyers and supportive requirements in country, they will give focus to the data you collect for your PESTEL analyses. The body of the paper (approximately 10-15 pages double spaced) should be organized around Opportunity factors and trends first, and then Threat factors and trends: Do not organize by country, but compare the countries on each Opportunity and Threat factor. (e.g, Economic Opportunity: country A vs. Country B. See the example paper for Country Selection Rationale provided in this module). I. Opportunity factors and Trends. A. Economic Market Opportunity and potential growth: ALWAYS START WITH THE $'S WORTH OF OPPORTUNITY! Will this country have the buyers and the buyer capability to purchase what your client (Tesla) is selling. As an initial comparison, you can start with macro level measures from Five Year Economic Forecast, including GDP and Personal Disposable Income (PDI) as indicators of ECONOMIC opportunity—the Buyers’ potential ability to purchase your company's product/service. However, you should try to get as close as possible to indicators of opportunity for your client's particular product/service; For example, if you are selling software to hospitals, look for health care spending; if your client is selling cybersecurity services, look for cybersecurity spending to compare across the two countries. Collect the same information for both countries in order to compare them! B. Opportunity support factors are those PESTEL factors and trends that support the Economic market opportunity for your client; e.g.., 1. Political support may consist of existing or pending trade agreements or positive trade relations with the client’s home country; government policy that supports funding/advancement of your client industry 2. Economic support may consist of tax benefits that will help your client, low or trending lower tariffs relevant to your client's product/service; 3. Social support may consist of favorable attitudes towards U.S. companies or growing interest in your client's type of product (e.g., green technology, luxury goods) 4. Etc…. for Technological, Environmental, and Legal support factors and trends 5. Specifically include supports for your client's operational needs II. Threat factors and trends Country PESTEL Threats and trends should be ranked by degree of threat, along with an explanation for your assessment/ ranking; e.g., if you consider political instability to be a greater threat in the country than currency fluctuation (Economic threat), explain why. • Include under the appropriate PESTEL the Threats to your client's operational needs. For example, if a technologically sophisticated workforce is required for your client to operate successfully in country, a country that lacks such social (education) support will be a significant risk for your client's operational success. III. The Opportunity and Threat factors/trends can be shown in a summary table, but the text should explain how you weighted the factors/trends in order to compare Opportunity and Threat in the two countries (South Korea & Russia). IV. Conclude with a summary recommendation for one country as the better entry option. VI. Write an Executive Summary for the entire paper (include company and industry description). Aim for approximately 2 pages, double spaced. VII. Include a Title Page (with your name!) and a Table of Contents placed just after the Executive Summary. Pages should be numbered, starting with page one as the Body of the paper (your statement of purpose), The Executive Summary can be unnumbered or numbered as i, ii...but it is not a part of the body of the paper. VIII. Include a Reference list, using proper U.S.A APA format for references and all in-text citations.
RUNNING HEAD: TESLA COMPANY PROFILE Group 2: Profile of Client Company Tesla, Inc. 1 TESLA COMPANY PROFILE 2 Table of Contents About Tesla Inc. ............................................................................................................................ 3 The Buyer .................................................................................................................................... 4 The Resources ............................................................................................................................. 7 Market Competition .................................................................................................................... 9 Tesla Inc. Internal Analysis ....................................................................................................... 11 Strengths .................................................................................................................................... 12 Weaknesses ............................................................................................................................... 15 References .................................................................................................................................... 