GENERAL MOTORS BUYS 20% OF SUBARU

question 11

Essay

GENERAL MOTORS BUYS 20% OF SUBARU
In late 1999, General Motors (GM), the world's largest auto manufacturer, agreed to purchase 20% of Japan's Fuji Heavy Industries, Ltd., the manufacturer of Subaru vehicles, for $1.4 billion. GM's objective is to accelerate GM's push into Asia. The investment gives GM an interest in an auto manufacturer known for four-wheel drive vehicles. In combination with its current holdings, GM now has a position in every segment of Japan's auto market, including minivans, small and midsize cars, and trucks. GM already owns 10% of Suzuki Motor Corporation and 49% of Isuzu Motors Ltd. GM can now expand in Asia more quickly and at a lower cost than if it developed products independently.
GM has been collaborating with Fuji on various products since 1995. The move underscores GM's commitment to expanding its current modest position in the Asian market, which is expected to be the fastest growing market during the next decade. GM has sold less than 500,000 in the Asia-Pacific
region in 1999, including about 60,000 in Japan. In 2002, GM bought the remaining outstanding stock of Subaru.
:
-What other motives may General Motors have had in making this investment?

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Definitions:

Fovea

A tiny indent in the eye's retina that features the greatest visual sharpness because of a high density of cones.

Retina

The light-sensitive layer of tissue at the back of the inner eye, converting light signals into neural signals for vision.

Basilar Membrane

A structure in the cochlea of the inner ear that plays a key role in the sense of hearing by vibrating in response to sound.

Cones

Photoreceptor cells in the retina of the eye responsible for color vision and functioning best in relatively bright light.