Global Business Environment: Cultural Risks, Competitive Advantages, and Success Factors of Tesla

This report discusses the cultural risks faced by Tesla in the global business environment and how it overcomes them. It also explores the comparative and competitive advantages of Tesla and the elements contributing to its success. The report covers the major challenges faced by the company, including the inability to understand local practices, subculture differences, and ethical and local problems. It also discusses the role of comparative and competitive advantages, such as battery supply chain, supercharger network, and the company's branding, in the success of Tesla. Additionally, the report highlights the elements contributing to the success of Tesla, including government policies, market conditions, supporting sectors, and technological advancements.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Major cultural risk of company..............................................................................................1
Role of comparative and competitive advantages..................................................................2
Elements which contribute to success of Tesla......................................................................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Global business environment includes several environmental components that companies
could not be able to control or organise. International business refers to the process of delivering
products or services on global level between various nations. A business environment includes
overall elements and forces which are indirectly or directly impact the functioning of an
organisation (Najaf and Najaf, 2021). In the following report the chosen organisation is Tesla
which is an American company and deals in auto-mobile sector in USA. The respective company
was established in July 2003 and has its headquarters in Palo Alto, California, United States. The
report covers what cultural risk the company could face and how it make efforts to overcome
those challenges. The report also discuss several roles of competitive and comparative benefits
within the company that could help it in getting success. Furthermore, the report focus on how
industrial policies of a nation, elements conditions and supporting sectors as well as internal
rivalry could contribute in the success of respective company.
MAIN BODY
Major cultural risk of company
Cultural risks are associated with ethics and believe of a country that could impact the
operations of a company within its boundaries. As every country have different customs, norms
and languages which could influence the functioning of a company. With these cultural
challenges the main purpose of companies is to overcome these economic, legal, technological
and political barriers (Manning, Larsen and Kannothra, 2017). But sometimes many
organisations avoid these challenges and face challenges and barriers in future in order to
accomplish their objectives effectively. This ignorance of organisations towards cultural
difference could result in several risks such as weak market share, negative image, joint ventures,
less productivity, negative returns and many more. The cultural challenges which could impact
the functioning of the respective organisation are discussed below in detail:
 Unable to understand local practices: cultural challenges not only impact the customer
interface but also influence the success of global business and to overcome this risk
selected company needs to develop a deep understanding of domestic customs. In case of
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Tesla, the organisation is required to expand its knowledge and understanding of local
market and customs in order to run its business smoothly as well as effectively.
 Unable to determine subculture difference: There are several differences in culture and
subculture which includes conditions of market and modifications in preferences of
customers. These preference of people and modifications in market greatly influence the
functioning of companies (Malefane and Odhiambo, 2019). In context to the selected
organisation, it is required to determine the preference of its potential customers and new
market trends while creating goods or services.
 Unable to identify new opportunities: Cultural barriers could result into missing of
great opportunities and because of this companies might not be able to expand its
business on global level. This could also cause barriers for companies to grab the
attention of foreign market and reduce the impact of local competitors. In case of the
selected organisation, the company needs to accomplish its targets and identify
opportunities early in the market so that it could expand its business smoothly.
 Unable to understand ethical and local problems: Because of cultural challenges
various companies are unable to understand domestic and ethical issues which could
result into failure of determining legal and ethical issues (Mayer and Phillips, 2017). In
case of the selected company, it is required to understand the issues of domestic and
ethical problems of the nation it wants to expand it business.
In case of Tesla, the organisational culture of the company develops human resource competence
which are important for innovative goods and services in the international auto-mobile industry.
The respective company needs to overcome various challenges it faces in the market so that it
could expand its business without any barriers.
Role of comparative and competitive advantages
Comparative advantages is described as capabilities of economy to manufacture products
or services at lower opportunity cost which is better than its other trading parteners. It will
provide the company the capability to trade its products or services at lower price as compare to
its competitors. It includes various elements that will provide company an opportunity to
manufacture good at cheaper price. In case of the selected company named Tesla, it has a broad
competitive advantages over other companies in the auto-mobile sector of US. The company
offers quality products or services to its potential customers. It has also developed a strong
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brand image in the market and in auto-mobile industry which is considered as a strong point of
organisation.
