Do you need this or any other assignment done for you from scratch?
We have qualified writers to help you.
We assure you a quality paper that is 100% free from plagiarism and AI.
You can choose either format of your choice ( Apa, Mla, Havard, Chicago, or any other)
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.
Introduction to Tesla Globalization
Tesla Motors is an American transnational corporation that specializes in producing electric vehicles, as well as battery products. It was founded in 2003 by a group of Silicon Valley engineers. The company was able to successfully overcome entry barriers in the car industry, while pioneering the production of electric cars (Stringham, Miller, and Clark 2015). Today, the vehicles are created in Fremont, California; in addition, more manufacturing facilities are being built in the US and the Netherlands (“About Tesla” n.d.).
The company is also constructing a “gigafactory” at the moment, the aim of which is to produce a large number of lithium-ion cells that could be used to power cars (up to 500,000 vehicles yearly) and other devices (The Economist 2014).
The company sells its vehicles mainly in the US. It recently went global; the first Tesla car was delivered to Europe in August 2013, whereas the first delivery to Asia was carried out in April 2014 (O’Hara 2015). The organization’s entry to the Asian market, where there are wealthy people who wish to purchase luxury vehicles that would be different from those of their peers, was initially successful.
However, the company faces certain complications related, for example, to the “range anxiety” of its customers, that is, the fear that they will not be able to recharge their car if they travel too far (“Musk reboots Tesla’s China strategy” 2015). In Europe, the most successful entry was into Norway, which is known as an environmentally friendly nation, and also, as a matter of fact, where Tesla Motors was supported by the government, becoming the best-selling brand (O’Hara 2015). The enterprise also sells its cars in a number of other European countries. More details about the geography of Tesla’s international operations can be found on the map of the global network of Tesla Motors (see below).
Motives for Tesla Expanding Internationally
Fulfilling the Mission of the Company
There are a number of reasons that prompted the Tesla Motors company to expand into the international market. First, it is worth mentioning that, according to the company’s website, the mission of the business is to manufacture and promote a product that would allow for a more sustainable use of the natural environment (Musk 2013).
Environmental concerns are crucial when it comes to the transportation industry; some statistics show that the transportation sector is responsible for almost 70% of global oil consumption, as well as for approximately 57% of emissions of greenhouse gases that cause harm to the environment (Mangram 2012). Because environmental concerns are global, it is paramount to promote the use of electric vehicles all over the world, not only in the US. Therefore, fulfilling its mission is one of the reasons for Tesla Motors to expand internationally.
Market Access Interests
Furthermore, it should be highlighted that, according to Mangram (2012), the company experienced a large net loss as of the quarter ending in March 2011; the total revenues were listed as $49 million, whereas the net losses amounted to nearly $48.9 million. This means that it was critical for the business to expand into the international market, in order to increase the potential amount of sales and start making more profit.
In addition, it is of the essence that many governments around the globe pay attention to environmental problems. Environmental awareness provides a stimulus for governments to provide some special advantages to the companies that promote the use of environmentally friendly technologies. As has already been mentioned, Tesla Motors was able to obtain a number of benefits from the government of Norway, which helped the enterprise to become the best-selling brand in that country (O’Hara 2015).
The government of China also provides Tesla Motors with numerous advantages, which allow the company to more profitably sell its cars in that market, and there is a high probability that China may provide a considerable opportunity for the growth of this enterprise (Trefis Team 2016). Because of governmental policies in some countries, selling vehicles in certain foreign countries allows the corporation to make more profit per car sold in these countries, which makes this sort of expansion more attractive for the business.
Sourcing Efficiency
It may be possible to hypothesize that sourcing efficiency has not been the primary goal of the international expansion of Tesla Motors, so far. It was already noted that the company currently produces its vehicles in California, and that additional manufacturing plants are being built in the US, and also in Holland (“About Tesla” n.d.). Thus, the company transports a significant number of its cars from the US, and the factory in the Netherlands, currently under construction, is the only manufacturing facility that is not based in the US.
On the other hand, it is clear that the factory being built in the Netherlands will offer a certain degree of sourcing efficiency. The most obvious advantage to be anticipated is that it will no longer be necessary to transport cars from the US to Europe, thus saving Tesla Motors costs that would otherwise have been spent on logistics. Clearly, the business will have better access to the local infrastructure, which will allow it to more easily deliver cars to the locations where they are needed, simplifying distribution management. In addition, because European governments may tend to have a seemingly favorable attitude toward companies that create environmentally friendly products, it is possible that Tesla Motors will also be able to obtain additional benefits.
Contract Relations
It does not appear that contract relations had a crucial impact on the decision of Tesla Motors to operate in the global market, even though the company had a number of agreements with other corporations, whereby collaboration was conducted (Mangram 2012; Cheong, Song, and Hu 2016).
