Reference no: EM132891228

Question

Globalisation refers to international transactions, co-operation, and competition among firms. China has become one of the most active trading nations in an increasingly globalised world. China's pursuit in transforming itself into an industrial economy gave birth to a thriving auto-mobile industry and Geely Automobile Holdings Limited was founded in 1986. Geely is a subsidiary of Li Shufu's Zhejiang Geely Group. They began with motorcycle production and eventually started manufacturing cars in 1997. Geely's moto of 'Happy Life, Geely Drive' encompasses its customers, suppliers and human resource to manufacture safe, environmental friendly and god value automobiles. Relentless pursuit of better technology, foreign brands and oversees market resulted in Geely's European acquisition of Volvo cars in 2010 and London Taxi Company (LTC) in 2012. London Taxi Company is the manufacturer of the iconic London Black Cabs. Coventry has been the home of the company for last 70 years. Coventry city is the birth place of British motor industry and has long tradition of manufacturing iconic automobile brands like Jaguar, Rover, Triumph, and Armstrong Siddeley. The FX4 model taxis rolled out in 1959 from Coventry plant set the quintessential shape for the black cabs. They formed partnership with Geely in 2006 which finally acquired the taxi maker in 2012 for £11.4 million after it went into administration. London Taxi Company's current annual production is approximately 2000 taxis. Geely has been constantly investing to increase capacity and competitiveness since acquisition. The company has recently announced a £250 million investment to build a new factory with a production capacity of approximately 36000 cars annually. This new investment is celebrated locally and nationally due to 1000 new jobs creation and boost to the local economy. Geely's ambition to put iconic London taxis in all major cities in the world require lots of innovation in emission technology and globalising the London taxi experience. The current technology is not suitable for bigger cities due to high emission, less fuel efficiency and bulky weight. The company has pledged to invest a further £80 million in research and development of TX5 model with hybrid engines. Hybrid and electric taxis are expected to roll out from the new factory in 2018. Western manufacturers are also developing strong manu-facturing bases in China to tap the opportunities presented by the increasing purchasing powers of Chinese people. Competition from foreign manufacturer, cost pressures due to stringent regulatory requirements at home and volatility in some export markets are some of the current challenges for Geely. The management is searching for new opportunities to overcome these challenges. The Chinese state extended its support to fund Geely's oversees ambitions. China EXIM bank is offering a 20 billion yuan credit line to Geely. This is exciting news for privately owned enterprises in China as favourable credit lines were mostly available for the state owned enterprises (SOEs) until recently. This is an expected move from new Chinese leadership team under chronic overcapacity and mounting losses of the State Owned Enterprises. Geely's ownership of London Taxi Company is an example of multinational corporations (MNCs) from emerging economies acquisition in the industrial hearts of developed countries. This is a fairly new phenomenon in international business which becoming more and more common with growing powers of emerging economies.

Questions

1-1.What might be the underlying motivations of emerging markets MNCs like Geely's acquisition of foreign auto brand?

1-2.How does cooperation in international business offer competitiveness?

1-3.What role can the government play in promoting internationalisation?