Category : Articles
Introduction to International Business
Unit 4 Individual Project
July 3, 2011
In this paper I will attempt to show the purpose for foreign investment regulations as well as list and explain the foreign investment regulations. I will also attempt to show tow issues that concern management when screening potential markets and sites. Last I will go over the steps in the screening process.
Foreign investment is a necessary factor for counties the entire world to maintain economic growth. Therefore there have to be regulations put into place to safeguard investors as well as the countries that they are investing in.
There are many factors that foreign investors should consider such as exchange rates and how they are determined, what type of strategy to use in other to obtain the goals and outcome that they desire. They also need to do research in whatever international business venture or market that they are interested in. Research must be made in what location to set up in, the business environment. (Unit 4 Multimedia Course Material)
The purpose for foreign investment regulation is to control the flow of foreign investments in certain sectors. The aim of the regulations is to maintain a balance between domestic and foreign investments. These regulations also are put into place to address concerns for national security. (India Business Directory, 1999-2010)
Foreign investments are put into place to put foreign capital to work. These regulations include the promotion of local productivity; and technological development, the encouragement of local participation and the minimization of foreign competition in areas that are economically served by the local businesses. (Unit 4 Multimedia Course Material)
These regulations are implemented by requiring the foreign investors to register with the government and to also receive approval form that government for their particular market proposals. How the approval process is handle varies by county. (Unit 4 Multimedia Course Material)
The manger??™s role is to determine what countries to invest in. Factors that the manger should consider when making their determination are economic, political, technology, and developmental factor that are in their country of origin.
??? Economic- The ability for the investor be it a company or a country be able to meet its financial obligations. That is whether or not the company or country will be able to return a profit on its investment and if there will be a change in the policy of the country origin in the area of taxes and any thing that would affect the outcome of doing business in a foreign country.
??? Political- Changes in the government policy that would adversely affect the profits, such as put policies in place that would force foreign investors to turn over a huge amount of their profits or that would limit them on how much they can produce or the demand that they can only use the foreign government??™s ideas and technology.
??? Technology- Some countries are underdeveloped in such technology as highways or roads, cell phone towers, and electricity.
??? Legal Issues- The wise manger consults with the legal departments both at home and abroad to make sure are of the host country regulations are adhered to. (Deresky, 2007)
There are two main issues that concern management when screening potential markers and sites: keeping the research cost at a minimum and checking out each location and potential markets. (Unit 4 Multimedia Course Material)
??? Identifying basic appeal- knowing what the consumer needs and desires, the behavior of the buyer.
??? Accessing the national business environment.- knowing the culture practices; politics; the economy and regulations and knowing who your competitors are
??? Measure market or site potential ??“ developing a market strategy, getting to know the behavior and mindset of the potential buyer.
??? Selecting the right market or site- knowing the employment status and wage rate in the desired location. Anticipating the market trends and shifts, keeping abreast of any changes in the present regulations, evaluating the market size, distribution and logistics. (Unit 4 Multimedia Course Material)
Foreign investment regulations are very important to have in place. It protects the investor as well the desired country that is to be invested in. Without out these regulations foreign countries could come in and cause havoc on the country??™s economy by bushing out the local businesses. It creates a stable balance between foreign investments and local business.
It is essential that managers do the proper research before launching into foreign countries. They need to do their homework and look at the market and site, develop a strategy for marketing, know the buyers attitude and needs and desires. They need to be up to date on the changes in the potential country??™s regulations. Do the proper research can be the difference between launching a successful and profitable business to having the business fail.
Deresky, H. (2007). International Management: managing across borders and cultures Your expected profit . Prince Hall.
India Business Directory. (1999-2010). Retrieved April 15, 2011, from Regulations for Foreign Company Investment: http://business.mapsofindia.com/fdi-india/regulations-foreign-company-investments.html
Unit 4 Multimedia Course Material. (n.d.). Retrieved April 15, 2011, from https://mycampus.aiu-online.com/Classroom/Pages/multimediacoursetext.aspxclassid=308912&tid=195&uid=191915&HeaderText=Course Materials: MGMT220-1101B-06 : Introduction to International Business