The report presented below represents the critical examination of theoretical paradigms associated with export marketing. The evaluation comprises of assessment of the initial stages of the export marketing activity, the selection of exporting as a market entry method, and the implementation stages in the export marketing of Tesla. The critical reflection on theory related to stages and activities included in export marketing enables the formulation of suitable recommendations for framing an export marketing plan. The report further examines the probabilities for improving the current marketing practices followed by Tesla as well as establishes a plausible course of action to improve organizational capabilities for exporting. The home country firm Tesla would be looking to export to India as the host country and this scenario has been adopted as the scenario for the following report. The illustration of notable entities such as export market selection, export motives, export marketing mix, export mode and strategic relationships, and export operations alongside promotion assistance has also been provided in the report. The critical analysis presented in the report is indicative of the motivating factors that are involved in the selection of export as a plausible market entry mode. Theoretical comparisons enable the readiness of Tesla for export alongside a flexible estimation of long-term strategic goals in exporting. Furthermore, rationalization of the application of exporting in the case of Tesla is also presented alongside considering the management of strategic relationships. The concluding sections of the report are reflective of a comparative review of the operational implementation of the export marketing mix concerning strategic logic and the elements of finance and ordering management.
The notable concern among business organizations is noted in the scope of international trade. Even though the challenges in domestic markets continue to evolve with every passing day, organizations are allured by the prospects of acquiring a broader market base through international trade. Most organizations do not assume the route for international trade to refrain from the risks associated with it such as international currency fluctuations, economic downturns as well as geopolitical disturbances. However, the expansion of an organization in international markets can be partly attributed to the industry the organization is based.
As observed in the present global market, service-based industries; automobile, and manufacturing industries are widely dominant in the international business setting. These industries are acclaimed in different countries all over the world and examples of rapid expansion of fast food chains, supermarkets, and retail chains suggest the implications of international trade for different organizations. Bennett said that it has been imperatively observed that US-based organizations have dominated the international business platform with notable contributions from software industry organizations including Microsoft.
Tesla is one of the renowned automobile manufacturers in the US market and was founded on July 1, 2003. The organization’s unique selling point or innovative advantage can be observed in its ability to frame, develop, manufacture, and sell energy storage products and electric vehicles. As per Ghauri, Lutz & Tesfom, the reputation of the organization can be seen in the competition it receives from prominent names in the automobile industry such as Mercedes, Nissan, Ford, Volkswagen, General Motors, and BMW (Ghauri, Lutz & Tesfom, 2003). Tesla has excelled in the design of two explicit models of electric vehicles such as the Model S and Model X among which the latter is a sports utility vehicle. Energy storage products of the company reflect on the application of the products in single homes alongside utility-scale applications.
The notable product of Tesla, the Powerwall is renowned for prolific applications such as residential energy storage, backup power, and usage of solar power for consumption and load shifting.
The generic motives that can be noticed for the preferences for exporting include increased revenue, productivity, and profit alongside economies of scale. The advantage of economic advantages in other markets alongside a prolific representation of opportunities for framing new ideas can be noticed as profound export motives for Tesla. According to Bilkey, concern for the growing environmental concern in the Indian market and the gradual development of preferences for electric cars in the Indian automobile market can be considered as motivation factors alongside the support provided by the Indian government through the association of Tesla with the ‘Make in India’ initiative (Bilkey, 1985). The general requirement for estimating the opportunities for exporting includes an export plan, export readiness, and comprehensive market research.
The formidable presence of Tesla in countries in the Euro Zone, Mexico, China, Russia, Japan, Brazil, and Africa has been associated with the company’s disruptive marketing strategy. One of the instances of the company’s disruptive marketing practices includes the refraining from the allocation of budget for the advertisement of products. It is rare for an organization in the automobile industry which be reliant on the description of product features to customers. As per Cavusgil & Nevin, the export motives as defined in theoretical perception refer to the expansion of sales, acquisition of resources, and the diversification of the supply chain and sales management (Cavusgil & Nevin, 1981).
