Direct Foreign Investment Decision Proposal-Hyundai Motor & Brazil - Essay Example

Direct Foreign Investment Decision Proposal – Hyundai Motor to Brazil Hyundai Motor Company seeks the Brazilian government’s financial support in opening a production plant that will specifically cater for the Brazilians. Due to the high and unnecessary importation and voyage costs, its new plant will help avail of the vehicles at reduced costs. The company wishes to approach the Brazilian market in a distinct way since Brazilians need to experience more than just cars. Thus, it seeks to deliver the best possible customer satisfaction.

If Brazilian government agrees to help, the company will need a total amount of $ 600 million US dollars to be functional. Considering future perspectives, according to Hyundai, the project will enhance economic strengths of the country and its people. During five years of survey, the company has designed the best tools to achieve success, so it will meet the customized Brazilian needs with the utmost potential. Since the amount of money required is very large, the company, seeks the Brazilian government’s financial support, as the project’s objectives will yield fruits within two years (Brainard & Martinez, 2009).

Financing and Investment Strategy Hyundai Motor Brazil is a subsidiary of Hyundai Motor Group, based in South Korea. It views Brazil as an exceptionally attractive segment. For five years, the company has been conducting a research in the market, and Brazilian needs will be its first priority as the company seeks to create over three thousand jobs directly and another twenty thousand jobs indirectly. Therefore, the company perceives that the government grants will enable it to offer employment, run operations, and deliver the best satisfaction to the Brazilian market.

Expectations are that, in a period of three years, all households will be able to purchase a Hyundai in the country. The company strategically seeks to offer outstanding HB20 car version, the first of its kind that will cater for all customers’ driving needs in the Brazilian environment. The company is committed to ensuring that its practices rhyme with Brazilian laws about industries, labor, environmental and economic requirements. The company needs the government to authorize its operations and to allow the use of 60,000 square meters of land at the appropriate location.

It further needs the Brazil government to reduce taxes, which, when imposed inappropriately, may injure its performance. Effecting taxes and tariffs reduction, HBM will be able to offer the best of its car models in Brazil at cheaper prices. The cuts will also enable HBM to hit the target job number at favorable prices and ensure continuous growth of the number of workers and prospective suppliers. The company guarantees that all its products are tailor-made for the Brazilian markets. All this will result in the continuous support of, and trust in, the company’s products and, therefore, the company will focus on producing the best goods (Sachs et al., 2009). The cars will appear in different models, maintaining fuel efficiency practices for both manual and automatic transmission engines.

This aspect will reduce fuel crisis and, consequently, cut down unnecessary costs, increase Brazilians’ income per capita, and promote the fast growth of the economy. Hyundai Motor Brazil (HBM) will strive to enhance the country’s economic progression rather than exploiting the economy. The core business of HBM being vehicle production, it ascertains that it will involve eight spare parts suppliers sourced locally to further indirectly reduce unemployment levels. The prices will be $15,000 US dollars, which is quite a brilliant offer in comparison to the imported ones (Sachs et al., 2009). Following the introduction of HB20, HBM will introduce a smaller version of the SUV model – Sonata (i45), inclusive of all its amenities and sub-compact features.

Due to the distinct needs of Brazilians, the SUV will reach those customers who seek to drive stylishly and quickly on all kinds of terrains and with guaranteed performance. Expiration of the Project Life In a period of five successive years, HBM prospects reveal that it will be enjoying economic growth with the country, Brazil, due to maximization of returns and economies of scale. At this time, HBM will have made the target jobs available to the Brazilians. It further seeks to explore other Latin American markets after Brazil proves a success.

As the production plant will remain in Brazil, foreign exchange returns will increase in the host country as the company maximizes its output. At this point, HBM will be able to inject more income among the locals through the provision of extra job opportunities. The company aspires to reduce prices of its vehicles in the local market of Brazil immediately after diversifying to other markets, a factor that will see the lower middle class of the society having the opportunity of purchasing a new car.

Therefore, HBM’s activities in Brazil are a lifetime objective as far as ethical practices prevail. Economic Decisions to Change Locations Hyundai Motor Company, the parent company of Hyundai Motor Brazil, anticipates growth and diversification of investments by venturing in Brazil. For a fast growing economy, Hyundai feels as sturdy as Brazil and, therefore, its venture in the country is a considerable economic stimulant through industrialization in the country. The desire thus encourages Hyundai to design unique and reliable cars for the Brazilian market.

The diversification will see the company coming up with new technologies that are eco-friendly, since Brazil imposes strict measures that will ensure and ascertain life to forthcoming generations. Therefore, HBM views the aspect as a positive change and, on adhering to the set of practices, will be able to have a competitive edge. Bearing in mind that Brazil is a fast growing economy, early positioning will be of advantage to the company as it will be growing fast technologically compared to the competitors (Brainard & Martinez, 2009).

References Brainard, L., & Martinez-Diaz, L. (2009). Brazil as an economic superpower? Understanding Brazil's changing role in the global economy. Washington, D.C: Brookings Institution. Sachs, I., Wilheim, J. Pinheiro, P.S., Anderson, R.N., & Davila, J. (2009). Brazil: a century of change. Chapel Hill: University of North Carolina Press.