Managing International Business for NIO: Expansion in Europe

This report discusses the expansion of NIO, a Chinese electric vehicle manufacturer, in Europe. It analyzes the use of international business theory, Eclectic Paradigm, to justify the expansion and suggests entry routes and advantages. The report also highlights the importance of ownership, location, and internalization advantages in expanding operations.

Managing
International Business

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................9
REFERENCES:.............................................................................................................................10
Books and Journals...................................................................................................................10

INTRODUCTION
Organisations have to manage their regular operations who are operating their business
across different boundaries. Managing functions and operations on world wide platform requires
number of resources and efforts. All the departments of business need to be analysed in proper
manner including financial, human resource, sales and marketing so that smooth operations can
be carried out (Battaglia, Gragnani and Annesi, 2020). It is duty of managers to formulate
different strategies and plans in order to overcome various threats and challenges which business
may face in international market. This report is based on NIO which is auto mobile manufacturer
based in Shanghai, China. It was founded in 2014, November and its CEO is William Li and
specialised in developing electric vehicles. They serve various locations including Germany,
United Kingdom, United states and Norway. This report will include how the organisation
expand their business in different locations of Europe for their further growth. International
business theory can be used in order to justify the appropriate expansion in the context of
business.
MAIN BODY
NIO is a Chinese multinational manufacturer who involved into designing and offering
electric vehicles. They are very well known famous for their development of battery swapping
stations. Gradually they are planning to expand their business in now boundaries of Europe as
they have analysed high demand of electric vehicle in Russia and Hungary. Besides that, they
have planned to deliver their electric ES8 SUV in the boundaries of Norway between the time
period of 4 months. NIO have planned to deliver their new launch which is NIO ES8 which is
electric seven seater vehicle. Russia and Hungary are most appropriate locations for them as they
are technically very advanced which support their designing and development of vehicles. Their
main aim to expand operations in new boundaries so that they can gain different competitive
advantages in cost effective manner (Bodle and et.al., 2018). NIO wants to become global brand
which can be recognised by each and every user at different location. They are using different
marketing strategies in order to increase their brand awareness in the market. They have
launched number of vehicles which have to be delivered in boundaries of Russia and Hungary.
The list of vehicles include EP9, EC6, ES6ES8 and ET7. The upcoming models of NIO includes

EF9, ES3, ES7 and ET5 which they have to offer in new markets and locations. The production
and manufacturing unit is supervised in appropriate manner on regular basis so that they does not
face any challenges and risk due to errors.
NIO uses number of advanced technologies such as NOMI AI which provides digital
assistance which provides facility of closer engagement between their passengers and drivers.
Other technologies include NIO Pilot and Aquila which improves the quality of their electric
vehicles. The large government system support the new businesses for expanding their
operations as it add value in their GDP. Their rich culture easily adopt changes and demand for
improved services which can improve the quality and standard of their life. Different macro
factors influence the growth of NIO in positive manner so that they can generate higher revenues
along with satisfying the needs of their customers. Before launching their products they use to
analyse the reviews and feedbacks of the customers so that they can add features according to
that (Bryson, Sundbo, Fuglsang and Daniels, 2020). Customers of NIO get customised services
which assist in increasing the engagement rate in best possible manner. It is necessary to focus
on the resources such as personnel, capital, time and infrastructure. It is responsibility of
organisation to focus on their sustainable practices so that they can maintain better quality of
their environment. They have to manage their nuclear waste, pollution, damages and water
pollution so that their organisation can sustain for longer period of time. It establish the positive
image of brand in large global market so that they can attract customers in effective manner.
Organisations have to train their employees which improve their productivity and performance.
Improved productivity results in positive outcomes as it reduces mistakes and errors from the
production and manufacturing procedures.
Hungary also promote various new products by allowing different countries to operate in
their region. NIO can increase their sales rapidly by delivering their new launches in the cities of
Hungary. Electric vehicles improve the standard of living by reducing the pollution level as it
reduce the consumption of fuel and other natural resources. The demand of electric vehicle is
significantly recorded in that region which should be satisfied by NIO. It is the great opportunity
for organisation to cater the needs of customers by offering high tech models in the range of
vehicles (Cassells and Lewis, 2019). It is analysed that Hungary is switching to electric cars
gradually because of they are moving towards to the eco friendly environment. The perception
of customers is changing as there are number of attractive features are added by NIO in their

