Global Strategy and Market Entry Analysis for Tesla in Pakistan

This report examines Tesla's global strategy, focusing on its potential entry into the Pakistan market. It begins with an introduction to strategy development and implementation, highlighting Tesla's revenue and global expansion goals. The main body of the report analyzes the market using Porter's Diamond Model to assess competitive advantages, particularly focusing on factor and demand conditions, related industries, and firm strategy. The report then details Tesla's internationalization strategy, recommending an international strategy for Pakistan. Further analysis includes a PESL (Political, Economic, Social, Legal) analysis of Pakistan, as well as Porter's Five Forces to evaluate competitive rivalry, buyer and supplier power, and the threat of substitutes. The report concludes with a discussion of managerial and organizational issues and potential solutions, providing a comprehensive overview of Tesla's strategic considerations for the Pakistani market.

Global Strategy,
Development &
Implementation

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
(1) Porter's Diamond Model along with the justified reasons for internationalisation..........3
(2) Internationalise Strategy...................................................................................................4
(3) (a) PESL Analysis of the Country....................................................................................6
(3) (b) Porter's Five Forces.....................................................................................................7
(3) (c) Marketing Mix.............................................................................................................8
(4) Mode of Entry...................................................................................................................9
(5) Managerial and organisational issues along with its solutions.......................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Strategy Development and Implementation evaluate the effect of external environment on
the organisation. Implementing strategy refers to executing such plans and strategies which led
the organisation to achieve goals from long term. Whereas strategy development help the
organisation to devise mission and vision statement. Further formulates strategies to manage the
influencing external factors in order to attain sustainability in the marketplace (Cvitić, 2020).
The company taken in this report is Tesla, Inc. is an American company engaged in
building electric vehicles and provide clean energy services. Company revenue increased by 28
per cent as compared to previous year. The company revenue generated 31.5 billion U.S. Dollars
in the year of 2020. The company aims to expand its global strategy and build networks in the
countries U.A.E, U.K., U.S. Etc. in approximately 40 countries. Also the company is planning to
make debut in the market of other developed countries. At present the total number of employees
are 70,757 who works for the company. Under this report the company is planning to make its
launch in the market of Pakistan.
MAIN BODY
(1) Porter's Diamond Model along with the justified reasons for internationalisation
This model helps the organisation to examine the competition which other nation possess.
The model further examines the factors that will be beneficial for the organisation to gain
competitive advantage from the other national market. The model is used to evaluate the sources
to gain national competitive advantage and corrective measures to obtain such advantage. The
company need to formulate the strategies by using this model in respect of investing and
operating in markets of Pakistan. The porter examined four determinants, are as follows:-
Factors Conditions
Under this the resources are bifurcated as basic and advanced ones. The basic includes
natural resources and unskilled labour while the advance one includes specialised labour
possessing expertise skills. Competitive advantage is gained when the nation and respective
company possesses specialised factors. Pakistan government initiative will led employment
opportunity. Further the company will find easy to employ inexpensive and skilled labour
(Becker and Abrams 2017).

Demand Conditions
It evaluates the condition in respect of success of a company in a certain country. Such
home demands creates a benefit in the market and opportunities to grow in respect of launched
product (Chernov 2018). Tesla can gain competitive advantage in Pakistan as there are no local
electric vehicle manufacturer and can gain great target in coming years by converting
commercial vehicle into electric vehicle.
Related & Supporting Industries
Success of particular industry is sometimes depend on the success of its related and
supporting industries as these provides aids in respect of resources and innovation. In recent
trends, the start-up companies are gaining competitive advantage by making their debut in the
market with the help of various famed industries. Tesla can take the support of Pakistan Electric
Vehicles Manufacturing Association to stimulate its investment. NEVP (National Electric
Vehicle Policy) takes measures in respect of incentives to promote investment in electric
vehicles.
Firm Strategy, Structure and Rivalry
The firm creates its organisational structure keeping in view the factors involving in the
internal environment. According to the structure firm formulates strategies in order to eliminate
the influence of such factors. Thus such effective strategies evolve competitive spirit in the
industry leading to innovations and global advantage. Pakistan aims to attain 30 per cent of
automobiles industry in respect of electric vehicle. The current market share of the Pakistan in
the automobile industry accounts for 4 percent of Pakistan’s GDP.
(2) Internationalise Strategy
Global Strategy
The strategy enables the firm to offer their products and services in those selected foreign
markets in which they cover a good area of expertise. The company aims to offer its products
and services to the selected nations. The company fails to prioritize local conditions prevailing in
the market (Dickson-Gomez, and Murphy, 2020). Marketing managers opt the concept and enter
into the selective market by acting locally. The main aim of the strategy is to globalise the
company by offering same products and services across different nations.
Multi-Domestic Strategy

