The report analyses the strategy chosen by a Japanese Manufacturer Nissan to enter the European Market. After a thorough research it was found that Nissan decided to enter the United Kingdom by establishing a wholly owned subsidiary in Sunderland, in 1984. The subsidiary was called Nissan Motoring Manufacturing Ltd. and today it accounts for 60% of all the Nissan cars sold in Europe.
Nissan had a number of rational reasons to choose the UK for setting up a plant. These reasons and possible benefits are analysed by using the Porter’s Diamond. The most evident motives appeared to be easily accessible labour, the level of technology, high demand for vehicles, a big number of steel manufacturers and the opportunity of being closer to the customers, i.e. building up competitive advantage.
The report also examines the advantages and disadvantages of a wholly owned foreign subsidiary. The key advantages found were the complete access and control by the Nissan management over the subsidiary and the elimination of a need to share the innovative ideas, which is likely to happen in an alliance or in other entry modes. Finally, all the profits were to be retained in the parent company. However, there were a few drawbacks, such as an extremely high cost of building a plant from the scratch, together with a big amount of resources required to establish an efficient factory.
As a final point, the report evaluates the suitability of the chosen country and the entry mode. The results show that the benefits outweigh the losses, i.e. the company made a competent decision. Meaning, that the United Kingdom was able to offer plenty of gains in such fields as labour and technology. Whereas the entry mode adopted meant high set-up costs, however, big profits in a long-run.
The report aims to analyse the chosen country and the entry mode adopted by Nissan- a Japanese car manufacturer. Firstly, the brief introduction of a foreign wholly... [continues]
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