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Market Analysis For Tesla Motors

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Describe capabilities of database management systems. Evaluate the challenges and benefits of data management systems. Critically evaluate the technical, ethical and legal challenges database presents for an information systems manager.

 

Answer:

Introduction

The purpose of this report is to conduct a thorough market analysis for Tesla Motors. The aim of this market analysis is to recommend Tesla Motors the best suit international market. The company manufactures electric vehicles since 2003 (Tesla.com 2016). Ion global market, the company has 17 stores. The company has planned to enter in international market with online selling strategy. On the other hand, it is highly important to have physical stores in order to ensure growth in international market (Deyo 2016). This report will suggests the best suit international market and efficient marketing mix for entering into that market through physical stores.  

Macro and Microenvironment of Automobile Industry

Nowadays, analyzing the external and internal market forces is becoming the most important factor for the marketers. Similarly, in automobile industry, many micro and macro factors are affecting business growth of the organizations. The market competition in this industry is very high (Aydin and Kacker 2015). Therefore, Tesla needs to conduct efficient market analysis in order to know the external and internal forces that could affect business growth of the company. Following are the micro and macro analysis of automobile industry in order to understand the impact of market forces on electric vehicles manufacturer.

Microenvironment Analysis (PESTLE)

PESTLE framework helps to evaluate the external market forces, which may affect business growth of an organization positively or negatively. This management framework includes six factors such as political, economic, social, technological, legal and environmental. Following are the impact of these factors on electric vehicle manufacturer in global market.

Political: In order to conduct business in global environment, it is important to consider the political stability of the targeted country. An electric car manufacturer needs to comply with a set of legislations imposed by the government. For example, organizations need to provide efficient safety features in order to comply with the governmental policies (Cardoza et al. 2015). On the other hand, the company needs to maintain a minimum fuel efficiency of the products. In case of electric vehicles, the products should have minimum energy efficiency.

Economic: Economic condition of a country has impact on the buying power of consumers. It is an external market force for the automobile industry. Electric vehicles are expensive and therefore, an economical recession will prevent the organizations from conducting sustainable business (Conaty 2016). Therefore, it can be said that economic factor has wide impact on the automobile industry.

Social: When it comes to the social factors, it has impact on the buyers’ decision-making process. Social background of the targeted consumers influences the buying behavior. For example, consumers from high social background will seek for products with premium pricing (Zander, McDougall-Covin and Rose 2015). On the other hand, people from low social background will seek for moderate quality products at low cost. Therefore, it is highly important for automobile industry to evaluate the social factors before entering in international market.

 

Technological: In automobile industry, technological improvement affects the business process in an effective manner. A car manufacturing organization should implement innovative technologies in order to attract the consumers towards the brand (Brouthers, Nakos and Dimitratos 2015). When it comes to the electric vehicle manufacturer, the organizations need to be more attentive while introducing new technologies. It is highly important to evacuate whether the targeted consumers are accustomed with innovative technologies or not.

Legal: In automobile industry, the organizations need to evaluate the legal frameworks imposed by the government. Different countries have different legal procedures (Cantwell 2015). Without complying with the legal frameworks, it will not be possible for the organizations to conduct sustainable business.

Environmental: In order to conduct business in global market, organizations should maintain the environment quality. Now, in case of the automobile industry, the organizations need to maintain minimum carbon emission (Radebaugh, Sullivan and Daniels 2015). However, the electric vehicle manufacturers need to ensure that their products are energy efficient. In this manner, it will be possible to comply with the environmental policies.

Micro Analysis (SWOT)

This management framework helps to identify the strengths, weaknesses, opportunity and threats of an industry. Following is the SWOT analysis of automobile industry. The key focus of the analysis is electric vehicles.