18 TESLA COMPANY PROFILE 3 About Tesla Inc. Tesla Inc. is an exciting and steadily growing technological organization that was founded on the premise of accelerating the world’s transition to sustainable energy through transportation (Tesla, 2019). Tesla Inc. was established in 2003 by Silicon Valley engineers and is headquartered in Palo Alto, CA with currently more than 30,000 employees. Going public in 2010, Tesla Motors is currently traded on the NASDAQ under TSLA and is looking to change the automotive industry with its innovation and drive towards environmentally friendly zero emissions vehicles. CEO Elon Musk is the mastermind and spokesperson behind Tesla’s current success, drumming up interest with his commitment to building the best electric cars and electric powertrains in the world. With a focus on designing and manufacturing advanced electric vehicles with zero emissions, they look to employ and develop talent from around the globe (Tesla Inc., 2019). Tesla is rethinking how cars are built and produced in an effort to help the environment and provide a superior driving experience. Aligned with Tesla’s vision to accelerate the advent of sustainable transport by making products accessible and affordable, Group 2’s business plan will focus on expanding a Tesla store and gallery into an additional BRICS and/or +11 countries. Tesla currently has 200 stores and galleries across 31 countries but has room to expand into additional locations (Tesla Inc., 2019). These locations will be assessed using different situational analysis tools taking into account various risk factors that are not limited to environmental and legal factors, opportunities, threats, and weaknesses. “Tesla continues to make products accessible and affordable to more and more people, ultimately accelerating the advent of clean transport and clean energy production,” which drives the need to expand globally (Tesla Inc., 2019). TESLA COMPANY PROFILE 4 “In an industry with many challenges, including large fixed costs, network effects, and incumbents that might prefer to preserve the status quo, Tesla is showing that a Silicon Valley startup can overcome many seemingly insurmountable economic problems” (Stringham, Miller, & Clark, 2015, p. 87). Expanding more globally will continue Tesla’s ability to promote clean transport, while making waves among the automotive industry. Enabling the expansion of a store and gallery or production plant into an additional country furthers the company’s mission to accelerate the world’s transition to sustainable energy (Tesla Inc., 2019). The additional store and gallery can capitalize on the network Tesla Inc. has established having 450+ charging stations “that charge at zero marginal cost to the user. Spending $500,000 per station and not charging users anything” (Stringham, Miller, & Clark, 2015, p. 95). The advanced network expansion of the charging stations paves the way for expanding the sales capability with a new store and gallery, it’s important that consumers can use what they are purchasing and with electric cars is important to be able to charge them. The products to be made available in the expansion include the Model S, X, and 3, along with the roadster and new Semi options (Tesla Inc., 2019). An additional production plant would aid in the distribution of products, and could further market Tesla, Inc. through employment opportunities in a new country and increased product availability. The Buyer Global industry business demographics play a significant role in the creation of its profile and strategizing approach. This is, however, one of the components that are easily neglected by most global chain industries. A company or business that desires to expand its market and grow larger must first have a firm glimpse of understanding about the demographics of the industry and the customers (Ward, 1997). The components of importance in the global industry in which TESLA COMPANY PROFILE 5 Tesla operates entails the company's name, approximated annual income, the contact address, management and directorate, products and services offered, departmental breakdown, physical geographic location, mode of ownership, and the number of workers on board. This should also include marketing trends in terms of buying habits and profit margins, values and virtues, hobbies and interests. Understanding business demographics helps in many ways with sustaining the global market as discussed below and it minimizes unforeseen costly expenses. An interpretive and reasonable approach in defining the demographics helps the industry to reduce costing errors in unfortunate events (Wegner, Costa e Silva, & De Rossi, 2018). This is because a well-structured demographic understanding helps in alignment with the marketing plan and expenditure. It assists in determining customer interests and preferences with what is available in the market. This guides the industry to make reasonable strategies within the market and approaches to business. It helps to move in tandem with what other business are offering and minimize unnecessary competitions (Wegner, Costa e Silva, & De Rossi, 2018). Secondly, it helps in the identification of needed products and services. A proper understanding of this makes the global industry produce what the client desires. For the case of Tesla in the automotive industry, they have focused on improving efficiency, safety, and quality of transport with energy saving (Stringham, Miller & Clark, 2015). This is actually the modern society need in solving the challenge of increasing technology. Last but not least, it helps in identifying the target pricing to avoid client overexploitation. This is usually based on the Gross National Product and the annual income of the residents. The income of an individual will significantly determine what they can offer (Stringham, Miller & Clark, 2015). It, therefore, saves the industry from offering what will not sell in the target market. TESLA COMPANY PROFILE 6 Business to business (B2B) refers to the business approach, which involves a business entity directly selling their products to another business entity. The quality of the products and services offered has a direct influence on consumer preference and consequential profit margin potential. Whereas, business to consumer (B2C) entails the model of selling goods and services to a single individual who constitutes the main consumer chain. The business owners have a direct link with the service consumer at a personal level (Brown & Jayakody, 2008). Since the inception of these marketing models, Tesla has had a significantly