This paper hopes to answer how increasing uncertainty is impacting International Management and how new and innovative companies like Tesla Inc conduct international expansion.
Economic activities in the 21st century, are characterized by dynamic global competition, the increasing interdependence and internationalization of economic relations and the resulting merging of world markets. With the continuous expansion of world trade and investment, with factors of production being highly mobile, and with the sources of innovation becoming increasingly global, an increasingly larger share of the global economy is reasonably accurately characterized as “open” it est as being exposed to the forces of global competition, and to the international flows of capital, technology and skilled labor.
Yet, the belief in globalization and free trade seems to be in disarray since the shocks of Brexit and Trump in 2016. In various regions of the world, a flare-up of nationalism, protectionism and trade barriers is creating a politically and economically volatile atmosphere. While 2019 and 2020 brought new obstacles - from customs tariffs to a global pandemic - this has led to a shift in framework conditions rather than an end to international competition. In addition, a lot of companies across various business sectors are entangled in extensive and expensive investment or restructuring programs brought upon by the ever-increasing pace of technological, sociological and legal developments. Still, there is uncertainty if these investments will one day pay off or turn out the be a charge in the wrong direction.
Between 1970 and 2018, FDI grew from 14.2 billion to 1.43 trillion US dollars, an increase of over 900 percent. Based on this rapid development, participation in international competition has become a matter of course - if not a necessity - for many companies, and their attention is focused on efficient conduct and value-adding administering of international activities.
This begs the question how internationally active companies with a global and decentralized value chain can fight rising uncertainty and react to constantly changing environments? How can these companies not only hold on to existing business but expand their dominance in the market against the backdrop of uncertainty? Are established strategy models such as Ghemawat's AAA model still applicable today, do they need to be revised or is there even a need for completely new approaches?
Table of Contents
1. Introduction
1.1 Need for Rethinking International Strategy
1.2 Structure, Aim and Research Method
2. Conceptual Foundations of International Strategy Development
2.1 Difficulty of Developing an International Strategy
2.2 Emergence of basic Visions and Strategies of Internationalization
2.2.1 Competition in Global Industries
2.2.2 Convergence versus Divergence according to Levitt & Kotler
2.3 Crossing Borders with the AAA-Model according to Ghemawat
3. New Requirements for Strategy Concepts against the Backdrop of increasing Uncertainty
3.1 A Shifting Playing Field: Uncertainty is challenging International Management
3.1.1 Definition and Capture Options of Uncertainty
3.1.2 Factors Influencing the Increase of Uncertainty in International Business
3.1.3 Consequences of Increased Uncertainty for International Management
3.2 Derivation of Requirements and Challenges for modern Strategy Concepts
3.2.1 Challenges and Requirements
3.2.2 Potential Approaches
4. Comparative Analysis between the AAA Model and the Internationalization Process of Tesla Inc.
4.1 Considered Aspects of Management and Business Structure
4.1.1 Strategy: How to compete
4.1.2 Presence: Where to Compete
4.1.3 Architecture: How to Organize
4.2 Discussion of the Analysis
5. Results and Recommendations
Objective and Research Scope
This bachelor thesis examines how increased global uncertainty impacts international management and assesses the extent to which traditional strategy frameworks, specifically Ghemawat’s AAA model, remain applicable in the modern, volatile business environment, using Tesla Inc. as a case study.
- The impact of rising global uncertainty on international business operations.
- Evaluation of traditional strategy frameworks (AAA-Model) in current market conditions.
- Analysis of Tesla Inc.’s internationalization strategy and its deviation from traditional models.
- Derivation of modern requirements for corporate strategy under high-uncertainty conditions.
