Essay
Unit 5
- Module
- Business
- Institution
- PEARSON (PEARSON)
This is the international analysis on tesla in Germany and China.
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P5: Explain the external factors that influence a selected business considering tradinginternationally.
Tesla Motors was created in July 2003 by Martin Eberhard and Marc Tarpenning as an
homage to inventor and electrical engineer Nikola Tesla. Elon Musk became the company's
largest stakeholder in February 2004, after investing $6.5 million. He has been CEO since
2008.
Political Factors:
Tesla has a worldwide presence, with offices in a variety of nations and territories, and it is
constantly expanding and optimising its retail, service, and Supercharger operations across
the world. As a result, they are subject to a wide range of legal, political, and regulatory
constraints, as well as social and economic situations over which they have little influence.
The Tesla corporation may be influenced by numerous trade rules that are specific to a
certain location. Several hazards linked with overseas company activities raise expenses,
affecting its capacity to sell its products. These concerns need management's ongoing
attention. Tesla must meet specific criteria, including international regulations and safety
standards for all its autos, as well as charging stations and other electric infrastructure.
SpaceX has gotten $5.6 million in federal and state subsidies since 2012, while Tesla has
earned $2.5 million. As July 2015, Musk's enterprises have received $4.9 billion in
government funding. Brexit will also have a huge impact on tesla as they could lose EU
customers however, they would have less restrictions placed on them. If the government of
Germany were to change rules and laws may change as well. Taxation on products, income,
or wealth influences economic behaviour and resource allocation. Taxation can have many
impacts on the economy like, affecting labour supply and inflation. Brexit will reduce Tesla’s
investments and recession. Their supply chain may be affected due to an increase in costs
causing delays.
Economic Factors:
Cars are regarded luxury items in major developing nations and must be priced properly to
gain big markets in these countries. Currently, Tesla automobiles are regarded costly in
these developing countries, and even if one chooses to purchase a Tesla, the necessity for
charging stations is not totally met. The fact that the government is pushing the sale of the
car by offering incentives is a bonus for the corporation. It can design and modify cars to
meet the needs of consumers in various regions, while keeping affordability and
government incentives in mind. Renewable energy is a fiercely debated issue all around the
world. Tesla has a fantastic potential to deploy it into markets where a transition to more
sustainable energy sources is required. Tesla has raised prices on their vehicles as it
anticipates cost pressures from suppliers and logistics over the next six to 12 months. Tesla
can also face external factors like inflation, Inflation is a measure of an economy's rate of
rising prices for goods and services. Inflation can occur when the cost of manufacturing,
such as raw materials and salaries, rises. In the UK inflation is increasing only just making the
average spending on petrol per family £100 per week. This affects Tesla as people wouldn’t
want to purchase a luxury car knowing that they are going to paying £100 a week. This
,affects tesla in so many ways on being less investments meaning a loss of revenue. It also
leads to lower international competitiveness, lowering exports for tesla. Venezuela have the
highest inflation of 2022; they are a less developed country. Tesla will struggle in countries
like this due to them having to increase their prices in a country that has a low-income rate.
When inflation rises unemployment drops because when more people are working tesla
have the power to spend which leads to an increase in demand. Europe rely on Russia’s
energy. As the supplies are cut off due to external threats, they must buy from other
markets. Less supply means higher prices, this isn’t good for Tesla because their consumers
have less disposable income for luxury cars like theirs.
Social Factors:
Tesla can grab a wider percentage of people who are prepared to pay high money for status
as service and brand value by developing cars that look and function better than normal
automobiles. Tesla has created a good impact in the world of electric cars by always
evolving with the trends and responding to the requirements of the people. Tesla has an
advantage over its competitors since it has an already established image in the eyes of the
public. Tesla owners are mostly elderly people. According to their research, the median age
of a Tesla Model S and Model X owner in the UK is slightly under 54 years old, compared to
38 for the US population. The average Model X owner is 52 years old, whereas the average
Model S owner is 54. Most of the Tesla cars can be used as an everyday vehicle however
Tesla have made a cyber truck that may be used as a pickup truck, Tesla have made a car
that goes best with a certain demographic. Construction workers are at an advantage, so
that they can move heavy objects with ease. In 2022 many people prefer to purchase
electric cars as they are helping the environment which is also an environmental factor.
Tesla operate in China as they have the largest population in the world with under 1.4 billion
inhabitants, Tesla can make revenue from selling in high populated areas.
Technological Factors:
Technology is always evolving, and Tesla has been at the forefront of several technological
developments in the industry. A recent example is the 'smart summon' software, which the
corporation has made available on a trial basis. This software is compatible with all vehicles
that have full self-driving capacity or improved autopilot. This technology is capable of more
than merely moving the car forward and backward. It may be set to reach you from the
parking lot, but only if it is visible. Though technology appears to be completely progressed
and exciting, the corporation can work on improving the limitation of being in sight of the
automobile. 5G allows customers to access internet faster, this beneficial for tesla as orders
can be made online. Tesla have used the internet to their advantage by installing an app for
their cars, the app also has a feature where you are able to move the vehicle on your phone,
this is innovative and attracts many people.
Legal Factors:
Given the short time frame, Tesla has managed to capture a sizable portion of the market.
Tesla intends to grow in other nations to provide better service to clients worldwide. To do
so, Tesla must keep current on all international patents and copyrights that exist in the
, territory into which it wishes to expand. Certain nations do not allow direct sale; therefore,
Tesla will have to build a network of suppliers, which will include numerous dealers. Tesla
must abide by the numerous labour regulations and behave properly. Tesla recently violated
labour rules by intimidating employees who attempted to organise unions. The national
minimum wage in China is 2,320 yuan which is $360, and the national minimum wage in
Germany is 1,584 Euros per month. Tesla must also look at employment laws for example,
how many hours a worker works a week. Tesla works have a 12-hour shift, 6 days a week
which is 72 hours a week. Some Tesla workers sleep on factory floors as part of closed loop
system which is meant to keep corona virus out and cars being produced. Tesla are
responsible for their workers health and safety, which is why they provide equipment to
their workers due to heavy lifting and more. Consumers have laws they follow for example
they are allowed to choose any product from the range of products and services, they are
also allowed to be heard. Advertisement laws must be followed for example if Tesla were to
release an advert on a new model it must be truthful and non-deceptive. They must also
have evidence to back up their claims.
Environmental/Ethical Factors:
The world is heading in the direction of a more sustainable future. Given this reality,
individuals are prepared to purchase an electric car to save money on the additional costs of
a conventional vehicle while also helping to save the environment. Tesla has reduced
emissions by more than 4 metric tonnes based on sales thus far. Tesla has deployed 3.5
gigatons of solar cells as of February, producing around 13 gigatons of pure, emission-free
power. This is suitable for Tesla's supercharging facilities. Tesla also built South Australia's
largest lithium-ion battery. The ethical analysis of Tesla is that it has a positive influence on
the globe since it is helping to save the environment by lowering the quantity of chemicals
and pollutants that humans emit into the atmosphere. Tesla consumers avoided 5.0 million
metric tonnes of CO2 emissions in 2020, helping to speed the world's transition to
sustainable energy.
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