Russian business will also be evaluated

Running head: INTERNATIONAL BUSINESS
Volkswagen in Russia
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1INTERNATIONAL BUSINESS
Introduction
In the current business scenario, foreign market investment is one of major trends being
followed by the business entities. However, foreign market investment decisions should be taken
by considering different factors majorly relevant in the host country or the potential challenge
will get increased. In the case of Volkswagen’s business in Russia, the same incident happened
and diluted the business potentiality of them (Hinz and Morris 2017). Till 2014, the potentiality
of business in Russia is high, which attracted Volkswagen to directly invest in the country and
make the most out of it. However, with the imposition of economic sanctions and massive drop
in the oil price, the market got reduced and posed challenges for Volkswagen in continuing with
their Russian business. Hence, the relevant factors in this case should be examined properly to
gain the insights.
This paper will discuss the motivating factors for Volkswagen in investing in Russia
along with the type of investment being done by them. The current decision of Volkswagen of
staying with their Russian business will also be evaluated based on different factors.
What factors underlay the decision by Volkswagen to invest directly in automobile
production in Russia?
One of the major motivating factors for Volkswagen in directly investing in Russia is the
competitive scenario. This is due to the reason that their major competitors such as Ford, General
Motors and Fiat also planned to invest by setting up the manufacturing facility in the country.
Thus, Volkswagen will lose out in tapping the opportunity if they are not following the same
strategy. In addition, it was projected that Russia will become the largest car market in the
European region by 2020, which also promoted Volkswagen to invest in the country and tap the