Can someone help me identify and explain the issues a company should explore before deciding whether to export or to engage in foreign direct investment please?I have to assume that a company near...
Can someone help me identify and explain the issues a company should explore before deciding whether to export or to engage in foreign direct investment please?
I have to assume that a company near me wanted to expand into foreign markets - hope this helps you with my question
This is a good question and somewhat similar to your other questions. If a company wants to expand overseas, they need to explore several important things.
First, they need to take assessment of their own financial status. If a company is not cash heavy, they will want to think twice in this economic climate. Companies like Apple are wise; they have tons of cash on hand.
Second, the company should know the target market very well. They need to research whether that target market will grow. Foreign investments can be great; just think of KFC or Coke in China. They are making a killing. However, foreign investments that are ill-timed, or based on faulty information can lead to great losses. The point is that there needs to be thorough research.
Third, the company should also find out about what governmental regulations there are. If the government is too strict, this can lower profits.
Finally, as a general rule of thumb, foreign investments will probably lead the way in the future in terms of growth. China, India, Russia and Brazil are the countries to watch.