1. Introduction
Global vehicle sales in the start of 2013 have been soaring and have been at an all-time high since 2010 (Gomes 2013). This is greatly supported by the 30% increase in car sales in Asia (Gomes 2013). Colourful Corporation being a car manufacturing company would want to align our company vision of efficiency and profitability with the future prospects of expanding in Asia.
Colourful Corporation has been approached by the Ford car manufacturing company to invest $200 million in one of its existing manufacturing plants in Asia as part of a consortium. This gives Colourful Corporation to further explore the prospects of the Foreign Direct Investment opportunity in Asia.
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1. Aim
The aim of this report is to determine the vision, strategy and managerial issues in regards to a foreign direct investment (FDI) in Ford car manufacturing plant in Asia. This is
Using theoretical framework and available resources, a research into the vision, strategy and managerial issues was conducted. In addition, research into how another
Issues Foreign Direct Investment (FDI)
Foreign direct investment (FDI) in Asia for Colourful Corporation in this case looks at the investment of existing facilities of the Ford manufacturing plant in Asia. In this section of the report, we look at one of the methods that justifies the FDI in the manufacturing plant in Asia.
Figure 1 FDI decision framework (RMIT 2013)
In reference to the figure above, FDI decision framework will assist in the determination if a FDI in the Ford manufacturing plant in Asia is beneficial. Besides FDI, consideration was given to different methods such as, licensing and exporting. This is further looked at in the section below when we assess the decision framework.
The framework in relation to Colourful Corporation is as below: * Currently the logistics cost of exporting Colourful Corporation’s cars to Asia is high, and Asia is one of our main markets which provides potential * According to the Internalization theory, FDI reduces the risk of dissemination of information monopoly, in this case the research and development (R&D) of Colourful Corporation’s cars (Waheed, 1992) * FDI will give Colourful Corporation tight control over the manufacturing process in Asia to maximize profitability, as opposed to licensing (RMIT 2013) * Colourful Corporation might lose its competitive edge in the development of future cars (hybrid, solar, electric, hydrogen)
However, this framework is a guide where the report will further justify a FDI in the Ford manufacturing plant in ASIA.
Conclusions
The report covered
Recommendation is to follow.
Recommendations
It is recommended that :
* References
RMIT, 2013, “International Trade and Foreign Direct Investment” Introduction to Business Management, Melbourne.
Waheed, A., 2012, “The Internalization Theory of Foreign Direct Investment” Journal of Multinational Financial Management, vol 2 (1), The Haworth Press Inc.,
Gomes, C. 2013 “Record Sales And Production In Early 2013 — North American Output Schedules Point To Further Gains In The Spring”, Global Auto Report, Global Economic Research, Scotia Bank, 6 March 2013
