Discuss about the International Business for Management of Engineering and Technology.
Tesla Inc. was founded by a group of engineers in the year 2003 (www.tesla.com, 2018). The company was brought in to the market to build electric cars with the aim to make electric vehicles quicker and easier and fun to drive as compared to petrol cars. The initial product of Tesla was a sport car which had high performance was run on electric known as the Tesla Roadster. This was launched in 2008 and made the market realise the new battery technology that the company used and the electric powertrain that it was (Muller, 2015). Tesla built the first premium sedan which was an all-electric car from scratch and named it Model S. The car was a complete package with being safe, efficient and best in performance among other cars of the same class. Tesla next built Model X, which received a five star rating of being the safest sport vehicle. Next Tesla introduced a low-priced and high volume electric car which was Model 3, the production of which was started in 2017 (www.tesla.com, 2018). Just after releasing the Model 3, Tesla started forward to unveil the safest and most comfortable truck which was ever produced, Tesla Semi. This truck was being launched with the aim to save the owners a lot of fuel cost. Tesla claims to use Lithium-Ion batteries that are not considered to be hazardous to the environment and are also safe in landfills (Chung, Elgqvist, & Santhanagopalan, 2016).
Tesla trades car is almost 17 countries around the world. For this they have to be aware of every political, economic and socio-cultural scenario in every country. Tesla in Australia keeps in mind that it has to abide by the Australian laws and rules to conduct a smooth run and establishment in the country. The Tesla industry first and foremost follows the political factor of environmental protection laws that states to build cars which are environment friendly and that the emission levels are strictly met. The Tesla Company also makes good use of the loan programs that are offered by the government to conduct the research and development of new electric car technologies. Economic factors in Australia involve the rapid economic growth in the electric car sector as more people are purchasing electric cars due to the increase in the cost of fuel prices (Moritz et al., 2015). Due to the recovery in the GDP and inflation rate of Australia, the consumer purchasing power is recovering. The battery costs of Tesla are quite low and hence it makes the cars quite affordable for the consumers. The socio-cultural environment in Australia has a great impact on the Tesla industry. Due to the environmental problems caused by gasoline fuels, consumers these days are more inclined to find alternative sources of resources which can save the environment (Hardman, Shiu & Steinberger-Wilckens, 2015). Electric cars also act as a status symbol and are liked by the wealthy people who likes to purchase quality electric cars to elevate their status in the society.
Political, economic and socio-cultural environment
Tesla, like all other companies, had the agenda of global expansion on their mind. They wanted to expand their vehicle stores and the car manufacturing plants on a global scale so that their innovative and one of a kind vehicle reaches more people. Tesla target three consumer sectors which helps them to penetrate a new market by offering a standardised product to the consumers. Tesla enters the markets with quite a low pressure from the local marketers due to the innovative nature of its product. The company produces high-end innovative models for which customers pay high prices for the vehicles. The company then reduces the price to create a huge mass market with high volumes of production. However, Tesla does face a lot of barriers from other high end global industries like Volkswagen, BMW and Toyota because of the same price range and high competition among all these cars. Tesla has also tried to reduce its switching cost for the customers by eliminating the limitations and providing added benefits for the use of electric vehicles. Tesla has also faced high pressure to reduce the costs of its vehicles from many markets. However, instead of doing so Tesla has aimed at increasing the perceived value of its customers by providing many value-added services globally like introducing different charging services around the world. Additionally, Tesla had also reduced the length of the customer chain by making available online purchase for the customers so that they can purchase it directly (Stolze, 2014). Hence, Tesla Inc. had adopted the strategy of direct exporting to enter the new markets and to grab the attention of the consumers.
Tesla has ensured various strategies which could help it to grow and organize the business successfully in the international market. Tesla aims at low cost cars and differentiate them geographically keeping in mind the local differences of each country. They do this to grab more customer attention and so that the customers prefer their cars over other companies. Tesla positions its cars in the areas where there is high traffic, high retail visibility like in malls and streets where there are many shops (Karamitsios, 2013). This has been done so that people can easily decide when they think about purchasing a new car as the cars will be visible to them. Tesla gets the support of the government by making environment friendly vehicles and hence making forging good international relations. For example they were exempted from giving tax in many countries like Hong Kong and Malaysia because of producing electric cars with zero-emission. This exemption from taxing has also helped to reduce the retail cost of cars and make it reachable and affordable to the target customers. Tesla endeavours to produce high performance cars and target the customers of high income group. Furthermore, due to the innovative aspects of Tesla cars the customers’ bargaining power is low and this makes it easy for them to penetrate any new market.
