Topic: Tesla entering China

Instructions on Assessment:
Tesla was ranked by Forbes as the World’s most innovative company in
2015.Tesla Motors is an automotive company, which was established in 2003
by a group of Silicon Valley engineers, including Elon Musk (founder of PayPal).
On 7th March, 2019, Tesla Motors signed an agreement with Chinese authorities
to build a factory in Shanghai, this factory would be Tesla’s first outside of the US
(BBC, 2019).
Reference
BBC News (2019), ‘Electric carmaker Tesla has signed an agreement with Chinese authorities to
build a factory in Shanghai’. Retrieved from: https://www.bbc.co.uk/news/business-44789823
Aims of the Assignment
• Q1a/1b/1c
ü Understand the key theoretical concepts that underpin practices of the
multinational enterprise (MNEs) – OLI model
• Q2
ü Critically evaluate the implications of global innovation networks and
understand how innovation assists MNEs in gaining competitive
advantages
Based on the case of ‘Electric carmaker Tesla entering China’, students are
required to produce an academic report to address the questions below by using
relevant academic theory and concepts. Answers MUST be adjusted and
supported by sufficient self-collected research data.
QUESTIONS

  1. Professor Dunning (1977) proposed the well-known ‘eclectic paradigm’,
    including ownership-specific advantages (O); Location advantages (L) and
    Internalisation advantages (I). Applying OLI framework, and using
    appropriate analytical tools, critically discuss and answer the following
    questions:
    a) To enter foreign markets, the MNE must possess some sort of ownership specific advantages. What ownership advantages can give Tesla Motors a
    competitive advantage over local electric carmakers in China? How can
    these contribute to Tesla’s success in China? (20 marks)
    b) What location-specific advantages is Tesla motivated to exploit from
    China, and why has Tesla Motors decided to build a factory in Shanghai?
    (15 marks)
    c) How could Tesla Motors effectively internalize their ownership-specific
    advantages (identified in part a) in China (e.g. protect and use its
    ownership advantages in the host country)? (15 marks)
    Assignment tips
    1a
    • Key – identify and analyse Tesla’s Os
    • Use VRIN table to analyse Tesla’s Os,
    • Classify identified Os into Oa/Ot/Oi (the O tripod)
    • Provide your discussion & analysis – Variety of relevant theoretical
    concepts/academic literature can be used (e.g. RBV, tangible/intangible
    resources, capabilities, SCA etc.) + sufficient & case related research data
    1b
    • Key – discover the location advantages for Tesla/both China (country-level)
    and Shanghai (regional –level)
    • What are the factors and characteristics that propel a firm to that
    country
    • Consider both external and internal factors

    • Apply a variety of academic literature and frameworks (e.g. IBV,
    agglomeration, networks, FDI motivation, Porter’s national Diamond etc.)
    • Look at the FDI motivation, choose between 4 types. What Tesla
    motivation is for internationalise and opening a factory in China
    • Your answers should focus on no more than 5 areas in total
    1c
    • Understand what does ‘internalisation’ mean!
    • Internalisation advantages arise from the benefits of producing internally to
    the company, since they allow the firm to overcome external market and
    transaction costs
    • Link your answers to Q1a
    • How to internalize (e.g. explore or protect) ‘Os’ to the host country
    • A variety of knowledge and academic literature can be applied (e.g. HQssubsidiary relationship, knowledge transfer, embeddedness etc.)
  2. Drawing upon relevant academic literature, critically discuss what type(s)
    of innovation strategy Tesla Motors adapted. What are the benefits and
    challenges of building a local innovation network in China for Tesla Motors?
    • Clearly state what innovation strategies Tesla adapt (e.g. open or close innovation;
    rational, incremental or disruptive innovation strategies etc.) (choose 2-3 if Tesla
    used different innovation strategies)
    • What types of external ‘innovation’ networks can Tesla possibly establish in
    China? (choose 2-3)
    o What could a local innovation network look like in China
    o What sort of players are going to involved in that innovation network
    • Benefits and challenges of these innovation networks (choose 2-3 for each)
    Benefits: what could Tesla gain (knowledge spillovers) is associated with that
    network, how is going to hold with that innovation capability, research, and
    development activities
    Challenges: what issues could arise from being a member of this local innovation
    network
    Must engage with academic literature and concepts to substantiate each points

Type of service-Academic paper writing
Type of assignment-Research Paper
Subject-Business
Pages / words-10 / 2750
Number of sources-20
Academic level-Undergraduate
Paper format-APA
Line spacing-Double
Language style-UK English

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