Tesla Inc.’s Entry into the United Arab Emirates

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Abstract
Distinctive Features of Doing Business in the United Arab Emirates
Risk Assessment
The Product and Rationale That Makes the Idea a Viable Business Opportunity
Market Entry Strategy and Specific Market Entry Plan
International Business Plans
Summary
Conclusion
Recommendations
References

Abstract

Tesla, Inc. is one of the leading manufacturers of electric cars in the global market. The company’s primary market is in North America and Europe. However, stiff competition in these markets has made it necessary for the firm’s management to explore other untapped markets. In this paper, the focus was on determining how the firm could make a successful entry into the United Arab Emirates’ market.

The paper has identified external environmental factors that may affect the firm’s capacity to enter the market. The local car industry in the country has also been analyzed to enable the marketing team of Tesla to understand what to expect. It is suggested that the company should start by selling its luxury cars to create a strong brand in the local market before introducing other products such as solar panels. Exporting cars manufactured in the United States to the UAE would be appropriate given the fact that the country lacks skilled labor that would enable the firm to set up its manufacturing plant overseas.

Tesla Inc., previously known as Tesla Motors, is an American electric car manufacturer that has its headquarters in Palo Alto, California. Elon Musk, Martin Eberhard, Marc Tarpenning, J. B. Straubel, and Ian Wright were inspired to start an electric company following the initial trials that had been made by GM. The team founded this company in 2003 target a new market segment that wanted environmentally friendly cars (Doeden, 2015).

Since then, the company has experienced impressive growth in the United States market and even considered venturing into the manufacturing of solar panels. Gleam (2014) explains that Tesla has always focused on environmental conservation and its products are designed to have the least possible impact on nature. As the Tesla brand continued to gain popularity in the market, the firm considered moving into the luxury cars market as a strategy to achieve growth.

These cars have gained acceptance in North America and European markets. The decision of the management of this firm to explore foreign markets is aimed at enhancing its market growth. The United Arab Emirates offers an opportunity for growth. When entering this market, the management of Tesla should understand opportunities and threats in this market to define appropriate strategies that it can use to achieve success. In this paper, the researcher focuses on how this company can make a successful entry into this foreign market despite the expected challenges. The product of interest in this report is its luxury cars.

Distinctive Features of Doing Business in the United Arab Emirates

The United Arab Emirates is currently one of the most preferred overseas market destinations for American companies seeking to expand their operations to the Middle East and parts of Africa. It is important to understand distinctive features of doing business in this country for Tesla Inc. to achieve the desired success in the market. According to Ahmed and Hamdan (2015), one of the distinctive features of doing business in the United Arab Emirates is the unique composition of its populace.

Unlike some of its neighbors, the UAE has a diversified population composed of people from Africa, India, North America, Europe, and other Asian countries that have relocated to major cities like Dubai because of employment or business endeavors. Another unique feature of this market is that the country’s legal system is governed by Islamic principles. As such, a foreign business entity would need to understand these principles to operate with ease in this country. It is also important to note that the economy is growing rapidly and government is spending significant amount of national resources to promote diversity (CIA World Fact Book, 2019).

When planning to enter the United Arab Emirates’ market, the management of Tesla should be ready to deal with external environmental forces that may have a direct or indirect impact on its ability to realize success. The business environment in the United States is significantly different from that in the UAE. It means that the business model that the firm has been using in the home country may not be appropriate in this new market.

As Turner (2015) advises, one of the first steps that a firm should take when entering a new market is to conduct an analysis of the external environment within the new country. Factors such as competition may affect the ability of a firm to achieve the desired level of success in the market. Failure to understand the level of competition in the market may have serious consequences on a firm’s operation (Information Resources Management Association, 2017). It is expected that Tesla Inc. will have to overcome stiff competition in the UAE because of the existence of other car brands in the market. PESTEL analysis would be appropriate in facilitating the analysis of this new market.