electric vehicles which is great opportunity to capture large market. It becomes most effective to
compete with competitors like Tesla by adding innovative features. Innovation can easily
influence the mind of customers as it become more demanded according to the current market
trends. The auto makers should evaluate the reviews and feedbacks of the customers so that they
can understand their demands. Various social media platforms can be utilised by them for
promoting and advertising the electric vehicles which are existing or newly launched. Platforms
such as Facebook, Twitter, Instagram and YouTube assist in sharing information regarding the
vehicles which NIO is going to deliver in the market of Hungary. It provides communication
platform to an organisation so that they can interact with their customers in more attractive
manner. It assist organisation in increasing the rate of loyal customers who can buy their
products and services in appropriate manner (Cirpan and Alayoglu, 2018). Updating customers
regarding new products and services become easier for organisation which the help of
connectivity which is created by social media platforms.
In order to enter the international market which is Russia and Hungary, NIO can use
different entry routes which are most suitable for them. They can use joint venture which allows
two or more entities for commencing their operations collectively in order to provide services. It
can be said as shared ownership which involves in agreement for sharing risk and profits. It
facilitates organisation in providing their products and services in international boundaries
without investing huge amount and capitals. It is a type of partnership which can be opted by
NIO so that they can create their presence in Hungary and Russia. They can also avail resources
like technology so that they can maintain the quality of their offerings according to the
requirements. All the factors related to economic and social should be analysed so that
organisation can understand the behaviour of their new customers (Dayour and et.al., 2020). NIO
can also adopt exporting for delivering their electric vehicle in the new market and boundaries. It
suggest that organisation can manufacture products and services in their home country and offer
them in international market. It saves lot of capital and time in developing proper infrastructure
in new country which may results in complexity. Marketing products in different boundaries
become more convenient with the help of this entry route which is positive factor in generating
revenues. Facilitation of international trade increased in appropriate manner without involvement
of complex formalities can be carried out with this method. It contributes in the economic growth
of a country which results in economic stability.

The expansion of business can be carried out with the help of international business
theory which is Eclectic Paradigm. This is British economist J.H Dunning which assist
organisation in analysing the attractiveness in terms of foreign direct investment. The OLI
framework refers to ownership, location and internationalization. Before delivering electric
vehicles in Hungary and Russia, NIO have to analyse the market opportunities so that they can
generate higher revenues and profitability. It clarifies the relationship between different elements
of market so that organisation can develop different approaches in order to sustain in particular
market (Dayour and et.al., 2020). Different competitive advantages can be identified on the basis
of the choices and preferences of the customers present in the new market. NIO can expand their
business with the help of foreign direct investment in selected international countries. Customers
can get updated electric vehicle as NIO is designing and manufacturing advanced and upgraded
vehicles. The requirements of customers should be focused by an organisation so that they can
provide services in best possible manner. It involves three key factors into this framework which
assist organisation in analysing their exact position in the new market.
The first factor of this framework is ownership advantage that analyse the
competitiveness in the foreign market which they get with the help of foreign direct investment.
NIO is going to deliver their new launches in Russia and Hungary which requires to understand
the importance of their proprietorship or ownership in the market. It suggest that organisations
can use unique methods and resources in their production and manufacturing procedures so that
appropriate uniqueness can be maintained (Ghazali and et.al., 2019). It assist in securing the
rights of designs and plans with the company which is positive factor in establishing the brand
image. It limits the rate of competition in the market as unique features make electric vehicles
different from competitors. Artificial intelligence and technical advancements can be used by
NIO so that they can offer best services which are new for the customers. They can also use
economies of scale in their manufacturing procedure so that they can maintain the required
budget. Foreign direct investment should be monitored by organisation on regular basis so that
they can eliminate mistakes and errors from the services. It provides accuracy in the electric
vehicles which help organisation in facing different challenges. Market can be easily captured by
organisation by implementing differently unique resources which are not disclosed in the market.
Ownership is very important in order to engage customers which make organisation successful in
the foreign market.

The next factor of Eclectic Paradigm theory is location advantage which need to be
measured by organisations during expanding their operations. In order to gain different
competitive advantages, it is necessary to identify the location related parameters on prior basis.
Geographic advantages play major role in increasing the sale of electric vehicles due to the
economic health of the particular location (Hradský and Sadílek, 2020). NIO have selected
Russia and Hungary for the delivery of their services which is most appropriate option in terms
of location. Management of NIO have evaluated increase in demand of electric vehicles in these
locations. Customers prefer more electric vehicles as it contributes positive efforts in making
environment more safe and clean. They can opt various entry modes like licensing and
franchising in order to enter the new market after identification of most profitable location.
Competitive advantages should be achieved easily by selecting the location where less
competitors are present. Markets of Russia and Hungary have less electric vehicles as compare to
Norway and UK where they are already operating. It is great opportunity for them to capture the
large market area in initial stages of providing unique services. Government of both these
locations have formulated business friendly policies which support business in their country.
The expansion become more successful when organisation does not have to unnecessary trades,
taxes and tariffs (Jones, 2021). NIO conveniently commence their operations as they can find
low cost labour who can assist in manual operations in selected boundaries. Most of the
organisations use Porter's diamond model in order to evaluate the advantages related to the
location. Russia and Hungary have skilled and trained employees who can assist organisation in
generating higher revenues and profits. Both the countries are developed in terms of
technological advancements which results in providing opportunities in process of expansion.
The last factor of this theory is internalization advantage which suggest that which
appropriate investment pathway should be adopted by an organisation. It provides various ways
of investment which assist organisation in generating higher revenues. NIO analyse their
internalization advantages so that they can diversify their investment criteria according to the
requirements of the business. Each and every department of business should be allocated
required and sufficient financial resources so that they does not face any challenges in
commencing operations (Stănciulescu and Scarlat, 2021). NIO should identify the local market
knowledges so that they does not over spend their essential resources. They can also outsource
different entities who can assist them in accomplishing their targets and goals in low

