Toyotas Decision to Build a Plant in France Essay -- Business Managem

Toyotas Decision to Build a pose in FranceBackgroundIn late 1996, Toyota began to look at the strong of western Europe for a site for its ultra-modern whole shebang. Belgium, the Czech Republic, France, Germany, Poland and the UK all seemed to be the most promising investment recipient, but the list was quickly left over(p) a head-to-head battle between Europes oldest foreign investment rivals - France and the joined Kingdom. At first, the UK seemed the obvious choice. Toyota had its only European car assembly plant at Burnaston, in the UKs Midlands, where a skilled workforce and well-established automotive al-Qaeda and cluster of related firms atomic number 18 available. However, at the end of January, company death chair Hiroshi Okuda voiced doubts about investing in the UK because of its hesitation to fully figure in the European monetary system. In 1997, Toyota finally announced plans to take a leak a $660 million car plant in Valenciennes, 60 km from Lille, France.Evalu ation1.The reasons for French government to invite Toyota to invest in France are attributed to the benefits of foreign direct investment (FDI) to France as the host country. a.Resource-transfer effect Toyota great deal make positive contribution to French economy by supply capital, technology, and management resources that would former(a)wise not be available and thus pull ahead French?fs economic growth rate. -CapitalToyota, as a multinational enterprise (MNE), because of its large size, reputation, and monetary strength, has access to financial resources which may not be available for French local firms like Renault or Peugeot-Citroen. These financial resources can be originated from Toyota?fs internally-generated cash, or from capital markets. As a redoubtable and financially strong company, it may be easier for Toyota to have access to such(prenominal) resources than French local companies do. -TechnologyTechnology plays important role in economic growth of a country, sin ce it can stimulate economic developing and industrialization. Technology can be incorporated into both production military operation and the product itself. In case of Toyota, the French government may be benefited from its advanced technology which it passed to its French employees, therefore improves the employees?f skill without surplus investment to develop their own indigenous product and process tech... ...mic misdirection result cause drastic changes in a country?fs pedigree line environment that adversely affect the profit and other goals of a business enterprise. If the French economic is in turmoil, Toyota?fs investment in this country will also be affected. c.Legal RiskLegal venture is the likelihood that a concern partner will opportunistically break a weight-lift or expropriate property rights. This may also happen to Toyota?fs when its trading partner in France infringes contract agreements. Beside those three risks, Toyota also faces the cultural risk sinc e the ?grules of game?h of doing business in France with French people is dissimilar with that in Japan and other countries where Toyota already put its investment. The French linguistic communication and culture can be a problem for Japanese firms utilise to speaking English when working overseas. ConclusionThe decision to build a plant in France is a part of Toyotas global strategy in Europe. The company has already built plants in UK, Belgium, Poland, and Turkey. Supported by other plants in Europe, which supply the manufacturing components, the French plant will strengthen Toyotas typeset to penetrate European market.