Question

In: Economics

You are a senior manager in a U.S. automobile company who is considering investing in production...

You are a senior manager in a U.S. automobile company who is considering investing in production facilities in China, Russia, or Germany. These facilities will serve the local market demand. Develop a summary that determines the benefits, costs, and risks associated with doing business in each nation. Which country seems to be the most attractive target for foreign direct investment? Why?

The course is DBA 8710 International Business and Global Strategy

Solutions

Expert Solution

International Business Strategy are the plans,action takes by firm or private companies to make commercial transactions between different countries.

COUNTRY- Germany- It is one of stable trading Economy  in Europe.

BENEFITS - 1. Innovative Country - It is one of top ten innovative countries , in world. It's government have a strong commitment to increase expenditure on applied research and development.

2. Germany offers new investment , incentives programs , like cash grants , Research and development. grants etc.

COSTS -.

1. Tax laws are extremely complicated , like every business make nine tax payment per year , which is time consuming and costly process.

2. Germany ranks 125 out of 190 economies to start a business by World Bank ,2020 , Registering property in Germany also involve long procedure which is

RISKS - 1 . Cultural Differences also act as a hurdle in doing business in Germany

2. Political Risk is very high in Germany with many political issues involved in doing business.

3. Although it has educated workforce but have there is skilled labour shortage.

COUNTRY - CHINA - It is one top countries where foreign firms want to invest.

BENEFITS - 1. It has attractive market , gives more profits higher than anywhere in world.

2. Chinese government make regular changes in laws are regulatries for making it favourite investment destinations.

3. Availability of skilled talent and competent workforce.

COSTS -. 1. Business costs involved is pretty high , as labour  nominal wages are too high

2. Long and complicated licensing process remain an important issue of Increase in costs .

RISKS - SOCIAL AND CULTURAL DIFFERENCE , there are many differences in view and ethics

2. Intellectual property laws in Chinaare not consistent with foreign law

COUNTRY- - RUSSIA -

BENEFITS - 1. It has strong logistics like transportation and infrastructure which Improve efficiency of doing Business.

2. It has large and captive market where consumers incomes is increasing rapidly

3. It is one of stable and growing economy.

RISKS - 1. It has high political risks .

2. High policy of protectionism and regular government interference.

COSTS - Underdeveloped infrastructure even getting adequate electricity is a laborious work  in Russia

2. Getting construction permit , Registering properly , intellectual property rights is a long and complicated process.

CONCLUSION - Being a senior manager in USA based automobile and on the basis of above analysis, it can be concluded CHINA is one of best and emerging markets as compared to Russia and Germany ,

Reason- as China has comparatively low risk , low costs involved and great potential demand for automobile products. Thus , China is a best destination to invest .


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