Gm Avtovaz Essay

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GM and Avto VAZ were sitting down to finally negotiate a deal that they had originally committed to in 1999, to jointly build and sell Chevrolets in the Russian market. This car market was expected to account for a significant share of global growth over the next decade. GM felt pressure to jump on board or miss the opportunity. Other auto makers were already on the move. Ford, Fiat and Daewoo were already exploring their own opportunities in Russian and GM did not want to be left out in the cold. However, things were not going to be easy due to a weak economy, turbulent car market, legal problems of Avto VAZ related to tax evasion, the fact that Avto VAS was horribly inefficient at building cars, and a divided showing
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The clarity of ownership was like trying to figure out how many licks it takes to get to the center of a tootsie pop! However, this wasn’t just unique to just Avto VAZ, unclear ownership was a common problem among Russian companies. This problem contributed directly to their difficulty in securing foreign investments in Russia, just imagine who would feel comfortable investing, when they aren’t sure what or who they are really investing in?!? After taking a closer look at Avto VAZ it looks like two different management groups controls the majority of their shares, AVVA (All-Russian Automobile Alliance) 32.35% of shares and AFC (Automobile Finance Company) 19.19% of shares, OAO Russian Invest 5.45% of shares and ZAO Depository Center 5.05% and the rest of the shares widely held. Then it only gets complicated from there, Avto VAZ owned an 80.8 interest in AVVA, and it appears AVVA was also someway controlled or influenced by Boris Berezovsky one of Russia’s most high profile oligarchs. It would appear however that Avto VAZ owned themselves and were involved in a partnership with Berezovsky which was set up to heavily benefit Berezovsky and not AvtoVAZ? It would appear so. He was set up with a distributor who didn’t have to pay until much later than the inventory moved and collected their own payment directly from the customers. Logo VAZ, would become one of Russia’s largest auto importers and Berezovsky would become extremely
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