Battery supply chain: The selected organisation possess a strong competitive advantage as
compare to its competitors that it has a strong supply chain for batteries. In context to the
selected organisation, the company manufactures 4-all electric vehicles which possess better
battery capabilities (Bhattacharyya and Verma, 2019). The major benefit of the selected
company is that the supply chain of the company is strong and effective which provide
competitive advantage to the company in the market.
Supercharger network: The selected company develops an efficient recharging opportunities in
comparison to other existing companies. In case of the selected organisation, its present fleet of
supercharger range in power from 72Kw and it also has Urban supercharger which is up to
250Kw for new installed supercharger.
Company's Branding: It has a strong reputation fro manufacturing high quality goods or
services. In case of the respective company, the Roadster has changed the brand image of all
electrical cars from slow to fast vehicles. The organisation also provides its potential consumers
an outstanding and expectational services (Oetzel and Miklian, 2017).
The other competitive advantages of the company includes robot axis, giga factories and
Full automated with vision. The company has developed as a high competitive player because of
its advanced technology and development of electrical vehicles. The global image of the
organisation has been boosted by its advanced products and services. The company has gained
reasonable competitive advantages in the sector of auto-mobile industry through adopting hi-tech
innovations and developing of unique supercharger bases.
The respective form was able to gain competitive advantage by effectively removing
radar features from its product and providing additional features which increase consumer
satisfaction. This helped the company reach its vision and enhance competitive position in the
market. The main features of the new Tesla car which helped the company gain competitive
advantage include complete self-driving an autopilot mode along with advanced safety feature
which improve Protection of the consumer through the use of AI technology. This characteristic
of Tesla to constantly improve product features according to consumer reception and survive in
the market is the main reason behind success of the company and the ability of the firm to gain
beneficial position in compassion to rival businesses.
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Tesla has adopted differentiation strategy to assure maintenance of competitive advantage
for a long time. This involves developing vehicles which are unique and innovative to create a
distinguished brand image in comparison to rival businesses. The sustainable automobile option
offered by Tesla is an example of usage of differentiation strategy by the company to attract
consumers and gain competitive advantage. The supply chain of Tesla also supports
competitiveness of the company (Alghalith, 2018). This is because batteries Are an important
element of the supply chain of Tesla. This is better in comparison to fuel based automobile
producers which helps the company gain sustained competitive advantage in the automobiles
industry.
Elements which contribute to success of Tesla
Tesla is one of the most successful business forms in a current corporate environment and
a leading organisation in the electric automobiles industry. There are different factors which
support global success of Tesla. Currently followed policy in the industry, market conditions
situations in supporting sectors, level of competition in the industry and technological
advancement are some of the factors which come into play in case of international success of
Tesla. Tesla is a American company friend government policies in relation to automobile sectors
in the country have influence success of Tesla. US government has enforced policies and
initiated financial investment in energy sector so that invasion, research and development in the
country can be promoted. This played an important role in success of Tesla because the firm was
able to gain federal loan from the American government. This helped the company and to the
electrical automobile industry and successfully expanded sales on an international scale.
The financial resources physical sources human resources and technological
infrastructure available at Tesla bleeding important role in global success an expansion of the
company. The market condition also influenced growth of Tesla and enables the company to
develop advanced products. the company was able to increase demand for Tesla products
because of the global brand recognition and premium symbolism of the products. The main
characteristics of electric vehicles which are considered by consumers during making purchase
decisions include reduction in fuel costs security features and availability of charging points in
the region (Ahmad and Khan, 2019). Respective company was able to attain high seals in places
where these factors supported consumer purchase such as Europe where transportation
infrastructure is improving in context of electric vehicles.
