TESLA International Business StrategiesPresentation.pptx

All about Tesla company

1. TESLA, Inc. International Business Strategies May 30, 2017 Cedric Kamkoum International Business Oral Presentation, Pusan National University Course Lectured by Professor Eon- Seong Lee

2. Research Topic Tesla’s International Business Strategies and Success Factors of These Strategies

3. Research Objectives Analyze strategies Tesla used in the foreign market Discuss factors that made its strategies successful Identify problems it should solve Outline important managerial implications .

4. Introducing Tesla - 1 Tesla, Inc. (formerly known as Tesla Motors Inc.) is a US-based automobile company that designs, manufactures, and sells electric cars and electric vehicle powertrain components, with a focus on energy innovation (Tesla n.d. ) . Although Tesla was initially co-founded by Martin Eberhard and Marc Tarpenning in 2003, it also considers JB Straubel , Ian Wright, and Elon Musk as its co-founders (Burns, Kumparak , and Escher 2015) . Its current CEO is Elon Musk —who owns 22.25% stake in the company as of April 2017.

5. Introducing Tesla – 2 (Mission) Tesla’s mission is to accelerate the world’s transition to sustainable energy (Tesla n.d. ) .

6. Introducing Tesla - 3 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.

7. Introducing Tesla - 4 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 .

8. Introducing Tesla - 5 (Car Models) The Tesla Roadster: The first fully electric car in the world and the first production automobile to use lithium-ion battery cells. RRP: From $101,500

9. Introducing Tesla - 6 (Car Models) The Tesla Model S: A n electric luxury sedan which ranks as the world’s all-time second best-selling plug-in electric car as of December 2016 . RRP: From £57,400 Range: 479.6 to 613.2 km battery-only Acceleration 0-62 mph: 2.7 seconds Max speed: 139.8 to 155.3 mph Battery charge time: 1.75h at 440V

10. Introducing Tesla - 7 (Car Models) The Tesla Model X: A full-size crossover SUV first delivered to the public in September 2015. RRP: From £79,900 Acceleration 0-62 mph: 3.1 to 5.2 seconds Range: 416.8 to 540.7 km battery-only Max speed: 139.8 to 155.3 mph

11. Introducing Tesla - 8 (Car Models) The Tesla Model 3: U nveiled in March 2016 Its production is programmed for end 2017

12. Reasons for Choosing Tesla - 1 “What are the problems that are most likely to affect the future of the world or the future of humanity? Sustainable energy problem is the biggest problem that we have to solve this century” (Elon Musk) . 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) .

13. Reasons for Choosing Tesla - 2 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.

14. International Strategies Tesla Employed in the Foreign Market - 1 Tesla’s international-level strategy is the transnational strategy

15. International Strategies Tesla Employed in the Foreign Market - 2 Tesla’s international strategies are similar to those it employs in the US 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.

16. International Strategies Tesla Employed in the Foreign Market - 3 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) .

17. International Strategies Tesla Employed in the Foreign Market - 4 Related Diversification : Tesla’s collaboration with Toyota, Daimler AG, and Panasonic

18. Problems Tesla Should Solve in the Foreign Market - 1 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

19. Problems Tesla Should Solve in the Foreign Market - 2 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) .

20. Factors of Tesla’s Success in the Foreign Market - 1 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

21. Factors of Tesla’s Success in the Foreign Market - 2 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.

22. Factors of Tesla’s Success in the Foreign Market - 3 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

23. Summary - 1 Tesla is a US-based automobile company that was founded by a group of innovative Silicon-Valley engineers in 2003. Its mission is to accelerate the world’s transition to sustainable energy. Its objective is to manufacture affordable zero-emission electric cars. It delivered the world’s first fully electric car model, the Tesla Roadster, in February 2008. In addition to the Roadster, Tesla has produced two other fully electric car models (the Tesla Model S and Model X) and unveiled a fourth model, the Tesla Model 3. 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.

24. Summary - 2 Tesla uses similar strategies both in the US and abroad Its corporate-level strategy is related diversification Its business-level strategy is focused differentiation, and Its international business strategy is the transnational strategy.

25. Summary - 3 Factors of Tesla’s success in the foreign market include the existence of a weak competition in the electric car sector and its first-mover advantage its unique strategies of focused differentiation and direct selling, and the support it receives from governments in the form of grants and tax breaks through programs encouraging green technology

26. Summary - 4 Problems Tesla should solve in the foreign market include its lack of acquisitions and joint ventures in the foreign market the high prices of its car models its limited number of stores compared to that of its competitors, and its insufficient number of superchargers

27. Managerial Implications Tesla is in the right direction , and to maintain its dominant position in the electric vehicle sector, it should continue with its direct-selling strategy. On the other hand, it must establish more factories, stores, and galleries worldwide , enter into more alliances and joint ventures with and acquire local firms in the foreign market. Tesla should continue with the focused-differentiation strategy in developed countries, but should use a focused-cost-leadership strategy to enter underdeveloped countries since potential customers in third-world nations have relatively low incomes compared to customers in developed countries.

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29. Thank you!

30. References Burns, Matt, Greg Kumparak , and Anna Escher. 2015. “A Brief History of Tesla.” TechCrunch, July 28, 2015. https://techcrunch.com/gallery/a-brief-history-of-tesla/ . Ford. n.d. “Working with Ford – Dealers.” Accessed April 08, 2017. http://corporate.ford.com/microsites/sustainability-report-2015-16/people-dealers.html . IPCC, 2014: Summary for Policymakers. In: Climate Change 2014: Mitigation of Climate Change. Munoz, Felipe. 2016. “Europeans paid an average of €27,500 for the new cars bought in H1-16.” JATO Dynamics. Last modified September 12, 2016. http://www.jato.com/europeans-payed-average-e27500-new-cars-bought-h1-16/ . Musk, Elon. 2012. “The Tesla Approach to Distributing and Servicing Cars.” Tesla, Inc. Last modified October 22, 2012. https://www.tesla.com/blog/tesla-approach-distributing-and-servicing-cars?redirect=no . O’Hara, Mark. 2015. “What is Tesla Doing to put Things Right in China?” Market Realist, Inc. Last modified August 31, 2015. http://marketrealist.com/2015/08/tesla-put-things-right-china/ . Tesla. n.d. “About Tesla.” Accessed March 28, 2017. https://www.tesla.com/about?redirect=no . Tesla. n.d. “Careers: Investors.” Accessed March 28, 2017. http://ir.tesla.com/ . Tesla. n.d. “Find Us.” Accessed March 28, 2017. https://www.tesla.com/findus/list .