In what ways does a company making a direct foreign investment in a new factory have more control than a company engaged in direct exporting?
5 comments:
Anonymous
said...
A company making direct investments in a foreign factory have more control than companies simply engaging in exporting because they are more involved in the economics of the country they are doing business in. They can potentially make more profits because they do not have to worry about tarriffs or quotas on exports, because they are not exporting products, they simply own or have invested in a company in another country.
Directly investing in a foreign factory is basically the same as investing in a domestic factory. If you were to invest in a domestic factory, you would have an amount of control based on your investment. Investing in (or even buying) a foreign company is no different. It does offer much more control than just exporting. In exporting, you are just selling a product, but direct foreign investment allows a measure of control over the production of the material and how it is sold in the country.
When you make a direct foreign investment in a new factory it is giving you partial control over some of the things that go on within that company. Instead of just exporting your products and having no control over how its sold, the prices, or the marketing for the product. With a direct investment you can control the materials used to create the product, the manufacturing, and the marketing of the product.
Foreign direct investment has more control over than companies involved in Direct Exporting. This is because they can make more of a profit then that of direct exporting. When you are exporting something it creates an increase in cost. Foreign direct investment, however does give you a little control over something's in the company.
Ways a company making direct foreign investment in a new factory is to make sure the country is stable enough for foreign products or services can handle it without rebellion. Another thing to do is to make sure the company has the money to invest in this new factory. Talking to the government officials would be good to make sure the company does not insult the country by accident.
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5 comments:
A company making direct investments in a foreign factory have more control than companies simply engaging in exporting because they are more involved in the economics of the country they are doing business in. They can potentially make more profits because they do not have to worry about tarriffs or quotas on exports, because they are not exporting products, they simply own or have invested in a company in another country.
Directly investing in a foreign factory is basically the same as investing in a domestic factory. If you were to invest in a domestic factory, you would have an amount of control based on your investment. Investing in (or even buying) a foreign company is no different. It does offer much more control than just exporting. In exporting, you are just selling a product, but direct foreign investment allows a measure of control over the production of the material and how it is sold in the country.
When you make a direct foreign investment in a new factory it is giving you partial control over some of the things that go on within that company. Instead of just exporting your products and having no control over how its sold, the prices, or the marketing for the product. With a direct investment you can control the materials used to create the product, the manufacturing, and the marketing of the product.
Foreign direct investment has more control over than companies involved in Direct Exporting. This is because they can make more of a profit then that of direct exporting. When you are exporting something it creates an increase in cost. Foreign direct investment, however does give you a little control over something's in the company.
Ways a company making direct foreign investment in a new factory is to make sure the country is stable enough for foreign products or services can handle it without rebellion. Another thing to do is to make sure the company has the money to invest in this new factory. Talking to the government officials would be good to make sure the company does not insult the country by accident.
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