Strengths

Weaknesses

·         Improved technology helps the companies to attract consumers

·         Electric car is environment friendly and therefore, organizations would be able to comply with environmental policies

·         Consumers are showing keen interest on electric vehicles due to cost efficiency 

·         Bargaining power of consumers is high in this industry

·         Government has imposed many policies such as excise duty, which tends the company to increase price

 

Opportunity

Threats

1.      Fuel cost do not have impact on car sales

2.      Energy efficiency helps to increase organizational sales

3.      Organizations in this industry can expand in global market through innovative technology

 

·         The market competition in this industry is high

·         Economical recession has negative impact on organizations’ growth

·         Cost of research and development is very high in this industry

·         Sealing cost is remarkably high in this industry

(Source: Meyer and Peng 2016)

 

Analyzing Internal Business Factors of Tesla Motors

Internal business factors refer to the internal analysis of an organization. Tesla Motors deals with electric vehicles and now planning to expand in global market through physical stores. Therefore, it is highly important to conduct an internal analysis through which it will be possible for the company to understand the probable opportunities (Richter, Sinkovics and Ringle 2016). The current profit margin of the company is 29.6%. Now, the company has planned to reduce its battery cost by 30% in order to increase the profitability. Apart from that, the company needs to expand business in international market and therefore, it is highly important to evaluate the organizational resources carefully. Following is the internal environment analysis of Tesla Motors, which shows its internal business factors, which can affect organizational growth of the company.

Strengths

Weaknesses

·         The company has copy rights on its concept car planning

·         Since, Tesla Motors has introduce electric car for the first time, marketing expertise is a positive factor

·         The company has a good brand image, which may help the company in international expansion

·         Products offered by Tesla Motors are innovative in nature

·         Limited fund prevents the company from introducing new products

·         Low manufacturing volume, there is no importance of Tesla in global economy

·         Negative incidents may harm business growth of the company negatively

Opportunities

Threats

·         The market of electric car is in developing stage and therefore, Tesco has high opportunity to expand in international market

·         The company can work collaboratively with companies like Toyota and Daimler

·         The products are environment friendly and therefore, the company would be able to comply with the environmental policies

·         New organizations are entering in this industry, which is increasing market competition

·         As the market is developing, new market research could change the trend of this industry

·         Governmental interruption may affect business process of the company negatively

(Source: Buckley, Burton and Mirza 2016)

Evaluation of Markets

In order to enter in international market, it is highly important to evaluate different markets before taking the final decision. Here, it is important to consider economic conduction of the country in order to analyze feasibility. Tesla Motors needs to evaluate the market based on product demands and market competition. The company should choose a country, where market competition is present (Hamilton and Webster 2015). In this manner, it will be possible to gain competitive advantages. Now, Tesla Motors needs to understand the market from every aspect in order to ensure sustainable development. Following is the process of evaluating different markets in international market.

Country identification: Here, the company needs to identify the potential country for the electric vehicle. Developing country will be the most efficient target market for Tesla Motors. In such market, the company would be able to reduce manufacturing cost in an efficient manner (López‐Duarte, Vidal‐Suárez and González‐Díaz 2015). In such countries, the company would be able to reduce the labor cost and other resources. Apart from that, the economical background of the country should be taken under consideration.

Preliminary screening: Here, Tesla motors needs to take a close look to the external market forces. For example, the economical stability and buying powers of the consumers are the most important factors, which the company needs to observe (Neelankavil 2015). Apart from that, the company should evaluate exchange rate and currency stability of the nominated countries.

In-Depth Screening: In this step, Tesla needs to conduct in-depth evaluation of the markets. Here, it will be beneficial to observe business growth of companies in automobile organizations (Drogendijk and Martín 2015). Following this process, the company would be able to narrow down the process of market selection in an efficient manner.

 

Final Selection: Here, the company should select a country based on the previous analysis. In this step, the company needs to take the final decision of international expansion (Eicher 2016). In order to select the appropriate market, the company needs to consider some critical success factors such as market competition, buyers’ power and demand of technological products.

