Question Bank International Business

(firms) have overall – some have invested in foreign countries through FDI - felt that

* International Investment - refers to the transfer of assets to another country or the acquisition of assets in that country. Economists refer to such assets as factors of production and they include capital, technology, managerial talent and manufacturing infrastructure.

As well as the direct impact on employment and wider economic benefits of FDI as follows:

FDI allows the home country to invest into the host country to produce, advertise, and distribute products, in order to upsurge their market share and provides a long-term investment and enhancement. (Moosa, 2002)

Foreign direct investment (FDI) is investment that gains control of the foreign business or assets. It is a method of international expansion that gets a controlling interest in property, assets or companies located in other countries. FDI can also involve a business controlling resources such as mineral deposits, land and other assets in other countries. This form international expansion involves a higher level of commitment by the business because it usually involves a transfer of money, personnel and technology.

FDI in a developing economy means the development of the entire national economy on a grand scale, benefiting several other support industries, development of the country 's infrastructure, raising standards of living and increasing per capita income. World-leading manufacturers on

Investments can be categorized as Foreign Direct Investment (FDI) and Foreign Indirect Investment (FII), where Foreign Direct Investment is venturing into an economic activity outside the economy of the investor. It is referred to as Direct Investment because the investor whether as a person or as a company has a direct long term interest in another country's company either through purchase or building and getting involved in the management and control of the operations. An investment qualifies as an FDI when the investor has acquired the voting rights by obtaining 10% of the issuer's common stock.

A firm’s home country is the nation with which it is identified culturally, normatively, operationally and/or by its founding. A firm’s host countries are those in which it has foreign operations (also called “foreign affiliates”), which may occur through foreign direct investment, acquisitions and quasi-diversifications by alliances, joint ventures, and long-term contracts. (p.146)

Foreign direct investment has many forms. Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra-company loans".

This paper analyzes why and how companies set their international business strategies with the host nations and the benefits that they have reaped through the years with their decision. The discussion handles foreign manufacturing strategies with direct investment and without direct investment, its advantages and disadvantages and how companies have profited by their decisions in each of the cases. At the end of the discussion it would be clear that how such business decisions play a vital role in the growth of the companies both in home and host countries

Foreign Direct Investment (FDI) Inflows into World Regions (in Billions of U.S. Dollars per Year)

The second group of policies refers to the actions that foreign companies undertake (Dicken, 2003). Some of the requirements might aim at involving local resources or labour force in the firm’s activities; others might claim certain levels of exports or policies towards the transfer of technology (Dicken, 2003). The third category is based on minimum outflow of capital and higher taxation towards FDI companies. Last, but not least important a number of countries stimulates the inward investment, because FDI might be

financial caliber of the donor country. In this regard, I tally the total volume of both the instock FDI for the recipient country and the outstock FDI for the donor country. The former

FDI has only been treated as separate to traditional theories of capital movements in the internationally sphere since the 1950s (ref: lit review copied text). It became a system and theory in its own right in response to undertakings to understand the inadequacies in projected investment return from different countries, and began to differentiate between them as individual systems. A study by Mundell (1960) showed that some American firms were actually able to gain a higher rate of return on European investments that those in their local economy.

Foreign Investment is direct method to have trade in other country in this a company invest a huge amount of money in selected country. In foreign investment company is going to establish new enterprise own its own in totally new environment. Company have to arrange every single thing like plant, machinery, employees and authorise dealer for marketing the products.