Tesla Economic Strategy Rostow Galbraith Analysis

Compare and contrast each theory using a chosen company’s Domestic and Global environments. Company's domestic environment identify its economic environment and compare and contrast it with your selected global economic environment using Rostow and Galbraith.

As it relates to both domestic and global economic theories, both Rostow and Galbraith are applicable Tesla. Beginning with Rostow, his text entitled, The Stages of Economic Growth is highly applicable to both the domestic and global markets. Domestically, American society can support Tesla and its development as it is currently within the “Mass Consumption” stage characterized by Rostow. Here, Rostow also arguable about the benefits of modernization and its appeal from a societal perspective. Mature nations such as America, are undergoing a long-term trend of modernization. This modernization has occurred with the emergence of renewable energy, the need for sustainable product solutions, and the countries reliance on petroleum-based products. Modernization is occurring that ultimately can support the products provided by Tesla. Both consumers and governments both demand these products and are willing to pay premium prices for quality products. Government, in its pursuit of modernization have used tax incentives and credits to help incentive product development. Likewise, consumers, feeling empowered to purchase sustainable solutions are willing to pay premium prices for an environmentally friendly product. Likewise accommodative monetary and fiscal policy within the United States has allowed many consumers to utilize leverage to purchase Tesla products. With lower interest rates, Tesla products are now much more affordable thus helping to generate demand.

From an international perspective, many developing economies are within the “Take-Off” and “Drive to Maturity” phase. Here, these economies are developing and thus looking to establish their middle-class foundations. Here, higher employment, lower interest rates, and higher wealth are allowing consumers to better afford Tesla products. China in particularly is experiencing rapid economic growth that can eventually support Tesla sales.

Galbraith, believed that market power was weakened by large corporations and governments, thus undermining the widely accepted principle of consumer sovereignty. In the case of Tesla and its economic environment, the industry itself will not allow it to weaken consumer sovereignty. From an international perspective, many governments such as China and India are helping to promote international competitive in an effort to prevent one manufacturer from dominating the market. Likewise, Galbraith believed that large corporations, with the strongest market power would produce goods beyond an efficient amount (Woolf, 2012). This too appears unlikely as market factors will ultimately force prices down as manufacturing productivity becomes more efficient both domestically and internationally. In addition, many companies such as Tesla have much higher environmental, social, and governance standards than companies that where prominent during Galbraith’s period. Tesla much like other large companies are now expected to contribute to the overall well-being of society and not simply to the needs of shareholders. This idea of shared prosperity ultimately underpins the economic factors leading to Tesla’s growth both internationally and domestically. Domestically, the company provides stakeholder with a high quality, highly demand product that protect the planet and reduces societies reliance on fossil fuels (National Academy of Sciences, 2009). From an international perspective the company is helping countries such as China, better improve their own air quality and environment. These two catalysts are ultimately helping to propel electric vehicle consumption.