Selection of Market with Justifications

In order to enter in global market, Singapore would be the most feasible location for Tesla Motors. Singapore is a developing country in Asian market. In this country, Tesla would be able to reduce labor wages. After conducting market evaluation, it can be said that political risk factor of Singapore market is comparatively low from other countries. The major threat of automobile industry is restrictive political framework. Expanding business in this country would help the company to maintain sustainability (Cuervo-Cazurra 2016). When it comes to the economic factors, the country is vibrant in terms of economical background. Singapore’s per-capita income is 76,860 dollars. The business environment is corruption-free, which will help the company to conduct ethical business. Due to favorable economic state, the market competition of this country is high and therefore, it will be easy for the company to gain competitive advantages. When it comes to the social factors, purchasing power of the consumers is very high in this country. Therefore, Tesla Motors will be able to maintain stable cash inflow in an effective manner (Folsom et al. 2016). Singapore is a technologically advanced country, where demand of innovative products is very high. Consumers are willing to buy product with good features. Therefore, it will be easy for Tesla Motors to manufacture electric cars in this particular market. After evaluating the Singapore market from different aspects, it can be said that the selected market is feasible for the company. In this market, the company would be able to influence consumers’ buying behavior through innovative range of electric vehicles.       

Market Entry Strategy for Tesla Motors

In order to enter in Singapore market, Tesla Motors should implement Joint Venture strategy. Through this strategy, the company would be able to reduce entry cost in an efficient manner. The company should evaluate the company with which they can conduct collaborative business. Here, the company can choose Ford as the company with which strategic alliance is possible (Ghemawat 2015). In this entry strategy, it is highly important to understand the required resources for the planned expansion. For example, the company should have adequate knowledge about the roles and responsibilities of their strategic alliance. Tesla should take the responsibility of product manufacturing in order to build a global image. Through this market entry strategy, the company would be able to reduce the cost of physical store in Singapore market (Deyo 2016). Apart from that, the cost of manufacturing unit will be reduced through this strategy. Entering in international market is costly and therefore, it would be easy to merge up with another organization in order to maintain profitability. 

Recommended Marketing Mix for the Selected Market

Before entering in international market, it is highly important to frame the marketing strategies through appropriate marketing mix. It would help Tesla Motors to gain superiority in international market. Following is the marketing mix for Tesla Motors in order to conduct sustainable business in Singapore market.

7s Marketing mix framework

Product: In order to attract consumers in Singapore market, the company should incorporate innovative features into their products. Apart from that, the company should pay close attention to the product quality. Following are the features that Tesla will incorporate into the electric vehicles.

  • The products will be energy efficient
  • High security features will ensure low damages
  • Zero carbon emission would help to improve environment condition
  • Minimum recharging time (less than one hour)

The above-mentioned features would help to attract the consumers in Singapore market. Additionally, the company needs to focus on product design and build in order to gain competitive advantages.    

 

Price: Economic background of Singapore is feasible and therefore the company would implement premium-pricing strategy. Purchase power of consumers in Singapore is high. Therefore, this pricing strategy would be favorable for the targeted customers in this country. However, the company has planned to reduce cost of lithium ion battery by 30% in order to increase organizational profitability. People in Singapore are willing by products with high technological features. Therefore, high pricing will not be an issue for this group of customer.      

Place: Tesla will conduct business through physical stores in Singapore market. Apart from that, the company will also collaborate with the distributers in order to increase product availability in this market. Consumers will be able to book products through official website of Tesla Motors. Online selling process is not used in automobile industry before. Therefore, this service will attract large group of consumers in an effective manner.    

People: Tesla would recruit workforce from the Singapore market. Through this strategy, the company would be able to reduce company wages, because labor cost of this country is comparatively low. However, the employees are skilled and well efficient to handle critical situation. The company will recruit based on skills and cultural background of people. In order to maintain business sustainability, the company will avoid segregation while recruiting. A fair recruitment policy would help the company to utilize knowledge of skilled workforce.

Promotion: In order to promote the products in Singapore market, the company would adopt online promotional strategies. Tesla should adopt celebrity endorsement in order to influence buying behavior of Singapore’s consumers. Wirth effective social media promotional strategy, the company would be able to communicate with the targeted consumers directly. The proposed promotional strategies would help the company to promote the electric vehicles in Singapore market in an efficient manner.  

