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|