TESLA: international business strategies- introduction to tesla, Pricing strategy: price skimming, General Environment AnalysisSegment Elements Industry Effect, Five Forces Analysis, SWOT ANALYSIS, International Market strategies, Problems Tesla Should Solve in the Foreign, Factors of Tesla’s Success in the Foreign Market,

1. TESLA
International Business
Strategies
Presented by :-
Vaibhav bhalotia

2. TESLA
• Tesla’s mission is to accelerate the world’s transition to
sustainable energy
• The significant role Tesla plays in transitioning the world to
sustainable energy:
14% of the global greenhouse gas emissions in 2010 and
26% of the total US greenhouse gas emissions in 2014
originated from the transport sector (IPCC 2014, 8; United
States Environmental Protection Agency 2017) .

3. TESLA
• Tesla currently has about 272 stores worldwide, 164 of
which are in 26 different countries outside the US, with
Germany having the highest number (27) of its foreign
stores (Tesla n.d.).
• Tesla’s first expansion moves into the foreign market were its
opening of a showroom in London on 25 June 2009 and a
store in Munich in September 2009.

4. TESLA
• Tesla’s dominance in the electric car sector:
As of December 2016, Tesla had sold over 185,000 electric
cars worldwide (Tesla n.d.), making it the second largest
global pure electric car manufacturer after the Renault-
Nissan Alliance.

5. TESLA
• Tesla’s core competencies are powertrain and
vehicle engineering.
• Its basic pricing strategy is price skimming: it
initially entered the automotive market with an
expensive, high-end product, the Tesla Roadster,
targeted at wealthy customers. With profits generated
from the sales of the Roadster, it could finance the
production of a less expensive car model, the Tesla
Model S. Profits obtained from the sales of the Model
S, in turn, helped finance the production of an even
cheaper car model targeted at a larger and less
affluent market, the Tesla Model X.

6. Pricing strategy: price skimming

7. General Environment Analysis
Segment Elements Industry Effect
Segment Elements Industry Effect
Political/Legal • Regulations on Emissions and Safety
Standards
• National Traffic and Motor Vehicle Safety
Act, 1966
• Energy Policy and Conservation Act, 1975
Neutral
Technology • Higher demand for reliable, fuel efficient
vehicles
• Alternate fuel vehicles (Ethanol, Biodiesel,
Hydrogen Fuel Cells)
• Online shopping/research
Positive
Sociocultural • Luxury vs. Economy Vehicles
• Power vs. Fuel Efficiency
Positive

8. Five Forces Analysis
● significant bargaining
power in traditional industry
supply chain
○ dealers and consumers can
negotiate prices
● tesla’s direct to consumer
online sales model
eliminates bargaining power.
● Bargaining power is
low
● Tesla gets ion cells
from multiple
manufacturers
● Other vital
components like
engine, chassis,
transmission all
manufactured in house
● substitutes for automobile’s exist
○ public transportation, airplanes
● public transportation is cheaper, air
travel potentially cheaper over longer
distances and frequencies
● but, neither as convenien
● High barriers to entry
○ regulated industry
○ capital intensive
● shallow experience curve
○ learning is hard
Suppliers(+) Customers (+)
Entry(+)
Substitutes(+)
Rivalry (-)
● Numerous established
competitors
○ brand loyalty
○ access to
capital/economies of scale
○ diverse product lines

9. SWOT ANALYSIS
S W
O T
Threats
• End of green energy tax
breaks
• new competing energy
sources
Opportunities
• Significant economies of scale from
the mass production
• growing demand of renewable energy
sources
Weaknesses
• Long-distance drivability
• supply chain not fully established
• limited production and factory capacities
• low affordability
• high debt
Strengths
▪ Strong brand recognition and
base of loyal customers
▪ sustainable, energy efficiency
innovation
▪ ecosystem of compatible
products

10. International Market strategies
• Tesla’s
international-
level strategy is
the transnational
strategy

11. International Market strategies
• Direct Selling:
Tesla sells its cars directly to customers through its stores and
galleries or through the Tesla website
• Certified Pre-Owned (CPO) Program:
Tesla uses a buyback program called Certified Pre-Owned
(CPO) in countries such as Germany, France, Sweden,
Norway, and Canada.

12. International Market strategies
• Strategic Positioning of Stores and Galleries:
Tesla deliberately positions its stores and galleries in high
foot traffic, high visibility retail venues, like malls and
shopping streets that people regularly visit in a relatively
open-minded buying mood (Musk 2012).
• Local Responsiveness:
Made modifications to the Tesla Model S in China, including
an ‘executive rear seat’ option, which costs $2000 over the
standard model and aims to make the rear seat experience
more comfortable (O’Hara 2015).

13. International Market strategies
• Related Diversification:
Tesla’s collaboration with Toyota, Daimler AG, and
Panasonic

14. International Market strategies
• Integrator
Around 800 supercharger stations with more than 5,100
superchargers top up Tesla vehicles in minutes. The
firm’s Gigafactory is powered by 100% renewable
energy
• Solution Provider
The company’s first big push into energy was marked by
the introduction of the Powerwall and the Powerbank.
Tesla further acquired SolarCity to provide efficient
solar roofs

15. International Market strategies
• Open Source
Tesla is fully committed to its vision. In 2014, Tesla
made its electric vehicle patents open source – an
unprecedented move for a for-profit company

16. Problems Tesla Should Solve in the
Foreign
• High Prices and Threat of Substitutes:
As a comparison, Europeans paid an average of US$30,700
for new fuel-using vehicles bought in H1-16 (Munoz 2016),
but a Tesla Model X was priced at US$80,000 at that time.
Tesla has not been able to establish stores in any
underdeveloped countries, where it would have very few
customers.
• Lack of Acquisitions and Joint Ventures in the Foreign
Market:
Tesla currently has no main foreign acquisitions or joint
ventures

17. Problems Tesla Should Solve in the
Foreign
• An Insufficient Number of Stores and a Lack of
Superchargers:
With only about 164 stores outside the US, Tesla is far
behind its main competitors such as Ford, which as of the
end of 2015 already had about 8733 Ford and Lincoln
dealerships outside the US (Ford 2016).

18. Factors of Tesla’s Success in the
Foreign Market
• First-Mover Advantage and Weak Competition:
First company to offer a fully electric sports car—the
Tesla Roadster.
Fewer number of electric carmakers as compared to
the number of fuel-using car manufacturers

19. Factors of Tesla’s Success in the
Foreign Market
• Support by Governments for Environmentally Friendly
Vehicles:
For example, in countries like Malaysia and Hong Kong,
zero-emissions electric vehicles like those offered by Tesla
are fully tax exempted.
The Singaporean failure case.

20. Factors of Tesla’s Success in the
Foreign Market
• Focused Differentiation, Low Bargaining Power of
Buyers, and Inelastic Demand:
Tesla’s generic business strategy is focused differentiation
Tesla cars are a luxury good
• Direct Selling:
Creates a closer relationship with its customers

21. THANK YOU..