SM9533 International Business Growth Strategies and Resourcing Northumbria University

Title SM9533 International Business Growth Strategies and Resourcing Name Northumbria University

Introduction Tesla History, organization Structure, Products and performance History Tesla, a clean energy revolutionary automaker, was founded in 2003 by Silicon Valley engineers and business enthusiasts such as Martin Eberhard Straubel, Elon Musk Ian Wright, and Marc Tarpenning (Saxena, & Vibhandik, 2021). The primary goal of the Tesla founders was to produce high-quality electric vehicles to achieve a zero-emission future in the auto industry. From 2003 to 2011, the company produced a Roadster (Vynakov, Savolova & Skrynnyk, 2016). The company embarked on the Model S sedan, a speedier, improved, and increasingly exciting compared to petrol cars. Following the success of the launch of the Model S, Tesla added to its product variety by producing the Model X sport utility vehicle in 2015. Besides the safety, speed, and power, this product was characterised by a maximum battery range of 340 miles, making it superior in its product category. Tesla began building large factories to run its activities. In 2016, the company ventured into Model 3, a new electric vehicle characterised by low-cost high-volume. Tesla Semi, another comfortable truck saving cargo hauliers a minimum of $200,000 per million miles on fuel was produced in 2017 by the company. Besides electric vehicles, Tesla ventured into clean energy solutions like include Powerwall, solar roofs, and Powerpack. Venturing into this category aimed at empowering individuals, industries, and utilities to harness, store and consume green energy. The production was expanded to Buffalo, NY, and Shanghai, China. Regarding structure, Tesla utilizes a functional organizational structure characterised by hierarchies and minimal autonomy. According to Alghalith (2018), the company has a flat structure with a higher subordinate-to-manager ratio. At the top is the office of the CEO and chairperson operating from its headquarters in Austin, Texas. The

incentivise venturing and influence demand for goods and services. The attractiveness of the business environment depends on the indices of these political factors. Concerning this, Tesla’s entry into China was a sign of the host government’s receptiveness to an influential foreign investor in the emerging electric vehicles industry. The authorities permitted the company to set its operations on its soil to stimulate the global capital market interest, express goodwill and openness to foreign investment, encourage domestic market auto industry player innovation from domestic Chinese players and propel her domestic electric vehicle industry to new heights, with the help of Tesla’s market-leading capabilities. Tesla technology presented a new business opportunity for China like Apple did in the mobile internet transition leading to the creation of powerful platforms like WeChat and app TikTok.(New York Times, 2022). Thus, openness to foreign investors is one of the political factors affecting Tesla's business in China. Secondly, China’s government is stable under the Chinese Communist Party despite the escalating pressure for reforms, including a reduction in the state’s power in business (Miao et al.,2022). In its foreign policy, China has pledged to protect the rights of foreign enterprises, including allowing these firms to fully control their subsidiaries, and protect their intellectual property . Then again, Chong and (2019) still hold that the China is disguisedly determined to influence its domestic and global markets in favour of its enterprises as part of its strive for global dominance. . Part of China’s public policy in the last decade has been incentivising the transition of its population from gasoline to electric vehicles. Some of these incentives are subsidizing the vehicle price and restricting auto license plates to restrict major city pollution. During the coronavirus pandemic outbreak, the Shanghai authorities shut down the city for two months to contain the city's worst Covid19 outbreak. Tesla's factory operations stopped following a shutdown in Shanghai for weeks. During this period, Tesla’s production

