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).
Based on the case of ‘Electric carmaker Tesla entering China’, students are required to
produce a 3000 words (+10%) academic report to address the questions below by using
academic theory and concepts. Answers MUST be adjusted and supported by sufficient self collected research data.
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
*Additional suggested resources covering aspects of the case have been posted on Blackboard as a start
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 give Tesla Motors competitive
advantages over local electric carmakers in China to be successful? (20 marks)
b) What location-specific advantages is Tesla motivated to exploit from China, and
why does Tesla Motors build factory especially in Shanghai? (15 marks)
c) How could Tesla Motors effectively internalize its ownership-specific advantages
(identified in part a) in China (e.g. protect and use its ownership advantages in the
host country)? (15 marks)
2. Considering the importance of informal institutions (e.g. cultures, value and norms)
for international business, critically discuss how national cultural differences can bring
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Assessment Brief – Level Six Undergraduate
both barriers and competitive advantages for Tesla Motors operating in China? What
cross-cultural management approach should be taken by Tesla to acquire crosscultural competence when operating in China? (25 marks)
3. 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? (25 marks)