Exporting Tesla 2
Exporting Tesla 2
EXPORTING TESLA TO PAKISTAN
Marketing across cultures
Bernard Tamer
Derby University
Muhammad Raybaal Asif
Exporting Tesla to Pakistan
Before exporting to a foreign country, companies must analyze the foreign culture and business environment to develop appropriate strategies and determine suitability. Pakistan, for instance, is listed as Asia’s fastest-growing automotive industry owing to a shift in its automotive policies. Pakistan recently passed an automotive development policy that should run from 2016 (BOI, 2020). The policy is intended to encourage foreign automotive companies to establish manufacturing plants within the country, spurring foreign investment into the country. Through the policy, the government has effectively lowered the threshold for new investors who can develop manufacturing plants for vehicle assembly (BOI, 2016). Before the implementation of the policy, international companies would have to pay upwards of 50% as duty tax for foreign investors (Mumtaz, 2019). High taxes and tariffs made the country unattractive for foreign investors and problematic for local industries. The automotive industry has slowly but surely grown in the past decades, from focusing on tractors and agricultural vehicles to private vehicles in recent decades. Owing to the consumption and exportation of vehicles from Pakistan, establishing Tesla manufacturing plants in the country would be successful for both the country and the company. Cultural aspects of Pakistan are also significant to analyze, which include its communication style, individualism, and indulgence. Cultural aspects would be crucial to informing the marketing strategies employed by Tesla.
PESTEL Analysis
Political Environment
Improved road infrastructure
Enhanced policies encouraging foreign investors and localization
Measures to increase vehicle consumption
Ban on non-essential luxury goods, including vehicles (Ahmed, 2022).
The government has increased taxation on the importation of vehicles and parts.
Economic environment
An economic downturn is hurting the automotive industry
The central bank has imposed restrictions on car financing to minimize the economic downturn(Ahmed, 2022).
Decreased automobile sales in the country
The country’s automotive production capabilities increased due to foreign investment and localization (Ahmed, 2022).
Interruption of the supply chain due to the pandemic and the Russia-Ukraine war
Social environment
Pakistanis have significantly high brand loyalty, influencing their purchasing decisions (Amir and Asad, 2018).
The country also has a significant attachment to the social image, which means vehicle purchasing decisions are often made with the brand’s image in mind (Khan et al., 2021).
Pakistanis are also interested in the aesthetics of purchased vehicles which means they favor cars with significant aesthetic value (Khan et al., 2021).
Attitudes and perceptions also significantly influence vehicle purchase intentions in the country, meaning consumers often identify vehicles based on the brand’s image and social associations (Khan et al., 2021).
After-sales service availability and quality also impact consumers’ purchase intentions in Pakistan. Brands and companies that had perceived poor after-sale services had significantly less appeal (Amir and Asad, 2018).
Technological environment
There is an advanced technological adaptation in the country for the automobile industry due to the entrance of foreign companies and investors (Tribune, 2022).
Drive towards affordable fuel-efficient vehicles.
The country has begun production of electric vehicles as an alternative to gasoline vehicles as the market for gasoline vehicles continues to decrease (Tribune, 2022).
They have stalled technological adaptation by local manufacturers, decreasing their competitiveness (Qadir, 2016).
There is an untapped market for electric or hybrid vehicles (Tribune, 2022).
Legal Environment
The climate change act necessitates vehicle manufacturers to strive towards producing low-emission vehicles, particularly electric ones (Uddin, 2020).
Specific employment laws regulate employment standards and conditions for manufacturing plants and factories. These include Industrial Relations Act, which allows unionization, and The Factories Act, which dictates working conditions in manufacturing plants (Majeed, 2022).
The Automobile Division, under the Directorate of standards, sets the standards for vehicles manufactured and sold in the country. All companies in the country are mandated to comply.
Environment
The climate change act directs and mandates the country’s sustainability and climate change efforts.
The country has a significant problem with air pollution, mainly contributed to by transportation (Islamabad, 2022).
The country has developed policies to encourage investment in electric drive technologies.
Pakistan is a signatory to the United Nations Framework Convention for Climate Change which includes commitments to reducing air pollution (Ahmed Butt, Kate, and Namada, 2018).
Ministry of Climate Change cites inappropriate automotive manufacturing technology as one of the leading causes of air pollution and advocates for changes in the automotive industry (Ahmed Butt, Kate, and Namada, 2018).