Process: In order to expand in this particular market, the company should adopt joint venture strategy with Ford, which is a car manufacturing company of global market. Through this strategy, the company would be able to work collaboratively. Therefore, it can be said that cost of expansion will be low with this strategy. 

Physical evidence: In order to increase trust level of the consumers, Tesla Motors will open physical stores in Singapore market. However, the company will also provide the facility of online purchase. Consumers can buy products through physical stores or the website. The company will provide efficient training to the employees in order to ensure high quality reception to the consumers. 

Conclusion

While concluding, it can be said that in order to expand in international market, it is highly important to conduct feasibility study. After conducting the micro and macro environment analysis of automobile industry, it can be said that organizations in this sector has huge opportunity to enter in international market. In case of Tesla Motors, The Company should target Singapore market with joint venture strategy. Through this strategy, Tesla Motors will be able to reduce the cost of international expansion in an effective manner.

 

Reference list

Aydin, N. and Kacker, M., 2015. International Expansion of the US-Based Franchisors: Opportunities and Problems. In Proceedings of the 1986 Academy of Marketing Science (AMS) Annual Conference (pp. 467-467). Springer International Publishing

Brouthers, K.D., Nakos, G. and Dimitratos, P., 2015. SME entrepreneurial orientation, international performance, and the moderating role of strategic alliances. Entrepreneurship Theory and Practice, 39(5), pp.1161-1187.

Buckley, P.J., 2016. International business: economics and anthropology, theory and method. Springer.

Buckley, P.J., Burton, F. and Mirza, H. eds., 2016. The strategy and organization of international business. Springer.

Cantwell, J., 2015. An introduction to the eclectic paradigm as a meta-framework for the cross-disciplinary analysis of international business. InThe Eclectic Paradigm (pp. 1-22). Palgrave Macmillan UK.

Cardoza, G., Fornes, G., Farber, V., Duarte, R.G. and Ruiz-Gutierrez, J., 2015, January. BARRIERS AND PUBLIC POLICIES AFFECTING THE INTERNATIONAL EXPANSION OF LATIN AMERICAN SMEs. In Academy of Management Proceedings (Vol. 2015, No. 1, p. 14103). Academy of Management

Conaty, P., 2016. International Expansion in the Retail Industry: A Multi-Case Study on Strategic Expansionary Variables.

Cuervo-Cazurra, A., 2016. Corruption in international business. Journal of World Business, 51(1), pp.35-49.

Deyo, F.C. ed., 2016. Social reconstructions of the world automobile industry: Competition, power and industrial flexibility. Springer.

Drogendijk, R. and Martín, O.M., 2015. Relevant dimensions and contextual weights of distance in international business decisions: Evidence from Spanish and Chinese outward FDI. International Business Review, 24(1), pp.133-147.

Eicher, S. ed., 2016. Corruption in international business: The challenge of cultural and legal diversity. CRC Press.

Folsom, R., Gordon, M., Van Alstine, M. and Ramsey, M., 2016.International business transactions in a nutshell. West Academic.

Ghemawat, P., 2015. From International Business to Intranational Business. In Emerging Economies and Multinational Enterprises (pp. 5-28). Emerald Group Publishing Limited.

Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University Press, USA.

López‐Duarte, C., Vidal‐Suárez, M.M. and González‐Díaz, B., 2015. International Business and National Culture: A Literature Review and Research Agenda. International Journal of Management Reviews.

Meyer, K. and Peng, M., 2016. International business. Cengage Learning.

Neelankavil, J.P., 2015. International business research. Routledge.

Radebaugh, L.H., Sullivan, D.P. and Daniels, J.D., 2015. International business: Environments and operations. Pearson Education.

Richter, N., Sinkovics, R.R. and Ringle, C., 2016. A critical look at the use of SEM in international business research. 0265-1335, 33(3), p.forthcoming.

Tesla.com. 2016. Model S | Tesla UK. Available at: https://www.tesla.com/en_GB/models [Accessed 16 Aug. 2016]

Zander, I., McDougall-Covin, P. and Rose, E.L., 2015. Born globals and international business: Evolution of a field of research. Journal of International Business Studies, 46(1), pp.27-35

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