International Business Strategies and Ethical Issues of Tesla Inc.

This report provides a comprehensive analysis of Tesla Inc.'s international business operations, focusing on its market entry strategies in Australia, business management practices, and the political, economic, and socio-cultural environment influencing its operations. The report examines Tesla's approach to new market entry, including direct exporting strategies and the targeting of specific consumer sectors. It delves into how Tesla navigates international borders, considering factors such as government support and customer preferences. Furthermore, the report addresses the ethical challenges faced by Tesla, such as delivery delays, workplace issues, and the autopilot system, and details the company's responses to these challenges. The conclusion summarizes the key findings, and recommendations are provided based on the case study to offer insights into Tesla's future strategies.

Running head: INTERNATIONAL BUSINESS
INTERNATIONAL BUSINESS
Name of the Student
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Author Note

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Executive Summary
The aim of this study is to understand the different business scenarios of Tesla Inc. The
different political, economic and socio-cultural environment in Australia is analysed and how
the company manages these areas. The market entry strategies of the company is also
determined in this report along with the business management practices. The ethical issues
faced by the company is discussed and how the company was able to overcome these issues.
Furthermore, recommendations is provided based on the case study on Tesla Inc.

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Table of Contents
1. Introduction............................................................................................................................3
2. Discussion..............................................................................................................................3
2.1 Political, economic and socio-cultural environment........................................................3
2.2 New market entry strategies.............................................................................................4
2.3 Business across international borders..............................................................................5
2.4 Business management practices.......................................................................................5
2.5 Ethical challenges of Tesla...............................................................................................6
2.6 Response to ethical issues................................................................................................7
3. Conclusion..............................................................................................................................8
4. Recommendations..................................................................................................................8
5. References:...........................................................................................................................10

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1. Introduction
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).
2. Discussion
2.1 Political, economic and socio-cultural environment
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

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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.
2.2 New market entry strategies
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

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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.
2.3 Business across international borders
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.

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2.4 Business management practices
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).
2.5 Ethical challenges of Tesla
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

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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.
2.6 Response to ethical issues
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

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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.
3. Conclusion
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.
4. Recommendations
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

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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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5. References:
Chung, D., Elgqvist, E., & Santhanagopalan, S. (2016). Automotive lithium-ion cell
manufacturing: Regional cost structures and supply chain considerations (No.
NREL/TP--6A20-66086). NREL (National Renewable Energy Laboratory (NREL),
Golden, CO (United States)).
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.
Iacopi, F., Van Hove, M., Charles, M., & Endo, K. (2015). Power electronics with wide
bandgap materials: Toward greener, more efficient technologies. MRS Bulletin, 40(5),
390-395.
Karamitsios, A. (2013). Open innovation in EVs: A case study of Tesla Motors. Corporate
strategy
Manufacturers, T., Cyclical, S. C., & Year, F. (2013). TESLA MOTORS INC.
Moritz, M., Redlich, T., Krenz, P., Buxbaum-Conradi, S., & Wulfsberg, J. P. (2015, August).
Tesla Motors, Inc.: Pioneer towards a new strategic approach in the automobile
industry along the open source movement?. In Management of Engineering and
Technology (PICMET), 2015 Portland International Conference on (pp. 85-92).
IEEE.
Muller, F. (2015). Tesla Motors, Inc (Doctoral dissertation). Intro
Stolze, E. D. (2014). A Billion Dollar Franchise Fee-Tesla Motors' Battle for Direct Sales:
State Dealer Franchise Law and Politics. Franchise LJ, 34, 293. Direct sales

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www.tesla.com. (2018). Electric Cars, Solar Panels & Clean Energy Storage | Tesla.
Retrieved from https://www.tesla.com/en_AU/?redirect=noCheong, T., Song, S. H.,
& Hu, C. (2016). Strategic alliance with competitors in the electric vehicle market:
tesla motor’s case. Mathematical Problems in Engineering, 2016.