improved market and profit margins. There has been a significant transformation in the delivery of their services at the global market (Pride, 2017). From recent scholarly studies, there has been noticeable customer ignorance with regard to the kind of goods and service provided to them by the company (Pride, 2017). Ideally, it was exploitation and heavy exhortation of the consumers who were in constant need of these products. However, with the increasing business-to-business approach marketing strategy, there has been an increase in the conductivity of the client-business environment (Derval, 2018). There is now product classification and categorization with regard to consumer needs. One significant principle is the application of online e-business and ecommerce strategies. These approaches help in advertising, marketing, and publicity of the available products (Chen & Perez, 2018). Consequentially, it has resulted in the availability, affordability, and confidentiality of the business-consumer relationship. It can be understood that e-commerce creates impacts in organizations and facilitates development. Tesla as a company is not left behind. Tesla motors can use the e-commerce to engage in advertising and marketing of their products (Laudon & Traver, 2019). The advantage generated in the organization is that it facilitates convenience and ease as the procedure is user friendly and the customer will be just seconds and clicks away from getting the information TESLA COMPANY PROFILE 7 about Tesla motors. E-commerce therefore helps Tesla in reaching out to a large number of potential consumers who are from different continents (Laudon & Traver, 2019). Consequently, Tesla motors may benefit from the e-commerce business through issues like providing a round the clock business service to the consumers. The information and service maybe an after work service or even information presented after midnight but the information will still be available at round the clock (Mihaltianu, 2018). The customers will not need to wait till the following day to get information about the motors or help from the management team of Tesla motors. There will be a direct connection between managers and Tesla customers. It is also evident that, with the inception of the B2B and B2C, the Tesla industry has been able to offer training and educational forums with regard to the kind of services and products they engage in (Mihaltianu, 2018). This has been a benefit for the client and the company concurrently. Through this, the global industry has been able to market its products while creating a stronger reliable and trustworthy market. These platforms have resulted in the international market enlargement and awareness with good profit realization. On the other hand, the consumers of the products have been able to get first-hand information about the type of products they receive from a well-informed person. The adoption of this approach by the global industry has propelled its operations and helped it gain momentum on the market line. The Resources Since Tesla first began in 2003 it has nearly doubled in size. The first Tesla factory opened in California and it is one of the most highly developed automotive plants in the country. Additionally, Tesla began building the Gigafactory in Sparks, Nevada. The Gigafactory will be designed to ramp production and it is anticipated to produce 500,000 cars and lithium batteries each year (Tesla Gigafactory, 2019). TESLA COMPANY PROFILE 8 Many resources are needed in order for Tesla to maintain its production of electric vehicles and battery products in a new country. First, Tesla would need to develop an entry strategy, such as exporting. Tesla will also have to take in account that the new country may raise taxes on all exports. Certain countries, like Mexico, see a future investing in products that focus on saving energy and combat global warming, which all Tesla products offer (Doxier, 2016). Next, Tesla will have to market the product and services they offer to the consumers of the new country. Tesla markets their products using an online presence, which serves as the key distribution channel for the company. The online distribution channel would be used to announce the entry of the Tesla brand in the new market. Tesla also promotes their products using social media sites, such as Facebook, Instagram, and Twitter. Additionally, Tesla uses company owned stores and galleries to sell its products, instead of using conventional dealerships. The Tesla store serves as a showroom and allows Tesla specialist to interact with possible customers. Furthermore, Tesla will use a secondary costing approach to determine pricing based off the cost of producing more products. This approach, “will allow profit maximization while maintaining Tesla’s aim for saving the environment without foregoing luxury” (Doxier, 2016). Lastly, Tesla will have to manage their human resources department by moving some employees from the U.S. locations to ensure a smooth transition in the new country. This will also help create a culturally diverse company. Once Tesla and the authorities of the new country reach an agreement, then the building of a new plant and development center can begin. When opening up a new plant, executives are needed to manage the development. While the new plant is under construction a Tesla store will be available to potential customers, where they can sample vehicles and obtain more information. Tesla Product Specialists will be able to interact with customers and give them the TESLA COMPANY PROFILE 9 opportunity to learn more about electric cars and batteries before they decide to buy. Tesla stores are manufactured to be informative and interactive in a positive way, unlike the traditional dealership (Musk, 