entry in a international market

8/9/2019 Entry in a International Market

1/5

Assignment

On

ENTRY IN INTERNATIONAL MARKET

Submitted to: Submittedby:

Prof. raveendra desai Nitesh bhawsar

ROLL NO - 2


2/5

Entry in a international market

iperians a car manufacturer of all segments in India. Now we enter in Europe to sell our

products in African countries. We invest in African markets and open a manufacturing plant

in Africa. We will fulfill all necessary legal conditions to sell our products in African. we will

set up a manufacturing plant because in Africa there is very low rate of production so weeasily save a huge cost.

Foreign Direct Investment

Foreign direct investment (FDI) is the direct ownership of facilities in the target country. Itinvolves the transfer of resources including capital, technology, and personnel. Direct foreigninvestment may be made through the acquisition of an existing entity or the establishment ofa new enterprise.

Direct ownership provides a high degree of control in the operations and the ability to betterknow the consumers and competitive environment. However, it requires a high level of

resources and a high degree of commitment.

REASON TO CHOSSE THE COUNTRY

In past ten years there is seen a huge growth in African countries in 1997 in southafrica itself

sell four lakh car and in 2007 its increase to seven lakhs . These all shows that there is huge

changes in south Africa economy and income of people. In past few years there are some

big players are also enter in Africa and earn huge profit. Now India's second-largest car

manufacturer, Tata Motors, wants 7% of the local passenger car market by 2007-8. South

Africa's automotive industry has become an increasingly important contributor to the

country's gross domestic product, mainly through strong growth in the motor vehicle andcomponent exporting sector.

The automotive industry is one of South Africa's most important sectors, with many of themajor multinationals using South Africa to source components and assemble vehicles forboth the local and international markets.

Despite its distance from some of the major ma rkets Africa, and particularly South Africa,produces high quality products at prices competitive with other automotive manufacturing

and assembly centers.

The South African automotive and components industry is growing rapidly and is perfectlyplaced for investment opportunities. Vehicle manufacturers such as BMW, Ford,

Volkswagen,Daimler-Chrysler and Toyota have production plants in the country, whilecomponent manufacturers (Arvin Exhust, Bloxwitch, Corning, SeniorFlexonics) have

established productio n bases in the country.

The industry is largely located in two provinces, the Eastern Cape (coastal) and Gauteng(inland). Companies with production plants in South Africa are placed to take advantage ofthe low production costs, coupled with access to ne w markets as a result of tradeagreements with the European Union and the Southern African Development Community


3/5

free trade area. Opportunities also lie in the production of materials (automotive steel and

components).

South Africa's aim is to become an a utomotive investment destination of choice.Modernization and upgrading of key elements in the automotive industry are required to

keep pace to achieve international competitiveness.

Interest rates are currently at historic low levels, reducing the cost o f investments. It issignificant to note that most major multinational vehicle manufacturers are currently

represented in SA, which means that international developments also impact on the country.

The outlook for the vehicle industry is bright in terms o f both exports and the domesticmarket. A key challenge will be to raise local content, particularly in the vehicles now being

exported in large volumes.

In south Africa there are already a large numbers of automobile players in country so there isno problem of technology and there are efficient numbers of manpower are available in

country, southafrica appreciate those who want to setup industry in Africa so this is the bigadvantages for us.

Our mode of entry direct investment

We set up our l B segments car manufacturing plant in south Africa because in African

countries there are not a big player of B segments of car our price and quality of car is so

good in comparison of others company. We manufacture our all cars in Africa because in

Africa have already a good num bers of manufacturing plants for automobile industry so

helps to easily get a raw material.

Southafrica regulation act -

We will fulfill all regulation act to open a manufacturing plant in southafrica. And we think that

government give a green signal very soon for production because its increase the revenue

for a country tax opportunity, employment opportunity, proper utilization of raw materia l, and

increase a automobile market in south Africa.

.

Conditions favouring in this mode

Import barriers

Small cultural distance

Assets cannot be fairly priced

High sales potential

Low political risk

ADVANTAGES


4/5

Greater knowledge of local market

Can better apply specialized skills

Minimizes knowledge spillover

Can be viewed as an insider

DISADVANTAGES

Higher risk than other modes

Requires more resources and commitment

May be difficult to manage the local resources

Growth

South Africa has been one of the best performing automobile markets in the world in recent

years. New vehicle sales figures soared to record-breaking levels for three years in

succession, from 2004 to 2006. In 2006, sales increased by 14.4% to just under 650 000 units,

generating revenue of R118.4-billion.


5/5

REFERENCES-

Southafricaninfo.business.com

Wikipedia.in

Africagoodnews.in

entry in a international market

Documents