Reference no: EM132790805

Political, Legal, Economic

Tesla has developed a fully-electric, luxury auto, to the delight of people concerned with the environment and the effects of fossil fuel usage (and eventual exhaustion). New automobiles are usually sold through dealers or agencies, which have showrooms, salespersons and so forth. The company determined it would need to develop a new distribution system, and focused on how Apple products are sold. In that approach, product experts are used rather than salespeople. Tesla then would open its own showrooms with its own product experts and service-people. This ran it into a major political problem, since some states would not allow the vehicles to be sold therein (particularly Texas, Florida and New Jersey) and various others put on restrictions (number of showrooms allowed, etc.) Not allowing the vehicles to be sold in a state has various economic ramifications in addition to legal ones. Tesla's experience has been somewhat the opposite of Uber's, where governments allowed them fairly rapid access. At a minimum, this shows how the political environment can affect business strategies, since Tesla faces a very different situation than Uber.

Questions:

1. Why would states want to hamper or stop sales of Tesla within their borders?

2. What entity/group would be most affected, and likely behind the obstacles thrown up by government?

3. How are salespeople generally remunerated (paid for their services) in traditional sales?

4. How are product experts (in say, Apple) paid?

5. Why would Tesla want to sell through this different model?

6. What can Tesla do in states with the view of not permitting their access?

7. Are there alternatives to selling through their own showrooms, for Tesla?

8. How does it affect a state economically if it does not allow Tesla access?

9. Are there other recent examples can we think of where states did not allow in new products/services/companies, to their later regret?