Ford and GM in Russia (FDI)

IntroductionForeign Direct Investment (FDI) occurs when a company invests directly in facilities to produce and/or market a product in a foreign country. (Hill, 2004) This type of venture is growing quickly and has proven success but many decisions motivation to be made by companies before they take the risks that are associated with FDI. certain(prenominal) things such as enthronization timing and the type of investment need to be considered and many theories are associated with these decisions. In the chase sheath study, I will discuss the decisions that crossbreeding and GM pluck up recently made regarding the entrance into Russia?s race industry through FDI. wherefore are Ford and GM entering the Russian railroad railroad car market straightaway? Why did they non invest earlier, and why do they not persist over investment until the market is bigger?In 2002, Ford and GM decided to enter the car market because they matt-up the m was right to gain a foothold on the Russian car market. Even though the levels of car self-will in Russia were currently real(prenominal) low by international standards, car sales were rising by approximately 8% a year. (Hill, 2004) This trend was very inviting to companies that were looking at getting in ahead of the competition. Getting into this venture any earlier would substantiate been a very risky investment and the risk did not outweigh the potential reward.

If the trend continued it would mean very large profits for Ford and GM and postponement whitethorn have meant a missed opportunity that would most for certain enough be seized by another competitor. Why do you work out Fo! rd chose to establish a whole owned auxiliary in Russia, rather than license its deed and product engineering science to a Russian automaker like Avto VAZ?The likely suit that Ford chose to establish a wholly owned ancillary instead of just licensing its... If you emergency to get a adept essay, order it on our website: BestEssayCheap.com

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