Tesla's Strategic Goals and Market Entry in China: BUS2171

This assignment analyzes Tesla's strategic decision to expand into the Chinese market, focusing on the resource-based view and its influence. The analysis explores Tesla's strategic goals, including full factory ownership, protection of technology, and reduced costs for the Chinese buyer. It also assesses the impact of trade agreements like CUSMA on Tesla's decision, concluding that CUSMA has minimal effect. Furthermore, the assignment examines the competitive landscape, highlighting potential advantages for Tesla and the impact on other electric vehicle manufacturers. The paper uses APA style citations to support its arguments, providing a comprehensive overview of Tesla's business strategy in China and its implications for the electric vehicle market.

Tesla
Name of the Student:
Name of the University:
Author Note:

Table of Contents
Resource Based View on China:................................................................................................3
Strategic Goals:..........................................................................................................................3
Trade Agreements:.....................................................................................................................4
Competition Parody:..................................................................................................................4
References:.................................................................................................................................5

Resource Based View on China:
The company Tesla is one of the largest manufacturer of automobile in the electric
segment. The company has operations in California but opening a new factory in Shanghai
provides the company the use of various resources which is available in China. The factory
would be larger than the current factory producing almost 500000 vehicles per year. Thus, the
production capacity would increase. The company can use the large and cheap labour force in
china at its facility which would reduce the production cost per vehicle for the company. Also
China is near other Asian countries and the European countries and is well connected through
the sea route. This would enable the company to timely deliver the vehicle in other countries
with its factory being in China and the company using the resources which is available in the
country (Perkins & Murmann, 2018).
Strategic Goals:
The strategic goals for the company Tesla top go big in china can be listed in the
following points,
 The company has full ownership of the factory and need not enter into joint venture
with other Chinese Company to do business in the country.
 The technology of the company would be safe and no fear of infringement of
intellectual property would arise for the company.
 The Impact of the trade war would not be on the business of the company, hence the
company would be profitable and enter a new market. The effects of the trade war
would be negligible for the company.

 The 40% tax rate which is levied by the government on the vehicles would be invalid
as the vehicles would be manufactured in China, thus reducing the cost for the
Chinese buyer of the vehicles (Cheong, Song & Hu, 2016).
Trade Agreements:
CUSMA is a replacement of the old NAFTA agreement and probably have no
significant effect when Tesla opens a factory in China. However, if the company had not
established factory in china and would had been a part of the CUSMA, the cost of production
of the vehicle increases significantly. This is due to as per the new agreement manufacturers
can open factories at lower cost regions only when the 75% of the components are
manufactured in US. Thus, at that point the company cannot ship components from the lower
costing Chinese economy (Johnson, 2019).
However, the target consumers of the company are based in China itself, hence the
CUSMA would not have significant effect on opening a factory in China.
Competition Parody:
The other manufacturers of electric vehicle would try to penetrate the Chinese market
as the cost of production would be lower for Tesla. Thus, this would provide significant
advantage to the company while other manufacturers would be at a disadvantage position.
This would lead for other company to locate factories in the country increasing the
employment opportunity in China (Jiang & Lu, 2018).
The company would tend to enter the China market which would be a cost saver for
other companies like Tesla.

References:
Cheong, T., Song, S. H., & Hu, C. (2016). Strategic alliance with competitors in the electric
vehicle market: Tesla motor’s case. Mathematical Problems in Engineering, 2016.
Jiang, H., & Lu, F. (2018). To be friends, not competitors: A story different from Tesla
driving the Chinese automobile industry. Management and Organization
Review, 14(3), 491-499.
Johnson, J. (2019). Bumper to Bumper: Will the CUSMA Rules of Origin Make America’s
Auto Industry Great Again?. CD Howe Institute Commentary, 547.
Perkins, G., & Murmann, J. P. (2018). What does the success of Tesla mean for the future
dynamics in the global automobile sector?. Management and Organization
Review, 14(3), 471-480.