Introduction

Direct investment among the richest countries has been one of the eminent features of the world economy since the mid-1980s. Within this broad trend, Europe features prominently as both a home and host to multinational enterprises (MNEs). Not only did many Japanese and American firms invest massively, but even the most somnolent European firms appeared to awake to the need to look beyond their own national borders. (Thomsen and Woolcock, 1993)

In narrow terms, FDI is simply all capital transferred between a firm and its new or established foreign affiliates. In its broadest sense, FDI represents competition: among workers, governments, firms, markets and even economic systems. (ibid)

The main
• Business strengths: Nissan is strong in manufacturing capability, product technology, and its supplier technology base, while Renault is strong in management, product planning and product design capabilities.

• Product range: Nissan is strong in light trucks and sport utility vehicles (although Nissan`s product portfolio covers nearly all segments), while Renault is strong in passenger cars.

Nissan`s major FDI strategy for setting-up production in the European economic community (EEC) was market-seeking, and the UK was Nissan`s largest market in Europe, accounting for one third of Nissan`s sales in Europe in 1982. (Loewendahl, 2001)

The economic conditions in several UK regions provided an environment suited to Nissan. While industrial relations in the UK in the early 1980s were not perfect (as far as Nissan was concerned), the Thatcher government promised radical changes. Nissan considered conditions in the North-East to be particulary favourable for establishing a single union and introducing new work practices, because Sunderland would provide an acquiescent workforce that has no tradition of automobile production, in region of high unemployment. (McRae, 1997)

The domestic environment in the UK was