PESTEL Analysis

This marketing tool helps to understand the political, economic, social, technological, ecological, and legal environmental factors. The political environment in the United Arab Emirates is significantly different from that in the United States. In the home country, society has one of the advanced democracies in the world where the political class is expected to rule for a given period before handing over power to another party.

Doeden (2015) explains that in such a setting, the business community is often not sure about the policies of the new administration. Some of their new policies may have a significant impact on the firm. In the United Arab Emirates, a constitutional monarchy has been embraced as the appropriate form of leadership. The ruler of the country has no term limit. He has the responsibility of appointing top-ranking government officials.

The country has remained politically stable over the last several years, creating an enabling environment for the business class. Leaders of this country have been keen on promoting foreign direct investment by enacting policies that protect foreign businesses in the country. Such policies will help Tesla to achieve growth in this market. Political stability, as Turner (2015) observes, is one of the critical environmental factors that define the ability of a firm to operate in a given market.

The economic environment is another aspect that defines the firm’s potential to realize growth in a new market. The United Arab Emirates may have a smaller economy compared to that of the United States, but Doeden (2015) explains that when analyzing the economic environment of a new market, the focus should always be on the capacity of the locals to purchase goods or services of a given company. Tesla cars are high-end products that target the rich and the upper middle class.

The price for these products is significantly higher compared to other brands such as Toyota and Nissan, which are also common in the country. According to Turner (2015), although the UAE has a large population of immigrant workers whose purchasing power is relatively low, locals have the financial capacity to purchase these products. The United Arab Emirates has a GNI per capita of $ 74,410, making it the fifth richest country in the world in terms of citizen’s purchasing power (Global Entrepreneurship Monitor, 2018).

It is richer than the United States, Canada, the United Kingdom, and Germany when this economic index is used to compare these countries. The index shows that although the country may be small in terms of its population, the purchasing power of its citizens is high, making it one of the most attractive markets in the world for high-end products such as Tesla cars.

The social/demographical environment in the new market is another factor that the marketing department of Tesla should not ignore. The UAE is an Islamic country that is governed by strict Islamic principles and cultural practices (Subramanian et al., 2017). Men, who in many families control financial resources, often make purchasing decisions. They decide which cars their family should buy, the number that is necessary depending on the need and financial capacity, and when such purchases should be made.

When designing an appropriate marketing policy for such a market, care should be taken to ensure that the message is convincing to decision-makers. In cities such as Dubai, the majority of the population is composed of foreigners (Word Bank, 2018). As such, it is easy for a foreign firm such as Tesla to blend in and operate without having to deal with strict cultural practices. The majority of the population are men, especially because of the high number of economic migrants in major cities in the country. The social environment is tolerant towards the product and business model of Tesla.

Technology is becoming one of the most important environmental factors in the business community. Tesla is operating in an industry that is guided by technological advancements. In the United Arab Emirates, society has embraced technology in their ways of life (CIA World Fact Book, 2019). Online marketing is becoming popular in the country. Although customers purchasing expensive products such as Tesla cars still prefer going to showrooms to try the commodity before making their purchase, most of them rely on information available on the Internet to determine the appropriate car they need to purchase.

It means that online reviews and other information available online directly influence the purchasing decision of customers (Starr & Gupta, 2017). Technology also defines the quality of products that customers purchase. Customers prefer purchasing cars that offer them maximum comfort, safety, performance, and high cosmetic value. Every time a new technological concept emerges in the car industry, customers expect new cars to have it. The management of Tesla will have to ensure that its products are designed to meet these needs.

Ecology is a major concern in the current business environment. Turner (2015) explains that climate change and global warming are concepts that have gained popularity in recent years. Many governments are currently capping the carbon emissions that firms must abide by within a given period. Tesla may not have any significant challenge in meeting emission levels in this foreign market because its production plant is in the United States.

