1

Chapter # 02 Search protocol

2.1 Introduction

Search protocol is an important aspect in the research study which helps in dictating a direction

for the research. In other words, it helps to dictate the research subject in a precise way so that her

the acquired results helps to convey a meaning. Search protocol greatly assists in finding the

appropriate data of the research in order to acquire a good amount of information on the current

subject in consideration. This research study is based upon the exploration on assessing the role of

Modularisation in Tesla Motors Inc. The literature review gathered is identified by the help of the

research subject. The books, articles, newspapers, online forums and research papers based upon

the subject of modularisation in the automobile industry are extracted out in order to attain the

required literature.

The literature on modularisation is very limited as the subject is relatively new, therefore, there is

a lot of research gaps found in the concept of modularisation. Since, the concept of modularisation

is not much practiced in the automobile industry, therefore, Tesla Motors is the chosen company

in order to role of the modularisation process in the company. Tesla Motors will be analysed by

regarding the company to serve the role of Modulators rather than sticking upon the strategy of

Integrators. Hence, the search protocol will correspond to the research respondents, who will help

in contributing knowledge on how the process of modularisation can be installed and implemented

within the company.

The search protocol will cover the aspects of identification and analysis of clear and definite

literature review which is suitable for carrying the objectives of the research study.
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2.2 General Information

Protocol Title:

Protocol Date:

Protocol Venue:

Name of the Researcher:

2.3 Rationale of Research

The rationale behind this research study is to cover the research gaps on the research topic. The

strategy has not been implied in automobile industry because of the unavailability of skills and

expertise in implementation of modularisation process.

2.4 Names of Research Articles

The research articles are searched on account of the availability of information on the proposed

topic of the research. The names are acquired by internet, business articles and research journal

sources. The names of the research articles are as follows:

2.5 Information of Research Respondents

The names and information of the research respondents is kept confidential. This is due to the

exposure of information, they have provided in regard of the companys automobile processes.

The processes which are hidden are revealed in the research study in order to provide meaningful

knowledge to the research audience. Hence, the identity is kept hidden from the audience.
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2.6 Study Goals and Objectives

The study goals is to acquire proper and suitable literature in order to acquire correct information.

This is done to ensure correct data findings for the research which is then concluded with

appropriate recommendations.
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Chapter # 03 Literature review and synthesis

3.1 Introduction

The literature reviews comprises of methodological and theoretical contributions in the context of

the research study. The sources assessed in search of collecting the literature reviews are only from

secondary sources where there is no new information to the experimental work. Literature review

is written in order to develop an understanding and explore researches and studies in context of

the research topic.

As the research topic revolves around the research upon the Role of Modularisation in Tesla

Motors Inc., therefore, chapter will be based on the literature review of Modularisation in general.

The literature review will further cover aspects like significance of modularisation, techniques

based on modularisation, research paradigms, and theories based on modularisation.

3.2 Importance of Modularisation

In literature, the term Modularisation is not a new terminology. Even the production industry

knows the importance and the critical significance of modularisation (Langlois, 2002). It has been

over 60 years that the modularisation has been practiced in the world of automobile industry.

Modularisation has been known widely in the automobile and aviation industry where the strategy

has created wonders in cost effectiveness and production utilisation tool. In order to locate the

theories or the case studies based on modularisation, it becomes a complete different task as it is

very difficult (Baldwin and Clark, 2000). Therefore, the process can be described vaguely in the

procedures and processes. There are few researchers who have provided an effective strategy or

work techniques that best describes the use of modularisation (Argyres and Bigelow, 2010;

Pandremenos, Paralikas, Salonitis et al, 2009).

 5

By the help of these few researchers, formularisation and amalgamation of techniques are used in

the automobile processes in regard of the field of modularisation. The main reason is the process

that is accurately suitable for the modularisation process is hard to be determined or formulated

(Baldwin and Clark, 2006).

Some of the researchers contend upon the statement that literature is found on the modularisation

evolution. But, the discussion upon the modularisation contradiction is limited and scarce (Larson,

Casey and Howard, 2005; Salerno and Dias, 1999). Even the field of modularisation has been

observed and assessed for a while, still there are some existing gaps in the researches and literatures

based on the approach of modularisation. Similarly, the identification of the team goals and

objectives are critical in obtaining a successful modularisation venture (Xue-Jie, 2005).

In one of the research conducted by Fourcade and Midler (2005), the modularisation in the

automobile industry is connected with the organisational perspective with the modularising act

and referred to the decoupling in the design of the final product that is to be inherited in the firm.