Terpstra and Sarathy Cultural Framework
Terpstra and Sarathy’s cultural framework effectively describes the cultural environment of Pakistan. For instance, in terms of language, Pakistanis tend to be indirect to avoid confrontation or offense, which means context is critical to communication (Cultural Atlas, n.d.). Islam is the primary religion practiced in the country and significantly influences the people’s culture and practices (Britannica, 2019). Pakistani people are vastly interconnected and feel a sense of loyalty or commitment towards other members of their community and family. The total literacy rate of Pakistan is estimated at 58%, with far fewer women being educated than men though there is no law prohibiting education for any gender (O’Neill, 2022). Islam is the country’s primary religion, meaning Pakistan primarily operates under a caste system where members of high and middle castes have more significant economic and social advantages (Mumtaz et al., 2022). Pakistanis are also increasingly modernized and more connected to the world, meaning they have a more accepting nature of innovations and new technologies. The legal system in Pakistan is commonly based on English common law and Islamic Sharia Law, indicating the significant influence Islam has on the country and its governance. Pakistan has also become increasingly modernized in its perception of aesthetics, gearing technological maximization in its perceptions (Ahmed, 2021). These cultural attributes should drive any marketing strategies by Tesla if they are to enter the market. For instance, in its marketing, the company should center family and community in its messages which will appeal to the population. Understanding these aspects of Pakistan’s culture would ensure the company’s triumphant entrance into the market.
Cross-Cultural Analysis
The Hofstede Cultural dimensions theory can be influential in determining the impact of cross-cultural differences on Tesla’s business in Pakistan. The theory scores national cultures on various cultural aspects, such as individualism and uncertainty avoidance (CFI Team, 2022). Some of these aspects could be crucial to Tesla’s marketing approach in Pakistan and require adjustments and differences between the US and Pakistan. For instance, Pakistan scores very low on individualism which suggests that the country is mainly collectivist (Hofstede Insights, n.d.). Collectivism means that the country’s people feel more obligated to the community and society.
On the other hand, the US scores very highly on individualism, meaning that the country’s people are essentially individualist (Hofstede Insights, n.d.). The difference in scores should inform the different strategies that should be used in Pakistan to market Teslas. For instance, while Teslas may be marketed as a sign of individual success and luxury vehicles in the US, the company should appeal more to the communal aspect of the vehicle. For instance, the company could leverage its impact in minimizing air pollution and contributing to the greater good in its marketing. Such cross-cultural differences must reflect in Tesla’s marketing.
Also, according to Hofstede’s cultural dimensions, the two countries significantly differ in indulgence scores. Pakistan has a score of zero, meaning the country largely shuns indulgence in favor of restraint (Hofstede Insights, n.d.). On the other hand, the US scores highly on the indulgence scale, which means the culture has relatively weak control over its desires and impulses (Hofstede Insights, n.d.). While marketing in the US culture could emphasize the luxury aspect of the vehicle, marketing towards Pakistanis should focus less on indulgence and more on the vehicle’s economic and social benefits. The focus on economic benefits would ensure that the desire to purchase is seen from a more practical than an indulgent point of view. The difference in the indulgence aspects of Hofstede’s cultural dimensions should inform marketing approaches and strategies to favor a more restrained society than the indulgent American society.
The cross-cultural communication theory should inform and identify cultural differences between the US and Pakistan. The cross-cultural communication theory is based on the idea that culture influences society’s style of communication (Communication Theory, 2014). Communication in Pakistan is mainly indirect, expressive, and loud. In Pakistan, it is common for people to show affection even to individuals of the same sex. Communication style in the US differs significantly from this, where it is straightforward and straight to the point. Americans also favor confrontation, whereas Pakistanis are not confrontational. These aspects must be considered when determining how the company will communicate with its market to avoid offending its target audience.
Conclusion
Various identifiable differences in American versus Pakistani culture should influence Tesla’s marketing and business environment. There are various opportunities within the macro-environment of Pakistan that Tesla could take advantage of strategically. For instance, the country currently has significant commitments to climate change efforts, including reducing pollution by the transport industry. Pakistan also has significant economic policies encouraging foreign investors and companies to develop manufacturing plants. Policies for encouraging innovations and the development of electric cars are also in place in the country, which offers significant advantages to companies such as Tesla, who are already advanced in technology for electric cars. For instance, whereas Pakistani culture tends to be communal and interconnected, American culture is essentially individualistic. Communication in Pakistan is also indirect and expressive, whereas in America is straightforward and to the point. It would be necessary for Tesla to adjust and tailor its marketing strategies, informed by these cultural aspects, to suit its new market.
Reference List
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