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hk: i‟m gonna do part A the rest you guys do okay :) i‟m done with my part.

kel: i fill up any missing parts yall cannot manage to find (i.e. part B i shld think) ZX: wa damn hard to find data kel: idgi (the inward outward investment thing) A) What is the spatial organizations of the TNC‟s operations? B) What kind of linkage does the TNC have with the host economy? 1. Look at the TNC’s inward investment as well as the outward investment of FDI. 2. What is the extent of these linkages? 3. What role do the government of host economies play in attracting these investments? C) What are the impacts of the TNC‟s operations on the host economy? 1. Examine the TNC’s social, economics and environmental impacts on a specific host economy. 2. Which impacts are the most significant? Evaluate the short term and long term implications of some of these impacts.

A) The Toyota Mortor Co. Ltd was first established in Japan in 1937. By 2012, it is the 10th largest TNC, and the largest automobile manufacturer in the world. In 2012, the company: ● had 12 plants and 11 subsidiary companies in Japan and 50 manufacturing companies in 26 countries, from USA to India ● employed over 300,000 people worldwide ● vehicles are sold in more 170 countries and regions Global Headquarter: Toyota City, Aichi Tokyo Office: Bunkyo, Tokyo Nagoya Office: Nakamura-ku, Nagoya


the transnationality of the Japanese producers changed dramatically during the 1980s. 7 miles from Derby with its long tradition of car manufacturing 2 Deeside. it chose 2 sites in UK: 1 Burnaston. a 600 acre site. and the first European production plant in 1992. Toyota in Europe When toyota first decided to set up a plant for its expanding market in Europe. Toyota built its first US production plant in 1988. However.Toyota had no overseas production facilities for cars before the early 1980s. flat and easy to develop. mainly due to the need to be inside major markets such as Europe and US. 7 miles from Chester on a well-prepared industrial park It chose UK because: ● excellent skilled and flexible workforce ● strong tradition of engineering and vehicle manufacturing and favourable work practices ● large domestic market for Toyota cars ● reliable industrial transport links to customers and the British and European supply partners 2 .

It chose Chengdu. as it vastly increased its overseas production share to more than 50% by 2012. Sichuan China because: ● China‟s Economic and technological development zone ● abundant chinese labour ● lower labour cost ● greater access to raw materials ● large domestic market 3 . as English is the 2nd language in Japan ● first class environment to live and to work ● supportive positive inward attitude from the government Toyota then shifted its production to developing countries. establishing a production plant in Sichuan in 2000 and Thailand in 2008.● ease of integration and communication.

such as: Japan: Product planning. 1 in UK. France. Thailand. 2 in USA. Fundamental research. new technology research for engines France: Exterior. near Shanghai. build 4 . They focused on different aspects of R&D. Toyota invested a total of $689 million to purchase land.Design and R&D Centres 4 centres in Japan. Interior and Colour Design Thailand: Vehicle Engineering and Evaluation A Design and R&D centre was built at an economic development zone in Changshu. Australia and China.

studies quality control at its local assembly plants and develops low-emission vehicles and engines for the local market.research facilities and a test track. The centre surveys the Chinese auto market. 5 .

Poland and the UK all seemed to be the most promising investment recipient. in the UK's Midlands. What is the extent of these linkages? 3.B) What kind of linkage does the TNC have with the host economy? 1. Germany. Resource-transfer effect Toyota can make positive contribution to French economy by supplying capital. Capital Toyota. What role do the government of host economies play in attracting these investments? Chosen host economy: France In late 1996. the UK seemed the obvious choice. and management resources that would otherwise not be available and thus boost French•fs economic growth rate. In 1997. France. 60 km from Lille. reputation. France. where a skilled workforce and well-established automotive infrastructure and cluster of related firms are available. and financial strength. 2. Look at the TNC’s inward investment as well as the outward investment of FDI. technology. as a multinational enterprise (MNE). At first. the Czech Republic. Toyota finally announced plans to build a $660 million car plant in Valenciennes. Belgium.France and the United Kingdom. Toyota began to look at the whole of western Europe for a site for its ultra-modern plant. company president Hiroshi Okuda voiced doubts about investing in the UK because of its hesitation to fully participate in the European monetary system. Toyota had its only European car assembly plant at Burnaston. but the list was quickly left a head-to-head battle between Europe's oldest foreign investment rivals . because of its large size. 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. at the end of January. has access to financial resources which may not be available 6 . However.