declined. Its activities were limited even after the reopening of the plant due to the disruption of the supply chain. Like other companies, Tesla struggled to obtain parts from suppliers, forcing it to cut back production due to chip and battery shortages (He, 2022) [3] However, the company’s rival, BYD circumvented the country's sweeping lockdowns with its vertically integrated supply chain minimizing its vulnerability to supply chain disruptions The automated driving features, of Tesla’s EVs, like Navigate on Autopilot, make the cars more camera-reliant than the rivals’ systems. China limited Tesla’s electric vehicles' use by state and military personnel, and embarked on a vehicle security review of these vehicles, citing security concerns. The final report of the review indicated that Tesla’s sensors can keep records of the images of the vehicle's surroundings that they are used .and track private information, like a cellphone’s contact list when connected to the car and sent back to the United States (Bursztynsky, 2021) [4] The country’s education system has been significantly favourable to Tesla. Precisely, China has also embraced science, math and engineering courses, which have enabled the company to acquire highly skilled experts to run its activities at a relatively low cost. With readily available highly skilled labour, Tesla has been able to run its operations at a low cost and charge its customers relatively low prices consistently with its new business model of mass production. Economic factors Economic factors encapsulate the economic performance components with a direct influence on the success of a foreign and local venture in the short-term and long-term. To assess the economic factors, one needs to look at economic growth, consumer confidence, fiscal and monetary policies, exchange rates, and interest and inflation rates. The consumers' disposable income trends, and the level of joblessness, are the key determinants of the local demand for a product.

perceptions of human rights, individual and environmental health and safety, culture and lifestyle changes. Social factors play a crucial role in the marketing processes of a company, such as formulating the most appropriate marketing mix for a country. Today’s world has a substantial proportion of highly educated customers, with a high capability of evaluating the quality of materials that a company is using, the working conditions it is giving workforce and associated social initiatives including sustainable production and consumption In China, the main demographic changes are the change in the lifestyles, especially the younger wealthier population. For example, women are more financially empowered. Making them potential customers for Tesla products. However, these customers have unique tastes that automakers must strive to meet. Unique customer demographics are influential in the company’s business in China. . Porsche and Wuling have a large female customer base in China by skewing their auto for younger, female, and tech-savvy customers. Female car owner’s account for over 60 percent of Wuling’s Hongguang MINI EV but Tesla has been slow in tapping into this area. Female youngsters share sharing videos of these cars while interacting on social platforms such as Kuaishou, Little Red Book, and Douyin, whose views and likes can exceed 100 million. Partnership with local companies like YOHO!, Elle Magazine, HeyTea and Pantone Universe has enhanced Wuling’s sales of auto to youthful customers. Tesla lags in tapping into this new customer base due to its persistence in its conventional production and distribution models and philosophy. The other social aspect of the Chinese market that affects Tesla’s business is the increasing customer consciousness and voice. The company’s customers can report problems with Teslas’s products to the authorities. As an illustration, some customers have complained about large gaps between Tesla EV car’s body panels, poor quality painting and glass chipping on the Chinese social media platforms, undermining the company’s image. Surveys

and reviews by enterprises like Consumer Reports have supported the claims (Boudette, 2021). [7] . Other institutions like the Chinese media and netizens have blown the negative image out of proportion by reporting Tesla EV incidents depicting Tesla’s cars as unsafe on social media platforms. Technological factors In PESTLE analysis, technological factors encapsulate a range of technological innovations in a particular industry with a significant impact on individual firm operations. The key areas of technology include technological transfer possibilities, the rate of technological innovations, technology acquisition incentives, customer and labour preferences for automation, and technological change awareness level in the target market that can affect demand. Technology is one of the key factors that firms consider when joining an industry or market, to launch products. A firm must know the initial costs of acquiring technology, developing it and managing its obsolescence to determine the real impacts of disruptive technologies. The details facilitate production and sales planning models in the target market. Rapid advancement and spread of AV technology is the key factor affecting Tesla in China. The top-notch reliability and safety features embedded in Tesla’s cars like Model S positioned Tesla positioned as a maverick, expanding the modern car feature boundaries. Though, the company does not command this business in China. Li (2021) asserts that the EVs and plug-in hybrid electric vehicle (PHEV) of Tesla are similar to its competitors like to Build Your Dreams (BYD), indicating that despite Tesla being one of the pioneers, the rivalry has significantly evolved. The presence of multiple EV car producers in China implies that consumers have an opportunity to choose from a variety of foreign and local car models and brands.