The strategy adopted by the firm offers its products and services matching the local
condition prevailing in the foreign markets. It forms competitive spirit among the individual
subsidiaries of a multinational firm. It concentrates on the need of local market rather than
adopting global approach (Ferrara and et. al., 2017). This strategy helps the firm to know the
local culture of market promptly. The financial and marketing policies are controlled by the
headquarters. This strategy is used by the many other framed companies.
Transnational Strategy
Under this strategy the firm combines the above two strategies i.e. the global and multi-
domestic strategy. The strategy promotes the firm to offer its products and services in accordance
with the local conditions prevailing in the country in which firm want to internationalise. In this
company's global and domestic activities are coordinated between its head office, operating units
and other subsidiaries located internationally. The strategy is planned when the company wants
to conduct its business activities internationally. Generally the transitional strategies are used by
food chain companies in order to achieve the desired results.
International Strategy
Under this strategy company aims to do its business in international markets without
establishing its franchise in other nations. The strategy in respect of import and export of goods
to overseas customers are made effectively (Ghita and et. al., 2020). The strategy helps the
company to study international market in order to achieve its desired goals. This strategy is
beneficial for the company operating across the international borders.
Tesla can opt International Strategy in order to sustain in the market of Pakistan. Under
this strategy company will be able to understand the outcomes of the market and economies of
scale may led company to attain low prices. Further the company will be successful in its
research and development which aims to increase market price by selling its vehicle at low price.
Also Tesla can explore new opportunities with the international strategy. The company believes
more in research and development collaborations rather than merger and acquisition. The
strategy will be successful because the force of competitors are weak. And it will be helpful for
the company to maintain sustainability in the marketplace.

(3) (a) PESL Analysis of the Country
PESL is the acronym of Political, Economic, Social and Legal factors. The analysis is
used to examine the external factors evolving in the environment (Inca, and Szasz, 2017). The
analysis helps the organisation in formulating strategies in order to meet its objectives effectively
and efficiently. The analysis will make the company to overcome its weakness and threats.
Further it will be beneficial for the company in examining the complications faced by them in the
external environment. PESL framework will help Tesla to gain insight the external factors which
causes impact on the company in deriving the result. The significant external factors are as
follows:- Political Factors: Tesla may get affected by the political factors influencing in Pakistan
such as inflation, political rivalry between countries poor governance etc. There are many
political factors giving reasons to the company not establish. Further the National Electric
Vehicle Policy is not adapted efficiently. It is not the right time for Tesla to establish in
Pakistan during the peak period of inflation. The government itself is engaged in
balancing its other costs. Economic Factors: The sale of electric vehicle itself portrays positive impact on the
company. The sale of electric vehicle is rising and it will rise in future. Such idea of
establishing Tesla can ensure economic growth in Pakistan. Further the NEVP takes
initiatives in respect to increase investment in electric vehicles such as benefit of lower
tax etc. Economic factors seems to create positive impact on Tesla as the aim of country
is to convert most commercial vehicles into electric vehicles in the coming years. Also
the cost of battery is low and thus, the product of company is innovative as it cause less
use of renewable energy. Social Factors: Electric Vehicle is considered as eco-friendly cars. As the company aims
to provide better environment (Koubida Small and Yasin 2017). Further the cost derived
in using commercial car is more as compared to electric vehicles, thus the use of electric
vehicle is cheaper. Also the Pakistan government ensures lowering the unit rate of
electricity which will be beneficial for the company. The NEVP aims to promote Pakistan
goals in respect of climate and quality of living.
 Legal Factors: Pakistan government has formulated the regulations in respect of
automobile industry. The aim is to raise the automobile standards in the nation. Such as