Excerpt from the Book
1.1 Need for Rethinking International Strategy
Economic activities in the 21st century, are characterized by dynamic global competition, the increasing interdependence and internationalization of economic relations and the resulting merging of world markets. With the continuous expansion of world trade and investment, with factors of production being highly mobile, and with the sources of innovation becoming increasingly global, an increasingly larger share of the global economy is reasonably accurately characterized as “open” i.e. as being exposed to the forces of global competition, and to the international flows of capital, technology and skilled labor.1
Yet, the belief in globalization and free trade seems to be in disarray since the shocks of Brexit and Trump in 2016. In various regions of the world, a flare-up of nationalism, protectionism and trade barriers is creating a politically and economically volatile atmosphere. While 2019 and 2020 brought new obstacles - from customs tariffs to a global pandemic - this has led to a shift in framework conditions rather than an end to international competition. Disputes between the United States and its largest trade partners, particularly China caused a series of imposed tariffs and retaliations. Meanwhile, countries tightened screening of foreign corporate takeovers, advanced data localization policies, and clamped down on immigration. While witnessing strong growth in 2017, recent GDP growth rates from 2018 and 2019 are indicating that the mentioned developments have already begun to affect international trade flows and hamper global business.2
In addition, a lot of companies across various business sectors are entangled in extensive and expensive investment or restructuring programs brought upon by the ever-increasing pace of technological, sociological and legal developments. Still, there is uncertainty if these investments will one day pay off or turn out the be a charge in the wrong direction.
Summary of Chapters
1. Introduction: Outlines the rise of global uncertainty, current shifts in international trade, and the research objective of analyzing Tesla Inc. within this context.
2. Conceptual Foundations of International Strategy Development: Reviews basic strategy theories, including those of Porter, Levitt, Kotler, and the AAA model by Ghemawat.
3. New Requirements for Strategy Concepts against the Backdrop of increasing Uncertainty: Defines uncertainty in international business and discusses its drivers, consequences, and potential coping mechanisms for firms.
4. Comparative Analysis between the AAA Model and the Internationalization Process of Tesla Inc.: Applies the reviewed theoretical frameworks to Tesla’s expansion path to evaluate modern competitive approaches.
5. Results and Recommendations: Synthesizes the analysis, emphasizing the need for flexibility and adaptation in strategy to overcome environmental volatility.
Keywords
International Strategy, Global Uncertainty, Tesla Inc., AAA Model, CAGE Framework, Internationalization, Competitive Advantage, Globalization, Market Entry, Strategic Management, Supply Chain, Adaption, Aggregation, Arbitrage, Economic Volatility.
Frequently Asked Questions
What is the core focus of this bachelor thesis?
The thesis investigates how rising levels of global uncertainty influence international management and challenges the effectiveness of traditional strategy models.
Which theoretical frameworks are primarily utilized?
The study relies heavily on Pankaj Ghemawat’s AAA model (Adaption, Aggregation, Arbitrage) and the CAGE framework to analyze international strategies.
Why is Tesla Inc. chosen as the case study?
Tesla is analyzed as a successful modern entrant that has managed to establish itself despite significant industry barriers and environmental uncertainty.
What is the primary research question?
The work seeks to understand how companies can effectively deal with uncertainty and to what extent traditional strategy concepts still apply to innovative, global firms today.
What methodology does the author use?
The paper employs a comparative analysis approach, contrasting theoretical strategy models with the empirical internationalization path taken by Tesla Inc.
What are the key themes addressed in the main body?
Major themes include the definition of uncertainty, factors increasing global volatility, and specific strategic responses like cooperation, flexibility, and control.
How does Tesla’s approach to advertising differ from traditional car manufacturers?
Tesla avoids traditional, expensive advertising campaigns, relying instead on connective technology and fan-made content to lower costs and bypass complex marketing channels.
What role does the "Gigafactory" play in Tesla's strategy?
The Gigafactories are central to Tesla's "integrative" strategy, allowing the company to build local production bases in key markets like China and Germany to minimize political and supply chain risks.
- Arbeit zitieren
- Moritz Henninger (Autor:in), 2020, Rethinking International Strategy in Times of rising Uncertainty. The Internationalization of Tesla Inc., München, GRIN Verlag, https://www.grin.com/document/988308