since it can help improving the efficiency of operation in the host country. thus French employees working for Toyota may gain benefit from their daily works activity. the French government may be benefited from its advanced technology which it passed to its French employees. Technology Technology plays important role in economic growth of a country.000 start-up jobs. or from capital markets.for French local firms like Renault and Peugeot-Citroen. In case of Toyota. Toyota is a well-known company in term of managerial capability. As a reputable and financially strong company. Balance-of-Payment effect French balance of payment can benefit from Toyota‟s investment in France in three ways: 7 . b. Superior management skill of Toyota may also influence and stimulate local suppliers to improve their own management skill. Management Foreign management skills acquired through FDI can produce important benefit for the host country. Since Toyota also invests significant amount of capital in R&D in French. The benefits may be greater if special trainings are provided for French employees prepared to occupy specific position within the Toyota subsidiary in French (financial. opened in 2001. created around 2. The plant. since it can stimulate economic development and industrialization. managerial. These financial resources can be originated from Toyota‟s internally-generated cash. A second phase may double the capacity by 2005. Technology can be incorporated into both production process and the product itself. Employment effect Toyota brought with its investment the need for employment. with an annual capacity of 100.000 vehicles. c. but it may also upgrade existing technology or creating new technology there. this company is not only transferring technology to the country. therefore improves the employees‟ skill without additional investment to develop their own indigenous product and process technology. it may be easier for Toyota to have access to such resources than French local companies do. or technical posts). The establishment of Toyota subsidiary in Valenciennes opened new job opportunities.

When Toyota established its subsidiary in France. Northwest France is a short distance from the UK and was also near Brussels. home to Toyota's European headquarters. good infrastructure. Another consideration of the advantage of France‟s geographical location is transportation cost.When Toyota exports the cars to other countries from France. better access to French market. Geographical location Toyota wanted to be close enough to ship engines over from its UK plant cheaply. the current account of French‟s balance of payment is increasing. are good.. The physical location of Valenciennes. Backed by good infrastructure and supportive government.If Toyota‟s cars substitute for imports of other countries‟ cars. offers rapid freight and passenger access to the UK through the Channel Tunnel. to other European countries. Good infrastructure France is the third most important host country for FDI. Connections to the rest of mainland Europe. Toyota has had less success selling there due to a greater degree of nationalism. b. where the company wants to sell its cars. after US and UK. . the city Toyota finally chose to be the next site of its investment. the capital account of France benefits from the initial capital inflow (however. Better access to French market Previously. and availability of good-quality labor. is almost ideal. It is easier and less costly for Toyota to transport cars from France. again the French balance of payment will benefit from this export. . this is just a one-time-only effect). c. which tends to drive French consumers to buy French brands cars. Paris is two hours away by road or rail. which is located in Europe continent. a. 8 . France is considered very attractive by many MNE. The Belgian Border is just 6 km from the site. Nearby city. Lille. The points Toyota considered before investing in France are geographical location.

Toyota tries to crack this nationalist sentiment. b. The north-east is a region with 20% unemployment. Beside those three risks. The French 9 . The region is home to several car manufacturers that have created a large pool of suitable workers. so Toyota was offered aid for training. France's tax breaks enabled Toyota to buy its 100 ha site cheaply.Therefore. If. If the French economy is in turmoil. Risks associated with Toyota‟s investment in France a. by making cars in France. Toyota also faces the cultural risk since the Ѓgrules of gameЃh of doing business in France with French people is different with that in Japan and other countries where Toyota already put its investment. Political Risk Political risk is the likelihood that political forces will cause drastic changes in a country‟s business environment that adversely affect the profit and other goals of a business enterprise. Availability of good quality personnel Northern France and neighboring Belgium have the skills base. A waiving of social security contributions was granted too. Legal Risk Legal risk is the likelihood that a trading partner will opportunistically break a contract or expropriate property rights. c. Toyota may find it also harms its investment. This may also happen to Toyota‟s when its trading partner in France infringes contract agreements. due to a specific case. Economic Risk Economic risk is the likelihood of that economic mismanagement will cause drastic changes in a country‟s business environment that adversely affect the profit and other goals of a business enterprise. High unemployment rate also help to avoid wage inflation. Toyota‟s investment in this country will also be affected. The French government is also very generous in inviting Toyota to invest in France. The authorities also cut the annual property tax on the site and helped to set up Japanese-French schooling. the political situation in French changes dramatically and negatively influenced the business environment in France. d.