It was also briefly defined by the researcher that the roles embossed within the project of

modularisation refers to the technology engineers and architects (Fourcade and Midler, 2005).

However, the concerned team fails to specify an analysis which is thoroughly defined on the roles

connected with such project. This is because of the strategical focus in the research paper

(Fourcade and Midler, 2005).

When modularisation is implemented within a project, the situation defined for the required

product is very specific in nature and it is important to know that every project concerned with the

modularisation technique is different each time (Park, Lee, Bang et al, 2005). Therefore, the
 6

structure and the roles of the modularisation project is very critical in order that it permits the

influence from all functions in an organisation (Salerno, 2001). The adaption and approach of

every function can be expressed to obtain the extent of modularisations synergy effects at

marginal costs in terms of resources (Langlois, 1999). In a case where a modularisation process is

run without the total dedication and involvement in each function, the back-log will develop before

the modularisation project is considered closed. This ultimately costs more resources for the

organisation that originate the project. In other words, the project is known to be modular

management (Takeishi and Fujimoto, 2003).

3.3 Existence of Modularisation in Automobile Industry

In the automobile industry, modularisation is still considered as a process which is in error and

trial stage. The auto industry has started to address these issues where it shows the history of

several years. The purposes and contexts of modularisation differs among different regions and

firms (Fourcade and Midler, 2004). Therefore, it is yet quite uncertain and unpredictable in the

current environment in the context of the evolution and impact of modularisation (Fujimoto, 2014).

Hence, the arguments which is created holds no more significance except the speculation. Still, it

can be said that the modularisation strategy in the automobile industry is safe and the ingoing

procedures that concerns modularisation provide several interesting cases to assess the dynamics

of the adjoining engineering and architectural modifications (Hsuan, 1999; Lung, Salerno,

Zilbovicius et al, 1999; Ulrich, 1994).

The aspect that lie in the middle of the dynamics is the linkage among the inter-firm system,

architecture of the product and production system (Takeishi and Fujimoto, 2001). The

modification in the production system hierarchies and the inter-firm systems produces tensions in

their interactions with the architecture of the product. Thus, it encourages the redefining of the
 7

architecture of the product. It was pointed out by Baldwin and Clark (2002) that the problems in

the modularisation comprises of the modularity in production, modularity in use, and modularity

in design. The main focus in the research was based on the aspect of modularity in design.

In contract to this research, another researcher Takeishi and Fujimoto (2001) contended that each

of the defined three aspects has their own ideal architecture and they are balanced well in regard

of the relationships between them, which should be controlled in the modularisation process. This

tends to suggest that the three modularisation aspects ae inter related with each other and all of

them has an adjacent co-ordination which is very critical. The researchers also pointed that it is

significant that the co-ordination between organisational architecture and architecture of the

product is to be secured as well (Takeishi and Fujimoto; 2001). The organisational architecture is

inclusive of the inter-firm and intra firm organisation. The argument was also equipped with a

suggestion that the inter-firm system has a tendency to lead to modifications in the architecture of

the product. It is well recognised that the modularisation process in the architecture of product

sometimes alter the structure of the labour division in the automobile industry (Genba, Ogawa,

and Kodama, 2005). This is applicable on the vertical industry automobile structure towards the

horizontal industry automobile structure (Baldwin and Clark, 2003).

In other research paper, it was suggested that the relation among the inter-firm system and the

architecture of the product is two way which is responsible in former influencing the latter and the

latter lays an impact upon the former (Wang and Huang, 2010). It was argued upon the analytical

framework in context of the hierarchies in the system product called the product function and the

product structure which corresponds to those in the inter-firma system and production system

(Sako and Murray, 1999). In a complex system, the hierarchal structure is produces as a technique

to rationalise the labour division. Each of the production, inter-firm systems and product has their
 8

own logic in the labour division. The inter-firm systems and the production system hierarchies

modifies in their own regard (Lung, 2004). The example can be taken from the development of

labours satisfaction, the utilisation of the salary gap among different firms, the re-allocation of

risks, and investment liability etc. (Yamaguchi, 2016). Such modifications in the inter-firm

systems and the production systems might demand modification in the architecture of the product.

The design activities conditions is not only the factor for modification in the architecture of the

product (Fujimoto and Takeishi, 2001). For instance, there are European automobile

manufacturers which are engaged in the exploration of new architectures across the production

systems, product systems, and inter-firms systems. The main motive of these automakers is to

search for a higher lucrative and cost effective business model (Milkovic, Ivkovic, and Konecki,

2016).