2012). Customers will use the Tesla online distribution center to order their vehicle. The vehicle will be custom made at the factory and then delivered to the closest distribution and service center for pick up. If a customer is more than 160 miles from the closest service center the product can be shipped directly to their home (Tesla Support, 2019). All Tesla vehicles have to be charged after driving so many miles, therefore public charging stations would have to be built in the new country in order to maintain and service the vehicles. Tesla vehicles can also be charged at home using the wall connector and outlet that is included with the purchase of the Tesla. With Tesla expanding globally they will be able to distribute more product and services, as well as, make a much higher profit. For example, Tesla has opened an auto plant in China and it has become Tesla’s second largest market and has contributed a total of $2 billion in revenue (Yongqi, 2019). Expanding Tesla to new countries may be expensive and time consuming, but worth it in the end when products begin to sell. Market Competition The major competitors in the global automotive market for Tesla include traditional automotive companies such as Ford Motor Company, General Motors, Honda and Toyota (Investopedia, 2019). However, because the majority of Tesla’s product line is considered luxury vehicles they are also in competition with companies such as BMW, Volkswagen, TESLA COMPANY PROFILE 10 Audi and Mercedes (McCarthy, 2018). According to U.S. News (2018), Tesla was listed in the #2 and #4 spot for top electric vehicles against their competitors. Until recently, very few electric vehicle (EV) models, 100% electric vehicles powered by a battery, sold in big volumes around the world. A look at the US, Canada, Europe, Japan and China paints the picture of a rather small market: in 2017, plug-in electric vehicles (PEV) accounted for only 1.7% of the total new cars sold in these countries. From the 1.1 million PEVs sold last year, only 734,000 were EVs, the rest being plug-in electric hybrid vehicles (Mihaltianu, 2018). In the US, Tesla clearly dominated the EV market in 2018, with the Model 3 (24,367 examples), Model S (10,820 units) and Model X (9,525 units) all selling more than the fourth-placed Chevrolet Bolt EV (7,858 units sold). Nissan Leaf came in fifth, with only 6,659 examples sold in the same period of time. BMW i3, Fiat 500e, Kia Soul EV, VW e-Golf, smart ED, Honda Clarity BEV, Ford Focus Electric, Hyundai IONIQ EV, and Mercedes B250e sold, combined, less than 10,000 units (Mihaltianu, 2018). In the coming years, especially in the luxury car market, the market segment will change drastically with many competitors eyeing the market share that Tesla already has a hold on. For example, the following companies all have models coming out that directly rival Tesla models (Mihaltianu, 2018): ➢ Jaguar I-Pace - a direct alternative for Tesla's Model X and will begin with selling prices starting at 10% less than the Model X ➢ Audi e-Tron Sportback - an SUV that also attacks Tesla's Model X ➢ The Audi e-Tron - is a direct attack on the Model S and as a compact car, targeted on the Tesla Model 3. Both models are expected to the market in 2019 and 2020. ➢ Porsche Taycan - is directly targeting the Model S TESLA COMPANY PROFILE 11 ➢ Porsche Mission E Cross Turismo - will most likely target the Model X ➢ BMW i4 – is expected to debut in 2020, and will be based on a completely different platform than the current BMW EVs, also targeting the Model 3. ➢ Mercedes-Benz EQC - will be the first electric SUV of the German brand and will directly target the Model X. ➢ Mercedes-Benz EQA - will be launched in 2020, it will target the Model 3 ➢ Polestar 2 EV - will make its appearance at the 2019 Geneva Motor Show and will be able to compete directly with the Tesla Model 3. There are also a number of reasonably priced vehicles that will be coming to the market to rival Tesla models, which include the Hyundai Kona Electric, Kia Niro EV, and the Renault ZOE (Mihaltianu, 2018). Group 2 has determined that there is a strong opportunity for establishing a strong EV presence in the BRICS and Next 11 global markets. The empirical data will attest to that conclusion. In addition, the data shows that there is a strong need to research and possibly establish Tesla, Inc. presence in developing nations globally. If the data derived from a cost benefit analysis can support the establishment of Tesla’s presence in the BRICS and Next 11 nations, then it would also serve towards Tesla’s corporate responsibility and help enhance their corporate brand globally. Tesla Inc. Internal Analysis The ultimate goal of any company is to create value that consumers are willing to pay for. Value creation for a company occurs when the benefits of the products that they are creating for their target consumer are higher than the actual cost of production (Seidl, n.d.). Companies that are able to create the most value are able to effectively outperform their competitors. Therefore, it is almost imperative that companies understand what activities actually create value and where TESLA COMPANY PROFILE 12 their strengths lie. According to Porter, every business conducts primary and support activities that fall into nine generic categories which are support activities; firm infrastructure, human resources, technology development and procurement. As well as primary activities; inbound logistics, operations, outbound logistics, marketing and sales, and services (Seidl, n.d.). This is also why companies must be able to evaluate their internal and external environments. Internal analysis in conjunction with an industry analysis helps companies understand, the micro-level and the macro-level environment, as