However, it will need to find ways of ensuring that its products are fuel-efficient. Some of the developed countries in Europe are now moving towards electric or hybrid cars as a way of reducing carbon emissions. Tesla has been at the forefront in the production of hybrid cars (Robinson, Fallon, Cameron, & Crotts, 2016). It will need to ensure that it understands the needs of the targeted market. Most of the rich families in the UAE often purchase fuel guzzlers such as Lamborghini. It means that they may not have a problem purchasing some of Tesla’s high-end cars that consume big amounts of fuel. However, that should not deter this firm from continuing on its path towards the production of fuel-efficient cars.

The legal environment is another external environmental factor that should be considered as identified in this model. According to Doeden (2015), it is not possible for a company to operate in an environment that lacks law and order. A firm needs to be protected from external stakeholders to ensure that agreements made are binding and that no party would be allowed to illegally acquire a company’s asset or cause malicious damage.

The United Arab Emirates has strict policies and laws that guide the business community. Although the government has created an enabling business environment that is attractive to foreign firms, it has laws that regulate how they should operate in the country. A good example of such policies is the consumer protection law (Rangarajan, Sharma, Paesbrugghe, & Boute, 2018). The law forbids a firm to promise customers values that they cannot deliver.

It means that when developing a promotional message in the market, care should be taken to ensure that the actual product has the exact qualities explained in the promotional campaign. When Tesla decides to enter this market, it should follow the set regulations needed to make it a legal entity in the country. It should pay taxes and other fees set by the Emirati government to avoid legal sanctions. Turner (2015) argues that in the UAE, laws and regulations guiding the business community are meant to promote economic growth.

Risk Assessment

Tesla cars have remained popular in the United States and European market. However, Turner (2015) notes that in recent times, the firm’s financial records show that it is struggling to achieve sustained success. The decision to explore the new market is crucial as the firm struggles to increase its market share and profitability. The United Arab Emirates is one of the most attractive markets that the firm can target. However, the marketing unit of this company should assess and understand the primary risks that Tesla will face once it starts its operations. The following are some of the major factors that should be considered when assessing these risks.

Political Risks

Political risks may have serious ramifications on a firm operating in the foreign market. The United Arab Emirates has remained politically stable despite the Arab Spring that affected many neighboring countries in the Middle East and North Africa (MENA) region (Wang & Ahmed, 2016). The stability is beneficial to local and foreign firms operating in the country. The warm relations between the United States and the UAE will also benefit Tesla. It will not be targeted in this foreign country primarily because it is an American firm. Doeden (2015) explains that the concept of “buy local – build local” often affects foreign firms in a given market. However, such policies do not exist in the UAE. It means that political risks in the foreign market are significantly lower.

Currency Risk

Currency risk is another factor that a firm should consider when planning to enter a new market. Gleam (2014) explains that the risk arises when there is an erratic change in the price of one currency in relation to another. It is important to note that Tesla will continue to manufacture its products in the United States. The products will then be shipped to the United Arab Emirates. When setting the price of its products, this firm will depend on the current exchange rate.

The problem arises when the local currency is devalued, which would force Tesla to increase its products’ prices. Customers may not understand the reasons why the price has to increase. The price has remained stable against the dollar for the last few years (Ratten, Braga, & Marques, 2017). As the economy of the country continues to be strong, the local currency is expected to remain strong.

Economic Risks

Economic risks may have a serious impact on this company when it starts its operations in the foreign market. As a luxury product, this firm relies on the strength of the economy to ensure that it can continue with its sales in the market. In cases of an economic meltdown, customers often avoid purchasing luxury products (Wang & Ahmed, 2016). Locals would consider purchasing basics needed for survival. The economy of the United Arab Emirates has been growing steadily and it is expected that the growth will continue in the coming years. It may not be possible to predict when a country will suffer an economic breakdown (Kumar & Bhaskar, 2014), but given that it has diversified its economy and remains one of the leading oil producers, the risk decreases.

