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Volkswagen Group Rus and GAZ Group are extending their joint project to produce Volkswagen and KODA cars in Nizhny Novgorod in western Russia. The cooperation between Volkswagen and GAZ started in 2011 with the signing of an agreement for the contract assembly of Volkswagen and KODA cars at the GAZ plant. Under the project, new assembly and body shops were built at GAZ, the paint shop was modernized, logistic and quality control systems were improved, and production of components for Volkswagen and SKODA vehicles was established. The total number of cars produced so far totals approximately 200,000. Marcus Osegowitsch, General Director of Volkswagen Group Rus, commented: 'We are extending our successful partnership with GAZ Group for contract manufacturing because local production has always been a key element of the Volkswagen Group's long-term development strategy in Russia." Based on this vignette, how did Volkswagen enter the Russian market and how would you assess the merits of this market entry strategy? This is a direct investment strategy; it is riskier than either exporting orjoint venturing but poses a big payoff for Volkswagen because of its global expertise in car A . manufacturing. This is a licensing strategy; it is less risky and more protable than eitherjoint venturing or direct investment because of the expertise of GAZ Group in Russia and its stake in A the prot. This is a management contracting strategy; it makes a lot of sense because Volkswagen is unfamiliar with Russia and this entry strategy, even though riskier than exporting, (V is less risky than direct investment. This is a joint venture; it is riskier than exporting but less risky than direct investment a smart move from Volkswagen to balance its risk and potential payoff in a sizable, A but complex, market. 0 This is a multipronged strategy involving both joint venture and direct investment, with the latter specifically entailing assembly facilities