Icon College HND Research: Tesla's FDI Impact on Profits in Romania

This research project investigates the impact of foreign direct investment (FDI) on the profitability of Tesla in Romania. The study begins with an abstract, acknowledgement, and introduction, outlining the research aim, questions, and objectives. It provides background information on Tesla and the rationale for choosing this topic, emphasizing the significance of FDI for both Tesla and the Romanian economy. A comprehensive literature review explores the effects of FDI, supported by data and analysis, including research philosophy, approach, strategy, and various data collection and analysis techniques. The research also incorporates a Gantt chart, findings and analysis, conclusion, and recommendations. The project examines the benefits of FDI, such as market access and resource acquisition, while also addressing potential drawbacks, including risks from political changes. The study suggests strategies for Tesla to overcome these challenges, like providing employment opportunities. The research concludes with a reflection, references, and appendices, including a questionnaire and research proposal form.

Research Project

Table of Contents
TITLE:.............................................................................................................................................1
ABSTRACT ....................................................................................................................................1
ACKNOWLEDGEMENT...............................................................................................................1
INTRODUCTION...........................................................................................................................1
Research Aim: .......................................................................................................................2
Research Questions: ..............................................................................................................2
Research objectives:...............................................................................................................2
Background Of Company ......................................................................................................2
Rationale of the research .......................................................................................................2
Significance of the research ...................................................................................................3
Literature review .............................................................................................................................3
Methodology ...................................................................................................................................6
Introduction ...........................................................................................................................6
Research philosophy...............................................................................................................6
Research Approach: ...............................................................................................................7
Research Strategy...................................................................................................................7
Research Choice: ...................................................................................................................7
Techniques and procedures of data collection: .....................................................................8
Research sampling: ................................................................................................................9
Data analysis techniques: ......................................................................................................9
Access Negotiations ..............................................................................................................9
Research Limitation: .............................................................................................................9
Ethical issue: ........................................................................................................................10
Cost:......................................................................................................................................10
Gantt Chart...........................................................................................................................11
Findings and Analysis ...................................................................................................................13
CONCLUSION .............................................................................................................................23
RECOMMENDATION ................................................................................................................24
REFELECTION ............................................................................................................................24

REFERENCES .............................................................................................................................26
Appendix .......................................................................................................................................28
Questionnaire........................................................................................................................28
Research Proposal Form.......................................................................................................29
.......................................................................................................................................................39

TITLE:
“To investigate the impact of foreign direct investment on profits in Romania. A study on
Tesla.
ABSTRACT
Foreign direct investment is essential type of entry mode strategies used by an enterprise
to enter into international market successfully. It introduces as a direct ownership of facilities in
the specific nation. It basically involves the transfer of different resources such as technology,
personnel and capital. It may be created via the acquisition of a present entity or the
establishment of a unique organisation. Literature review have been done with the view point of
different authors and writers regarding the impact of FDI. Data about the topic have been done
with the support of different methods of research such as research philosophy, approach, design,
Gantt Chart, data collection and analysis techniques etc. Along with this, research findings and
analysis have been completed through questionnaire. It is a most essential method helped a
researcher to accumulate reliable as well as valid information about the topic. Conclusion and
recommendation have been completed via addressing all aims and objectives.
ACKNOWLEDGEMENT
I would like to thank my friends, they help me to carry out this research. I must say
special thanks to my friends and relatives who were very helpful of me via this time when I was
doing the research. I am also thankful to my tutor who given me with direction and patience so
that I could have executed the research successfully.
INTRODUCTION
Foreign direct investment refers as an useful form of investment which is made by an
organisation on a person in one nation into business interests located in another nation (Alfaro,
2015). Mainly it takes place when a capitalist set up foreign business operations as well as
acquires business assets, covering setting ownership and monitoring interest in an international
organisation. For this project, Tesla is given American automotive organisation based in Palo,
Atlo, California. It was founded in year 2003 by Martin Eberhard, Marc Tarpenning, Elon Musk,
J. B. Straubel, Ian Wright. Company mainly specialise in in manufacturing electric car via its
solar panel manufacturing, solar city subsidiary. Apart from this, Tesla decide to expand their
business activities in Romania market through foreign direct investment.
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Research Aim:
Main intent of this project is “To investigate the impact of foreign direct investment on
profits in Romania. A study on Tesla.
Research Questions:
 What is the impact of Foreign Direct Investment on profits for Tesla in Romania?
