4 Important Strategy of Foreign Direct Investment

The globalization andclearance of trade barriers between nations and industrial business have
expanded the horizon of national companies to strengthen their global web and
develop into a powerful multinational company. Thus, self-assessment is a
necessary decision and an invincible step before undertaking a foreigndirect investment to enter a new market. Following are the strategiesa company must adopt to self assess a foreign direct investment (IntelSwot Analysis)
1.    Objectives 
Companies consider theforeign direct investment as it improves its growth and increases the
shareholder’s wealth. Finding the objective of foreign direct investment is its
primary strategy. It includes: (BehaviouralFinance assignment help)

• Revenue - draw new sources of demand for the product or service. When the growth in the local becomes
  stagnant, demand from foreign countries for its resources helps the company
  expand. (Genetic Assignment Help)
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• Cost – if the cost benefit analysis suggests that better profits earned in a foreign market through the better sale of products and other companies working in
  the same market get the same result, a company can improve its horizon in
  that country. (Essay Writer)
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2.    Monopolistic market
Some companies takeadvantage of the monopoly market. If a company has been able to capture the
domestic monopoly market through its advanced technology, it can try to use the
same policy in the international market. A technologically backward country can
be an excellent market for a monopoly company with technologically advanced
tools. Some set up production locations where land and labour are inexpensive.
In contrast, others opt to use foreign raw materials and placer their production
line, wherein the raw materials' site reduces the import charges.
 
3.    Domestic advantage
Assessing the domesticcompetitive advantage is the next strategy of continuing the business in the
home market. The company’s competitive advantage must be exclusive and robust
enough to balance the likely disadvantage of running the business abroad. The
primary competitive advantage of a national company is the economies of scale,
which includes development in production, finance, brand management,transportation, research and development and purchasing niches. Production
economies take place because of extensive equipment automation or production
rationalization through worldwide specialization.
 
4.    Production control ofadvanced technology
The production controlof advanced technology is instead the most crucial strategy of foreign
development investment. Located in developed countries, the large Multinational
companies have access to upgraded technology to develop differentiated products
that other firms cannot copy. Production of these products requires thorough
research and marketing, which most rival companies cannot bear. Moreover, these
companies cannot devote the time and resources to replicate the original
magnificent product. Accompany that developed and marketed such products in the
national market can do the same with significant effort in the foreign market.
 
The 4 strategiesmentioned above help a company to self assesses for foreign direct investment.