Conclusion The decision to build a plant in France is a part of Toyota‟s global strategy in Europe. Belgium. and Turkey. the French plant will strengthen Toyota‟s position to penetrate European market. Supported by other plants in Europe. Poland. <INSERT INWARD OUTWARD INVESTMENT HERE> 10 .language and culture can be a problem for Japanese firms used to speaking English when working overseas. The company has already built plants in UK. which supply the manufacturing components.

Toyota has planned environmentally friendly manufacturing processes in China. Toyota Australia has achieved significant reductions in carbon emissions: since 2006/07. manufacturing emissions have decreased 28% and per vehicle emissions have decreased 23%.C) China: Environmental: +ve: Toyota is committed not only to sustainable motoring. The 2010 roll-out of TEMS has so far resulted in: ● ● ● Reduced water use by 28% at the manufacturing plant in Altona. but sustainable manufacturing and living as well. Investment of more than $2 million on environmental protection processes at the Altona plant. The „Yundong Plan‟ aims to bring advanced technology to the local market which will streamline the manufacturing processes and make it cleaner Toyota's manufacturing plant at Altona Victoria is an example of clean manufacturing processes. Implementation of a building retrofit program at the corporate headquarters in Port Melbourne. In 2010 Toyota won the SAI Global Systems Excellence Award at the Australian Business Excellence Awards for TEMS. ensure legal compliance and promote continuous improvement. Toyota has also reduced water use by 8% and recycles 95% of manufacturing solid waste. At both production and non-production sites TEMS has been certified to the international environmental management standard ISO 14001. Through the award winning Toyota Environmental Management System. 11 . aiming for a 40 % reduction in building energy use and minimum four star rating of the National Australian Built Environment Rating System (NABERS). Victoria. extra info Toyota Australia‟s Environment Management System (TEMS) is used to manage the company‟s environmental risks.

which can permanently scar the lungs of those who breathe them in Social: -ve: Low pay at Toyota factories with respect to rising cost of living has led to social unrest within areas surrounding the factories. The multiple plants creates employment opportunities for locals. and the total automobile exports of the country amount to around 50. construction workers and government employees.000 per month. High 12 . Economical +ve: Toyota has multiple plants in China. and a key contributor to strikes such as the 2010 Chinese Labour Unrest. in terms of the type and wage of the jobs. education levels are set to rise as a wider middle class begins to emerge. as the production of electric motors.-ve: The Toyota Prius has been harmful to the environment. such as healthcare and housing services. there is a contrast in availability of jobs. The minimum wage in these areas has been raised from 660RMB to 1000RMB in lieu of the strikes. The trickle down effect of the Japanese automaker. could add up to 17. health care professionals. inverters and nickel-metal hydride batteries release non-methane hydrocarbons and particulate matter. These revenue can be diverted into social welfare spendings. +ve: The introduction of Toyota manufacturing plants in Mississipi has led to an increase of the number of middle class citizens. With that.000 new jobs for northeast Mississippi over the next decades. but many of the migrant workers have been unable to save any money as their salary barely covers their basic expenses. including the need for more teachers. However. High export revenue which contributes to the GDP of the host country.

The company‟s headquarters town near Nagoya. as the production wind-back has resulted in tens of thousands of jobs being lost in the auto parts sector that supplies its production lines. Toyota‟s announced that the company has a “headcount surplus” at its Derbyshire plant in the UK. 13 . The decline is determined in terms of workers‟ jobs. pay and conditions. Up to 750 jobs may be lost. (2009) Toyota slashed more than 6. were also not spared. especially in the US. This has led to a chain reaction. -ve: Toyota has been blamed for the decline in local automobile industries.000 jobs at its Japanese plants since the onset of the global economic crisis. as it saw mass unemployment during 2008 for the first time ever.paying managerial positions are usually reserved for foreign expats while locals are offered low paying labour intensive jobs.