 What are the ways through which Tesla can overcome the drawbacks of foreign direct
investment ?
Research objectives:
 To analysis the impact of Foreign Direct Investment on profits for Tesla in Romania?
 To identify the ways through which Tesla can overcome the drawbacks of foreign direct
investment ?
Background Of Company
For this Tesla is chosen multinational organisation. They wants to expand their business
activities in Romania. It is a market with excellent or fabulous potential, favourable business
climate and a strategic location. Its economy is among the European Union's quickest growing;
approximately 4.8% growth in year 2016 and around 6.9% growth in 2017. This growth is
mainly based on primarily consumption which is driven by the legal authority of Romania's. It is
related with Romania's tax fiscal policy, including tax cuts, pension increase, minimum wage
maximise and public sector (Boghean and State, 2015). Therefore, it is a best market for Tesla to
expand their business activities and accomplish competitive benefits easily. Business activities of
Tesla is mainly related with designing of goods and services, location strategy, job design and
human resources, inventory management, maintenance of financial records etc. Thus, all these
are major activities for an enterprise which will help them in its development and success at
global level (Ciocoiu and et. al., 2013).
Rationale of the research
Main rationale behind choosing this topic is to to investigate the impact of foreign direct
investment on profits of Tesla in Romania It is a multinational corporation which will help in
growth of economy of Romania by providing job opportunities to citizen. Along with this,
globalisation is a large topic which will help a researcher to enhnace their literature review skill,
data analyses and data interpretation skill (Dachs, Stehrer and Zahradnik, 2014). These kind of
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qualities will help a researcher to conduct each activities of research systematically and
successful manner.
Significance of the research
There are different advantage of foreign direct investment such as it provides local
economics benefits in multiple locations, foreign income can maximise, it improves humans
resources etc. All these benefits help an organisation by increasing its profit and market share
within given time duration (Bradshaw, 2017). Thus, with the the help of research, a researcher
can easily identify significance of Foreign direct investment and its benefits to TESLA.
Literature review
A literature review is a form of comprehensive summary of past topic. It includes, books,
scholarly articles, and many other useful sources relevant to the research or topic. Main purpose
of literature review is to provide a completed and accurate accounting of the actual state of
understanding for whichever investigation question is being addressed. Thus, it is an essential
and important aspects of scholarship because without it, scholar cannot judge or evaluate
whether the author is well-sophisticated or whether the activity that is being shown is original
and novel (Buettner, Overesch and Wamser, 2018). It is a more useful section for completing
research project in systematic manner. With the help of this section, an investigator can easily
critically analyse about the impact of foreign direct investment on profitability of business
activities in Romania market.
The impact of Foreign Direct Investment on profits for Tesla in Romania
As per the view point of JAMES CHEN, 2019, FDI introduces as an effective kind of
investment which is mainly made by an enterprise as well as individual in individual nation into
business interests laced in another nations. It mainly takes place when a capitalist or investor
establishes confirmed international business operations. FDI is critical for emerging and
developing market nations. Their organisations requires the multinationals' expertise and funding
to enlarge their global sales. Their nations require private finance in infrastructure, water and
energy to maximise wages and jobs. It offers different benefits to both the foreign host nation
such as Romania and the investor also. In a growing globalised economy, Foreign direct
investment by transnational organisation is introduced a main factor in the development of
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economy of less developed economies, covering the economics of eastern Europe and central
Europe.
Foreign direct investment in Romania measure to USD around 5.1 billion in year 2017,
up by approximately 3% compared to the similar time duration of 2016, according to information
by the Romanian National Bank and UNCTAD.
Illustration 1: Doing Business, 2019
Source: Doing Business, 2019
From the above given graph, it has been concluded importance of Foreign direct
investment for profitability of Tesla. As in Romania index of transaction transparency is high as
compare to other countries such as United State, Germany, Eastern Europe and Central Asia. It is
will help a Tesla to enhance their profitability and market share within given time duration.
Along with this, index of manager's responsibility is moderate in Romania market which will
also support an enterprise to retain employees for long time (Foreign direct investment (FDI) in
Romania, 2016). As it will be more effective and important for success and growth of company
within given time duration. Index of shareholders power is also moderate in Romania country
which will also help a stakeholders within Tesla to take legal action and gain competitive
benefits easily. At last, the investor protection is around 6.0 % which will highly impact on
profitability and market share of Tesla.
