Question 1:

The major automobile manufacturers are all multinational companies (MNC’s) which operate in many countries globally. Toyota is an automotive giant which has established its presence in global markets by providing different types of vehicles of excellent quality to millions of consumers globally. Toyota established a presence in the South African automotive industry during the early 1960’s, and quickly established itself as a market leader, a position that it has retained ever since.

Develop a research essay to address the following questions relevant to Toyota:

  • Identify the type of foreign direct investment (FDI) that Toyota adopted in terms of producing motor vehicles for the South African market and for export
  • Explain the benefits associated with this type of foreign direct investment (FDI).
  • Identify a further two (2) motor vehicle producers in South Africa who have adopted the identical type of foreign direct investment (FDI).
  • Provide relevant motivations where necessary to justify your

• Refer to the grading rubric on the next page for guidance when researching and writing your essay.
• You have been provided with three (3) academic sources (see below), these sources are compulsory and must be consulted and referenced when answering the research essay.

Journal Article 1: Sabinet
Gastrow, M. 2008. An Overview of Research and Development in the South African Automotive Industry. Journal for New Generation Sciences, 6(1):1-15.

Journal Article 2: Google Scholar
Casson, M and da Silva, T. 2013. Foreign Direct Investment in High–Risk Environments: An Historical Perspective. Business History, 55:1-56.

Journal Article 3: Google Scholar

Robbins, G., Lebani, L. and Rogan, M. 2008. TNC FDI Foreign and Domestic SME Linkages. Reflecting on Three SADC Studies. Working Paper Series 2008- 03, 1-51.

Answers to Above Questions on Business Management

Answer 1: An analysis of the given case study of Toyota indicates that the company has its operations worldwide and it has a manufacturing unit in South Africa as well. The company has its presence in almost all parts of the world, and it has expanded its operations in the form of foreign direct investment that allows it in producing motor vehicle across different market. Before understanding the type of foreign direct investment that Toyota motor has adopted, it is important to understand the type of FDI available and these are broadly categorised into three main types such as vertical, horizontal and conglomerate FDI. In case of Toyota, it is considered as following vertical foreign direct investment because in this type of investment a company establishes different stages of production process in a foreign country, and assemble its product to make it a final one through the parts imported from different other units of the company. Toyota has a production facility in South Africa which allows it in manufacturing core components part of the automotives, and other parts are imported to assemble them to make a final car available for sale to end customer.

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