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In case of Tesla supporting industries such as artificial intelligence industries supported
success of the company by providing digital technology which can be used to improve safety and
enhance special attributes of the electric vehicles. Apart from this competitive rivalry also played
a crucial role in influencing the success of the company on a global scale. Competitive rivalry is
influenced by various factors such as the number of competitors present in the industry or the
ease with which new business forms can enter the industry and take away the market share of
existing organisations (Vinogradova and et. al., 2019). High competitive rivalry in industry
means that the market share of individual businesses is low because large number of businesses
is competing to gain small market share in the industry. Search high intensity of rivalry can lead
to cut throat competition and profit limiting actions such as price cutting increased advertising
expenditures and prioritising innovation.
Case of the American automobile manufacturer Tesla the ability of the company to
address consumer concern helped the firm secure beneficial position in the industry. The
respective organisation it’s present in a highly competitive environment and in order to survive
in this industry for a long time it is important for Tesla to develop competitive features in their
cars. This is because there is factors which enhances the intensity of competitive rivalry in
electrical vehicles industry.
Tesla faces low bargaining power of consumers in the electric automobiles industry.
The reason for this is that the consumers I’ve lost switching costs which increases obstacles in
purchasing high quality electric automobiles from rival businesses. In addition to this the
presence of moderate substitutes is another factor which reduces the bargaining power of the
consumers. On the other hand the intensity of competition in the electric automobile industry has
increased as several fuel based automobile manufacturers have entered the industry. They are
offering consumers self driving and electric premium vehicles which increases competition for
Tesla.
Company reached the successful position after 15 years of it's formation. Automobiles
have emerged as the perfect substitute for fuel powered vehicles which are highly unsustainable
and cause environmental damage. The electric vehicle products offered by Tesla are a pioneer in
this industry and have gained successful reception all over the globe (Musonera and Cagle,
2019). The reason for success of Tesla is because of its strong supply collection and ability to
work in a politically friendly climate. One of the factors which led to success of Tesla is the
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increase in prices of fuel because of the Great Recession. This economic factor has influenced
many consumers to switch to electric vehicles and contributed to high sales of Tesla food stop
increasing awareness about the sustainability and importance of using environmental friendly
products also shaped the profitability of Tesla. In a current situation where climate change is one
of the biggest concerns the electric vehicle products offered by Tesla support promotion of
sustainability.
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CONCLUSION
From the above report it can be determined that business forms not affected by the
external environment and success of enterprise is dependent on such environment. The cultural
risks and the ways in which businesses deal with this change affect the success of the company
such as Tesla. The success is dependent on various factors including policy adopted by the
industry market conditions and internal competition in the sector.
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REFERENCES
Books and Journals
Ahmad, S. and Khan, M., 2019. Tesla: Disruptor or Sustaining Innovator. Journal of Case
Research, 10(1).
Alghalith, N., 2018. Tesla: innovation with information technology. International Journal of
Business Research and Information Technology, 5(1). pp.37-51.
Bhattacharyya, S. S. and Verma, S., 2019. The intellectual core and structure of international
business strategies (IBS): A co-citation analysis. Review of International Business and
Strategy.
Malefane, M. R. and Odhiambo, N. M., 2019. Trade openness and economic growth: empirical
evidence from Lesotho. Global Business Review, p.0972150919830812.
Manning, S., Larsen, M. M. and Kannothra, C. G., 2017. Global sourcing of business processes:
History, effects, and future trends. The new Oxford handbook of economic geography,
pp.407-435.
Mayer, F. W. and Phillips, N., 2017. Outsourcing governance: states and the politics of a ‘global
value chain world’. New political economy, 22(2), pp.134-152.
Musonera, E. and Cagle, C., 2019. Electric Car Brand Positioning in the Automotive Industry:
Recommendations for Sustainable and Innovative Marketing Strategies. Journal of
Strategic Innovation & Sustainability, 14(1).
Najaf, R. and Najaf, K., 2021. Political ties and corporate performance: why efficiency
matters?. Journal of Business and Socio-economic Development.
Oetzel, J. and Miklian, J., 2017. Multinational enterprises, risk management, and the business
and economics of peace. Multinational Business Review.
Vinogradova and et. al., 2019, December. Artificial intelligence capabilities classification in
business environment. In Journal of Physics: Conference Series (Vol. 1399, No. 3, p.
033098). IOP Publishing.
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