ASSIGNMENT ON INTERNATIONAL BUSINESS ANALYSIS.

Running head: INTERNATIONAL BUSINESS ANALYSIS
International business analysis
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1INTERNATIONAL BUSINESS ANALYSIS
Introduction
In the current business scenario, venturing in the international business is one of the most
important decisions for the contemporary entities. This is due to the reason that globalization has
led to the opening of worldwide opportunities and entering of the foreign firms in the domestic
market. However, there are number of criterions should be met prior to the entry in the
international market. This decision is much important for the emerging companies in order to
gain the global status and tapping the larger market segments (Hovhannisyan and Keller 2015).
Tesla is one such emerging business that is rapidly creating market in their existing locations and
is aiming at changing the existing global automotive scenario. Tesla was founded in 2003 under
the leadership of their CEO Elon Musk and aimed at producing only electric vehicles for
different customer segments. Currently they are having four mass market models in the market in
addition of other electric accessories (Hardman, Shiu and Steinberger-Wilckens 2015). However,
as of now, their business is majorly limited within the United States and Canada and recently
they have ventured in the Chinese market as well. In order to compete with the globally
established car brands, it is important for Tesla to tap in more countries and create a global brand
image for them.
This report will discuss about the major motives for Tesla in further internationalization
of their business and also the most effective market choice for them will be selected. Different
management models will be used in justifying the choice of the target market for Tesla. In
addition, the expansion and market entry strategy to be followed by Tesla will also be discussed
and based on that recommended steps will be followed.
Discussion of the motives for internationalization

2INTERNATIONAL BUSINESS ANALYSIS
One of the major motives for Tesla behind internationalization of their business is market
development. This is due to the reason that according to the ansoff matrix, new market
development is one of the most effective ways of increasing the business volume. For example,
entering the Chinese market is one of major market development strategies of Tesla because with
the venture in the Chinese market, Tesla is being able to tap their growing business opportunities
and have got larger market to operate compared to their home country (Eriksson et al. 2015).
Another motive behind internationalization of business of Tesla is gaining economies of scale.
This is due to the reason that the more markets will be targeted by Tesla, the more will be their
level of large scale production process and the lower will be the average cost of production. For
example, the current facility of Tesla is capable of producing cars to be offered beyond the home
market of them. Hence, with the new market gained in China, Tesla is getting the opportunity
utilize the maximum resources from their facilities. Hence, with the motive of gaining further
economies of scale, Tesla is planning to further internationalize their business in newer countries
(Knight and Liesch 2016). With the reduction in their average cost of production, the
profitability for them will be also going to increase.
Uppsala model of internationalization can also be used in determining the motives for
the same of Tesla. According to this model, increasing market commitment and geographic
diversification contributes towards gaining the maximum internationalization. This is due to the
reason that the more will be the level of market commitment, the more will be the associated
risks for Tesla, which can only be offset by venturing in more countries (Yamin and Kurt 2018).
Hence, in the case of Tesla, their attached risks in terms of international business can only be
reduced by entering in more countries. With the presence in maximum countries, Tesla will be
able to have foreign production and sales subsidiaries and can attain the global status. Hence, it

3INTERNATIONAL BUSINESS ANALYSIS
can also be considered as the motive for internationalization for Tesla. Determination of the
motives behind the internationalization of Tesla can be done through economical theory as well.
According to comparative cost advantage by Ricardo, comparative advantages can be gained
by tapping the different available resources in different countries. This will further lead to the
maximization of the profits. For example, Tesla is gaining comparative advantages in terms of
human resources in doing business in China (Jacobsen and andChristoph Wolter 2016). This is
due to the reason that as of now, Tesla is having their manufacturing facility in the United States
and China. However, the average cost of human resources is less in China. Hence, Tesla is
gaining the comparative advantages in saving costs of human resources from their Chinese
operation. With the further internationalization of the business, Tesla will gain more comparative
advantages in terms from different countries and will contribute in their business (Gaur, Kumar
and Singh 2014).
Product life cycle can also be considered as another potential motive for Tesla in
internationalization of their business. This is due to the reason that according to the product
lifecycle theory by Vernon, there are different life stages through which each of the product goes
and Tesla is no exception. However, it should be noted that the validity of each of the life stages
depends on the external environments as well and hence it varies in different market conditions.
It should also be noted that the key objective of Tesla in this case is to extend the product
lifecycle of each of their models (Zou, Guo and Guo 2016). In this case, internationalization of
their business can be effective because the products will get extended life stages in different
market conditions. For example, Model X by Tesla was first introduced in the United States and
till date it is available in that market. Recently the model X is introduced in the Chinese market
as well. Thus, Model X is already in the growth stage in the American market whereas it is now