investments. Sometimes organisations opt for local producers who can help them in producing
products in minimum possible investment. NIO can take help in operations of various
departments such as sales, production, designing and manufacturing so that they can diversify
the resources in equal manner. Involvement of third party lower down burden and pressure
which results in effective and positive outcomes. Maintaining quality and standard of the
products is highly essential for organisation in order to sustain in new boundaries which can be
possible with the help of maintaining appropriate budget. NIO can involve themselves into
partnership with the local entities of Russia and Hungary so that they can understand the actual
requirements of the local customers (Yusof and et.al., 2022). They can also guide them how to
invest money in appropriate manner so that they get huge benefits out of it. Skilled employees
can suggest appropriate foreign direct investment plans to the respective organisation so that they
can potentially utilise their financial resources. For some of the operations, NIO outsource some
of the professionals so that they can maintain quality of the services along with reducing wastage
of financial resources. They also uses original equipment manufacturer in order to design and
manufacture electric vehicle according to the latest technology which can best suit the current
market trends. Involvement of innovative features along with maintaining appropriate budge is
highly useful for organisation so that they can improve their sustainability in long run.
It is evaluated that organisations can easily expand their operations in new boundaries by
studying their three most important factors which are ownership advantage, location advantage
and internalization advantages. NIO uses Eclectic Paradigm theory which provides best result to
them. It is important to study the over all market environment before delivering products and
services. NIO have selected Russia and Hungary for delivering their upgraded models so that
they can increase their market share in effective and efficient manner. This provides them
various opportunities which assist in competing with the competitors present in their respective
industry. The demand of electric vehicle increased in the market of Russia and Hungary which is
fulfilled by NIO so that they can accomplish their main aim. Increase in the use of electric
vehicle provides opportunity to organisation in establish their brand image in market.

CONCLUSION
From the above report it can be concluded that managing international business
require knowledge and resources at same time. It is important to focus on critical areas so that
organisation can grow and develop their business in appropriate manner. Various factors such as
economic, environmental, social, political and technological factors should be evaluated in
proper manner. Cross border transactions involves skilled labours and different resources so that
organisation can create their band awareness in new boundaries. It is mandatory for organisations
to follow all the rules and regulations of the country in which they are managing their business.
This report included about expansion of the business in new country so that organisation can
serve the requirements of customers. It is evaluated from this report that different factors should
be examined before delivering products and services in new boundaries.

REFERENCES:
Books and Journals
Battaglia, M., Gragnani, P. and Annesi, N., 2020. Moving Businesses toward Sustainable
Development Goals (SDGs): Evidence from an Italian “Benefit-For-Nature”
Corporation. Entrepreneurship research journal, 10(4).
Bodle and et.al., 2018. Critical success factors in managing sustainable indigenous businesses in
Australia. Pacific Accounting Review.
Bryson, J.R., Sundbo, J., Fuglsang, L. and Daniels, P., 2020. Reading and Managing Service
Businesses: An Integrated Case Study Approach. In Service Management (pp. 261-
278). Palgrave Macmillan, Cham.
Cassells, S. and Lewis, K., 2019. Managing to be environmentally responsible: incentives and
disincentives reported by small businesses. Small Enterprise Research, 26(1), pp.1-17.
Cirpan, H. and Alayoglu, N., 2018. Challenges of Turkish family businesses related to effective
management strategies. In Turkish economy (pp. 385-409). Palgrave Macmillan, Cham.
Dayour and et.al., 2020. Managing the COVID-19 crisis: coping and post-recovery strategies for
hospitality and tourism businesses in Ghana. Journal of Hospitality and Tourism
Insights.
Ghazali and et.al., 2019. Managing Shari’ah-Compliant Businesses to Create Sustainable Value.
In Management of Shari’ah Compliant Businesses (pp. 1-5). Springer, Cham.
Hradský, O. and Sadílek, T., 2020. Motivation of generation y members working in their
parents’ businesses. JEEMS Journal of East European Management Studies, 25(1),
pp.35-54.
Jones, B., 2021. Is Popia Bad Business for South Africa? Comparing the GDPR to Popia and
Analyzing Popia's Impact on Businesses in South Africa. Penn St. JL & Int'l Aff., 10,
p.217.
Stănciulescu, G.D. and Scarlat, C., 2021. The Role of Entrepreneurial Education in the
Development (and Success) of Family-owned Technology-based Businesses in
Romania. In Entrepreneurship, Institutional Framework and Support Mechanisms in the
EU. Emerald Publishing Limited.
Yusof and et.al., 2022, March. The Role of Community Managers in Digitizing Small
Businesses. In 2022 International Conference on Decision Aid Sciences and
Applications (DASA) (pp. 863-868). IEEE.