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?
b)What location-specific advantages is Tesla motivated to exploit from China, and why has Tesla Motors decided to build a factory in Shanghai?
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)?