Furthermore, technological innovation in automobile manufacturing as well as increasing the development of technological implementation in product delivery can also be assumed as viable opportunities for export motives. According to Cavusgil & Naor, Government support can be assumed as a reasonable motive for influencing international trade since the liberalization of trade policies and recognition of the influence of trade on the enhancement of lifestyles, increasing access to products, recognition of trade’s influence on living standards and the flexible provision of opportunities to people in the society to make money.
Therefore, Tesla has substantial export motives for engaging in export marketing initiatives in the Indian market (Cavusgil & Naor, 1987).
An organization needs to be aware of its resources, capabilities, and prospects for engaging in the international business entry mode of exporting. Therefore export readiness defines the capability of Tesla to address the requirements of international export. As shown in Figure 1 (in Appendix), it can be seen that near about 4556 number of vehicle has been exported over 6 months. As per Diamantopoulos, Schlegelmilch & Katy, the determination of export readiness is associated with the estimation of business concerns about markets for a specific product or service, the number of expected sales, and the nature of competition faced by the organizations (Diamantopoulos, Schlegelmilch & Katy, 1993).
The export marketing plan and management commitment of Tesla are largely dependent on the export readiness of an organization as it enables the streamlining of a huge market potential into minimal markets where prolific prospects for revenue generation can be realized. The export development process has been critically examined and identification of potential routes to access overseas buyers is identified as a notable element for determination of export readiness. Furthermore, literary references have generalized the requirements for an organization to be export-ready.
According to Gemunden, the first requirement is identified as management commitment which is obtained from the assertion of the management to invest resources and efforts in export marketing initiatives (Gemunden, 1991). The next element that dictates the export readiness of a firm is the identification of primary target markets. A plausible market entry strategy is the next inevitable aspect of export readiness. Different modes of market entry have been noticed in Tesla’s business management literature which includes franchising, licensing, and establishment of wholly-owned subsidiaries. As per Ghauri, Lutz & Tesfom, the development of an international marketing plan for Tesla is considered another formidable requisite for export readiness as it would be indicative of the measures to be adopted by the organization in the foreign market for improvement of sales and accomplishment of international trade objectives (Ghauri, Lutz & Tesfom, 2003).
Export readiness is also defined by the organization’s preparations in terms of programs and forms that could address the expectations of international distributors. The export objectives of Tesla can be observed in the context of short-term as well as long-term implications in short-term export goals, The organization aims to generate demand and improve the sales for vehicles manufactured by Tesla.
Development of brand awareness and sustaining corporate reputation alongside the creation of a loyal customer base through the management of the existing customer base can be noticed as primary export goals for Tesla. According to Hart, Webb, and Jones, the secondary export goals can be noticed in the objective of increasing market share and sustaining improvement through education of customers about Tesla’s potential contributions to the future. The other secondary objective for Tesla’s export marketing is to increase the waiting list for Tesla’s automobiles in the Indian market (Hart, Webb, and Jones, 1994).
The selection of a specific export market is dependent on various factors and has been defined in unison with different factors such as the responsiveness of organizations. The selection of a particular market and the responsiveness of an organization are relative terms since the capability of an organization to frame distinct approaches for dealing with unprecedented market scenarios is influential on the organization’s sustenance in foreign market environments.
As per Hart, Webb, and Jones, Business organizations opt for international trade to acquire financial returns, and other objectives can be perceived as secondary from a critical perspective. The existence of international business opportunities is liable for promoting Tesla’s chances at facilitating improvement in manufacturing technology for catering to Indian automobile markets (Hart, Webb, and Jones, 1994). The increasing trends for purchasing electric cars as an alternative to sports and luxury cars in the Indian market can also be noticed as a reasonable factor for the selection of India as an export market for Tesla. The influence of trade is also liable for the improvement of technological opportunities and the exchange of technological information and resources is also noticed in literature and therefore India can be validated as a suitable market for exporting.