3.4 Theories Based on Modularisation

There are two case studies which were presented by Mikkola and Skjtt-Larsen (2004) that

presented the idea of modularising at a concise and scientific mathematical pace. It describes the

view of expanding the theoretical modularisation. The researchers found many complications in

in the product portfolio of a huge company in any certain industry. Mikkola and Skjtt-Larsen said

that the product portfolio can be calculated by any meaning with an absolute certainty which will

be followed by the firms strategy of the product recommendation. However, with a mathematical

function to put the results in the right perspective could provide the validity and guidance tested

to deliver accordingly (Mikkola and Skjtt-Larsen, 2004).

It is not taken into account that Mikkola and Skjtt-Larsen's approach can "cope with modularity",

but a set a tool propositional to dialog with firms management to open or as an extension of the
 9

validity of the approach reports the understanding of modularisation management ((Mikkola and

Skjtt-Larsen, 2004).

In modularisation, there is a derivative used which serves as mass customisation into which a

customer interaction product is customised, precisely for each customer. This tool is extremely

influential to meet specific customer requirements, where big disparities in the product requires a

lot of customisation of the firm (McDermott, Mudambi, and Parente, 2013).

In another theory based on modularisation, a researcher named Prez, Gonzlez and Milans et al,

(2009) managed to explain the diverse roles in a project of configuration very thoroughly and

explored how these roles are significant enough in the modularisation. Therefore, Prez, Gonzlez

and Milans et al explained nine role that helped in focusing upon the development of a

configuration system which was way more than modularising. The researchers also pointed out

that there are many aspects of the configuration systems which considered transferable (Prez,

Gonzlez and Milans et al, 2009).

The researcher stresses upon how important a team approach is, by assigning the task of

configuring a system to meet as many needs as possible instead of focusing upon one approach

(MacDuffie, 2006). This concept is elaborated in the report where diverse approaches create effects

of synergy that allow a project to re-design the modular part or a defined system to meet the

requirements and focus on the key elements of various functional approaches. In the approach of

mass customisation, with a process of system configuration, where the processes of specifications

are highly important in terms of system design with the logical connectivity and constraints

(Vickery, Koufteros, Drge et al, 2015). This is much similar approach which is applied in the

process of modularisation, knowing the fact that the severity of the specification is most essential

in a configuration system.
 10

The process of decoupling becomes easier by determination of the specifications and defining the

interface points and their relation (Nunes and Bennett, 2008). Hence, it enhances the basis for the

development of modular products to be improved. As the field of modularisation is new, there are

still many areas which can be linked with the modularisation process. This can be done in order to

enhance the modularisation process in automobile industry (Furlan, Cabigiosu and Camuffo, 2014;

Ikeda and Nakagawa, 2001).

3.5 Strategies and Techniques used in Modularisation

The introduction of a modular strategy is complex. The costs will rise initially as the accountability

for investments is from car manufacturers to the car suppliers. The actual savings will only be

realised in the next generation of the vehicle (Furlan, Cabigiosu, and Camuffo, 2014). If one

consider a new policy of module or a relative strategy for taking into account then the firms should

consider the options to define the needs of the current and future vehicle venture, identify

commonalities between vehicles and define the clusters of module and their specifications, specify

a basic module along with variants and conduct cost analysis and finally to develop a fact sheet

and fact book and development of the hierarchy module (Gaillard, 2006).

In the practical auto industry, there are very few manufacturers known as OEM (Original

Equipment Manufacturers) which are using strict modularisation strategies (like Nissan and

Toyota). They have led to a considerable competitive advantage and jumping to sales growth from

one record of sales to the next (Fogliatto, Da Silveira, and Borenstein, 2012).

The approach requires knowledge in regard of the techniques and strategies of modularisation

which is used in the specified situation and the origination and configuration of the modularisation.

In current world, there are people who are busy in the exploration of the environmental friendly
 11

manufacturing processes, thus, modularisation strategy acts very significantly in this scenario and

is considered an effective tool in the production strategy where it is acting cost saving and user

efficient (Yamaguchi, 2016).

It is possible that the modularisation strategy cannot identify the actual challenges facing the

unnecessary product development strategy in wort case condition. The literature based on

modularisation strategy is unable to explain the diverse participation and its relative importance

which can break or make the conclusion of modularisation (Guerzoni, 2014). In such conditions,

it is recommended that, rather making thing rights, it is much better to do right things first. This

means that understanding the changes in the industry in business cases can lead to outcomes which

can be different. However, note the difference in participation in the modularisation project from

a certain industry to another, may end up as an important point (Luccarelli, Matt and Spena, 2015).

