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

Toyotas Decision to Build a Plant in France orbitIn late 1996, Toyota began to look at the whole of western atomic number 63 for a site for its ultra-modern plant. 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 a private battle between Europes oldest foreign investment rivals - France and the United Kingdom. At first, the UK seemed the patent choice. Toyota had its only European car assembly plant at Burnaston, in the UKs Midlands, where a skilled workforce and well-established automotive infrastructure and cluster of cogitate firms are gettable. However, at the end of January, company president Hiroshi Okuda voiced doubts nearly investing in the UK be exercise of its hesitation to fully participate in the European monetary system. In 1997, Toyota finally announced plans to build a $660 one thousand million car plant in Valenciennes, 60 km from Lille, France.Evaluation1.The reasons for French government to invite Toyota to invest in France are attributed to the benefits of foreign deal investment (FDI) to France as the host country. a.Resource-transfer effect Toyota croupe make unconditional contribution to French economy by bestowing capital, technology, and management resources that would other than not be available and thus boost French?fs sparingal crop rate. -CapitalToyota, as a multinational enterprise (MNE), because of its spectacular size, reputation, and financial strength, has access to financial resources which may not be available for French local anaesthetic firms like Renault or Peugeot-Citroen. These financial resources bay window be originated from Toyota?fs internally-generated cash, or from capital markets. As a reputable and financially steady company, it may be easier for Toyota to have access to such resources than French local companies do. -TechnologyTechnology plays important role in economic growth of a country, si nce it can stimulate economic scramment and industrialization. Technology can be incorporated into both production process 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 additional investment to develop their own indigenous product and process tech... ...mic mismanagement will cause drastic changes in a country?fs business 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 risk is the likelihood that a barter partner will opportunistically break a contract 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 since the ?grules of game?h of do ing business in France with French people is different with that in lacquer and other countries where Toyota already put its investment. The French language and culture can be a problem for Japanese firms used to speaking side 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 position to penetrate European market.