Climate Change Act of 2016 and Pakistan Environmental Protection Act, 1977 aims to
promote quality living of people in the country. Other law such as Business Law will
protect the company from unfair practices. Thus, the company is required to adhere the
regulations framed by the government of Pakistan.
(3) (b) Porter's Five Forces
The porter model helps the company to prioritize the factors available in the competitive market
and also ensures the bargaining power of customers and buyers in the environment. The model
ensures the long term profitability of the company in relation to other competitors in the market
(Oburu and Yoshikawa, 2018).
Tesla is using the Porter's Five Forces Analysis to construe its market position and
organizational strengths in order to analysis the environment of Pakistan. The following helps to
analysis the factors affected by the company and further its impact on strategies and profitability.
Competitive Rivalry
This force enables the company with the number of competitors and their ability to attain
sustainability in the competitive market. Tesla operates in a highly competitive market. Pakistan
already has few electric vehicle industries operating in its nation. As Tesla is providing the
electric car at fair rate will help the company to attain market in short time. The company opts
aggressive marketing strategies which will help the company to acquire market in short period of
time. Limited market of automobile industry is be beneficial for the company as by collaborating
with them will increase its market size.
Bargaining Power of Buyers
This force examines the power of customers along with their ability. Product
Differentiation help the company to attract consumers because of their unique features. It is the
best offer for the buyers of the Pakistan, to avail car at best price. Through its product
differentiation strategy the company will be able to achieve its desired goals effectively. As the
substitutes of automobile company in Pakistan are offering high rates and thus, will be good
opportunity for company to establish as people will tend to switch on the product at low price
along with best service (Valentina and et. al., 2020).
Bargaining Power of Suppliers
This force analyses the business power in the hands of supplier and how easily they can
drive up the cost of inputs, which in turn affects the profitability of the company. Pakistan with

the help of National Electric Vehicle Policy develops foreign direct investments in order to
increase the usage of electric vehicles. Thus with the limited suppliers Tesla can formulate
effective supply chain of management. As higher supplier led to low profitability of the
company. Also no substitute factor makes the force of suppliers strong. Further the products
offered by these suppliers are reasonable and less differentiated which influences the buyers to
switch to other suppliers (Rezaei Dolatabadi and Alikhasi 2020).
Threat of Substitutes
The threat of substitutes are generally more in automobile industry. The profitability
suffers when the other industry offers the products and services which adds value and uniquely
different from others. Such low switching cost influence the customers to use substitute products.
In order to establish company effectively in the country, Tesla is required to be customer
oriented rather than just product oriented. This strategy will help the company to increase the
cost of switching. Some of its substitute are BMW Motors, Nissan Motors, and Honda Motors
etc. Further the monopoly of obsolete cars is not affected as they are sold only in Pakistan.
Threat of New Entrants
A power of company is also affected by the force of new entrants in the marketplace. As
the growth rate of automotive sector in Pakistan is high which led many local and foreign brand
to install their plant in the company. The company in order to be successful required to offer
innovative products and services according to the needs of the customers. New entrants are not
likely to enter dynamics when they realise that company like Tesla is already existing in the
market. Thus, the company is required to focus on innovation in order to maintain its
sustainability from new entrants and also build effective economies scale which will help in
lowering fixed cost.
(3) (c) Marketing Mix
The marketing mix is an effective tool and company formulates strategy accordingly
(Dzamic and Kirby, 2018). The model is discussed below.
 Price: Tesla must use premium pricing which means high pricing for uniqueness. The
users of Pakistan will likely to attract towards the uniqueness of the products.
 Product: Tesla must first introduce with the automobile industry and solar panel because
of high demand of electricity in the nation. Further batteries and energy storage will help
the Pakistan to overcome their electricity issues.