well as, the meso-level environment of an organization (Dopfer, Foster, & Potts, 2004). Internal analysis give strategist the ability to a better understanding of a firm’s microenvironment, by analyzing its key resources and competences. In order to understand the competitive advantage of Tesla currently, we have to define and understand the company’s strengths and weaknesses respective to their competition. The SWOT analysis is used to summarize the Strengths, Weaknesses, Opportunities and Threats likely to impact a firm’s ability to achieve its objectives (SWOT Analysis , 2010). It provides an overall picture of the company’s strategic positioning and also helps strategist, such as Group 2, in deciding how to grow Tesla, Inc. as a company. For this paper we will focus strictly on the internal analysis of Strengths and Weaknesses. Strengths As one of the leading organizations in its industry, Tesla, Inc. has numerous strengths Internal Factors: Strengths Outsourcing Vertical Integration Production Flexibility TESLA COMPANY PROFILE 13 that help them to thrive in the automotive industry. Gigafactory These strengths not only help them to protect their Employing top talent market share in existing markets, but also help in Company structure penetrating new markets. There are several Technology advancement advantages that can position Tesla, Inc. in front of its Distribution Network competitors and contribute to success in their overall Elon Musk strategic goals. Outsourcing less relevant activities will help to minimize costs and enhance efficiency by focusing resources on primary activities and value creation. Vertical integration, on the other hand, allows Tesla to manufacture its most relevant components in-house, thereby ensuring disruption-free production and high quality standards (Namminga, 2018). Production flexibility enables Tesla to quickly respond to changes in demand (Martin, Starace, & Tricoire, 2017). Tesla’s Gigafactory will lead to reduction in battery costs through economies of scale that will improve the competitiveness of future model cars (Tesla Inc., 2019). Hiring top talent and allowing different departments to easily interact with each other generates an innovative environment that leads to faster problem-solving and significant collaborative creation. Tesla having a function-based hierarchy and centralized structure also further facilitates communication that speeds up decision-making and allows quicker responses to external factors (Meyer, 2018). The knowledge and being the first to expedite as well as launch the first fully electric vehicle, being in the forefront of autonomous driving, offering free over-the-air software updates and installing a filtration system, which is so efficient that passengers can even survive a military bio attack by sitting in the car, are just one of the many characteristics of the company that TESLA COMPANY PROFILE 14 differentiates it from other competitors in the automotive industry (Lambert, 2018). The company also uses state-of-the-art technologies enabling Tesla to develop and manufacture award-winning vehicles proving Tesla’s superiority over its competitors (Pressman, 2016). Tesla’s distribution network of direct sales ensures the same buying experience in every Tesla store, which further strengthens it brand and recognition. In addition, Tesla can make more profit per unit, while offering lower prices for customers, by cutting out the salesman and distribution to a dealer, who would have charged extra money for its services, which allows for higher profit margins and competitive pricing. Tesla already has a thorough understanding that EVs will only grow in popularity once there is enough infrastructure to support them which is why Tesla has been continuously building and expanding its supercharge networks that offer the world’s fastest charging stations for their vehicles and any other electric vehicles on the market (Telsa Inc., 2019). The organizations supercharging network, coupled with company-owned service centers and mobile technicians accelerate the widespread adoption of Tesla vehicles in the BRICS (Telsa Inc., 2019). Source: Tesla Inc. (2019) TESLA COMPANY PROFILE 15 The final, most prolific and profound strength that Tesla holds over other competitors is that of the CEO, Elon Musk. Elon Musk represents key competitive advantage that no competitor can duplicate. Besides having the required skills, knowledge, vision and will power to make Tesla great, Musk has earned the confidence of investors. Musk is a risk taker and visionary leader with an extensive knowledge in computer programming and engineering. These qualities make him well suited as the leader of a tech company like Tesla. With its innovative technology and dream of creating a “sustainable energy ecosystem,” Tesla needs a risk-taker/visionary at its helm (Tesla, 2019). He has already built billion-dollar businesses, such as PayPal and SpaceX. Elon Musk is backed by a team that is highly spirited and as passionate about the cause as their leader (Sparks, 2015). The leadership style of Musk, which is motivating and inspirational along with a highly self-driven team, is a success factor for Tesla (Sparks, 2015). Weaknesses Tesla’s weaknesses may compromise its competitiveness and growth. One of Tesla’s main weaknesses is, its low revenues earned when compared to other competitors. The graph below displays Tesla’s revenue market share in the automobile industry. TESLA COMPANY PROFILE 16 As displayed by the graph above, Tesla’s market share based on revenue in the automobile industry is 0.37% (Seeking Alpha, 2018). The low market share has a negative impact on the company’s revenue-generating capacity. The poor market performance indicates Tesla’s inability to penetrate the automobile