Tesla Inc.: Business Strategy and Operations in the European Union

This report provides a comprehensive analysis of Tesla Inc.'s business operations within the European Union. It begins by justifying Tesla's choice of the EU market, highlighting its advantages such as reduced operational costs and favorable regulations. The report then delves into the institutional and policy challenges Tesla might face, including economic difficulties and political divisions. It also discusses the political and legal advantages of operating in the EU, such as strong human rights commitments and economic benefits like free trade. The report identifies key factors for Tesla to consider, including political, social, economic, environmental, legal, and technological factors. Furthermore, it applies Porter's Five Forces to analyze the competitive landscape. Finally, the report recommends strategies for successful market entry and operation, including cost leadership, differentiation, and licensing, offering justifications for each approach. This detailed analysis aims to provide a clear understanding of the opportunities and challenges for Tesla in the European market.

Doing Business in Europe

Table of Contents

INTRODUCTION
While any organisation enters in the new market then it is very important to analyse and
assess several factors and element that can affect business operation and functions. The current
project provides the detail knowledge and understanding about the factors that affect business
operation in the European union. In addition to this, various advantages and challenges within
the European union has been also discussed in this report.
MAIN BODY
Justification
Tesla Inc is an American multinational organization that works in electric vehicle, vitality
stockpiling and sun powered board fabricating situated in Palo Alto California. It is established
in 2003 and represents considerable authority in electric autos, lithium particle battery vitality
stockpiling and private photovoltaic boards.
The organization has fundamental plan to extend its business everywhere throughout the world
and turn into the main car organization on the planet. It dreams is to acquire most extreme
productivity and piece of the pie in the aggressive business condition by conveying high caliber
of item and administrations to its clients. (Leitner, Meissner and Martyna-David, 2015.) Tesla
Inc have chosen the European Union for its assembling plant in future since it is the biggest
universal single market on the planet which prompted more prominent rivalry in administrations
and is useful for business and clients .
The major reason for selecting this European market because it helps to business
enterprise in reducing business and operational costs and has greater business efficiency. In this
market, there are clear and more impressive legislations and regulations that help company in
carrying out its business activities and functions in more secure and safe manner. Furthermore,
there is an elimination of anti competitive practices such as monopolies and cartels.
Institutional and policy challenge
Following are major institutional and policy challenges that may affect the operation and
working of Tesla Company in the EU market-
Ongoing economic difficulties-In 2008-2009, global recessions and euro zone debt crisis
influence European economies (Kernbach, Eppler and Bresciani, 2015). Due to this global
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recession and debt crisis, growth of economy has decreased and enhances unemployment in
many EU countries and posting a risk to the European banking system.
These economic disparities within EU have generated tension and contributed to policy
division among member states. Due to this issue in the EU policy of business can affect of Tesla
Company. At the time of designing the pricing policies and strategy, corporation have to focus
on this issue.
Increased acrimony and decreased solidarity-According to the examination, it has been
discovered that eyewitnesses fight that the emergencies regarding Greece and relocation. It has
created abnormal state of asperity and an absence of trust among EU part states. These
emergencies debilitate the center EU standards of solidarity. This issue can influence the
arrangement and technique advancement inside the Tesla Company.
Advantages within the EU that would affect the ability of company
As per the above discussion, it has been analysed that there are various issues and
challenges that may face by Tesla while it enters in the EU market. However, there are also
several advantages within EU that would affect the ability of company. These advantages are
discussed below-
Political and legal benefits
In the European Union, there is a strong commitment to human rights as every citizen has
their own powerful and strong rights through which they can live secure and protected life. In
addition to this, there is also effective legislation regarding business through which organisation
can carry out their activities and functions in secure and safe manner (Amran, Ooi and Devi,
2015.). A large number of eastern European nations are quick to join the EU since they feel it
will advance financial and political soundness.
Economic benefits
European Union is one of the most grounded monetary territories on the planet which
have 7.3% of the world populaces. It has 500 million people so this thing may create the benefit
and affect the ability of Tesla Company while it operates its business in the EU market. In
addition to this, free trade and removal of non-tariff barriers that will aid to company in reduce
costs and prices for consumers.
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3 Nations in the EU that would reasonable for the organization to find its creation and circulation
Factor that would company have to consider
As per the above discussion, it has been assessed that there are several challenges and
benefits of the European Union market that can affect Tesla while it will enter in the EU. For
support in the dynamic and aggressive business condition, it is vital to dissect business
condition(Staake, Thiesse and Fleisch, 2012). With the help of effective analysis and market
research, corporation can develop effective strategies and practices of business.
Business environment of the EU consists with several factors that have to consider in setting up
its production and distribution facility in the EU market.
These factors are discussed below-
Political Factors- This factor includes governmental policies, legislation, practices, taxation
policies etc that can directly affect the Tesla Company’s production and distribution facility in
the EU. At the time of entering in the European Union, Tesla have to focus on legislation,
regulation, code of conduct and practices which developed by the government. One of the most
effective ways in which political factor have affected the financial service industry is through the
introduction of stricter regulation across the whole industry. Social and cultural factor- Social and social factor has very impacted to the Tesla
organization in the European market since it is an auto portable organization and relied
on the client necessity and requirements. A for each the adjustment in the clients' requests
and necessities, organization needs to keep up change in the quality and cost of the
vehicle item and administrations (Doeksen and Symes, 2015). Change in the populace,
instruction level, occupation, culture, locale and way of life, organization required to
change in the item and administrations Tesla association needs to develop a strong
corporate reputation over various years for its consideration on social and normal issues,
including progressing commonsense change.
Europe has had real impact in culture, financial aspects and social development on the planet.