A modular strategy is defined as a process that takes advantage of the modular architecture of

products. Modular product is a product whose nature is complex and the individual elements are

made independently and yet work together as a unified whole (Hsuan, 1999). This type of product

was quickly adopted in the auto industry, in which the modules of the vehicles can be considered

like internal combustion engine, vehicle operating systems and car computers (Fujimoto, 2014).

By means of pursuing a modular approach, International Business Machines got the chance to

acquire the lead in manufacturing and designing the System 360 (Argyres and Bigelow, 2010).

However, the distribution of the revenues of a modular approach or strategy is motivated by the

specific characteristics of the industry, as the contrast among automobiles and computers portray

in the following diagram:

 12

Modularisation Areas Source (Fujimoto, 2014)

However, a widespread method seems to have been modularised. The MFD (Modular Function

Deployment) tool by Xue-Jie (2005) is frequently referred to and utilised as a stepwise process

upon the investigation as to which part of the architecture should be standardised and modularised.

In terms of participation and implementation of the Modular Function Deployment, portrayals of

approach and roles are reduced to clarify that the employees have a thorough knowledge of the

product. In opinion, it is not considered as an open modularisation (Xue-Jie, 2005). If the

respondents of the Modular Function Deployment, are utilised as a companys modularisation

strategy basis, belonging to the same persuasion or department of how the product can perform.

The project of modularisation project might not include procurement approaches that may have

been able to reduce the standardisation costs. Similarly, it is not inclusive of the marketing which

had been able to assess the future trends of the customer, or production, which could be able to

utilise prevailing knowledge on production in the process of implementation (Xue-Jie, 2005).

 13

3.5.1 Modular strategy and competitive advantage

The Original Equipment Manufacturers (OEM) in terms of strategy has an option to become

modular or turning to the integrated approach. In integration, the people which has an ability to

retain control of the complete production processes and design processes are the integrators (Park,

Lee, Bang et al, 2005). They continue to carry out a wide range of funds in both capacities. Strict

control over the design process provides an advantage to the integrator to retain the technology

leadership. It will be difficult to retain when the technologies are controlled and standardised by

dominant vendor modules. An integrator will also monitor the entire production process and

therefore has a mechanism to control the complexity and quality (Genba, Ogawa, and Kodama,

2005; Lung, 2004).

The strategy problems that are usually encountered by the OEMs is the vehicle comes across a

wider technological ranges to closely research and development, technical problems to integrate

diversity, expensive investments in new plants with regard to production items (Yamaguchi, 2016).

One way to solve these issues is to keep the technical control of design and research and

development. Another way is to switch to modular production processes which are higher in

technological aspects with great dependency on suppliers (Milkovic, Ivkovic and Konecki, 2016).

For example, Mercedes best suits in solving such issues and thus acts as a perfect model (Vickery,

Koufteros, Drge et al, 2015). It is responsible in conducting important research and internal

development, while changing the complexity of the production of large suppliers that produce

modules and make funding which are adjacent to closing assembly plants. At the other end, the

modulators is another option. They will change the complexity of the production suppliers and

follow a way to the modular design which facilitates the process of modularisation and production.
 14

Modulators will increasingly depend on suppliers to offer production experience, technical

expertise and design (Furlan, Cabigiosu and Camuffo, 2014).

Modularising strategy for the OEMs has a risk to lose technical control and a threat of deflation of

the value added source. This is because technical leadership shifts towards suppliers. Retained by

the shadow engineering manufacturer in society reflects this fear in the OEMs (Nunes and Bennett,

2008). On the other hand, the modular value can be maintained through branding, customer

service, the style of innovative products and product concepts in general (for instance; the smart

car). Original Equipment Manufacturers can also maintain added value by means of global

presence, smoothed by reduction in investment that allows outsourcing the support. In reality, the

modulators can be chiefly involved in accepting modules such as cost reduction or asset

minimisation strategy (Gaillard, 2006).

3.6 Findings

Car manufacturers all over the world have shared the manufactured cars in many areas to facilitate

the development process and manage production. Since some automotive manufacturers have

radically re-designed the hierarchies in their process of developing and producing modularisation,

others have also started to explore new relational hierarchies (Baldwin and Clark, 2003).