The prospects for modification in the lifestyle of people in the Indian market with the introduction of electric vehicles are also assumed as a facility for Tesla to undertake export marketing initiatives in India as the host country. Julian said that with the support of international financial bodies of authority such as WTO, OECD, and IMF, the organization could also capitalize on the support of the present Indian government for cleaner and greener initiatives in automobile manufacturing and energy storage systems. The potential for future growth in the Indian market could also have a substantial influence on its selection as an export market (Julian, 2003). As shown in Figure 2 (Appendix), it can be seen that Tesla is expecting to export 1,000,000 Cars by 2020.
Furthermore, it would be essential for the organization to ensure a comprehensive assessment of trade barriers, culture and competitive risk, physical and human resources infrastructure, economic indicators particularly stability, and regulations about intellectual property protection. Evaluation of the above-mentioned necessary factors is considered a prolific resource for Tesla to select a host country for exporting as a mode of international market entry (Koed Madsen, 1989).
The necessity of evaluating exporting as a plausible opportunity for facilitating and improvising international trade is observed in the identification of its beneficial as well as disadvantageous aspects. The references to the export mode of Tesla’s international business entry suggest the advantages of a minimal requirement of infrastructure, retention of brand image, and feasible returns on minimal investments (Koh, 1991).
However, some of the considerable disadvantages that can be illustrated concerning the export mode include possibilities for violation of intellectual property rights and reduction of profit as well as inability to capitalize on economies of scale. Organizations have to understand the significance of the detrimental aspects presented by exporting and the increasing costs of logistics could be a notable setback for the international mode of market entry. On the contrary, government support and strategic relationships in the domestic, as well as foreign markets, can be termed as appropriate moderators of export implications for Tesla.
As per Koh & Robicheaux, Tesla’s planning and export mode development for accomplishing strategic objectives are analyzed comprehensively according to distinct literary references (Koh & Robicheaux, 1988). The role of strategic relationships in export plan development also includes viable references to the modification in approaches for role allocation, timing, and estimating the nature of export planning. Export market development is described as a complex process in business management literature and is illustratively associated with the apprehension of different essential requirements to be searched for in a selected export market alongside the evaluation of the significance of strategic relationships. For example, the support extended by the Indian government for Tesla in the context of the Giga projects which are initiated by the organization to ensure environment-friendly energy storage systems primarily in the form of solar energy storage (Lee & Griffith, 2004).
The evaluation of Tesla’s automobile products as contributors to changes in lifestyle and consumption patterns is also favored by the Indian government through the provision of opportunities for a formidable market for export. Therefore, Tesla’s prospects for strategic relationships and support from the government can be noticed as promising attributes for India’s selection as a potential export market.
The marketing mix influence in the case of the export mode of international trade is characteristically dependent on the product characteristics of Tesla’s automotive. The product’s uniqueness would serve as a potential source for increasing the competitive advantage of the organization in the context of the marketing mix. According to Morgan, Katsikeas & Vorhies, the influence of the export marketing mix is also observed from the perspectives of product, pricing, place, and promotion.
The four distinct aspects refer to the marketing mix attributes that can be assumed by an organization in a foreign market for explicit benefits (Morgan, Katsikeas & Vorhies, 2012). Product characteristics are reflective of a firm’s characteristics and therefore serve as inevitable contributors to the enhancement of the competitive advantage of the organization. Pricing of products is also a notable element in the export marketing mix and therefore the commitment of an organization to its resources for developing product quality alongside maintaining reasonable pricing strategies would be equally alluring for buyers as well as distributors. The identification of different notable elements for promotion such as advertisement and social media promotion could also be integrated into the export marketing mix of an organization. Place refers to the organization’s capability for distributor chain management.
As per O’Cass & Julian, the process of distribution can be moderated through capitalizing on liberalized trade policies alongside the provision of substantial remunerations for distributors can be influential on the estimation of viable prospects for the attribute of place in the export marketing mix. The resources and firm-specific capabilities are also considered promising contributors to the development of the promotion aspect of the export marketing mix (O’Cass & Julian, 2003). In the case of Tesla, the promotion aspect of the export marketing mix would exclude the prospects for advertisement and would be based on the quality of vehicles facilitated by the company.
