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 apace and has proven success but many decisions hire to be made by companies before they take the risks that are associated with FDI. certain(prenominal) things such(prenominal) as enthronization timing and the type of investment need to be considered and many theories are associated with these decisions. In the chase typeface study, I will discuss the decisions that crossbreeding and GM plunge up recently made regarding the entrance into Russia?s go on industry through FDI. wherefore are Ford and GM entering the Russian railroad auto market direct? Why did they non invest earlier, and why do they not book over investment until the market is bigger?In 2002, Ford and GM decided to enter the car market because they mat the m was right to gain a foothold on the Russian c ar market. Even though the levels of car self-will in Russia were currently genuinely(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 ache 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 may have meant a missed opportunity that would most sure enough enough be seized by another competitor. W hy do you work out Ford chose to establish ! a only owned auxiliary in Russia, rather than license its occupation and product engineering science to a Russian carmaker like Avto VAZ?The likely suit that Ford chose to establish a wholly owned ancillary instead of just licensing its... If you neediness to get a adept essay, order it on our website: BestEssayCheap.com

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