Asian Businesses in Europe Foreign Direct Investment Strategies and Management

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1 Asian Businesses in Europe Foreign Direct Investment Strategies and Management Prof. Dr. Li Choy Chong (Hrsg.) with Anita Subramanian and Peter Lindstrom Asia Research Centre Research Institute for International Management University of St.Gallen featuring papers by Marusa Fasano, Christian Borstnar, Marc Oesch, Andreas Barfuss, Sven Graber, Stefan Graf, Gabriel Le Laidier, Robert Liebl, Daniel Seeli and Anita Subramanian ST. GALLER BUSINESS BOOKS a TOOLS INTERNATIONAL MANAGEMENT SERIES

2 Table of Contents Foreword Preface Acknowledgements List of Figures List of Tables Abbreviations ii iii vi xi xiii xiv 1. INTRODUCTION: ASIAN FOREIGN DIRECT INVESTMENT STRATEGIES AND MANAGEMENT IN EUROPE 1 2. ASIAN FDI IN EUROPE JAPANESE FOREIGN DIRECT INVESTMENTS IN EUROPE: WHY AND HOW? (BY MARUSA FASANO) What is Foreign Direct Investment? Theoretical Explanation of Foreign Direct Investment: Existing General Strategic Theories The Theory of International Product Cycles (Vernon) The Theory of Oligopolistic Reaction (Knickerbocker) Theory of Direct Investment (Hymer/Kindelberger) Internalisation Theory (Buckley/Casson) Eclectic Theory (Dunning) Specific Theories on Japanese FDI and their Hypothesis The Theory from Kojima Theory from Ozawa Japanese Direct Investment in Europe Japanese Investment by Country and by Economic Segment Motivation for Japanese Investment in Europe JETRO Survey Case Study - Japanese Automotive Industry in the United Kingdom 22 Commentary: Why do Asian Companies Invest in Europe? 24 vii

3 2.2 THE INTERNATIONALIZATION OF SOUTH-KOREAN FIRMS WITH FOCUS ON EUROPE: THE AUTOMOBILE INDUSTRY (BY CHRISTIAN BORSTNAR, TRANSLATED FROM GERMAN BY ANITA SUBRAMANIAN) The Internationalization of the South-Korean Economy: The Expansion of the Chaebols Increasing Trade between Korea and the EU The Chaebols discover Europe Case Studies of Daewoo and Hyundai and an Overview of the South Korean Automobile Industry Hyundai Daewoo Comparison of Daewoo and Hyundai 32 Commentary: Internalization Strategies of Asian Companies SOUTH KOREAN INVESTMENTS IN CENTRAL AND EASTERN EUROPE (BYMARUSAFASANO) International Transfer of Production Investment Forms Theoretical Models of FDI Development in Central and Eastern Europe Conceptual Framework Transferring Process Major Impact Factors Interest of South Korean Companies Production Dimensions Country Requirements Country Ranking Scenarios and Implications for Established Companies in Europe 49 Commentary on Marusa's Model ASIAN MANAGEMENT IN EUROPE JAPANESE MANAGEMENT IN EUROPE: ADAPTABILITY AND PROBLEMS (BY MARC OESCH) 54

4 3.1.1 A General Comparison of Japanese and Western Management: Some Key Elements Important Characteristics of Japanese Management Organization and Personnel Communication, Decision Making and Corporate Culture Management Challenges: Literature Findings in Comparison to the EPSON Case General Prejudices Japanese Executives at the Top: Difference in Leadership Deficits in White-Collar Management Conclusions and Solutions 66 Commentary on Management Adaptation ENTRANCE CONDITIONS FOR UNIVERSITY GRADUATES: A COMPARISON OF SWISS BANKS AND SUBSIDIARIES OF JAPANESE BANKS IN EUROPE (BY ANDREAS BARFUSS, SVEN GRABER, STEFAN GRAF, GABRIEL LE LAIDIER, ROBERT LIEBL AND DANIEL SEELI) Findings General Information Selection Socialization of Employees Training.' Performance Appraisal Compensation & Rewards Career Development Theoretical Framework: Main Differences between Swiss and Japanese Human Resource Management Comparative Analysis of Swiss and Japanese Personnel Marketing The Cultural Influence on Human Resource Management 75 Commentary on Cross-Cultural Problems ASIAN BUSINESS SUCCESS: A CASE STUDY TEKNOSOFT: A LOCAL PLAYER m AN INTERNATIONAL IT COMPANY 78 ix

5 4.1.1 Information Technology in India and the Tata Group The History of TCS TCS Today Manpower Growth at TCS Teknosoft (TkS) The IT Services Industry in Switzerland Today Why Companies Outsource Software The Key Success Factors The Product Managing the Project The Strengths of TKS/TCS Human Resources and Training Quality Management Competitive Advantage Outlook for the Future 90 Epilogue REFERENCES 94