Aashish Mishra

1820602
3 BBA F

Toyota UK

Case Summary:

The case basically talks about the growth of the company Toyota over a period
of time. Anyhow the main crux of the case ponders on different factors like
political state and external environment (especially location) that effects the
direct foreign investments. The case also shows the importance of foreign
investments for a company to grow further in this global market of today. While
talking about the growth of Toyota the case put forwards the message of
requirement of change of ideas and strategies with the change of time to sustain
in the market. Towards the ending of the case there is mentioning of benefits
which a country gets from the foreign investments like various job opportunities,
advance infrastructure and access to advance technology.

Questions:

1. What do you think are the key factors which have made the UK an attractive
location for the direct foreign investment?
Ans. These are some of the factors which, made UK an attractive location for the
direct foreign investment:

• It was the best location according to the political and economic scenario.
Japan post war success in export was not accepted by US and European
government as the exports has resulted to rise for a huge Japanese balance
of payment surplus and thus Japan was restrain for exporting automobile
goods. Anyhow, there was no restraining in manufacturing the automobile

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 outlets and factories present outside Japan and overseas. Thus establishing
a manufacturing unit outside Japan was the best option in terms of political
and economic sense for Toyota company.
• Favourable response to foreign direct investments by the United Kingdom
national and local government.
• The location provided Toyota a direct access to the world largest market
of automobiles. For instance: Burnaston offered a direct access to all part
of country and a relative quick route to the continent, via the ports and
channel tunnel.

2. To what extend do you think the expansion of the European Union will
affect the future inward investment decision?
Ans. If European Union expands then the market size will also increase, which
will gain attention of foreign companies and also as the role of local government
is to fulfil the requirements of their nationalities they will come up with more
flexible polices for direct foreign investments, which will further result to boom
of direct foreign investments in European Union. For new EU members the
opportunities of participating in the EU single market have been cantered on
attracting high levels of inward investment, and promoting their economic
development through free trade access to the higher income consumers of
advanced EU nations. The Central and Eastern Europe (CEE) region experienced
a five-fold increase in foreign direct investment (FDI) inflows between 2003 and
2008, rising from US$30 billion to US$155 billion. Inward investment was
particularly attracted to countries with low relative unit labour costs in
manufacturing and where expected growth of per capita incomes was high.

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Conclusion:

Direct foreign Investments is equally important for both company and the country
growth, but regular policies and contract should be made between the company
and the government to avoid the possible demerits of direct foreign investments.
Talking of India, we have seen a massive growth in direct foreign investments
after the government has put forward flexible deals and rules for direct foreign
investments. Foreign investments overall is very essential in present market
scenario as it not only provides job opportunities but also bring in a lot of trade
between countries in terms of technologies and innovation. It binds the human
resource of various countries across globe.

Reference:

• Book Name : Business Environment

Edition: 5th
Writer: Ian Worthington and Chris Britton
Publication: Prentice Hall