Barcelona Field Studies Centre

Transnational Case Study

Case Study: Fiat Car Factory, a TNC in Brazil

Factors that attracted the company to Betim, close to Belo Horizonte in the state of Minas Gerais, SE Brazil:

  • Guaranteed market for cars within Brazil, and Fiat could also supply the demands of other South American countries (see table below).
  • Loans, grants and cheap land offered by the government, amounting to 50% of the initial investment.
  • Taxes are low.
  • A low level of car ownership, but a rapidly growing market (see table below).
  • Brazil had a stable government: it was a low-risk investment.
  • Prepared site with infrastructure such as roads, sewerage, electricity, etc.
  • Well developed infrastructure in the region: excellent motorway, rail and coastal shipping connections.
  • Large pool of cheap labour.
  • A government guarantee of few labour problems, strikes etc.
  • Fiat can take their profits out of the country.
  • Low health and safety standards save costs.
  • Hard working and highly productive workforce: regularly the most productive car plant in the world.
  • Nearby steel works: saves transport costs.
  • High import tariff barriers provided a market protected from foreign competition. In 1996 the tariff for companies with plants in Brazil was 35% and for those without plants in the country 70%.
Fiat car plant location, Betim, Brazil
Fiat car plant location