Property Rights Risk

Property rights risk is another factor that the management of this company should consider as it makes a decision to spread its operations to this Middle Eastern country. In the manufacturing industry, it takes time to design a product that meets or exceeds customers’ expectations. As such, the property right should be protected by ensuring that no other company copies the design. In the UAE, such a threat is relatively low. All the rival companies operating in this market have their manufacturing plants in other countries. The government of the UAE is also developing punitive policies meant to discourage infringement of property rights. The firm should not worry about this risk.

Industry Risks (Porters Five Forces)

When conducting a risk assessment in the new market, the management should not neglect conducting an analysis of the industry within which it will operate in the country. Apart from the external environmental factors discussed using PESTEL analysis model, this firm will need to identify possible risks that it will have to face in the foreign market. Understanding these risks would define the appropriate business model that this firm will need to embrace. Figure 1 below is Porter’s five forces model that can help the marketing unit of Tesla to understand industry risks.

*Figure 1. Porter’s five forces model (Turner, 2015, p. 76).*

The threat of new market entrants is one of the concerns that a firm should have when planning to make an entry into a new market. According to Moreno-Gómez, Lagos, and Gómez-Betancourt (2017), the government of the United Arab Emirates has eliminated restrictions that would limit the ability of foreign firms to enter the local market. The country is keen on diversifying its economy and reducing its reliance on the export of oil and gas.

This means that while Tesla will find it easy to enter the Emirati market, it will face a serious problem because of the ease with which other rivals can enter this market. The company will need to find competitive ways of managing the rivalry that is expected to increase in the market (Kamila & Bhattacharjee, 2014). In fact, some of the top brands in the car industry are already operating in this market, something that would make it difficult for this firm to achieve rapid market growth.

The threat of substitute products is often another factor that may affect the ability of a firm to achieve growth in the market. Doeden (2015) argues that when a product has a close substitute, it has to compete against them by offering superior value at competitive prices. Tesla offers high-end cars in the market. These products do not have a similar competitor. It is possible for an individual to opt for a motorcycle, a plane, or a yacht as the preferred means of transport.

However, it is almost impossible to avoid the use of cars. A yacht and a plane may be restricted in terms of places they can be used. Motorcycles may not be appropriate for most rich clients in the United Arab Emirates. This means that it is almost impossible to find a perfect substitute for cars in this market. The threat of competitive products in this market is, therefore, significantly lower or non-existent.

The bargaining power of buyers may be a threat to the market, as Qasim (2014) observes. When customers have the capacity to decide on the terms of sales, they would ensure that they get the best deals even if a firm may end up with losses. On the other hand, if the bargaining power of buyers was low, then a firm could be assured of making favorable trade agreements that would guarantee good profits. In the United Arab Emirates, the bargaining power of a buyer can be looked at from two different perspectives.

On the one hand, the purchasing power of buyers can be considered high because of the number of other luxury car brands in the market. It means that they can choose to purchase their product from a firm that they believe offers them the best value. On the other hand, this power can be considered less when looking at what Tesla delivers to its customers. Just like other luxury car brands, such as Lamborghini, Tesla offers a unique quality to its customers which no other brand can match. When customers are looking specifically for these qualities and the unique brand name, their bargaining power is lessened. The nature of this kind of market makes it easy for a firm to negotiate favorable prices.

The bargaining power of suppliers affects a firm’s ability to make impressive profits in the market. The bargaining power of suppliers in the automotive industry, especially in the electric car segment, is relatively high. For instance, Tesla Inc. relies on Modine Manufacturing Company to provide the battery chillers it uses in its electric cars. Given that the chillers are used in an electric car, they have unique features that make them different from others used in standard cars.

The model is manufactured by a few firms, which have focused on renewable energy production and use. The high bargaining power of the supplier does not meant Tesla Inc. cannot negotiate for favorable deals that would enable it set competitive prices for its products. As Moreno-Gómez et al. (2017) observe, when the number of suppliers are relatively few, they have the power to dictate the pricing strategy in the market. Other suppliers such as AGC Automotive that sell windshields have low bargaining power because the product can be purchased from several other suppliers.

