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 speedily and has proven success but many decisions need 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 case study, I will discuss the decisions that Ford and GM soak up recently made regarding the entrance into Russia?s move industry through FDI.

wherefore are Ford and GM entering the Russian railroad car market now? Why did they non invest earlier, and why do they not carry over investment until the market is bigger?In 2002, Ford and GM decided to enter the car market because they felt the m was right to gain a foothold on the Russian car market. Even though the levels of car ownership in Russia were currently very(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 have 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 be seized by another competitor.

Why do you work out Ford chose to establish a wholly owned auxiliary in Russia, rather than license its production 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...

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