Case Study Foreign Direct Investment

Continuous growth is essential for company’s survival in the interest of its investors and work force. Hence, this reports addresses strategy development directions in this regard. The idea of growth should be one of the business objectives. The company needs to engage in strategy development so as to create competitive advantage over its competitors. The strategy development is important as it should be difficult for the competitors to replicate. Collaboration with business partners or the stake holders such as the company’s suppliers, distributors and customers is a guarantee creating a competitive advantage which the competitors cannot easily emulate (Campbel, Stonehouse, Houston, 2002) Different strategies to achieve competitive advantage are 1) knowledge-based strategy, 2) generic strategy 3) hybrid strategy and 4) core competence/distinctive capability/resource-based strategy. Organizations generally will select one of the strategies and incorporate value-adding activities in support of the strategy selected. These strategies are briefly explained (Campbel, Stonehouse, Houston, 2002). … Tacit knowledge is that which cannot be stored being mostly of individual experiences of experts. This is also not possible to be copied by the competitors (Demarest, 1997). There should be at least three types of knowledge available within firms. They are know-how, know-why and know-what referring to practical knowledge, theoretical knowledge and strategic knowledge respectively. All these combine to form core competencies of a firm. Generic strategies are the well known Michael Porter’s generic strategy frame work that explains the competitive advantage of a firm. (Campbel, Stonehouse, Houston, 2002). Hybrid strategy is the combination of knowledge strategy and generic strategy. Lastly, the core competency strategy which is nothing but the essence of the firm’s vast experience in the tradional activity the firm has been engaged in. Ansoff’s matrix will also serve to give the proper direction for the company’ s future activity. In view of the saturated market in Europe, the only way out for XYZ Plc is to seek greener pastures abroad. Developing countries are the niche market for automobiles because the globalization has improved the standard of living for the people therein resulting in creation of demand for automobiles. Markets for automobiles in these countries has not yet saturated. These countries are attractive not only within the context of domestic market for automobiles but also the savings in wages by almost 65 per cent. The countries offering huge opportunities for investment are China and India, the world’s two largest populated countries. Foreign Direct Investment (FDI) These countries have benefited a lot from the inward FDI flowing in continuously. India especially has survived the economic crisis that