The World 's Largest Car Manufacturer Responsible For 26 % Of Total Production
According to the Exhibit 5, today China is the world’s largest car manufacturer responsible for 26% of total production. Kenya is on the opposite end with only 3,080 cars being produced annually. China, India and Kenya are comparable in terms of labor costs. If GM facilitates production in Kenya, then it would have an easy access to the resources and cheap labor; while in China and India it would have to compete for the same resources with a large number of domestic and foreign manufacturers. Next, vehicle penetration in Kenya stands at only about 24 vehicles per 1,000 people, compared with about 600 vehicles in the mature markets such as Germany and Canada. This means that the mature markets are overly saturated, GM has an opportunity to establish strong market presence in Kenya, while Kenya has only a few vehicle dealers operating.
Infrastructure is a critical characteristic in determining the competitive advantage of any country. It defines the costs and structure of the supplier and customer relationships. We are going to review transportation, utilities and land costs in consideration of FDI in Kenya.
The infrastructure in Kenya has been significantly developed through the 2000s. It is one of the most advantageous developing countries for FDI. Over the past 10 years infrastructure contributed to 0.5 percentage point increase in the country’s GDP growth. Additionally, 90% of the population in Kenya gained access to…