It is observed that the modularisation process in the automobile industry is mainly adopted by

individual business models. Also, Western car manufacturers use individual modularisation

modules for certain models. There are no cases to adopt the same modules through diverse plants

or models. Similar to the sub-groups and rationalisation of the design applied in the Japanese

automotive industry. In this respect, the process of modularisation in the automotive industry is

fundamentally dissimilar from the open modularisation in the components of PCs, stereo systems
 15

and bicycles. If a car manufacturer outsourced design tasks in huge units to a specific supplier, the

supplier could allow to continue the exchange of components and standardisation to a particular

extent. This is due to the free hand given to supplier (Pandremenos, Paralikas, Salonitis et al 2009).

There is a mutual existence in the certain patterns of modularisation process in the international

automobile industry based on different strategies, capabilities, business environments, and paths

towards modularisation. In addition, a scenario for several modularisation models for diverse

product lines and market segments exists. Other than that a certain pattern might command

significant competitive direction, provided that the complete auto industry might be transformed

into the model of modularisation (Langlois, 2002).

Modularisation in future depends upon the pattern which would permit the auto manufacturers tp

produce and design cars having maximum value for the customers. It is also important to look for

innovation in medium and long-term technology in future. The need which exists urgently is to

protect the environment which has replaced the competition of a new energy source (like fuel cell

or hybrid engines) to accelerate conventional combustion internal engines (Baldwin and Clark,

2006; Langlois, 2002).

With the rapid development of communication and information technology, the development of

Intelligent Transportation System (ITS) has also increased. The importance of IT (Information

Technology) is growing in vehicles that has made the software role more significant. Therefore, it

has the tendency to support the modularisation kind by a separation in the software and hardware

of the automobile components. When these new technologies are implemented practically, the cars

architecture will be completely re-designed and these modifications will unavoidably affect inter-

firm and production systems. It is expected that in such cases of new architectures (for architecture

of the product, inter-firm systems and production systems) in the automotive industry will be
 16

produced by dynamic relations between the trials, modularisation and modern technological

innovations (Larson, Casey, and Howard, 2005).

3.7 Philosophical paradigms

Philosophical paradigms explains a perspective about the research study which is held by the

researchers community. The research paradigm is based on a set of shared concepts, values,

practices and assumptions. The paradigms are concerned with the disciplinary practices or

organisation of framework and holds the identification of the methods, practices and characteristics

which create certain expectations about the research conduct and nature. The research paradigm is

applied to the concept of philosophy when it is appropriate in proposing wide engagement to the

cause of the research problem.

In the context of the research study, the research paradigm is based upon the choices which are the

reflection of the views of the researcher. Therefore, it is based upon epistemological and

methodological assumptions. The belief that certain knowledge of modularisation is created refers

to the epistemology while the methodology is based on the explanation of modularisation

practices. There are two types of paradigms i.e. qualitative and quantitative. This particular

research study is based upon qualitative philosophical paradigms.

3.7.1 Worldview of Researcher

As this research is based upon the methodological assumptions, therefore, the inductive processes

will be followed on account of qualitative research. The inductive process is a process when

empirical observations are used to guide the modular theory development on inferring the general

principles of modularisation from the certain observations of the research.

 17

3.7.2 Experience and Training

The criterion of experience and training refers to the literary writing and library skills as the

research study is based on qualitative analysis.

3.7.3 Psychological Attributes

The psychological attributes refers to the extent of comfortability of the research with respect to

the guidelines and rules of carrying out the research study. This research is carried out more

comfortably as there is absence of the rules. The rules are absent due to the qualitative analysis.

There is high tolerance and longer durations in conducting the research study.

3.7.4 Nature of Research Problem

This particular research is an exploratory research where the proven facts on the research study are

scarce.

3.7.5 Research Audience

The audience of the research study are supportive and accustomed of the philosophical paradigm.

This is because, the research is conducted upon a topic where literature is limited and resources on

modularisation are limited.

3.7.6 The Social and Economic Development Paradigm

The social paradigm of this research is that the research is helpful in contributing factors which

are socially important. Social development is desirable in order to maintain a balance in the society

while the economic development is needed as it is responsible for bringing prosperity to the

countries and their nationals. Still there is an unevenness between the social and economic

paradigms.
 18

3.8 Conclusion

The third chapter is the literature review which is based on explaining the significance of

modularisation. The literature review clarified the fact that the indulgence of modularisation in the

automobile industry helps in creating a competitive edge. The literature review has highlighted the

research works of certain scholars who have discussed that how modularisation helps in improving

the products quality. It has also described an in depth analysis on the modularisation strategy,

techniques and relevant theories upon the research study. Finally, the research paradigms are

explained in context with the research examination.

 19

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