Academic journal article Journal of the International Academy for Case Studies

King of the Hill: Competing for Foreign Direct Investment in 'Dixie'.(Instructor's Note)

Academic journal article Journal of the International Academy for Case Studies

King of the Hill: Competing for Foreign Direct Investment in 'Dixie'.(Instructor's Note)

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns foreign direct investment (FDI) in the southern U.S., specifically automobile FDI in Alabama. Secondary issues concern the aggressive competition, using incentives and state-specific features, of southern states in recruiting foreign investment and the employment opportunities that FDI brings. This case has a difficulty level of three. It is suitable for a junior level course and can be taught in a 90 minute class with two hours of preparation by students outside of class. The case could also be used in a senior-level international management class to illustrate the reach of globalization into our corner of the world. This case can be used as a template for professors in other states in illustrating the proximity of FDI in their state and the consequences of that FDI. We propose that there is international activity in the form of FDI here or abroad as well as exporting and importing in virtually all states. A professor can use this case as is or as a template to reflect international activity in his/her local geographical area. Students should relate to the importance of international business as they see its relevance to their lives.

CASE SYNOPSIS

This case is designed to illustrate the concepts of foreign direction investment, job creation, state incentives as a factor in FDI, and the unique features that a foreign investor wants from a state. The case can be used in its entirety or in part as appropriate. For example, one could investigate recruiting methods used by U.S. states in the pursuit of FDI and the results of that pursuit. Or one could investigate the facets of employment, such as a non-union environment, educational development, and tax policies, that are particularly attractive to foreign investors. Or one could compare the incentive packages offered by various southern states and determine the return on their investment.

Countries are faced with numerous challenges as they compete for the same Foreign Direct Investment (FDI) dollars. FDI is increasing as the world evolves into a global marketplace for industry. The U.S. government continually adjusts its policies and tax procedures in order to be a viable player in the world market. The southern U.S. has become more aggressive in recruiting foreign investment by providing incentives to attract industries and communicating the unique advantages they offer to foreign companies interested in a U.S. presence. Many southern states, including Alabama, have been successful in improving their economies and providing new employment opportunities by offering the incentives required to attract FDI and industries to the area.

This case can be used as a template for professors in other states. We have included a reference page to assist others in modeling a case based on what is done here. The figures for FDI initially are reported for the U.S. The Bureau of Economic Analysis (www.bea.gov) offers information for each geographical area. Each state has a web site as well as a Development Office. Much of our information came from the ones for Alabama.

INSTRUCTORS' NOTES

Recommendations for Teaching Approaches

This case helps students appreciate the global reach of business today. In all states, there is foreign direct investment and state development offices to assist in attracting FDI. Allow the students to read the case and then assign the questions. They can use the Internet to find all the answers which are provided below. We also provided an extensive reference section to assist the teacher (and the students if you want to provide it to them). Students are adept at finding information on the Internet and enjoy the success that this case brings.

Discussion Questions

We suggest to first look at Alabama and its participation in trade. The students should answer the following questions:

1. What percent of FDI to the US is in the southern states? …

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