Global Marketing Report: Tesla's Expansion Strategy in South Africa

This report provides a comprehensive analysis of Tesla's potential expansion into the South African market. It begins with a company profile, outlining Tesla's background, product range, and competitive position. The core of the report is an environmental audit, utilizing PESTEL analysis to assess the political, economic, social, technological, environmental, and legal factors influencing Tesla's prospects in South Africa. A customer market assessment follows, examining market segmentation, opportunities, and threats. The report concludes with a new venture proposal, suggesting specific strategies for Tesla to thrive in the South African market, including compact and sports car models, and highlighting the potential of the electric vehicle market within the context of South Africa's environmental challenges and economic landscape. The report emphasizes the importance of factors such as unemployment rates, business tax, and poverty rates, and how Tesla can strategically address these factors to gain a competitive advantage. This report is a detailed evaluation of the opportunities and challenges for Tesla in South Africa.

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Executive summary
This paper is going talk about the company, Tesla, Inc. This paper is going to focus on the
expansion of the company in a new foreign market. The chosen country which is being
proposed for expansion is South Africa. Here the external environment is analyzed to assess
the favorability and the opportunities of the market which will be beneficial for Tesla, Inc to
thrive in this market and generate positive revenues which will help both the company as well
as the country.

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Table of Contents
Company profile.........................................................................................................................3
Environmental audit...................................................................................................................3
Customer market assessment.....................................................................................................5
New venture proposal................................................................................................................6

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Company profile
Tesla, Inc is an energy and automotive company. It is an American company and the
headquarters of the company is in Palo Alto, California. Founded in the year 2003 by
engineers, Martin Eberhard, Marc Tarpenning, Ian Wright, Elon Musk and JB Starubel, the
aim was to prove people that electric cars are at power with the cars that run on petrol or
diesel (Tesla.com 2019). The current CEO of the company is Elon Musk. Tesla was named
after Nikola Tesla, a well known mechanical and electrical engineer and a Serbian- American
inventor (Bach 2015). Tesla specializes in manufacturing electric cars and the company
currently operates in US, Europe, Hong Kong, UK, China and Australia.
The first car that was introduced in the market was the Roadster and the popular cars
of the company are the Tesla Model Y, Tesla Model 3 and the Tesla Model S (Chen & Perez
2018).
Batteries play a vital role in E-vehicles and Tesla has the best batteries due to their
advancement in technology. Tesla has batteries that are energy efficient that are of low cost
and provides customers with attractive designs. These factors give the company a competitive
advantage in the market which has helped the company generate $21.46 billion in 2018
(Ir.tesla.com 2019).
Environmental audit
The expansion of Tesla, Inc in South Africa will be favourable for generating profits
and to assess the external environment of the country PESTEL analysis needs to be
conducted.

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Political factors- The president of the country serves as the head of the government as well
as the head of the state. The country has been dominated by the African National Congress
(ANC) since the 1990s (Adam 2018). The political environment of South Africa has been
dicey before because of the presence of corrupt politicians however with new elections the
people of the country and the ANC are trying to curb this situation and reduce the rates of
corrupt politicians (Adam 2018). The political environment is favourable for expansion in the
country and it does support expansion of foreign countries in order to grow their economy of
the country. The country has passed bills that promote equality before the law, laws against
discrimination, forced labour and slavery and freedom of religion, speech and many more.
It will be suitable for Tesla, Inc to expand in the market as political environment
promotes and believes in the right to freedom which is essential and this ensures that the
government will not intervene in the operations of the company however will ensure the laws
are not violated like slavery and forced labour. The company will have enough freedom to
experiment in order to come up with innovative models that will cater to the needs of the
customers in South Africa.
Economic factor- South Africa is said to have the second largest economy in Africa and has
one of the most sophisticated financial market and the business tax rate of the country is very
low in the country (Cobbinah, Erdiaw-Kwasie and Amoateng 2015). In the year 2011, South
Africa joined the BRIC countries which indicate that the country is an emerging national
economy in the world (Pinto et al. 2018). However, there are issues like crime rates that have
had negative impacts on the economy of the country.
The economic factor of South Africa is favourable for the expansion foreign
companies in the market especially Tesla, Inc which is developing at a fast rate to become a
giant in the market. The country has lowest effective business tax rate which will be