Competitive rivalry among existing firms is another issue of concern in the market. Gleam (2014) explains that when the rivalry is high, then it is possible for some firms to embrace dangerous practices such as price wars to edge out rivals. Tesla Inc.’s products target both the rich and the middle-class members of society. It means that the company has to compete against brands such as Mercedes Benz, BMW, and Porsche, which produce electric cars with similar value.

These business rivals have all developed some form of a business strategy because they have been in this market for a longer period than Tesla Inc. Competition in the electric car market is, therefore, high. However, this model of operations makes it easy for them to avoid price wars. Given that these products target the rich and the middle-class, the primary focus of the firm is to increase quality of their products beyond what rivals in the market offer. Although Tesla will not have to worry much about price wars when dealing with the rich segment of the market, there is the threat of customers purchasing products of rival firms.

When a family is planning to purchase one electric car and they purchase a Mercedes Benz, chances are significantly lower that in the same year they would consider purchasing a Tesla. The firm must ensure that it promotes its brand in the local market to deal with the threat (Hussain, Rigoni, & Orij, 2018). Tesla’s primary focus in the promotional campaigns should focus more on quality than prices. Most of the customers who purchase electric cars are sensitive about the need to protect the environment through a significant reduction in the emission of greenhouse gases. As such, Tesla should explain to its customers, through its advertisements, about the environmental benefits of using its products.

The Product and Rationale That Makes the Idea a Viable Business Opportunity

Tesla, Inc. offers electric high-end luxury cars that primarily target the mid-class to the rich in society (Chang, 2017). The products are ideal for a family unit or single individuals who want comfort and a sense of class when moving from one place to another. It is ideal for local citizens in the United Arab Emirates and foreigners who are in the country for business activities or employment. The country offers a viable business opportunity for Tesla Inc., which will enable it to expand its market share beyond North America and parts of Europe. According to Word Bank (2018), government policies, tastes and preferences of the market, environmental factors, and economic forces are in favor of the product offered by Tesla Inc.

The United Arab Emirates’ government is making deliberate effort to electric car revolution in the country. Ahmed and Rab (2014) explain that the need to reduce carbon emissions has forced the government to make steps that would encourage the use of electric cars as opposed to fuel guzzlers. In the city of Dubai, there are over 100 electric car-charging stations (CIA World Fact Book, 2019).

Most of them are strategically installed in airports, gas stations in major highways and streets, shopping malls, government offices, hospitals, near institutions of higher learning, and within residential areas. Dubai Electricity and Water Authority has initiated projects that would help increase the number of charging stations from the current 100 to 300 in the next few years (Word Bank, 2018). The government is keen on setting up these stations in other major cities across the country, especially in Abu Dhabi, Fujairah, Sharjah, and Ras Al Khaimah as a way of making it easy for users of these cars to have access to the needed energy. These stations are meant to encourage locals in the country to consider using electric cars as opposed to that which uses gasoline.

The UAE government has expressed its determination to protect the environment in different platforms. DEWA has different projects across the country, which is meant to increase the production and supply of renewable energy for domestic and industrial use (Word Bank, 2018). Tesla electric cars, which produces minimal amount of carbon dioxide gas, will help the government to promote the initiative of reducing greenhouse gases produced in the country.

Promoting this product will be easy because the government has been championing for the use of renewable energy sources for the past one decade. The promotional campaign for this product can run alongside that of government entities such as DEWA. Tesla would argue that its products are meant to help the government to achieve its vision of having a society where economic activities can continue normally without threatening the environment.

When discussing the product rationale in the new market, it is important to look at what competitors offer (Global Entrepreneurship Monitor, 2018). Mercedes Benz, BMW, and Porsche, which are the main rivals of this firm, offer limited number of electric cars. For instance, most of the Mercedes Benz cars are fuel guzzlers. It only has a small fraction of electric cars, mainly meant to test their viability in the international market. On the other hand, Tesla has always positioned itself as a company that primarily focuses on these environmentally friendly cars, which are convenient for different lifestyles and suitable for people of varying age groups.