FDI in Romania has positive impact on profitability of Tesla. As it will help them by
providing different benefits such as market diversification, tax incentives, preferential tariffs,
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lower labour costs and subsidies. There are also some advantages of FDI for Romina economy
including evolution of human capital, maximise in employment, economic stimulation and
access to administration skills, expertise as well as technology. These are consider main
advantages which will directly support a company to gain competitive benefits and increase their
profit ration also. Along with this, FDI has positive impact on profitability of Tesla. Some other
benefits of foreign direct investment will be defined as under:
Access to market: According to the Shawn Grimsley, (2019), Foreign direct investment
can be effective and essential way for Tesla to enter into Romania. With the help of FDI
company can easily access to their domestic market which will also support an enterprise to
accomplish long term goals and competitive benefits within given time duration.
Access to resources: Foreign direct investment also consider as an effective and useful
way for an organisation to enlarge their business operations or functions in successfully manner.
Therefore, with the help of FDI, Tesla can easily acquires natural resources which will help them
by maximising its profitability ratio.
Reduce cost of production: FDI is a means for Tesla to overcome their production cost if
the labour market is not expansive and regulations or rules are less restrictive in the Romania.
The ways through which Tesla can overcome the drawbacks of foreign direct investment
According to the Crystal Ayres, 2019, there are different drawbacks of foreign direct
investment on profitability of Tesla within Romania. Some risk of FDI and ways to overcome
that risk have been determined as under:
FDI stops domestic investment from happening: It is a major drawbacks of foreign
direct investment which will unfavourably effect on business success and growth of Tesla in
Romania market. Minimum ten percent investment into an international nations is amount of
money that isn't going into home companies. Along with this money comes backs into general
people with foreign direct investment. Therefore, it is biggest drawbacks or risks of FDI which
will impact on Tesla in negative manner. In order to overcome that issue, large number of
employment opportunity is a best option.
Risks from political chance: It is also consider biggest issue of FDI in Romania which
will effect on business activities and functions of Tesla in negative manner. Political issues in
Romania can instantly change in which FDI is more risky for automotive industry. Political
changes in specific nations is highly and negatively impact on profitability of an organisation. As
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there hidden cost, currency exchange rate due to changes in the government rules and regulation.
Political changes or variation can also lead to expropriation. As in which government will have
monitor over the property and assets of an organisation.
Therefore, above mentioned risk of FDI is highly and negatively influence on
profitability of Tesla. There are some ways suggested to the Tesla about how to overcome the
impact of (FDI stops domestic investment from happening and Risks from political chance) over
business success.
Provide employment opportunities to community: This refers as an useful and effective
way which will help an organisation to overcome impact related with FDI stops domestic
investment from happening. Increment in employment opportunities help in development of
country's economy and it will also assist them by increasing living standard of people within
Romania.
Proper study about government's rules and regulation: It is also consider as an effective
and essential way for Tesla to overcome Risks from political chance and gain competitive
advantages within given time duration. For this, Tesla should do proper study about rules and
regulations governed by government. Thus, it is
Methodology
Introduction
Research methodology is useful process followed by investigator to accumulate reinvent
and appropriate data about the topic. For this section, research onion is consider one of the best
framework which will support a researcher to perform each activities of project in systematic
manner (Costaiche and Niculae, 2016). This framework have two layers, including inner and
outer. Both layers have different methods related to the primary and secondary which will help a
researcher to collect information regarding the role of foreign direct investment on profitability
of an organisation in Romania. There are different approaches and methods to secondary and
primary research, some are determine as under:
Research philosophy
It is consider as a first part of research onion framework used by researcher in evaluating
information effectively which will further outputs in arriving appropriate conclusion for the
study. There are essentially two form of research philosophy such as positivism and
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interpretivisim (Dyreng and et. al., 2015). For this project, interpretivisim philosophy will be
used because it is more suitable and help in arriving valid conclusion. On the other hand, there is
interpretivisim philosophy which is not accurate and suitable for executing each activities of
research in systematically.
Justification: Main reason about choosing interpretivisim philosophy as it will a
researcher to gather reliable information about the topic. This philosophy also essential and
useful by an investigator by driving valid conclusion towards the research.
