Managing in Global Economy

Running Head: MANAGING IN GLOBAL ECONOMY
Managing in global economy
Name of the student
Name of the university
Author note

1
MANAGING IN GLOBAL ECONOMY
Executive summary
The aim of this report is to discuss about the potentiality of Tesla in doing business in Malaysia
and South Africa. This report has considered a few factors in analysing the business
environments of both Malaysia and South Africa. It is identified that Malaysia is well ahead of
South Africa in majority of the factors. Thus, this report concludes that Tesla will have more
potential market in Malaysia than in South Africa. In addition, this report also discussed about
number of market entry strategies and concluded that joint venture strategy will be most effective
for Tesla in doing business in Malaysia.

2
MANAGING IN GLOBAL ECONOMY
Table of Contents
Introduction......................................................................................................................................3
Determination of the external factors of Malaysia..........................................................................4
Determination of the external factors of South Africa....................................................................7
Evaluation of the country.................................................................................................................9
Market entry strategy.....................................................................................................................10
Direct exporting.........................................................................................................................10
Joint venture...............................................................................................................................11
Greenfield investment................................................................................................................13
Recommendation...........................................................................................................................15
Conclusion.....................................................................................................................................16
Reference.......................................................................................................................................17
Peer evaluation...............................................................................................................................20

3
MANAGING IN GLOBAL ECONOMY
Introduction
In the current business scenario, entering in the foreign market is becoming more
important for the business organization. This is due to the fact that with the entrance of new
competitors, domestic market is becoming more saturated. Thus, business organizations are more
opting for foreign countries to enhance their market share beyond their domestic boundaries.
However, prior to the entry in foreign markets, it is important to identify the positive and
negative factors associated (Laufs & Schwens, 2014). Different countries are having different
external factors that will have influence on the business effectiveness of the organizations. On
the other hand, it should also be noted that different entry strategies are applicable in different
situations. Thus, it is important for the business organizations to determine the external factors of
the foreign countries and design their market entry strategies accordingly (Coeurderoy &
Murray, 2014).
In this report, Tesla Model 3 is selected as product and Malaysia and South Africa re
selected as the potential countries. Malaysia and South Africa are selected due to the reason that
both these countries are leading emerging economies in the world. Both these countries are
offering immense opportunities for the foreign business (Stringham, Miller & Clark, 2015). Both
these countries are witnessing steady electrification of transport systems. On the other hand Tesla
cars are now mainly available in the United States. Hence, they are also having the need for
market expansion and entering in the emerging countries will help them to increase their sales.
This report will discuss about the external business factors to be faced by Tesla in
operation in Malaysia and South Africa. Based on the analysis, one country will be selected. In

4
MANAGING IN GLOBAL ECONOMY
accordance, market entry strategy of Tesla will be discussed. This report will conclude with a
few recommendations for Tesla to have effective foreign market operation.
Determination of the external factors of Malaysia
Political factors  The business friendly approach of the present Malaysian
government under the Barisan Nasional has paved a strong
business outlook for developing and investing in business in
Malaysia (TheGlobalEconomy.com, 2018).
 It can be argued that the policy of Tesla to manufacture eco-
friendly vehicle is also similar to the Malaysian government policy
towards environmental sustainability.
 As far as the political stability index of Malaysia is concerned it
can be argued that the political stability of the country is moderate
with a value of 0.1 in 2016 (weforum.org, 2018).
 Therefore, Tesla can get better opportunities in terms of political
stability in Malaysia.
Legal factors  In terms of the Legal elements that influence business in Malaysia
it can be argued that political accountability is high and corruption
is low in Malaysia that facilitates a transparent and better business
environment for Tesla.
 However, the Malaysia is having more complex and extensive
legal formalities that may cause issues for Tesla in their business
operation.

5
MANAGING IN GLOBAL ECONOMY
 The legal proceedings in Malaysia is prolonged and based on a
strong basis therefore it is not possible for the business
organisation to continue illegal practices.
 Government effectiveness may not be effective in some areas and
in automobile sector, it will have more impact.
Economic factors  The leading Economic Index in Asia showed that Malaysia is
doing progress in its economic development. The economic
growth is slow but steady that will be an opportunity for Tesla to
establish its business in Malaysia.
 Exchange rate of Malaysia n currency against dollar is more than
MR. 4.13 against 1 dollar. Thus, the return on investment for Tesla
will get affected (TheGlobalEconomy.com, 2018).
 In case of inflation Malaysia experiences the lowest inflation rate
in 2018 with 0.2 percent that was reached 4.3 percent in 2017. This
proves to be a better economic opportunity for the Tesla.
 Due to the low inflation rate it will be beneficial for Tesla to invest
more in the Malaysian market.
Ethical factors  In the global Corruption Perception Index 2017 it can be argued
that Malaysia scores 10 in the Asia-Pacific region and 62nd in the
global ranking (transparency.org, 2018).
 This denotes the evidence of corruption in Malaysia business
scenario. Tesla will find it difficult in coping up with corruption in
operating in the Malaysia n market.