Question 6
企业管理作业代写 The multiplicity of companies across many countries established by Toyota indicates it runs horizontal FDI where the affiliate
Ownership 企业管理作业代写
Toyota establishes and owns the manufacturing companies by its own. Hence it is Greenfield FDI where a company builds a new production facility abroad. Compared with Brownfield FDI where a firm buys a controlling stake in a foreign firm, Greenfield FDI tends to be more stable but takes longer time.
Location
The multiplicity of companies across many countries established by Toyota indicates it runs horizontal FDI where the affiliate replicates the production process elsewhere in the world. The location choice depends on 1) transportation costs and other barriers to trade, and 2) location of necessary factor of production. The firm faces the proximity-concentration trade-off. In the case of Toyota. The cost of exporting is costly, hence horizontal FDI is more appropriate. That is, Toyota gives up concentration of production but achieves proximity to the foreign market via the foreign production facilities. 企业管理作业代写
Internalisation 企业管理作业代写
All the production processes of Toyota’s foreign companies are done in-house, which suggests that it uses vertical integration as the framework for fragmentation within the firm. It combines the upstream and downstream firms into one single company. Vertical integration may avoid or attenuate contractual difficulties, provide better transmission and protection of knowledge and property rights. It may affect the relative bargaining power of producers and suppliers in a profit-enhancing way. However, vertical integration could also increase the management cost in foreign countries. It may also constrain the responsiveness of foreign affiliates to change in the local economic conditions.
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