 Economical factor-This factor influence the organization deals and productivity. In this
factor it incorporates the rate vacillation, money conversion scale, cost of work, charge
rates. These all are influence straightforwardly and in a roundabout way Tesla
organization.
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 Economic factor includes recession, inflation, interest rate, financial crisis etc. These all
component affects the production and distribution facility of Tesla company in the
European union. At the time of developing the pricing strategy and policy, it is very
important for Tesla company to focus on the economic condition of the country
(Wesseling, Niesten and Hekkert, 2015). The economy of Europe is at present the
biggest on Earth and it is the most extravagant district as estimated by resources under
the administration.
 Environmental factor- It incorporates every single normal asset, for example, crude
material, water, fuel, air, water, climate, atmosphere and so forth. Tesla is an auto
versatile assembling partnership so it requires different common assets, for example,
water, fuel, gas, steel, plastic and so forth so as to fabricate and generation of item.
Refered to wander needs to center around this issue adequately and as per accessibility of
crude material in the nation it will create vital arranging. Legal factor- This factor to a great extent influence the company tasks and exercises. In
this angles different legislative structure has been incorporated, for example, business
rights. Client assurance act and certain arrangements that organization need to keep up
for themselves. Tesla organization has effectively endeavored and take after legitimate
system of the nation which aids request to secure its business and also clients
 Technological factor- The economy of Europe is at present the biggest on Earth and it is
the most extravagant district as estimated by resources under the administration. As Tesla
is the auto mobile and electronic goods company which delivers high quality of auto
mobile product and services. Technological factor largely affect the Tesla company's
business operation in the European union. The advancement and usage of new advances
have influence urban development, mass business and the ascent of another common
laborers.
 The technological environment in the European union is different as there is high level
of advanced technology that may affect the production and distribution facility within the
Europe.
Porter Five force analysis of the Tesla company in the European union
 The Threat of new entry- The threat of new entry for the Tesla company is low because
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 Tesla organization is one of the renowned brand in the auto versatile which serve high
caliber of item and administrations in the market (Doeksen and Symes, 2015). . Tesla has
a high number rivalry in the market. It contends with high assortment of firm, which
separate through cost, gadgets, mark picture, fuel effectiveness. The threat of substitutes- The threat of substitution is high in the Tesla company in the
European market because there are several numbers of organisation in the European
market which serves the same automobile product. In the European market, threat of
substitution for the Tesla company is high because client have loads of alternative to buy
a similar item and administrations from the other brand. The bargaining power of buyers- The bargaining power of buyer is also high in the
European market for Tesla company. Client have heaps of choice to buy the car item and
administrations from other association in the EU advertise. The bargaining power of suppliers- The bargaining power of supplier for Tesla company
in the European market is low because as Tesla is one of the largest automobile company
in the country that serves the high caliber of item and administrations. Its image name is
sufficient available to be purchased its item and administrations in the market (Staake,
Thiesse and Fleisch, 2012).
 Threat from rivalry-In the European market, there are high numbers of competitors of
the Tesla so it can be said that threat of competitor is high in the EU market.
Recommend a strategy with justification for the corporation entering and successfully operating
its business in the EU market
As per the above discussion it has been analysed that there are several factors that can
affect the production and distribution within the Tesla company in the European union market. It
is very important for the Tesla company to analyse the industry as well as business environment
so as they can effectively operate its business activities and function in the competitive business
environment. Following are some strategies for the company entering and successfully operating
its business in the EU market-
Cost administrating technique- According to the cost administration technique,
organization can set the least costs for its item and administrations. The firm offers its things
either at ordinary industry expenses to win an advantage higher than that of rivals or underneath
the typical business expenses to get bit of the general business (Amran, Ooi and Devi, 2015).
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Tesla can receive this technique so as to expand its benefit and piece of the overall industry in
the market. According to this idea right off the bat Tesla organization need to offer its item and
administrations in the lower costs. Tesla company can gain effective success and profitability in
the European union market with help of cost leadership strategy.
Differentiation strategy- In the differentiation technique, firm looks to be one of a kind in its
product and service along a few measurements that are generally esteemed by purchasers. Tesla
can receive this showcasing technique under which is incorporates such one of a kind and quality
element in the car which aids recognize from its rivals in the market. In the European market,
company should adopt differentiation strategy under which it should produce different featured
and quality of product and services that helps to attract large number of customers.
Licensing- It is the market entry strategy that will help of Tesla company in enter in the new
market. Licensing is a sort of consent or offer of exchange the rights to the utilization of item and
administrations to another organization. It is an official authorization or allow doing , utilize
something (Kernbach, Eppler and Bresciani, 2015). A permit might be conceded by a gathering
to another gathering as a component of an understanding between those gatherings. Diversifying
is the act of the rights to utilize an organization's plan of action and brand for a recommended
time frame. It is the best market passage procedure and process for fast market development
however it is picking up footing particle different parts of the world. It is a type of diversifying
and it functions admirably for firm that have a repeatable plan of action. In this procedure,
franchiser is a provider who permit an administrator or franchisee, to utilize the providers
trademark and circulates the provider's great.
CONCLUSION
From this whole report it has been presumed that to manage in the dynamic and focused
business condition it is imperative to dissect business condition. With help of compelling
investigation and market research, corporation can develop effective strategy and practices of
business. In the European union, there is a strong commitment to human rights as every citizen
have their own powerful and strong rights through which they can live secure and protected life.
In addition to this, free trade and removal of non tariff barriers that will aid to company in reduce
costs and prices for consumers.
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