Research Approach:
Research approach is another section of research project which give an accurate direction
over which a research should be performed in order to accomplish desired output. Research
approach basically divided into two section i.e. deductive and inductive (Estrin and Uvalic,
2016). In this report, inductive approach will be applied because it help a researcher in collecting
data from useful sources that support in valid conclusion and recommendation. On the other side,
deductive approach is not used for this study, because in which learner do not take part in the
creation of valid conclusion or generalization.
Justification: Inductive approach will be used for this research project as it will help
them to accumulate reliable as well as accurate information regarding the study. There are some
advantages of inductive approach such as gamut of probabilities, fuels further exploration and so
on.
Research Strategy
Various kind of research strategy are available such as observation, case study, survey,
questionnaire etc. These are consider as a main type of strategies which will help an investigator
to collect data about the topic (Gui-Diby and Renard, 2015). For this report, case study will be
used by researcher as it assist them by providing in-depth and detail information about the topic.
Justification: Case studies are more useful and flexible than many other forms of
investigation and allow the investigator to explore and discover as the research develops. It
emphasize in-depth and accurate content. An investigator is capable to create deep and apply a
different varieties of data sources to acquire a complete picture.
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Research Choice:
There are fundamentally two type of research which is qualitative and quantitative. In
case of qualitative research, there is more focus towards collecting data in theoretical way where
it handle with human discernment and sentiment. On the other hand, under qualitative method, it
mainly emphasis over collecting the data in order to create information or data more explanatory
and clear to reader and create better understanding among them with the support of theoretical
aspects (Islam, 2015).
Justification: Therefore, both type of research are effective but as per the study,
qualitative type of investigation will be selected because it help in collecting quality and accurate
data about the topic. Quantitative research is not useful according to the study, because it require
information in form of numbers and facts which is difficult for doing research in systematic
manner.
Research design: This is identify as an essential section of research methodology which
emphasis towards analysing the research design. All activity of research project is must be
depend of research design which will support in directing the tasks executed within the research
in right way (Janský and Palanský, 2018). This section of research is mainly classified into three
parts such as experimental, descriptive and exploratory. These kind of research design is more
important but as per the study, descriptive design will be used because it assist in presenting the
data in detailed and accurate manner.
Justification: Descriptive design used for this project because it is effective for a
researcher to analyse non-quantified issues and topics. In this researcher have possibility to
observe the concept in an unchanged natural environment and completely natural.
Techniques and procedures of data collection:
There are fundamentally two kinds of data sources used by researcher to gather primary
and secondary data regarding the study. For collecting primary data, questionnaire will be used
because it help a researcher to collect reliable and valid information about the impact of foreign
direct investment (Jude and Silaghi, 2016). On the other side, for gathering secondary data,
books, journals, magazines, publication research and many other articles relevant to the topic
will be applied. Thus, all these type of data sources are essential for an investigator to perform
each activities of research in more reliable and effective manner.
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There are different kind of data collection techniques such as observation, interview,
questionnaire, modelling, case study etc. All these techniques are important but according to the
topic, questionnaire will be used by researcher. As it will help an investigator to gather reliable
and accurate information about the topic. In order to present data about the topic, there are
certain type of presentation techniques such as bar chart, pie chart, tables, line chart and many
other graphs will be applied. All these techniques will support a researcher to easily present
information or data to the respondents.
Research sampling:
It is a best part of research methodology where there is an accurate description about the
number of population chosen to collect data regarding the specific topic. In this research, there
are mainly two types of sampling methods via which sample size is chosen which present entire
population, these are non-probabilistic and probabilistic (Kragulj and Parezanin, 2015). For this
research project, probabilistic sampling will be applied because it assist an investigator in
ignoring any sort of bias task. With the help of this method, 60 employees as a part of total
population will be selected for research. On the other side, non-probabilistic method of sampling
is not used for this project because it is not easy to make valid inference regarding the whole
population because the sample chosen is not representative. resent information and complete
research in more effective and systematic manner.
Data analysis techniques:
In order to present valid conclusion and findings of research, it is most important to
analyse as well as interpret the data gathered. In order to do primary and secondary data
collection technique has been applied. For analysing the information collected by investigator,
thematic analysis will be applied because it assist a researcher in presenting summary of the
concept which has been described throughout the analysis (Kurečić, Luburić and Šimović, 2015).
Thus, it is a best techniques of data analysis which will support in giving an accurate knowledge
to the reader about the subject which is elaborated below in specific theme.
Access Negotiations
` It is also consider as a best and useful method for performing primary and secondary
research systematically. For doing primary research, researcher have access for questionnaire
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