Table Of ContentDIRECf INVESTMENT IN THE UNITED KINGDOM BY
SMALLER EUROPEAN FIRMS
Smaller firms are becoming increasingly important international
investors. This research-based book examines a highly successful
group of investors - sm aller European firms in the United Kingdom.
They have pursued a combination of policies uniquely suited to the
United Kingdom environment. In product policy, entry strategy,
management decisions and organisation of production they have a
great deal to teach both British and foreign firms about successful
operation in the United Kingdom. In addition, their views on the
United Kingdom environment and the impact of government policy
on these firms is highly instructive for policy-makers in the United
Kingdom.
The book develops a unique methodology for the construction of a
success index, which is then used to evaluate the outcomes of the
many decisions which are involved in the establishment of a foreign
subsidiary. An analysis of 35 production subsidiaries, 16 sales sub
sidiaries and 10 parent firms yields fascinating insights into the
Continental firms' business strategies in Britain. The book suggests
that the United Kingdom environment is conducive to successful
operations provided correct management decisions are made, but
that government policy can be amended in order to improve the
likelihood of success.
The conclusions will be of interest to managers of British and
foreign-owned firms in the United Kingdom and to all those con
cerned with United Kingdom government industrial policy, as weil as
to educators in the international business and business policy fields.
Peter J. Buckley is Senior Lecturer in International Business at the
University of Bradford Management Centre.
Zdenka Berkova was formerly an SSRC Research Assistant in
International Business at the University of Bradford Management
Centre.
Gerald D. Newbould is Professor of Finance at the College of
Business Administration, Cleveland State University, Ohio, USA,
and former Professor of Managerial Economics at the University of
Bradford Management Centre.
Also by Peter l. Buckley and Gerald D. Newbould
GOING INTERNATIONAL: The Experience of Smaller Com
panies Overseas (with lalle Thurwell)
Also by Peter l. Buckley
HANDBOOK OF INTERNATIONAL TRADE (with Michael Z.
Brooke)
EUROPEAN DIRECT INVESTMENT IN THE USA BEFORE
WORLD WAR I (with Brian R. Roberts)
THE FUTURE OFTHE MULTINATIONAL ENTERPRISE (with
Mark Cassoll)
Also by Gerald D. Newbould
SUCCESSFUL BUSINESS POLICIES (with G. A. Luffman)
THE RECEDING IDEAL (with A. S. lackson)
BUSINESS FINANCE
MANAGEMENT AND MERGER ACTIVITY
EQUITY ISSUES AND THE LONDON CAPITA L MARKET
(with A. l. Merret and M. Howe)
DIRECT INVESTMENT IN
THE UNITED KINGDOM
BY SMALLER
EUROPEAN FIRMS
Peter J. Buckley, Zdenka Berkova
and
Gerald D. N ewbould
© Peter J. Buckley, Zdenka Berkova and Gerald D. Newbould 1983
Softcover reprint of the hardcover 1s t edition 1983
All rights reserved. No part of this publication may be reproduced or
transmitted, in any form or by any means, without permission
First published 1983 by
THE MACMILLAN PRESS LTD
London and Basingstoke
Companies and representatives
throughout the world
ISBN 978-1-349-06435-9 ISBN 978-1-349-06433-5 (eBook)
DOI 10.1007/978-1-349-06433-5
Contents
List 01 Tables x
List 01 Figures and Scenarios xix
Acknowledgements xxi
PART I INTRODUCTION
1 The Success of Smaller Companies 3
1.1 Outline of the Book 4
1.2 Going International 4
1.3 Executive Summary 5
2 Sampie Design and Background Data 6
2.1 Method of Selection 6
2.2 Nationality of Ownership of United
Kingdom Subsidiaries 8
2.3 Industrial Classification of United Kingdom
Subsidiary 9
2.4 Year of Establishment of United Kingdom
Subsidiary 9