Tesla can take advantage of the fact that it is exclusively focusing on electric cars in this country where the government is keen on protecting the environment. Its rivals are known to majorly focus on gasoline cars, and cannot position themselves as environmentally friendly car brands. The competitive edge that it has over these market rivals can enable it to create a pool of loyal customers in the UAE.

Market Entry Strategy and Specific Market Entry Plan

When making an entry into a new market, one of the most important factors that a firm must consider is the appropriate strategy that should be used. The strategy should be defined by the nature of the product, the size of the firm, its financial capacity, the nature of the new market, government policies, and the availability of skilled human resource. Hassan, Marimuthu, and Johl (2015) argue that making the wrong choice can be a costly process.

Realizing that a firm made a mistake in its market entry may force it to stop its operations in the foreign market, a move that may have devastating consequences. Sears, one of the largest retailers in North America, was forced to close its stores in Canada because of its poor market entry strategy. Wal-Mart was also forced to leave the German market because of similar mistakes (Wang & Ahmed, 2016). To avoid similar mistakes, Tesla must find an effective way of making an entry into the United Arab Emirates’ car market.

Exporting

Exporting would be the most appropriate strategy that this firm should consider using to achieve desired success. In this strategy, this firm will establish its shops in major cities such as Dubai, Abu Dhabi, and Sharjah. This firm needs to send some of its top marketing directors to head its operations in the country. Tesla will also employ locals to help in the sales of cars. Although this direct market entry through exportation may be costly, it will give the management of Tesla full authority to control activities in the new market. It will set up the business in a location it considers the most appropriate for this company.

It will also handle its clients based on policies that it has been using in the home market. Success will solely depend on the capacity of its own staff instead of relying on partners or other retailers. Another major benefit of this strategy is that the company will be in full control of the prices that customers are charged on the products (Choi, Jeong, & Lee, 2014). This gives the firm power over the value chain, making it easy to ensure that customers get the best value out of their purchase. Despite these benefits, this firm must be ready to incur the cost of renting the facility, paying its employees, and remitting tax and other levies to the government.

International Business Plans

When planning to expand a firm’s operation to the international market, Doeden (2015) explains that it is necessary to develop a business plan that would facilitate its operations in different countries. Gleam (2014) warns that a business plan that works well in the United States may not be effective in the Middle East because of the economic and cultural differences in the two markets. Tesla’s management must understand that strategies that it is currently using in North America and Europe may not work in the United Arab Emirates.

The external environmental analysis conducted above helps to identify unique factors within this country that would affect the normal operations of this company. When developing this plan, the management should focus on how to take advantage of the existing local opportunities while at the same time dealing with the possible threats and other challenges.

The plan is to export finished products to this country. Instead of working closely with local car dealers, the firm would open its own stores. In this plan, the firm will be aiming at having full control of the activities in the new market. As a new market, there is a certain impression that the management must create in the United Arab Emirates. The firm must convince its customers that it not only produces high-end products but also that it is concerned about its clients.

The after sales services such as free servicing of cars for a given period would help create a close relationship between the firm and its customers. Endearing itself to local buyers is crucial if this company is planning to introduce other products, especially its solar panels that are in demand in this country. Factors such as business capability, market research, market entry approach, marketing strategies, and international business administration should be considered in this plan.

Business Capability

When developing the business plan, one of the first steps that a firm’s management unit should consider is the firm’s capacity to embrace a given strategy. The chosen approach of making a direct entry into the foreign market requires financial muscle (Ahmed & Rab, 2014). The firm has to spend in hiring employees, paying rent to the premises used, and meeting other operational costs. Tesla has the financial capacity to use this strategy. The company’s revenue in the previous financial year was US$21.461 billion (Chang, 2017). It has the capacity to have two or three shops in this country as it plans to increase its products in the local market.