industry. Despite the poor overall market performance, Tesla has focused on the electric vehicle market. According to Chen and Perez (2018) Tesla has been a trendsetter in the electric vehicle segment. The company has infiltrated the plug-in vehicle segment, and Tesla’s vehicles have been positively perceived in the market. Tesla vehicles are highly priced compared to other vehicles with similar features. The company’s pricing strategy reduces the competitiveness of its vehicles. In turn, the firm makes lower sales, as customers prefer other cost-effective vehicles. While the products are environmentally sustainable as they use electricity for fuel, they have not yet made a substantial impact on the market. Claudy, Peterson, and Pagell (2016) indicate that Tesla’s electric vehicles are futuristic, and that most consumers have not ascertained whether they should invest in the technology. The vehicles are expensive and out of reach of low and middle-income consumers. TESLA COMPANY PROFILE 17 Tesla needs to re-think its strategy by enhancing customer awareness. While the benefits of electric vehicles are substantial, most consumers are deterred by their high prices. Tesla faces capacity issues that limit production. The company has a single production plant that is situated in Vermont, United States. The production capacity of the plant is limited, which prevents it from targeting higher volumes. Tesla’s inability to increase production may reduce its revenues, which would have a negative impact on the availability of capital (Hettich & Müller-Stewens, 2017). Due to limited revenues, the company’s ability to engage in marketing and research and development activities is minimized. Other competitors with bigger plants may produce larger units that provide them with increased capital to engage in research and development activities. Although Tesla’s premium pricing strategy provides it with increased revenue relative to other competitors, the pricing strategy lowers the total units purchased by consumers. If Tesla had additional plant capacities, it would have been earning higher revenues while still maintaining its premium pricing strategies. Tesla’s primary weaknesses may involve low revenues, high pricing strategy, and capacity limitations. The weaknesses may potentially lower Tesla’s competitiveness as they limit Tesla’s capability in engaging in activities that enhance growth and development. However, expanding Tesla’s production plants and offering the same buying experience in each store can strengthen and improve the Tesla brand. Tesla can cut out certain services, such as dealerships, in order to make a larger profit per unit, while still offering customers lower prices. Marketing activities and increased customer engagement would be effective in persuading consumers to purchase Tesla’s products, which will then increase low revenues. The company should also enhance awareness on the benefits of electronic vehicles due to their positive impact on environmental sustainability. TESLA COMPANY PROFILE 18 References Brown, I., & Jayakody, R. (2008). B2C e-commerce success: A test and validation of a revised conceptual model. The Electronic Journal Information Systems Evaluation, 11(3), 167184. Chen, Y., & Perez, Y. 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Retrieved from https://www.businessnewsdaily.com/5678-value-chain-analysis.html Hettich, E., & Müller-Stewens, G. (2017). Tesla Motors. Business Model Configuration. Investopedia. (2019, January 7). Who are Tesla's (TSLA) Main Competitors? Retrieved from https://www.investopedia.com/ask/answers/120314/who-are-teslas-tsla-maincompetitors.asp TESLA COMPANY PROFILE 19 Lambert, F. (2018, June 1). Elon Musk elaborates on Tesla’s Model S/X ‘Bioweapon Defense Mode’ and Model 3 air filter. Retrieved from https://electrek.co/2018/06/01/elon-musktesla-model-s-x-3-bioweapon-defense-mode-air-filter/ Laudon, K. C., & Traver, C. G. (2019). E-Commerce 2019: Business, Technology and Society (15th Edition). Boston: Pearson Education. Martin, C., Starace, F., & Tricoire, J. (2017, March). The Future of Electricity: New Technologies Transforming Grid Edge. Retrieved from World Economic Forum: http://www3.weforum.org/docs/WEF_Future_of_Electricity_2017.pdf McCarthy, N. (2018, July 31). The Tesla Model 3 Is Blowing Away The Competition. Retrieved from Statista: https://www.statista.com/chart/14921/the-tesla-model-3-is-blowing-awaythe-competition/ Meyer, P. (2018, September 8). Tesla Inc.’s Organizational Structure & Its Characteristics (Analysis). Retrieved from http://panmore.com/tesla-motors-inc-organizational-structurecharacteristics-analysis Mihaltianu, A. (2018, August 9). Tesla's competitors: the big tsunami of EV models to come until 2022. Retrieved from https://drivemag.com/news/tesla-s-competitors-the-big-tsunami-ofev-models-to-come-until-2022 Musk, E. (2012, December 22). The Tesla Approach to Distributing and Servicing Cars. Retrieved from https://www.tesla.com/blog/Tesla-approach-distributing-and-servicingcars Namminga, A. (2018, april 19). Applying Vertical Integration: What Companies Can Learn From Tesla's Master Plan. Forbes. Retrieved from TESLA COMPANY PROFILE 20 https://www.forbes.com/sites/theyec/2018/04/19/applying-vertical-integration-whatcompanies-can-learn-from-teslas-master-plan/#62a96a060ed4 Pressman, M. (2016, January). Tesla Model X Wins Awards and Top Honors. Retrieved from https://evannex.com/blogs/news/71899781-tesla-model-x-wins-awards-and-top-honors Pride, W., Hughes, R. J., & Kapoor, J. R. (2017). Foundations of Business (6th Edition). Boston: Cengage Learning. Seeking Alpha (2018). Why Tesla Inc. Stock Is Clearly Overpriced. Retrieved from https://seekingalpha.com/article/4085569-tesla-inc-stock-clearly-overpriced Seidl, D. (n.d.). Value