Kauppatieteellinen tiedekunta, 2011
Master's Degree Programme in International Business
Foreign production investment has become more topical during last few years for Finnish companies due to changes in global and domestic business environment. One crucial issue in these investments relates to investment location choice. The purpose of the thesis is to clarify how different location variables and their weightings affect on the screening results of potential location for a greenfield investment and emphasis the role of potential investment problems in target countries. Hence, the theoretical part identifies the most crucial variables relating both to country and site. The focus is also on clarifying strategic investment motives, providing knowledge regarding successful implementation and management of wholly owned foreign subsidiary and identifying potential external and internal problems relating to foreign direct investments in the host countries. In the end of the theoretical part the results of location studies are summarized in order to form a scoring method for evaluating the countries and regions in question.
The empirical part of the thesis analyzes the strategic motives of Finnish log building company that has established a foreign production subsidiary in Germany and identifies the most essential location variables of the case company. The main purpose of the empirical part is to compare Estonia, Finland, Germany and Poland as well as one region within them on the grounds of scoring methods and identify the potential problems for investments in these countries.
The results of the empirical part revealed that involvement of different location variables and weights did not considerably effect on the superiority order of the countries and regions. However, the involvement of potential investment problems in the evaluation of the countries showed that Poland which scored second highest points based on country evaluation variables appeared to be the most complex business environment for having foreign direct investment. Finally, this supports the fact that foreign direct investment location decision should never be done on the grounds of suppea variety of variables but to involve the potential investment problems typical in the country to the evaluation.
Plant location choice, Greenfield investments, Baltic sea region