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favourable for Tesla, Inc as it is already a well established company and here they have to
pay less tax which will be beneficial for them. The crime rates are high which the company
has to look into and make strategic decisions to curb the issue that may affect their sales.
Social factor- The population of South Africa is about 57.73 million in the year 2018, which
shows an overall increase of about 1.55% from the previous year. According to reports about
63% of the population of South Africa is urban (Güneralp et al. 2017) Most of the population
of the country are unemployed which is a big issue that impacts the development of the
country. The poverty rate among the black people of the country is high which another issue
the country is currently facing (Seekings and Nattrass 2015).
The social factor of the country is not very developed and the government needs to
take measurable steps in order to eradicate these issues. The expansion of Tesla in this
company will be both beneficial for the company as well as the country. As the
unemployment rates are high in the country, the establishment of Tesla will help in increasing
the employment rate in the country and also help the black people get jobs which will help in
improving their financial conditions.
Technological factor- South Africa has several coal-fired power stations which are
considered to be one of the largest in the world. The government of the country has made
many efforts in order to encourage business in fields like information technology,
biotechnology and many more however has been unsuccessful in doing so and very few
organizations have emerged to be a success in the domestic market (Brent et al. 2017). South
Africa is advanced when it comes to digitalization as it can be seen that internet is accessible
everywhere in the country.

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The advancement in technology in South Africa is moderate and there are few
successful companies that are operating in South Africa. This means Tesla will have
relatively low competitors in the market which will be beneficial for the company.
Environmental factor- South Africa is rich in natural resources but there is a dearth of lakes
which can supply water (Aleksynska and Havrylchyk 2013). The pollution level of the air is
high which makes the environment unsuitable for the people in the country (Naidoo et al.
2013)
This factor is important for Tesla as they manufacture e-vehicles that are made in
order to curb air pollution to make the environment safe. As the air pollution rates are high in
the country, the demand for e-vehicle will be high to protect the environment which will be a
huge bonus for the company which will help them generate sales.
Legal factors- South Africa is comprised of a mixed legal system. The Trade Law Centre in
South Africa also known as TRALAC is a not-for-profit organization that build trade laws in
the region of South Africa (Sandrey 2013). The main concerns here are the technical and
standard regulations on trade, the elimination of the import and export duties, export
restrictions and many more.
The legal factors of South Africa initially will be a bit difficult however will not be a
big problem as the company will be manufacturing all the cars and make innovations in
South Africa which will help Tesla operate in the country and will help the country in gaining
competitive advantage in the market as well.
Customer market assessment
On the basis of PESTEL analysis the market segmentation of South Africa can be evaluated.
The market segmentation of the country is the following:

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Demographics
Here the classification will be done based on the individual attributes of the person. The
gender here will be both male and females and the age that the company will target will be
about 30 and people above 30 as the cars will cost higher in comparison to the other cars in
the market. The occupation of the potential customers will be executives, professionals and
people in the managerial levels as these people will be financially strong and will be able to
afford the cars manufactured by Tesla.
Geographic
The chosen area here will be urban area as people here have a high lifestyle and will
want to buy Tesla cars.
Psychographic
The chosen people will belong from upper class and the middle class and on the basis
of their lifestyle, which are succeeder and aspirer. The people chosen here will be from the
middle class and the upper class as they will be educated enough to understand the need and
importance of e-vehicles and will be able to afford them as well.
Behavioural
The people chosen here will have a high degree of loyalty. The people will be
environmental friendly and would like to do things that would benefit the environment. The
personality of the people who will be chosen will be ambitious and determined and the user
status will be first time users and people who have already used e-vehicles. People having
these aspects would want to buy automobiles by Tesla.

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Tesla will have many opportunities along with few threats in the market. The biggest
opportunity for Tesla is the unemployment rates in the country which will give Tesla an
opportunity to provide employment in the market which will make South Africa welcome the
company in their market with open arms. The other fact is the low business tax which will be
beneficial for Tesla as they do not have to give a huge amount of money as tax to the
government of the country.
However, the biggest threat Tesla, Inc might face is the poverty rate in the country as
there may not be many buyers to buy the expensive cars as e-vehicles tend to be more
expensive than the cars that run on petrol and diesel unless innovative cars are made based on
the standard of living of the country.
New venture proposal
Tesla can come up with e-vehicle compact cars and sports cars that will cater to both,
people belonging from the middle class and the upper class as well. The compact cars will
help to serve the purpose of the middle class and the people belonging to the high class can
buy energy efficient sports car for their prestige and also be environment friendly at the same
time. The pollution rate in South Africa is high thus Tesla has a huge opportunity in this
market as they manufacture e-vehicles which does not create air pollution and is environment
friendly. This factor will help the company stand out in the market and give them a
competitive advantage that will be beneficial for them to thrive in this market.

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