The barriers and competitive advantages for Tesla Motors

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This is a paper that is focusing on The barriers and competitive advantages for Tesla Motors. The paper also provides additional questions to focus in writing the assignment paper.

The barriers and competitive advantages for Tesla Motors

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 to produce a 3000 words (+10%) academic report to address the questions below by using relevant academic theory and concepts.
BBC News (2019), ‘Electric carmaker Tesla has signed an agreement with Chinese authorities to build a factory in Shanghai’. Retrieved from:

*Additional suggested resources covering aspects of the case have been posted on Blackboard as a start

Please follow all the tips for this assignment beneath each question.


1.      Firstly, 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)      Secondly, 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)      Thirdly, 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)      Fourthly, 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)

Tips for this question:

Review Dunning’s OLI model (Dunning, 1977, 1981, 1988, 1993), and use relevant academic literature/frameworks (OLI + others) to analyse Tesla’s:
·         ownership advantages, classify Oa, Ot and Oi
·         location advantages in Shanghai, China – considering both external and internal environment
(no more than 5 in total)
·         Internalisation strategy – how to successfully explore/ transfer the identified ownership advantages (identified in 1a) to China (e.g. the relationship between the HQ and subsidiary in China, knowledge transfer, etc.)

The barriers and competitive advantages for Tesla Motors

2.      Secondly, considering the importance of informal institutions (e.g. cultures, value and norms) for international business, critically discuss how national cultural differences can bring both barriers and competitive advantages for Tesla Motors operating in China? What cross-cultural management approach should be taken by Tesla to acquire cross-cultural competence when operating in China? (25 marks)
Tips for this question:
·         Decide what national culture framework(s) to be applied (e.g. Hofstede) in your assignment when analysing the ‘barriers’ of national cultural differences
·         Do not forget to analyse how national culture can benefit the organisation to develop its competitive advantages
·         The final sub-question is to discuss how to manage cultural diversity effectively and also efficiently? (e.g. develop intercultural communicative competence etc.)

3.      Thirdly, 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)
Tips for this question –

·         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)
·         Benefits and challenges of these innovation networks (choose 2-3 for each)

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