 Place: Products must be available at the company’s owned stores and in malls and other
areas. Further charging station will be effective for company to attain success.
 Promotion: Personal Selling and Direct marketing is enough in the Pakistan to promote
its product widely. Further company can opt its viral marketing in order to attract the
targeted customers.
(4) Mode of Entry
Mode of entry provides effective entry of a company into the foreign market. The mode
acquired by the company need to be effective in order to achieve success and growth
internationally. There are several useful methods which can be used to expand business across
international borders (Staniškis and Katiliūtė, 2019).
Licensing
In this, company grants permission to a company which is established in other targeted
country to use its intellectual property right for defined period of time. The company use this
approach as it is cost effective and further helps in providing high return on investment. Under
this approach it is the duty of licensee to maintain manufacturing and marketing cost in the
targeted country.
Franchising
This approach act as contractual mode of entry which is similar to licensing. Franchising
act as an agreement which requires the organisation to conduct business activities into foreign
market. The difference is that this mode applies strict rules as compared to licensing. Further the
process is required to be strictly adhered by the franchisee. Agreement sometimes also specifies
the components required to be used in manufacturing (Yasmin and et. al., 2017).
Joint Venture
The mode consist of two companies one is the local company and the other is the foreign
company which is local to the foreign market. The companies in this mode agrees to share
control by establishing a jointly owned business. Such business provides new business
accompanied by skilled management team in order to achieve goals effectively.
Tesla need to use Joint Venture as a mode of entry in Pakistan. It will be efficient for
the company to enter the market. It will be beneficial for the company in sharing risk and
rewards. Further the joint product development will help the company to evolve new products
and services according to the needs of local consumers. This entry will enable the company to

achieve marketing presence with local company in market. Thus, may provide high returns with
comparatively high risk.
(5) Managerial and organisational issues along with its solutions
The types of issues accompanied by their solutions discussed below
Organisational Co-ordination
The major problem in respect of organisational co-ordination are as follows:-
 shortage of resources in manufacturing products and services,
 lack of resources in the targeted country
 low morale
 Refusal from investors
Tesla need to formulate effective strategies like proper research and development in
Pakistan order to eliminate the problems related to manufacturing. Further require to devise
effective budget so that the company can easily take financial risk. Company need to create
strong employment relations to increase the morale of employees and employers.
Cultural
Cultural values are important to achieve organisational goals effectively. Cultural
generally means the living styles an individual adopts. The dimensions of culture includes the
norms, beliefs, values etc. The concept of culture is considered as a complex part which need to
entertain effectively (You and et. al., 2019). The company need to understand the cultural
differences properly. For example people in Pakistan hesitate to shake hands and the culture is
entirely opposite to from that of America. The concept of honour knows as izzat is deeply
embedded from the Pakistan culture. They practice and adhere one religion. Thus the ethical
standards is required for creating ethical thinking across the business.
Accordingly, Hofstede Value Dimension study can be used to evaluate the culture of the
targeted country which in this report is Pakistan. Thus, will be helpful for Tesla in doing
business. The dimensions includes identity, power, gender, uncertainty and time. Tesla need to
focus more on Gender value dimension in order to sustain effectively in the market. Pakistan
cultural issue generally rises in establishing masculine and feminine role in work. Pakistan is one
of the example that has high rate of masculinity. Thus, the company is required to consider such
values and separate the both the roles so to achieve its desired goals.
Organisational Structure

The organisation structure issues also need to address in order to ensure effective
international business. Generally two types of structure are formulated in the business one is
centralized and the other is decentralized. Under the centralized structure, the organisation
depends on particular individual to deliver decision and directions for the company. Whereas,
decentralized consist number of individuals who participate in decision making of the company.
The issue arises in opting effective organisational structure. Tesla in order to operate effectively
in Pakistan, required to opt decentralized structure. Such structure will help the company with
the required area of expertise and knowledge in installing plant. Further will help to resolve
issues expediently. The company must target approximately 380 employees with the revenue of
$30.6 million for the financial year (Lan, 2020) (Popkova and Sergi, 2018).
CONCLUSION
From the above report it is concluded that the organisation is required to analysis the
environment prevailing in the market. Effective strategy need to be developed and implemented
in order to gain competitive advantage in the domestic as well as foreign market. The report
examined the strategies used by Tesla along with appropriate model in order to expand its
business across international border. Further the mode of entry of Tesla in Pakistan is also
discussed above accompanied by the suggestion in respect of proper mode. The issues in respect
of internationalisation is also solved by giving proper suggestions.

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