Triad and international business


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Triad and international business

  1. 1. CHAPTER 3 The Triad and International Business
  2. 2. <ul><li>The Triad </li></ul><ul><li>US, Japan and the EU (Germany, France, UK and Italy) </li></ul><ul><li>More countries are becoming increasingly prominent: Australia, Brazil, Canada, China, India, Mexico, the Netherland, the Russian Federation, Singapore, South Korea, and Spain. </li></ul>
  3. 3. Reasons for FDI <ul><li>FDI is ownership and control of foreign assets. </li></ul><ul><li>The ownership of a company in a foreign country is called foreign subsidiary </li></ul><ul><li>The equity investment can take a variety of forms: Acquisition, set up a new overseas operation as either joint venture or a totally owned enterprise. </li></ul>
  4. 4. Reasons for FDI <ul><li>Increase sales and profits </li></ul><ul><li>Enter rapidly growing markets </li></ul><ul><li>Reduce costs </li></ul><ul><li>Gain a foothold in economic blocs </li></ul><ul><li>Protect domestic markets </li></ul><ul><li>Protect foreign markets </li></ul><ul><li>Acquire technological and managerial know how </li></ul>
  5. 5. FDI by Triads <ul><li>USA to EU $433.7 billion </li></ul><ul><li>EU to USA 347.1 b </li></ul><ul><li>US to Japan $38.2 b </li></ul><ul><li>Japan to US $109.9 b </li></ul><ul><li>EU to Japan $11.5 b </li></ul><ul><li>Japan to EU $43.0 b </li></ul>
  6. 6. Trade among the Triad <ul><li>USA to Europe: $164.6 b </li></ul><ul><li>EU to USA: 213.4 b </li></ul><ul><li>USA to Japan: $64.5 b </li></ul><ul><li>Japan to USA: $144 b </li></ul><ul><li>EU to Japan $41.3 b </li></ul><ul><li>Japan to EU $78.5 b </li></ul>
  7. 7. Triad FDI Clusters <ul><li>USA: Latin America: Mexico, Brazil, Argentina </li></ul><ul><li>Japan: China, Singapore, Thailand </li></ul><ul><li>EU: Eastern Europe </li></ul>
  8. 8. Wal-Mart <ul><li>Retailing in the US is dominated by Wal-Mart </li></ul><ul><li>Has only 10% of stores outside North America </li></ul><ul><li>International expansion does not mean global </li></ul><ul><li>Wal-Mart is a regional business with a total 3,989 stores </li></ul><ul><li>2,985 stores in US </li></ul><ul><li>1,004 stores were international </li></ul>
  9. 9. Triad Activity & Auto Industry <ul><li>Diamler Benz’s acquisition of Chrysler to form DIamlerChrysler </li></ul><ul><li>Ford bought Jaguar, Mazda, Volvo, Rover (from BMW) </li></ul><ul><li>GM bought Lotus and Saab and owns 48% in ISUZU </li></ul><ul><li>Renault sold its truck division to Volvo, bought Samsung Motors and gained operational control of Nissan </li></ul>
  10. 10. Triad Activity & Auto Industry <ul><li>The US Auto Industry </li></ul><ul><li>16 – 18 million cars per year </li></ul><ul><li>Major players: GM, Ford, DiamlerChrysler, BMW, Saab, Volkwagen, Honda, Toyota, Nissan </li></ul><ul><li>EU automakers are market their cars in USA for decades e. g. BMW, Audi, Mercedes, Porsche, Vokswagen </li></ul><ul><li>Previously EU auomakers concentrated on engineering quality. Now they manufacture sporty cars </li></ul>
  11. 11. Triad Activity & Auto Industry <ul><li>It was found that Japanese cars Lexus and Infinity are better than </li></ul><ul><li>US (Cadillacs and Lincolns) and </li></ul><ul><li>European (BMW and Mercedes) cars </li></ul>
  12. 12. Triad Activity & Auto Industry <ul><li>Japanese cars have fewer quality problems. The number of problems per 100 cars in 2001 were: </li></ul><ul><li>Toyota: 115 </li></ul><ul><li>Honda: 135 </li></ul><ul><li>Nissan: 145 </li></ul><ul><li>GM: 146 </li></ul><ul><li>Diamler Chrysler: 154 </li></ul><ul><li>Volkswagen: 159 </li></ul><ul><li>Ford: 162 </li></ul>
  13. 13. Triad Activity & Auto Industry <ul><li>Faced with the challenges EU Automakers took the following decisions </li></ul><ul><li>Based their production facilities in US </li></ul><ul><li>Reduced the time to market their brands </li></ul><ul><li>US customized cars e. g. reliable and comfortable </li></ul><ul><li>Technical innovation and quality workmanship </li></ul>
  14. 14. Triad Activity & Auto Industry <ul><li>Japanese strong presence </li></ul><ul><li>Hybrid cars have gained more acceptance in the US market </li></ul><ul><li>They have concentrated economy as well </li></ul><ul><li>They have added Trucks in their plan to capture US market </li></ul>
  15. 15. The EU Auto Industry <ul><li>16 million vehicles annually </li></ul><ul><li>Germany, France, Italy, Belgium account for more than half </li></ul><ul><li>Major competitors are Europeans </li></ul><ul><li>Volkwagen, Renault, Fiat, Peugeot are major brands </li></ul><ul><li>US and Japanese automakers are not major players in Europe </li></ul>
  16. 16. The EU Auto Industry <ul><li>Ford’s strategy to market their cars with European parts </li></ul><ul><li>VW has bought Rolls Royce and Lamborghini </li></ul><ul><li>GM’s acquisition of Saab is an effort to capture more EU market </li></ul><ul><li>Ford and GM are trying to capture more AU market through acquisition and mergers </li></ul><ul><li>US carmakers have opted to manufacture smaller cars for EU markets </li></ul>
  17. 17. The Japanese Auto Industry <ul><li>BMW, Mercedes, GM, Ford DiamlerChrysler all have their operations in Japan </li></ul><ul><li>There is less local demand than expected earlier </li></ul><ul><li>The government has increased consumption tax from 3% to 5% thus discouraging peaople to own new cars </li></ul>
  18. 18. Economic Relations within the TRIAD <ul><li>Members of the Traid compete in the home market as well as in the market of others </li></ul><ul><li>The US, Europe were facing Recession and Japan had the effect of it </li></ul><ul><li>Japanese companies having large loans were not able to pay them back </li></ul><ul><li>Yen depreciated during the new millennium </li></ul><ul><li>Triad is more about the three interrelated group </li></ul>