2.5 Size of Parent Firm and United Kingdom
Production Subsidiary 11
2.6 Executive Summary 14
PART 11 THE VIEW FROM THE TOP
3 The View from the Foreign Head Office 17
3.1 The Overall View 17
3.2 Motivation for the Investment in Britain 20
3.3 Government Agencies in Britain 21
3.4 Taxation 21
3.5 Labour Costs and Productivity 22
3.6 Management 24
v
VI Contents
3.7 Quality Control 25
3.8 Supplies in Britain 26
3.9 Transport 26
3.10 Banks 27
3.11 Strikes 27
3.12 Political Factors 28
3.13 Major Problems 28
3.14 Lessons Learned from the British Experience 29
3.15 Executive Summary 30
PARTIII THE PRODUCTION SUBSIDIARIES
4 Measuring the Success of the Production Subsidiaries 35
4.1 Success and Failure in Foreign Oirect
Investment 35
4.2 Measures of Success:
(A )Profitability 38
4.3 Measures of Success:
(B)Growth 40
4.4 Measures of Success:
(C) Perceived Success 41
4.5 Measures of Success:
(0 )Market Share 43
4.6 Measures of Success:
(E)Operating Success 44
4.7 Success: So me Reservations 48
4.8 The Overall Level of Success 49
4.9 Executive Summary 52
5 The Product Decision 53
5.1 Previous Experience 53
5.2 Which Products? 56
5.3 Executive Summary 60
6 Other Entry Decisions 62
6.1 Alternative Countries 63
6.2 Greenfield versus Takeover 63
6.3 Joint Venture versus Wholly Owned 69
6.4 More Market Knowledge 72
Contents VII
6.5 Price versus Quality 74
6.6 Location in the United Kingdom 77
6.7 Executive Summary 85
7 Managing the Subsidiary 86
7.1 Marketing Autonomy 86
7.2 Production Autonomy 88
7.3 Functional Autonomy 90
7.4 Imposed Objectives 91
7.5 Financial Control 93
7.6 Control of Internal Prices 97
7.7 Management Control 100
7.8 Overall Control 104
7.9 Executive Summary 105
8 Production and Productivity 106
8.1 Operation al Problems 106
8.2 Production Problems 110
8.3 Subcontracting 113
8.4 Suppliers in the United Kingdom 114
8.5 Capital Equipment 116
8.6 Technology 119
8.7 Trade Unions 121
8.8 Industrial Disputes 123
8.9 Wages 124
8.10 Productivity 125
8.11 Labour Turnover and Redundancy 128
8.12 Executive Summary 129
9 Comments on the Seven Totally Successful
Production Subsidiaries 131
9.1 The Top Performers 131
9.2 Product Choice 132
9.3 Entry Strategy 132
9.4 Management Decisions 133
9.5 Production Decisions 134
9.6 Executive Summary 135
viii Contents
PART IV THE SALES SUBSIDIARIES
10 The Success of Sales Subsidiaries 139
10.1 Basic Data on Sales Subsidiaries 139
10.2 The Success of Sales Subsidiaries in the
United Kingdom 141
10.3 Sales Subsidiaries in the United Kingdom:
Range of Functions 146
10.4 Motivation for Foreign Direct Investment in
the United Kingdom Sales Subsidiaries 146
10.5 Sales Subsidiaries: Entry Strategies 149
10.6 The Marketing Strategy of United Kingdom
Sales Subsidiaries 152
10.7 Sales Subsidiaries: Attitudes to Converting
to Production in the United Kingdom 156
10.8 Executive Summary 159
PART V UNITED KINGDOM GOVERNMENT POLICY
11 The Impact of United Kingdom Government Policy 163
11.1 Regulatory and Incentive Devices for
Foreign Investors in the United Kingdom 163
11.2 United Kingdom: Specific
Regulatory/Incentive Devices 166
11.3 Source Country Regulations on Foreign
Investments 169
11.4 The Role of Government in the Location
Process 169
11.5 Government Restraints on Location 171
11.6 Local Assistance 172
11.7 The Motivation for the Investment 173
11.8 Alternative Countries Considered by the
Investors 179
11.9 The Export/Import Behaviour of the
Subsidiaries 182
11.10 Executive Summary 183
Contents ix
PART VI CONCLUSIONS
12 Conclusions 187
12.1 The Success of Smaller Continental
European Firms' Investments in Britain 187
12.2 Innovations by the Subsidiaries 189
12.3 Policy Recommendations 190
Appendix 191
Notes 226
Index 228