without an alternative rain and sewage diversion system and had an inadequate wastewater management system. Tesla’s subsidiaries are also accused of breaching various environmental laws and regulations. The accusation illuminates the conflict emanating from Tesla’s poor performance in safeguarding environmental standards as required by laws in China which can undermine its image and performance in the long term. Legal factors The Legal factors component of PESTEL analysis encapsulates the laws and legal procedures affecting a company’s production, promotion, and distribution, of goods and services. There is a close relationship between the legal and political aspects of a host country. The most popular legal factors affecting foreign industries are the local copyright and patent laws, labour and consumer protection laws, health and safety laws, antitrust law, and discrimination laws. Enterprise awareness of the legal factors minimizes conflicts with local communities and authorities and protects the company’s image. Concerning this, Tesla is required to comply with the Chinese domestic policies in its activities. Since the start of business in China, Tesla has been targeted n a series of customer complaints and lawsuits, including violation of environmental laws and failure to adhere to production standards and customer complaints (Wang, Duan & Liu, 2021). As an illustration, recently, one of their customers in Shanghai shot a video protesting the company’s failure to attend to his request to have his malfunctioning brakes repaired. The incident occurred at Tesla’s auto show. The Chinese head office claimed that the customer was insincere in his request but everyone, including authorities took sides with the customer Tesla International Business model Based on Tesla’s business stance, it can be deduced that the company utilizes a market Expansion Grid (Corporate Ansoff Matrix) to plan and grow its business. According to Helmold (2022), the matrix has four quadrants namely diversification (upper right

quadrant), market development (upper left), product development (lower, right) and market penetration (lower left). Tesla is operating within the lower left (market penetration) since its primary focus is expanding the sales of the current products because it is assumed that the products work. Despite the rivals having home advantage in China, Tesla continues with intrepidness, both in design and disruption in the EV and sustainable energy solutions industry. It has hardly embarked on adjusting its offering to suit local tastes. In all its product tweaks, the benchmarks are customer experience. It pays little attention to the social presence in China, despite the potential catastrophes linked to negative social media sentiments from disgruntled netizen opinions. Stakeholders that are likely to be affected The stakeholders that have a high likelihood of being affected by Tesla’s model are the customers, the authority and the company itself. Insisting that its products are superior as designed is a kind of rigidity that creates conflicts, not only with authorities with customers and the government. Upholding it can dent the reputation of the enterprise in the long-term (Kirtley & O'Mahony, 2020). As an illustration, state media and government agencies swiftly reprimanded Tesla following the Shanghai braking system video circulation, with official news outlets publishing multiple editorials about the issue. On the other hand, the central disciplinary commission of China issued a warning statement, demanding the company to strictly comply with Chinese laws and regulations, enhance its internal controls, and enact corporate quality and safety regulations(Boudette, 2021) [10] . Tesla representative in china alleged that the customer wanted to reap more than he sowed but this attracted further criticism, including an assertion that the company’s stance was overbearing arrogance and intolerable (Kharpal & Cheng, 2021), [11] The model limits responsiveness to the customer needs, compliance with the local standard s and affects the reputation of the enterprise negatively.

1. Internal factors I. Competitive offerings (Excellent) II. Customer relationships( moderate) III. Interdepartmental coordination(good) IV. Resources and commitment( management capital, technology, expertise(excellent) V. Marketing capabilities (Moderate) VI. Profitability ( excellent) 2. External factors I. Importance of Tesla to Chinese market (moderate) II. Market potential (good) III. Customer characteristics (Good) IV. Political support( moderate) V. Adaptation to competition(moderate) VI. Adaptation to new technological changes (excellent) VII. Legal compliance(moderate) VIII. Environmental compliance (moderate)

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