Foreign Direct Investment (FDI) In US and China

Foreign Direct Investment (FDI) In US and China Assignment Help Foreign Direct Investment

Foreign direct investment (FDI) could be defined as the investment of an organization based in a particular country

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in the company or entity of the organization based on another country. It is different from the indirect investment in foreign nations such as portfolio flows or investment in equities listed in national stock exchange of that particular foreign country. The direct investment by an entity or a company has significant influence and control into the entity or company in which the investment is made (Jones & Wren, 2006). For example given by FDI assignment help experts, if an US based organization takes some stake in China based organization then it will be termed as direct investment made by American firm. The availability of skilled labour, natural resources, and growth prospects is some of the major aspects, which attract the FDI. There are number of ways through which direct investment could be made such as share acquisition of foreign company, merger, joint venture etc.

Business Objectives of FDI Sales Expansion: To increase the competitiveness in foreign markets, manufacturing and service firms try to have a physical presence in those markets. Physical presence helps the businesses to eliminate the various trade, official and hidden barriers in new markets. These barriers generally appear due to government policies, perception of consumers for the country of origin etc (Tolentino, 2003). At the same time our FDI case study assignment help experts said that, the physical presence reduces the transportation cost and human resource compensation from the country of manufacturing, which increases organizational profitability.

Resource allocation: It is another business objective that outweighs the risk of FDI as an alternative to trade. Company can generate savings through vertical FDI in which firm facilitates manufacturing facilities of the different stages of production in different countries. This is developed by the businesses on the basis of input cost and availability of skilled labour (Jones & Wren, 2006). Additionally, the firm also gains the ability to increase production capacity, operation portfolio and sometimes, also gains the government incentives for establishing the business practices in those countries. Risk reduction: Businesses also prefer FDI to minimize the risks related to business and financial instability as through this business can facilitate diversification. A firm could invest in the company engaged in different activities for diversification to gain new opportunities. It also helps the businesses to increase the area of expertise including flexibility. The firm also enables to survive in the unstable market demands (Moran, 2006). At the same time, firm could also find supplier base diversification that is beneficial for the firm to stabilize its supply chain and acquire the required components from the multiple vendors at safe and favourable conditions.

Political objective: It is another major reason of FDI, which is related to the governmental, political and economic regulations. FDI reduces these trade barriers. At the same time, the positive perception of consumers about the products and services of a particular nation’s business also creates opportunities for the firm to expand the business (Tolentino, 2003). These are the major business objectives, which outweigh the risk of FDI as an alternative of trade. Get 100% original and business assignment help services from our experts. We assure you that you will get complete and perfect case study assignment help services from our US,UK and Australia experts.