Essay Sample: Business Organization and Environmental Report, Japan, Tesla Motors

Japan is a developed nation with a strong and free industrialized market economy. Also, the country is the second technologically powerful country after the United States. Additionally, this project will seek to determine the viability of Tesla Inc.'s decision to execute a foreign direct investment (FDI) in Japan as part of its expansion and globalization plan. Moreover, the PESTEL framework will act as a tool for guiding marketers on how to analyze as well as monitor the external marketing environment factors in Japan. Also, it will define the impact of such factors to the Tesla organization. Subsequently, the attained PESTEL report will portray the threats as well as weaknesses likely to affect Tesla Inc. in its startup venture in Japan. On the other hand, the Porters five forces framework will be employed as a tool for analyzing the level of competition likely to face Tesla Inc. in Japan after its establishment. Additionally, the framework will attain its objectives by employing industrial organization economics to ascertain the five forces that will influence Tesla's competitive intensity in Japan. Subsequently, the findings will illustrate whether Tesla's operations in Japan will attain profits or not. The decision of Tesla Motors to invest in Japan will be fruitful due to the conducive external environment that is available for the investors in the nation.

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Brief Company's Information

Tesla Inc. is an American corporation that specializes in the engineering of electric automotive, solar panel equipment as well as energy storage devices. Moreover, the corporation was established in 2003, and its headquarters are situated in Palo Alto, California. Today, additional products that are produced by the Tesla Inc. include power pack batteries as well as the solar roof tiles. Additionally, key people in the corporation include Elon Musk - the chief executive officer (CEO), JB Straubel - Chief Technology Officer and Deepak Ahuja -Chief Financial Officer (CFO). Also, Tesla Inc. is also a publicly traded company, and it retails its shares at the NASDAQ stock exchange market. Additionally, since its inception, Tesla Inc.'s market profitability has increased tremendously. Additionally, this can be supported by the net revenue of US$11.759 billion the corporation attained in 2017. Furthermore, based on 2017's corporation's report, the company employs approximately 33,000 personnel. Ultimately, the company's subsidiaries include SolarCity, Automation as well as Tesla Grohmann corporations.

Background Information on the Chosen County

Japan is a nation situated in the Pacific Ocean. Additionally, it is characterized by dense cities, mountainous wildlife parks and thousands of religious buildings - temples and shrines. Additionally, based on 2010's national census report, Japan had approximately 127 million persons. Subsequently, this makes the nation to be the biggest country globally, based on its population. The high population of the nation makes Japan be a perfect targeted market for Tesla Inc.'s products. Furthermore, Japan is ruled by Akihito the Emperor and Shinzo Abe who is the prime minister and based on World Bank's 2017's financial report, the nation has a GDP per capital report of US$38,894.47. Subsequently, the high GDP level illustrates that the nation's residents have a high potential of purchasing the Tesla Inc.'s products. Moreover, the largest cities in the nation include Tokyo, Hiroshima, Fukuoka, Osaka, Kitakyushu, Kobe as well as Kawasaki among others. Also, the life expectancy of persons born in Japan is 83.2 years, and it is considered to be the highest life expectancy in the world.

The primary ethnic group in Japan is the Japanese who make approximately 98.5% of the entire population. Additionally, other demographic groupings in the nation include Koreans at a proportionate of 0.5%, the Chinese at 0.4% and the rest of the population making the remaining 0.6%. Furthermore, Tokyo -capital city of Japan, has a population of approximately 13 million persons in the city area and 32.5 million persons in the metro area. Subsequently, the city would be the best for Tesla Inc. to establish its regional headquarters in Japan. Moreover, the nation's time zone is UTC+9, and the currency used in the nation is the Japanese Yen (YEN). Also, the growth rate of Japan's economy has been stable for the past three years. Moreover, this will be beneficial for the Tesla Inc. as it will promote the market performance of the corporation in the region. Additionally, the stability of the nation's economy means can be evidenced by the image below.

Figure 1: The image below was retrieved from the Trading Economics website, and it portrays the growth in Japan's economy since January 2015.

The labor market in Japan is expansive due to a large number of educated persons who can work in various corporations in the nation. Additionally, this will be a good thing for Tesla Inc. since they will be in a position to attain highly qualified personnel to work in the corporation. Based on the 2010 Japan's census report, it was ascertained that the nation had 65.9 million persons in the nation's labor market. Moreover, this population was approximately 59.6% of the entire population of persons who are 15 years and above in the nation. Also, in this population segment, 62.57 million persons were employed, and approximately 3.34 million were jobless. Consequently, this made the nation's unemployment rate to be computed at a rate of 5.1%. Also, the overall structure of Japan's labor force experienced a positive global transformation in the 1980s, and then the trend continued all the way to the 1990s. Additionally, this is because numerous Japanese attained education and became professionals in different sectors of the nation's economy.