Chains. (S. R. Clegg, & J. R. Bailey, Eds.) International Encyclopedia of Organization Studies. Retrieved from http://dx.doi.org.ezproxy.umuc.edu/10.4135/9781412956246.n551 Sparks, D. (2015, May 13). SWOT Analysis of Tesla Stock: The competitive landscape facing Tesla Motors isn't as black and white as some journalists may let on. Retrieved from https://www.fool.com/investing/general/2015/05/13/swot-analysis-of-tesla-stock.aspx Stringham, E. P., Miller, J. K., & Clark, J. R. (2015). Overcoming Barriers to Entry in an Established Industry: TESLA MOTORS. California Management Review, 57(4), 85–103. https://doi-org.ezproxy.umuc.edu/10.1525/cmr.2015.57.4.85 SWOT Analysis . (2010). Retrieved from QuickMBA: http://www.quickmba.com/strategy/swot/ Tesla Gigafactory. (2019). Retrieved from https://www.tesla.com/gigafactory Tesla, Inc. (2019). About Tesla. Retrieved from https://www.tesla.com/about Telsa Inc. (2019). On the Road. Retrieved from https://www.tesla.com/supercharger Tesla Support. (2019, January 01). Retrieved from https://www.tesla.com/support/frequentlyasked-questions TESLA COMPANY PROFILE 21 Vicent, J. M. (2018, July 30). 8 Best Electric Vehicles in 2018. Retrieved from U.S. News & World Report: https://cars.usnews.com/cars-trucks/best-electric-cars Ward, R. D. (1997). 21st-century corporate board. New York, NY: John Wiley & Sons. Wegner, D., Costa e Silva, S., & De Rossi, G. (2018). The development dynamics of business networks: A comparison among Wines of Brasil (Brazil) and Vitrocristal (Portugal). International Journal of Emerging Markets, 13(1), 27-44. Retrieved from https://doi.org/10.1108/IJoEM-12-2016-0332 Yongqi, H. (2019, January 10). Tesla factory points to appeal of China market. Retrieved from http://www.chinadaily.com.cn/a/201901/10/WS5c36898fa3106c65c34e391a.html Yoo, B., Choudhary, V., & Mukhopadhyay, T. (2002). A model of neutral B2B intermediaries. Journal of Management Information Systems, 19(3), 43-68.
Executive Summary An Executive Summary is a separate document from the main body of your document and must stand alone on its merits. It may be the only page from your report that gets read by top management -- so it must be able to "make the case" for your recommendation or proposal. The Executive Summary: 1. Summarizes the main points of a longer document (e.g., a business plan or proposal) and presents the essential issues in the paper: main points, analysis and recommendations. It is NOT an introduction, which would tell what you intend to analyze, not what you found from your analysis. If you are writing " this paper will....," then you are writing an introduction and not an executive summary! 2. Establishes the need or states the problem; recommends the solution and explains the value of the solution (why the reader should care); provides logical substantiation (your analysis!) for how you arrived at your recommendation. 3. Is written in text, not a bullet-point outline (quality of analyses cannot be shown through bullet points, which lack integrative logical connections among the bullet pointed ideas or data) 4. Should be one page or at most two pages for longer documents. No cut-and-pasting from the main document. Write from scratch so you are not tempted to provide unnecessary details. Always proofread the executive summary -- Ask people who haven't read the main document to read the summary and comment on it -- does it present the idea? Does it show the value? Does it "make the case" for your recommendation or proposal through clear logic based on sound data? If you wish to explore further, this link is a sample of best resources for how to write a top-notch Executive summary: http://www.csun.edu/~vcecn006/summary.html
Group 2 PESTEL Template Make a copy of the tab before use South Korea Factor Key Topics Sociocultural How stable is the political environment in the prospective country? What are the local taxation policies? How do these affect your business? Is the government involved in trading agreements, such as the European Union (EU), the North American Free Trade Agreement (NAFTA), or the Association of Southeast Asian Nations (ASEAN)? What are the country’s foreign-trade regulations? What are the country’s social-welfare policies? What are the current and forecast interest rates? What is the current level of inflation in the prospective country? What is it forecast to be? How does this affect the possible growth of your market? What are local employment levels per capita, and how are they changing? What are the long-term prospects for the country’s economy, gross domestic product (GDP) per capita, and other economic factors? What are the current exchange rates between critical markets, and how will they affect production and distribution of your goods? What are the local lifestyle trends? What are the country’s current demographics, and how are they changing? Sociocultural What is the level and distribution of education and income? Political Political Political Political Political Economic Economic Economic Economic Economic Sociocultural Sociocultural Sociocultural Sociocultural Sociocultural Technological Technological Technological What are the dominant local religions, and what influence do they have on consumer attitudes and opinions? What is the level of consumerism, and what are the popular attitudes toward it? What pending legislation could affect corporate social policies (e.g., domestic-partner benefits or maternity and paternity leave)? What are the attitudes toward work and leisure? To what level do the local government and industry fund research, and are those levels changing? What is the local government’s and industry’s level of interest and focus on technology? How mature is the technology? Technological Technological Environmental Environmental Environmental