Tesla Globalization Strategy
The Global Value Network Used
Producer chains
Tesla Motors produces and sells its own electric cars; the enterprise works as an original manufacturer, also creating components of cars that are then sold to other car makers. Tesla has strategic ties with a number of various suppliers that provide the company with different parts to be utilized in car production; for instance, the carbon fiber body panels used in the manufacture of the company’s vehicles are bought from Sotira, a French company. On the other hand, certain components, such as Tesla’s powertrain, are only built in the company’s plants (Mangram 2012).
Buyer chains
The company practices direct sales, that is, it does not engage in partnership with dealers to sell its cars. Tesla Motors attempts to sell its vehicles only in the stores owned by the company. In addition, customers may be able to order a car via an online purchasing procedure; they would need to visit a company’s store only to complete the transaction and collect their new car. While in the US the company often experiences problems, due to the fact that sometimes direct sales may be legally banned in certain states (Stolze 2015), the business is able to practice direct sales successfully in a number of foreign countries (Edelstein 2014).
Degree of market mediation
In different countries, the company has various degrees of market mediation, depending on the country. For instance, in the Chinese market, the company is sometimes faced with a decrease in demand for its vehicles, due to the fact that China is a very large country, and customers need to be able to cross long distances and still have the capability of recharging their cars. Therefore, the company is sometimes forced to employ market mediation in order to sell their product.
However, with the creation of a larger number of Tesla Motors supercharging stations, this problem is gradually becoming less and less important, making Chinese clients more willing to purchase Tesla’s cars (“Musk reboots Tesla’s China strategy” 2015). On the other hand, in small European countries, there is no problem of range anxiety; in addition, the attention paid to environmental concerns is significant, so Tesla does not have to employ much market mediation.
Relational networks
Tesla Motors engages in partnerships with other companies in order to purchase certain components from them, to work together on the development of new vehicles, or to sell certain components to them. The company even formed partnerships with some of its rivals (Cheong, Song, and Hu 2016). For instance, an alliance with Toyota was formed so as to jointly develop “electric vehicles, parts, production systems, and engineering support” (Mangram 2012, 299).
The company also formed alliances with such enterprises as Panasonic, Lotus Cars, and others. It is important to stress that Tesla’s “gigafactory,” which is currently under construction, is supposed to be able to produce a large number of lithium-ion batteries, so many that Tesla Motors itself will not be able to build the quantity of vehicles necessary to use all these batteries (The Economist 2014). Therefore, it is clear that the business is planning to sell lithium-ion batteries to other manufacturers.
Organization and Global Division of Labor
Approximately 13,000 employees work for Tesla Motors nowadays, but the majority of them are based in Fremont, California, in the company’s manufacturing facility. The work related to manufacturing is carried out in this facility, while the work pertaining to key decision-making and management issues is also based in the US; in fact, the company’s headquarters are located in Palo Alto, California (“Contact” n.d.). In the rest of the regions, Tesla’s activities are mainly related to the distribution and selling of the company’s products.
As for the wages that the company’s employees receive, it is stated that the CEO and chairman of the company Elon Musk earned only $37,584 in 2015. At the same time, the Chief Technology Officer had a salary of $250,560; the former Chief Financial Officer earned $339,300; the Vice President of Production made $1,144,845; the Vice President of Engineering received $3,115,708; and the Chief Financial Officer was paid $20,898,296 for 2015 (“Tesla Motors Inc: Compensation by Company” n.d.). Therefore, it should be observed that the salaries of the top executives differ significantly, with that of the CEO and chairman of the company being approximately at the level of an ordinary worker. However, this may raise a certain degree of suspicion.
The company employs a very small number of women; most employees and all the top executives of the business are men. This might be due to the fact that relatively few females choose a career in technical professions (Wattles 2015).
Relationships with National Governments
The company has good relationships with national governments and does not engage in conflicts with them. The governments have a positive attitude toward the enterprise, due to the fact that it produces electric cars that are more environmentally-friendly than cars that work on gasoline or other similar fuels. In the US, the company was able to gain a number of benefits and subsidies from the government that allowed it to overcome financial difficulties and continue growing (Harkinson 2013).
In foreign countries, the business was also able to obtain a number of privileges from local governments. In Norway, for instance, the local government provided Tesla Motors with tax benefits; it is stressed that, thanks to the support from the government, Tesla has achieved a high rate of sales in that country (O’Hara 2015). Some other governments also offered clients certain loan programs which made it easier for them to purchase the vehicles produced by this enterprise.
The Self-Representation of Tesla Motors and External Criticism
The author of this paper has not been able to find any significant claims that Tesla Motors runs “sweatshops” or utilizes child labor. This can be explained by the fact that the production facilities of the enterprises are located in the US, and another one is being built in the Netherlands. In these countries, child labor and unsafe, unsatisfactory working conditions are not only banned by law, but this ban is also enforced.
When it comes to the problem of pollution, Tesla Motors presents itself as an environmentally friendly enterprise, because electric cars do not need to burn gasoline, and therefore, do not emit greenhouse gases. In fact, the company obtains benefits from governments because of its products’ being significantly more environmentally friendly than those of numerous other car manufacturers.