Market Research

According to Doeden (2015), one of the factors that make many firms fail in their international business plan is the inability to conduct adequate market research. Tesla must understand that the new market is unique. Instead of relying on stereotypical facts about people in the Middle East and their purchasing behavior, this firm should determine the truth through actual market research. It should determine what customers in this market like, factors that they consider when planning to make a purchase, their actual purchasing capacity, and their view about this brand. The information should then inform the strategy that this firm will employ in the market. It is also necessary to know that tastes, preferences, and purchasing power also change with time. These changes should be reflected in the firm’s plan.

Market Entry Strategy

Direct market entry has been selected as the most effective plan that would enable this company to create a name in the market for future expansion. In the plan, the marketing department should make a list of all the opportunities and threats in the market. A detailed strategy of how each of the threats will be managed should be provided in the plan. The management should also explain how it intends to take advantage of opportunities once it starts its operations. Such a detailed plan would be easy to implement once the firm starts its operations.

Marketing Strategy

The plan should outline marketing strategies that Tesla intends to use in the new market. Gleam (2014) suggests that social media should be given an emphasis when defining a marketing strategy. The majority of those buying luxury cars in the United Arab Emirates are young adults aged below 44 years (Ahmed & Hamdan, 2015). These people are active on social media such as Facebook, YouTube, WhatsApp, and Twitter. The firm should use these platforms to reach out to them.

It may also be necessary to use mass media to reach a wider audience within a short time, especially the elderly who are not actively using social media. Popular local television and radio channels can be used to pass along promotional messages. In these adverts, the firm should emphasize the quality of its product, features that make it unique, and why it is most appropriate for this market. The message should convince customers that this product delivers quality value to them. Adverts should also explain where customers could get this product and its current market price. Such detailed information about the product would help customers when making purchasing decisions.

International Business Administration

The administration of this firm’s overseas branches such as that in the United Arab Emirates should be defined. Most firms prefer having a parent country national heading the business with the support of top executives who are host country employees. Tesla should embrace this model of managing foreign branches. In this case, this firm will appoint one of its top executives in headquarters to go and head the new branch in the UAE as the general manager.

The firm should then identify talented locals to head its marketing, operation, and research units. The finance director can be a third country or a parent country national. The goal is to ensure that the general manager would have advisors who understand the local market. The manager can then define how to align the company’s vision, mission, and values with realities in the local market.

Summary

The United Arab Emirates offers Tesla an opportunity to expand its operations beyond North America and the European market. The firm would need to use direct market entry (exporting) as the appropriate strategy of entering the market. It is evident that the strategy has some challenges that the firm will have to address, but the main benefit is that it would grant the management of this firm full control in the foreign market. It will enable Tesla to create a close working relationship with its customers in the market. It will also help the firm form a positive image in the country without having to rely on local car dealers. The strategy was chosen because it will enable this firm to develop a strong brand that will be necessary when it decides to introduce other products such as solar panels into this market.

Conclusion

Tesla Inc. is a major manufacturer and distributor of electric cars in the global market. The firm’s financial documents show that it has been struggling to make a profit in the local market. The decision to find other markets would enable it to achieve the profitability levels it desires. The report has analyzed the external environment within the United Arab Emirates that would affect operations of this firm.

It is clear that although challenges exist, the market has no serious impediment that would bar this firm from achieving success. The analysis of the industry also identifies threats such as stiff competition and ease of entry to foreign firms. However, these are the same threats that this firm faces in the home country. As such, it is advisable for Tesla to use direct market entry to explore the new market in the UAE.

Recommendations

The ability of Tesla to achieve success in this new market depends on various factors discussed in this report. The management of this company should consider the following recommendations when entering the UAE market:

The firm should appoint an executive from its head office to be the director of the firm in the UAE;
Senior managers in the UAE, especially marketing and operations directors, should be host country nationals;
The firm should use both social and mass media platforms to promote its products in the new market;
Direct market entry through exportation of its products is the most appropriate strategy to enter this market.

