GLOBAL STRATEGY AND SUSTAINABILITY: An Analysis of Tesla’s Business Environment

2. STRATEGY IN THE GLOBAL ENVIRONMENT

Tesla’s Motives for Global Expansion

To Fulfil Tesla’s Mission: The transportation industry has been a subject of environmental concerns. Evidence-based data shows the transportation sector accounts for nearly 70% of global oil consumption and almost 60% of greenhouse gas emissions that constitute hazards to humans and the environment (Pohl & Tolhurst, 2010). Because threats from global warming, climate change and other environmental concerns are global, Tesla promotes use of EVs across international boundaries—not only in the U.S (Gast et al, 2017). Thus, Tesla’s mission to design, manufacture and promote products that allow more sustainable use of the natural environment is the driving force behind its global expansion moves (Crane & Matten, 2016).

The advantages of exporting products (such as speed of entry and cost-efficient use of facilities) are quite attractive for small businesses. But considering the huge potentials from direct investment, Tesla should focus on licensing to achieve its global expansion project (Ditlev-Simonsen & Wenstop, 2013).

Visibility in Foreign Markets: Tesla announced a huge net loss in its first quarter of 2011 (Q1 2011) report. Total revenue was $49m and net losses amounted to nearly $48.9m, indicating an urgent need to explore other markets outside the U.S. Therefore, Tesla started its global expansion project to increase sales and create sustainable profits.

Tesla uses joint venture agreements to reduce culture gap and avoid some political risks, among other benefits. But the company needs a strong marketing and public relations strategy to maintain visibility.

Increasing Awareness and Support for Renewable Energy: International agencies, governments and non-governmental organizations (NGOs) are collaborating on environmental protection campaigns. Governments are also providing stimulus (special advantages) to support indigenous and foreign-owned companies manufacturing eco-friendly technologies. Thus, Tesla is expanding globally to maximize benefits from countries/locations with high environmental awareness and support for sustainable energy (Simpson & Taylor, 2013).

Tesla uses licensing as a model for penetrating foreign market. Although this business model eliminates import/investment barriers and increases sales potentials, the company should align with organizations and activists on global environmental protection projects (Stolze, 2015).