New market entry strategies
Tesla is a company which operates globally and it is mandatory that the company can adopt the different cultural aspects of each country. If the company is unable to abide by the cultures in the global market then there might be a chance of failure of the products. This is why the company has taken into account many business management practices that helps to adopt the various cultures of the countries. The employees are trained in such a way so that they understand the rapid changes that occur in the market. It is important to understand and work on those changes to succeed in the international market (Iacopi et al., 2015). The company also keeps an eye on the different global preferences and trends to make sure that no mistakes are conducted while manufacturing products for a certain country. They also try to understand the root problems and factors that might be a reason for problems in a certain country. When this is realised, they act on how the problem can be solved and their product might be favoured by the market. If the problem is not solved, they might be unable to grab the market. Therefore, problem-solving is an important agenda for them in every context. Additionally, the company always keeps track of any new innovation or technology that might have been introduced in the market, so that they can make effective products which are based on the needs and preferences of the global customers (Manufacturers, Cyclical & Year, 2013).
Tesla is a company of the future but just like other big corporations, it has also faced many ethical challenges which has spoiled its name in the market for a certain time. Firstly, Tesla was unable to deliver many cars to the customers as they have promised. They took pre-orders from the customer but were unable to deliver the cars to the customers who have ordered them. For many models more than half a million have pre-ordered the car but have not yet received them. The company kept on pushing the delivery datelines of the cars and some customers even received their cars after three years from their order date. Secondly, many workers of Tesla have complained against the company for harassing them for being homosexual and had also faced racial discrimination and violent threats. Even certain female workers filed lawsuits against the company on the basis that they were being paid less than their male co-workers, and being ignored during promotions and were stopped when they tried to raise any concern regarding the problems of the cars. Tesla also put huge pressure on the workers for continuous innovation and more working hours which made them fall ill and even get hurt physically. Lastly, the huge dilemma that was faced by Tesla was the death of an individual from the autopilot system of a Tesla car. This led to people being against the autopilot system as they could be fatal for the drivers since it made them rely on the automatic system and sometimes the car may be unable to detect any vehicle which might be coming towards them.
Business across international borders
Tesla responded mostly on the lawsuit that was filed against them regarding the death caused due to the autopilot system of the car. The CEO of Tesla said the autopilot system is an assist feature which does make it necessary for the driver to keep their hands on the steering wheel the whole time. The driver should maintain the control and take the responsibility of the vehicle at all time. The autopilot system does not enable the driver o leave the control of the car and completely rely on the autopilot. The company cannot ensure safety if the driver decide to do so. They further said that the accident was not caused just due to the autopilot failure but also due to the tractor crossing both the lanes of a highway which was divided and coming in front of a car. This situation could make it impossible for even a manual driver to swerve the car at the last moment and save itself. Furthermore, there was also no evidence that proved that the autopilot was not doing its designated work. On the other hand, Tesla tried to increase its manufacturing plants and production unit so that it could deliver the cars on time to the customers. Since the lack in delivery have cost them decline in customer loyalty, they figured that staying in this path could mean losing more customers with time. Hence, serious measures have been taken by the company to eradicate this issue. However, there have been no statement or known measures that have been taken regarding the issue of workplace problems.
Hence, it can be concluded from the above case study that Tesla Inc. is a global brand and company which produces high performance and innovative vehicles to save the environment from high emission and fuel discharge. Their aim to build such cars came from the prospect of providing environment friendly and hazard-free products to the people. They have developed various strategies which has helped them to penetrate different new market and establish themselves by learning and providing according to the likes and preferences of the people of different countries. Even though they have faced high competition from other players of the same market, they were able to overcome and go forward due to their unique ideas and innovative technologies. They strive to maintain good relations with the governing body of different international countries by abiding with their laws and rules and by also their environment friendly strategy. Even they have faced certain ethical issues in their run, nonetheless they were able to eradicate them with the use of careful measures.
Business management practices
Reviewing the whole case study there are certain recommendations that can be suggested for the Tesla Company to get more success in the market. There are certain strategies which can be adopted by Tesla Inc. to maintain its position in the competitive market and also improve the profitability of the company. Tesla should try to expand more globally and make its presence felt in the market among other multinational companies. This will help them to enhance their business growth. They should also invest more in the research and development sector of their company so that continuous researches can be conducted to produce more products which are highly technologically advanced so that they can run ahead in the competitive market. In this way, they can succeed in the global market in spite of high competition in the automobile sector. This is because consumers are more attracted towards technologically advanced cars than the traditional ones and especially the high income group. Tesla should also increase their production units so that they can produce more units of vehicles as the demand for their cars are quite high in the market. Timely delivery of cars are highly recommended because this will ensure consumer loyalty towards their brand and products. However, they should also keep in mind that the welfare of their workers should be their first priority because without the workers they would not be able to manufacture even a single car. Hence, the good health and a good working condition should be provided to the employees because a good working environment will motivate the workers to work hard without the need for any pressure.
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Hardman, S., Shiu, E., & Steinberger-Wilckens, R. (2015). Changing the fate of Fuel Cell Vehicles: Can lessons be learnt from Tesla Motors?. international journal of hydrogen energy, 40(4), 1625-1638.
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