Nevertheless, today, several factors are affecting the Japanese labor force that Tesla Inc. should be aware of before commencing their trading operations in the nation. First, the Japanese labor force has been affected by the shrinking population of the young generation who can function in various job markets in the nation. Furthermore, Japan has experienced a reduction in the post-war baby boomer population segment over the last decade. Consequently, lesser persons can work in various sectors of the nation's economy. Nevertheless, there has been a significant increase in the number of women who can work in Japan's the labor market. Additionally, this is because unlike in the past, more women have secured a quality education in the nation due to the increased sensitization of gender equality by the government. Lastly, Japan has also experienced a significant increase in the number of foreign nationalities in its labor market. Subsequently, such foreigners will also provide the Tesla Inc. with highly skilled labor force for its subsidiary in Japan.

Macro and Micro Environment Analysis

PESTEL Framework

Political Factors: The head of the state in Japan is the emperor. However, he has limited powers in terms of governance since the nation has constitution supremacy. Also, the citizens of Japan appoint the members of their parliament, and then the parliament elects their preferred prime minister. Moreover, due to its stable political structure, Japan has good relations with numerous nations, both in the developed and developing nations. Also, the nation is a member of the United Nations as a well as a non-permanent member of the Security Council. Lastly, the serene political environment of Japan has promoted the investment of business ventures in the nation, by both local and international investors.

Economic Factors: Today, the economy of Japan is strong, and it is measured to be the third largest in the world. Additionally, that is third from the economies of the United States and China. Also, the Japanese national currency had a gross domestic product (GDP) of $5.07 trillion in 2009 as well as an overall growth rate in GDP by 0.4%. Furthermore, the nation's GDP per capita was estimated to be US$39,573, and the nation also had an inflation rate of -1.3%. Also, despite reason that there is poverty in Japan, the overall population of persons that live below the poverty line is 13.5%. Additionally, the level of the nation's foreign direct investment (FDI) in 2009 was US$205.4 billion and the exports and imports made by Japan in the same year were US$516.3 billion and US$490.6 billion respectively.

Social Factors: The familial system of Japan is patriarchal as well as monogamous and in most cases, family members live together. Also, the Japanese society has religious freedoms with the dominant religions being Christianity, Islam as well as Sikhism. Moreover, the elementary, as well as secondary education in Japan, is compulsory, and people can advance their education in the institutions of higher learning like universities and colleges in the nation. Overall, the literacy rate of the people in Japan is 99%, which is remarkably high.

Technological Factors: The technology sector in Japan is remarkably high, and this can be marked by reason that approximately 27.7 million persons in the nation have broadband lines. Additionally, 78.2% of the people in the nation have access to good internet connection. Also, information in the nation is secured through computer devices like laptops, tablets, and smartphones. Furthermore, the nation has also advanced remarkably in its ability to perform ICT systems' automation in all major public facilities like malls, airports, schools, metro stations, and healthcare facilities among others.

Environmental Factors: Japan has approximately 3000 islands, and most of the topography is covered with mountains and forested landscapes. Also, Japan has good weather all year round, similar to numerous nations in other parts of the world. However, the nation has a high number of earthquakes, and as many as 1500 earthquakes have been reported in a single year in the past. After the environmental disasters that occurred in Japan in the 1950s and 1960s, the nation has enacted strict policies that are focused on environmental protection. Furthermore, the nation's environmental policy has created a balance between environmental protection as well as economic development.

Legal Factors: Japan has enacted their corporate law based on the Corporations Code. Subsequently, this has created a legal framework through which the corporations are formed in the nation. Also, Japan has strict labor laws, and all corporations are required to mention the laws on their contractual agreements before hiring personnel. Additionally, such laws governing the corporations' policies in regard to honoring their employees' minimum wage rates, working hours, leave rules as well as any acts of discrimination in the workplace. Also, Japan has a consumer contract act that was enacted on March 12, 2000, and it protects the consumers of corporations' products from being subjected to unfair commercial acts like an erroneous or misleading advertisement of products. Furthermore, the terms and conditions of a contract between employers and employees are enforced by the provisions of relevant corporate and commercial practices that are featured in the nation's constitution.

Porter's 5 Forces Analysis

The threat of New Entry: Tesla Inc. will face a little threat of new entries in the Japanese market because of the cost of establishing a car manufacturing corporation in the nation. Subsequently, this means that very few new corporations will be in a position to raise sufficient cash to establish a new car manufacturing branch in Japan to compete with Tesla Inc. Nevertheless, Tesla Inc. will be in a position to diversify their bra...