References

Ahmed, B., & Rab, K. (2014). Foreign direct investment and economic growth in India: A study. International Journal of Research in Management & Social Science, 2(3), 1-5.

Ahmed, E., & Hamdan, A. (2015). The impact of corporate governance on firm performance: Evidence from Bahrain stock exchange. European Journal of Business and Innovation Research, 3(5), 25-48.

Chang, E. (2017). The life and death of tesla motors in Taiwan: Electric vehicles in the mountainous island. Chicago, IL: Routledge.

Choi, B. P., Jeong, J. G., & Lee, Y. (2014). Diversity and firm performance: An analysis of different level of management composition. International Journal of Business Research, 13(1), 87-94.

CIA World Fact Book. (2019). Middle East: United Arab Emirates. Web.

Doeden, M. (2015). SpaceX and Tesla Motors engineer Elon Musk. Minneapolis, MN: Lerner Publications.

Gleam, J. (2014). Tesla 2015: Best features buyers guide. New York, NY: Conceptual Kings.

Global Entrepreneurship Monitor. (2018). Entrepreneurial behavior and attitudes. Web.

Hassan, R., Marimuthu, M., & Johl, S. K. (2015). Diversity, corporate governance and implication on firm financial performance. Global Business and Management Research: An International Journal, 7(2), 28-36.

Hussain, N., Rigoni, U., & Orij, R. (2018). Corporate governance and sustainability performance: Analysis of triple bottom line performance. Journal of Business Ethics, 149(2), 411-432.

Information Resources Management Association. (2017). Organizational culture and behavior: Concepts, methodologies, tools, and applications. Hershey, PA: Information Science Reference.

Kamila, K., & Bhattacharjee, S. (2014). Knowledge management and knowledge society. International Journal of Research in Management & Social Science, 2(3), 126-134.

Kumar, S., & Bhaskar, P. K. (2014). Social media branding and brand image development: Concepts and cases. International Journal of Research in Management & Social Science, 2(3), 68-72.

Moreno-Gómez, J., Lagos, D., & Gómez-Betancourt, G. (2017). Effect of the board of directors on firm performance. International Journal of Economic Research, 14(6), 349-361.

Qasim, A. M. (2014). The impact of corporate governance on firm performance: Evidence from the UAE. European Journal of Business and Management, 6(22), 118-122.

Rangarajan, D., Sharma, A., Paesbrugghe, B., & Boute, R. (2018). Aligning sales and operations management: An agenda for inquiry. Journal of Personal Selling & Sales Management, 38(2), 220-240.

Ratten, V., Braga, V., & Marques, C. (Eds.). (2017). Knowledge, learning, and innovation: Research insights on cross-sector collaborations. New York, NY: Cengage.

Robinson, P., Fallon, P., Cameron, H., & Crotts, J. C. (Eds.). (2016). Operations management in the travel industry (2nd ed.). Oxford, England, CAB International.

Starr, M. K., & Gupta, S. K. (Eds). (2017). The Routledge companion to production and operations management. New York, NY: Routledge.

Subramanian, N., Gunasekaran, A., Jose, C., Jabbour, C., Yusuf, Y., & Azapagic, A. (2017). Sustainable global operations management and frugal innovative sustainable production methods: Advancing theory and practice for a truly sustainable society. Sustainable Production and Consumption, 11(7), 1-4.

Turner, D. A. (2015). It’s my pleasure: The impact of extraordinary talent and a compelling culture. Boise, ID: Elevate Publishing.

Wang, C., & Ahmed, P. (2016). The development and validation of the organizational innovativeness construct using confirmatory factor analysis. European Journal of Innovation Management, 7(4), 303-313.

Word Bank. (2018). United Arab Emirates: Economic outlook – October 2018. Web.

Click Here To Order Now!