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)2.Considering the importance of informal institutions (e.g. cultures, value and norms) for international business, critically discuss how national cultural differences can bringboth barriers and competitive advantages for Tesla Motors operating in China? Page 1 of 9
Assessment Brief – Level Six UndergraduateWhat cross-cultural management approach should be taken by Tesla to acquire cross-cultural 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