The export marketing mix is also subject to the impact of environmental characteristics such as political stability, regulatory and legislative frameworks, identification of appropriate communication and distribution channels, and increasing the familiarity of customers with the product facilitated by Tesla (Rolf, 1986). Therefore Tesla has to frame an appropriate export marketing plan with relevance to the identified traits in the export marketing mix in the context of the Indian market.
The management of exports of an organization has to be assisted by the consideration of promotions assistance and operations management in the process of export market development. The creation of a specific export market for Tesla is ensured through the individual procedures which follow the selection of exporting as a reasonable entry method for an organization in international business. The notable aspects of financial and resource capabilities influence on Tesla’s decisions to ensure feasible execution of responsibilities in export initiatives. The export promotions assistance accessible in different jurisdictions is responsible for the flexible exporting initiatives of an organization.
As per Souchon & Diamantopoulos, the interventions that are required profoundly in export marketing initiatives are noted in the documentation aspect of exporting (Souchon & Diamantopoulos, 1996). The involvement of a lot of logistics in the process of exporting alongside the consideration of distance as a barrier from a critical perspective, it can be concluded that documentation is necessary for presenting the dynamics of export relationships between the Tesla and the host country i.e., India. The documentation aspect of export operations could be prolific for the estimation of key trends in the host market as well as possibilities for sustaining the market.
The export operations rely on logistics and hence the organization’s export operations are characterized by the estimation of flexible product packaging and assembly facilities for easy transportation of products. Export promotion assistance can be defined as the different assistance programs and schemes introduced by governments to facilitate external trade in the form of exports.
As per Tesfom & Lutz, the schemes have varying implications for different organizations in varying industries and they are primarily associated with economic privileges such as reduction in tariffs and exclusion of tax limitations (Tesfom & Lutz, 2006). Tesla’s export promotions assistance could also serve as a reasonable contributor to the development of flexible approaches for export operations especially through the moderation of the marketing mix and providing adequate support in case of each aspect of the marketing mix. Development of feasible prospects in the case of individual elements of product, place, promotion, and price for an organization is facilitated by the export promotion assistance programs of host countries. International business organizations can adhere to the export promotions assistance to acquire reasonable ROI on their export investments alongside gathering a wider consumer base thereby reducing the intensity of risk.
The operational application of the export marketing mix would have to be evaluated in the context of strategic logic through references in the literature. The consideration of Tesla’s future in export marketing in a host country i.e. India has to be initiated concerning sustainable growth in the sales of the organization’s automobiles in recent years. Zou, Fang & Zhao said that the exports of Tesla have been rising according to the reports found in 2015. Countries like Norway and the Netherlands have indicated a substantial increase in exports of Tesla’s electric cars (Zou, Fang & Zhao, 2003).
However, the application of an export marketing plan in India has to be evaluated from the perspective of initiatives of the organization to export its products to India. Necessarily, it can be concluded that the development of an export market for Tesla on a long-term basis should not only be inclusive of tailoring the export marketing mix to the needs of buyers and distributors but also through the consideration of long-term implications of exporting to the host country i.e. India, for Tesla. The critical reflection on the applicability of the export marketing mix as observed in the case of Tesla should be primarily reliant on product innovativeness alongside keeping the long-term impact of brand sustainability as well as the establishment of dedicated units in the Indian market for catering an increased demand.
The report provided an illustration of the notable entities in export marketing such as export goals, export motives, export mode and role of strategic relationships, marketing mix, and export operations for Tesla’s future export entry strategy into the Indian market. The assessment of the suitability of findings of this report for Tesla’s export plan from a critical perspective was also noticed as a profound attribute in the report.
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Figure 1: Tesla Exports by Month
Source: (Tesfom & Lutz, 2006)
Figure 2: Tesla Export Forecast
Source: (Zou, Fang & Zhao, 2003)Order Now