The purpose of this paper is to analyze and evaluate the market entry of Tesla Inc. in Germany. In November 2019, Tesla revealed to build a European production plant on the outskirts of Berlin in Germany. The aim of this paper is to give account to the foreign market entry of Tesla Inc. in Germany. This leads to the following research question that guides this paper: What could be business success factors and threats of Tesla's strategy to enter the German automotive industry market?
Tesla Inc. (former Tesla Motors Inc.) is a car manufacturer and sells fully electric vehicles, energy storage systems as well as installs, operates and maintains solar and energy storage products (Reuters, n.d.). The company was founded in 2003 by a group of engineers. In 2008 Tesla launched their first electric vehicle to the market (Tesla, n.d.). “Tesla’s mission is to accelerate the world’s transition to sustainable energy”, so the car manufacturer.
So far most of the Tesla vehicles are produced and assembled in the United States at its main Tesla Factory in Fremont, California. To that Tesla operates other, multiple production and assembly plants, named Gigafactory, such as in Fremont, California (Giga Nevada) and in Buffalo, New York (Giga New York). Recently, in 2019, Tesla opened its first Gigafactory outside the American region in Shanghai, China (Giga Shanghai). A strategic step to internationalize the company and to enter the Chinese market.
This strategic action can be explained by the fact that China is the largest car market in the world and the government is speeding up the expansion of electric mobility. Furthermore, manufacturing in Shanghai saves Tesla from having to transport its vehicles overseas and avoids import duties incurred in China for cars from the United States. However, the company is not just expanding its manufacturing into China.
Table of Contents
1. Introduction
2. Market Overview
3. Environmental Analysis
3.1. PESTL Analysis
3.2. Theory of National Competitive Advantage of Industries
3.3. The Diamond Model of the German Automotive Industry
4. Major Success Factors and Threats
5. Conclusion
6. Implication
7. Bibliography
8. Appendix
8.1. Passenger car production and passenger car registration
8.2. PESTL Analysis
8.3. Premium Car Production by Country
8.4. German OEM and Supplier Density
Objectives and Topics
The primary objective of this case study is to investigate and evaluate the strategic entry of Tesla Inc. into the German automotive market. By analyzing the unique environmental conditions of the German industry through established strategic frameworks, the paper seeks to answer the research question regarding the specific business success factors and potential threats associated with this market entry.
- Analysis of the global and regional market environment for electric vehicles.
- Application of the PESTL framework to evaluate political, economic, socio-cultural, and technological factors in Germany.
- Utilization of Porter’s Diamond Model to assess the competitive dynamics of the German automotive cluster.
- Identification of critical success factors and inherent risks for a foreign manufacturer operating in Germany.
Excerpt from the Book
3.2. Theory of National Competitive Advantage of Industries
"Why are firms based in a particular nation able to create and sustain advantages against the world’s best competitors in a particular field? Why do some nations succeed, and others fail in international competition?" This issue addresses Michael Porter in The Competitive Advantage of Nations. He created a model that outlines that competitive advantage is a dynamic process and is created and sustained through localization (Mahmood, 1998). This means the more intense the competition in a local industry the greater the innovative capacity and productivity of firms (Clarkson, Fink, & Kraus, 2007).
The so-called Diamond Modell (figure 4) consists of four broad attributes that shape the environment in which local firms compete and promote or impede the creation of competitive advantage (Porter M. E., 1990b).
The following four attributes according to Porter (1990a) are the forces that exert competitiveness success of firms: 1. Firm strategy, structure & rivalry: If companies are in close proximity to one another (industrial cluster), it is to assume that companies upgrade products and processes to remain competitive (Clarkson, et al., 2007). 2. Factor conditions: This attribute represents the necessary input resources a business needs, these consist of factors such as skilled labor force, specialized infrastructure, capital resources, educational institutions (Clarkson, et al., 2007). 3. Demand conditions: Regarding to Porter (1990a) firms must meet the demands of local customers. Furthermore, he outlines that firms have to co-operate with customers in order to be successful. 4. Related & supporting industries: This attribute looks at industries which share common technologies, inputs, distribution channels, customers or activities (Clarkson, et al., 2007). Its about benefiting from synergies and co-operation between firms and suppliers (Porter, 1990b).
Summary of Chapters
1. Introduction: This chapter introduces the purpose of the study and outlines the research question regarding Tesla’s market entry into Germany.
2. Market Overview: This section provides an overview of Tesla’s business operations, historical revenue growth, and its financial position within the global automotive market.
3. Environmental Analysis: This chapter employs the PESTL and Diamond Model frameworks to evaluate the external factors and cluster effects influencing the German automotive market.
4. Major Success Factors and Threats: This section synthesizes the analysis to identify the primary drivers of success and potential threats for Tesla's entry into Germany.
5. Conclusion: The conclusion summarizes the ongoing nature of the market entry and reiterates how Tesla can leverage the competitive German environment.
6. Implication: This chapter discusses the study's exploratory nature and suggests directions for future research in market entry strategy.
7. Bibliography: This section lists all academic and industry-specific sources used throughout the research.
8. Appendix: The appendix provides supplementary statistical data and visual charts regarding production, registration, and industry density.
Keywords
Tesla Inc., Market Entry, Germany, Automotive Industry, PESTL Analysis, Diamond Model, Competitive Advantage, Electric Vehicles, Business Strategy, Industrial Cluster, Sustainability, Innovation, Foreign Market Entry, Strategic Management, Corporate Performance.
Frequently Asked Questions
What is the core focus of this research paper?
The paper focuses on analyzing Tesla Inc.'s strategic entry into the German automotive market, examining the specific conditions that make this move both a strategic opportunity and a potential challenge.
What are the primary thematic areas covered in this work?
Key areas include the global automotive market environment, the political and economic landscape of Germany, industrial cluster dynamics, and the competitive factors within the electric vehicle (EV) sector.
What is the central research question?
The central research question investigates what the business success factors and threats are regarding Tesla's strategy to enter the German automotive industry market.
Which methodologies are employed in this analysis?
The study utilizes the PESTL framework for environmental scanning and Michael Porter’s Diamond Model to analyze the national competitive advantage of the German automotive cluster.
What topics are addressed in the main body of the paper?
The main body covers a comprehensive market overview, an environmental analysis of the German market, and a detailed identification of success factors and threats, followed by a strategic synthesis.
Which keywords best characterize this work?
The paper is characterized by terms such as Market Entry, Electric Vehicles, Automotive Industry, PESTL Analysis, Diamond Model, and Strategic Management.
How does the German workers council influence international companies like Tesla?
The paper highlights that German labor laws and the power of workers councils can be a significant hurdle for foreign companies, citing the importance of local regulations regarding labor rights and management relations.
Why did Tesla choose Germany as a location for its European Gigafactory?
Tesla chose Germany to leverage its highly innovative mechanical engineering sector, skilled labor force, and established automotive infrastructure, despite the competitive pressures of the local market.
- Citar trabajo
- Simon Glandien (Autor), 2020, Tesla's Market Entry Strategy in Germany. Foreign Market Entry and Cross-Cultural Business, Múnich, GRIN Verlag, https://www.grin.com/document/932052