Of course, the utilization of electric cars still can lead to the increased pollution of the environment and to harmful emissions, if the electricity used by the vehicle is produced by burning fossil fuels. However, it is not within the capability of Tesla Motors to control how the electricity is produced; this issue is within the responsibility of governments.
On the other hand, Tesla Motors has been criticized for obtaining numerous benefits from governments. For instance, Harkinson (2013) points out that the subsidies which the company received from the authorities are, in fact, shouldered by taxpayers, and it is unclear why taxpayers should pay their own money in order to help some corporation to grow. However, the chairman and CEO of Tesla Motors Elon Musk responds to this by stating that these subsidies are not important to the enterprise (which appears rather doubtful), and that numerous other companies, including car manufacturers that produce gasoline-fueled vehicles, also often receive subsidies from the government (quoted in Hirsch 2015).
The latter part of this response appears reasonable as, due to the fact that Tesla Motors creates environmentally friendly vehicles, it might be possible to argue that the subsidies it receives are more reasonable than those provided for other car manufacturers. Thus, Musk redirects critics to the government; it is indeed unclear why taxpayers should shoulder the expenses of major corporations, but that also includes Tesla Motors, at least to a certain degree.
Another problem is related to the relationships of Tesla with its partners. In the UK, Tesla Motors was accused of attempting to bully Ecotricity, a British green energy company, and of trying to take over a few of this organization’s locations in order to turn them into Tesla’s charging stations; it is stated that the representative of Tesla Motors did not directly deny these efforts, but said that they “work with partners as needed” (quoted in Vaughan 2014, 10). Therefore, it is clear that despite its reputation, Tesla Motors still may attempt to use some “dirty” methods for its own benefit in the market.
Conclusion: The Success of Tesla Globalisation
It should be stressed that Tesla Motors has only recently begun expanding internationally, but already has achieved a number of victories in foreign markets, in certain cases even becoming the leading brand. The main factor that contributed to its success is the use of innovative, environmentally friendly technologies, because environmental issues are a growing concern around the globe. It might be possible to forecast future success for the business if it keeps making an emphasis on the constant use of innovative technology.
As for the implication of this case, it is possible to state that in the contemporary world, the expansion into foreign markets might occur rather quickly. In addition, the ability to provide an answer to a global issue might allow a company to more successfully enter the international market.
References
“About Tesla.” n.d. Web.
Cheong, Taesu, Sang Hwa Song, and Chao Hu. 2016. “Strategic Alliance with Competitors in the Electric Vehicle Market: Tesla Motor’s Case.” Mathematical Problems in Engineering 2016: 1-10. Web.
“Contact.” n.d. Web.
Edelstein, Stephen. 2014. “Dealer Chains May Still Hate Tesla, but Now They’re Learning from It.” Web.
Harkinson, Josh. 2013. “Taxpayer Subsidies Helped Tesla Motors, so Why Does Elon Musk Slam Them?” Web.
Hirsch, Jerry. 2015 “Elon Musk: ‘If I Cared About Subsidies, I Would Have Entered the Oil and Gas Industry.‘” Web.
“Musk reboots Tesla’s China strategy.” 2015. Web.
Mangram, Myles Edwin. 2012. “The Globalization of Tesla Motors: A Strategic Marketing Plan Analysis.” Journal of Strategic Marketing 20 (4): 289-312.*
Musk, Elon. 2013. “The Mission of Tesla.” Web.
O’Hara, Mark. 2015. “International Expansion Is Crucial for Tesla Motors.” Web.
Stolze, Eric D. 2015. “A Billion Dollar Franchise Fee? Tesla Motors’ Battle for Direct Sales: State Dealer Franchise Law and Politics.” Franchise Law Journal 34 (3): 293-309.*
Stringham, Edward Peter, Jennifer Kelly Miller, and J. R. Clark. 2015. “Overcoming Barriers to Entry in an Established Industry: Tesla Motors.” California Management Review 57 (4): 85-103.*
“Tesla Motors Inc: Compensation by Company.” n.d. Web.
“Tesla Motors Inc.” n.d. Web.
The Economist. 2014. “Tesla’s High-Stakes Gamble.” Web.
Trefis Team. 2016. “Can China Be a Key Market for Tesla Motors?” Web.
Vaughan, Adam. 2014. “Tesla Motors Accused of Bullying to Grab Key Car Charging Sites in the UK.” The Guardian. Web.
Wattles, Jackie. 2015. “Tesla’s Female Engineers Say #ILookLikeAnEngineer.” CNN Money. Web.
Do you need this or any other assignment done for you from scratch?
We have qualified writers to help you.
We assure you a quality paper that is 100% free from plagiarism and AI.
You can choose either format of your choice ( Apa, Mla, Havard, Chicago, or any other)
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.