Environmental Environmental Legal Legal Legal Legal What is the status of intellectual property issues in the local environment? Are potentially disruptive technologies in adjacent industries creeping in at the edges of the focal industry? What are the local environmental issues? Are there any pending ecological or environmental issues relevant to your industry? How do the activities of international activist groups (e.g., Greenpeace, Earth First!, and People for the Ethical Treatment of Animals [PETA]) affect your business? Are there environmental-protection laws? What are the regulations regarding waste disposal and energy consumption? What are the local government’s regulations regarding monopolies and private property? Does intellectual property have legal protections? Are there relevant consumer laws? What is the status of employment, health and safety, and product safety laws? Reference: https://2012books.lardbucket.org/books/challenges-and-opportunities-in-international-business/s12-02-pes South Korea Other Country Considerations for Tesla's Expan Market Size Growth Support Factors Reference: http://eds.b.ebscohost.com.ezproxy.umuc.edu/eds/detail/detail?vid=1&sid=f8bb8a1a-281d-45e6-8559- Team Member: Opportunity or Threat (O or T) Any Comments/Notes nal-business/s12-02-pestelTeam Member: tions for Tesla's Expansion (Automotive Industry) 1a-281d-45e6-8559- Group 2 PESTEL Template Make a copy of the tab before use Russia Factor Key Topics Sociocultural How stable is the political environment in the prospective country? What are the local taxation policies? How do these affect your business? Is the government involved in trading agreements, such as the European Union (EU), the North American Free Trade Agreement (NAFTA), or the Association of Southeast Asian Nations (ASEAN)? What are the country’s foreign-trade regulations? What are the country’s social-welfare policies? What are the current and forecast interest rates? What is the current level of inflation in the prospective country? What is it forecast to be? How does this affect the possible growth of your market? What are local employment levels per capita, and how are they changing? What are the long-term prospects for the country’s economy, gross domestic product (GDP) per capita, and other economic factors? What are the current exchange rates between critical markets, and how will they affect production and distribution of your goods? What are the local lifestyle trends? What are the country’s current demographics, and how are they changing? Sociocultural What is the level and distribution of education and income? Political Political Political Political Political Economic Economic Economic Economic Economic Sociocultural Sociocultural Sociocultural Sociocultural Sociocultural Technological Technological Technological What are the dominant local religions, and what influence do they have on consumer attitudes and opinions? What is the level of consumerism, and what are the popular attitudes toward it? What pending legislation could affect corporate social policies (e.g., domestic-partner benefits or maternity and paternity leave)? What are the attitudes toward work and leisure? To what level do the local government and industry fund research, and are those levels changing? What is the local government’s and industry’s level of interest and focus on technology? How mature is the technology? Technological Technological Environmental Environmental Environmental Environmental Environmental Legal Legal Legal Legal What is the status of intellectual property issues in the local environment? Are potentially disruptive technologies in adjacent industries creeping in at the edges of the focal industry? What are the local environmental issues? Are there any pending ecological or environmental issues relevant to your industry? How do the activities of international activist groups (e.g., Greenpeace, Earth First!, and People for the Ethical Treatment of Animals [PETA]) affect your business? Are there environmental-protection laws? What are the regulations regarding waste disposal and energy consumption? What are the local government’s regulations regarding monopolies and private property? Does intellectual property have legal protections? Are there relevant consumer laws? What is the status of employment, health and safety, and product safety laws? Reference: https://2012books.lardbucket.org/books/challenges-and-opportunities-in-international-business/s12-02-pes Russia Other Country Considerations for Tesla's Expan Market Size Growth Support Factors Reference: http://eds.b.ebscohost.com.ezproxy.umuc.edu/eds/detail/detail?vid=1&sid=f8bb8a1a-281d-45e6-8559- Opportunity or Threat (O or T) Any Comments/Notes nal-business/s12-02-pestel- tions for Tesla's Expansion (Automotive Industry) 1a-281d-45e6-8559-

Tutor Answer

psumanrec
School: University of Maryland

Although,I am submitting the final paper but kindly extend the time and then accept.Otherwise the system will automatically detect as overdue.Thank you.

Running head: PESTEL

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PESTEL Analysis
Name
University Name
Course
Feb 21, 2019

PESTEL

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Executive Summary

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
past.
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

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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.

PESTEL

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Tesla Inc.

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
countries.
“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...

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Anonymous
awesome work thanks

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