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Foreign Direct Investment
Discuss the impact of corporate taxation on corporate decision-making, particularly investment and transfer pricing decisions
Taxation has a direct correlation to corporate profits and subsequent earnings per share. Taxes are a necessary aspect of the capital markets. In many instances, taxes are needed to maintain the overall economic system in which corporations operate in. Aspects such as national security, infrastructure, social safety nets, and other firms of government initiatives, are financed through taxes. Corporations benefit as they can now operate in a more efficient, credible, and transparent business environment. Taxes however, when excessive can discourage foreign direct investment within particular countries.
Taxes particularly for equity investors, have a profound impact on the overall attractiveness of securities. For one, investors are often taxed twice due to capital gains and dividend income. For instance, investors in equities often receive dividend payments throughout the duration of the year. These payments…
1) Morris, Andrew P. (2010). Offshore Financial Centers and Regulatory Competition. Washington: The AEI Press. ISBN 978-0-8447-4324-0
2) Scevola, Carlo; Sneiderova, Karina (January 2010). Offshore Jurisdictions Guide. Geneva, Switzerland: CS&P Fiduciaire. ISBN 978-1-60594-433-3.
Foreign Direct Investment and the Impact of Terrorism
Foreign Direct Investment provides many opportunities for both the expanding company and the host country. The host country receives an influx of business into their economy and the expanding company receives the ability to expand into new and emerging markets. There are many factors that weigh into a decision to expand and invest in another country. Of course, one of the key factors is a stable economy. The travel and tourism industry is one of the key industries that engages in foreign direct investment. This is especially true among the big chains. The following research will explore the factors that weigh into a decision to invest in a country, and will then focus on the impact that terrorism, has on this decision.
Patterns of FDI Growth Over the Past 20 Years
As the world moves toward a more global economy, there is…
Ahmed, S.(2002) Too many factors deter foreign investment. The DAWN Group of Newspapers, May 20, 2002. Retrieved at http://www.dawn.com/2002/05/20/ebr1.htm . Accessed November, 2002.
Bremmer, I., Zasslavsky, A.(2001) Bush and Putin's Tentative Embrace. World Policy Journal Article: Volume XVIII, No4, Winter 2001/02
Eichengreen, B. (2001)U.S. Foreign Economic Policy After September 11 the. Social Science Research Council. November 1, 2001. Retrieved at http://www.ssrc.org/sept11/essays/eichengreen.htm . Accessed November, 2002.
Finnegan, R. (2002) 'It's the brains, stupid': Kleinsteuber. Interview with Dr. Fritz Kleinsteiber. November 03, 2002.The Jakarta Post, Jakarta.
Foreign Direct Investments in ussia
The evolution of FDIs in ussia can be divided into three distinct time periods: 1996-1999, 1999-2002 and 2002-2006. Throughout the first period, foreign direct investments registered a steady growth from 0.65% of the GDP to 1.68%. Throughout the following period, they significantly decreased to 1.00%. Finally, in the third period, direct investments registered increases and by 2006, they would represent nearly 3% in the country's gross domestic product. For the overall period, the trend was an ascendant one.
FDIs and the Indicators of Institutions
VOICE -- with a value of -0.5687, the freedom of the ussian population to choose their own leaders and speak their minds remains limited; nevertheless, it has not managed to discourage foreign investments
POLSTAB -- of a -0.8474, the political stability remains a delicate issue within the ussian Federation, but neither this has discouraged investments
GOVEFF -- the quality of the…
Alfaro, L., Chanda, a., Kalemli-Ozcan, S., Sayek, S., FDI and Economic Growth: The Role of Local Financial Markets, the University of North Carolina and Chapel Hill, 2001, http://www.unc.edu/depts/econ/seminars/chanda.pdf last accessed on August 12, 2009
Choi, C., Does the Internet Stimulate Inward Foreign Direct Investment? Journal of Policy Modeling, Vol. 25, Issue 4, June 2003, pp. 319-326
Graham, J.P., Spaulding, R.B., Understanding Foreign Direct Investments (FDI), Going Global, 2005, http://www.going-global.com/articles/understanding_foreign_direct_investment.htm last accessed on August 12, 2009
Guidelines for FDI, Ministry of Mines, Government of India, http://mines.nic.in/comp3annex.html last accessed on August 13, 2009
However, the development and implementation of the new fiscal regulations could expand throughout numerous years.
Lack of incentives and transparency in the privatization process - the current administration is basically blamed for its refusal to privatize large state owned companies and numerous banks. In addition, the government is also accused that when they do indeed agree to the privatization of a bank or company, their procedures and reasons are not made public. (Wold ank, 2001)
These issues, alongside with other significant matters have been raised by international organizations and their quick resolve is vital for a balanced economy. While the North Atlantic Treaty Organization places increased emphasis on military strategies and alliances, the European Union places increased interest on all aspects of life. In this order of ideas, the European organization imposed numerous conditions including, amongst others, the reduction of taxation, the implementation of transparency policies and the reduction of…
2007, the World Factbook, Central Intelligence Agency, https://www.cia.gov/library /' target='_blank' REL='NOFOLLOW'>
Ongoing research is inclusive of."..mechanical and instrumentations laboratories and test centers." (Ibid)
Electronics and Infocomm Technology - founded the Centre for Mechanics of Micro-Systems in 1999 which works in collaboration with the Data Storage Institute as well as other partners in production of sensors, actuators, and miniature micro-systems.
Precision Engineering and Nanotechnology - established the Centre for Intelligent Products and Manufacturing Systems which has as its focus research and development of: (1) intelligent manufacturing; (2) automation technology, (3) robotics; (4) mechatronics; and (5) control engineering and computational intelligence. (Ibid)
These are only a few of the initiatives by Singapore in responding to the needs identified if the country is to keep pace with the demands in the manufacturing industry market and the products that are technologically in line with today's applications. Internal factors that positively affect the manufacturing industry in Singapore include the high level of openness in international trade…
Upgrading Capabilities in the Manufacturing Industry (1996) IDA Singapore - News and Events 2 December 1996. Online available at http://www.ida.gov.sg/News%20and%20Events/20050726151313.aspx?getPagetype=20
The Pattern of Innovation in Singapore's Manufacturing Sector (2003) Singapore Management Review. Goliath Online available at http://goliath.ecnext.com/coms2/summary_0199-2495748_ITM .
Wetzel, Hayden (nd) Industrial Process Controls - Singapore
Industry Canada - http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr-98609e.html
For instance, Kirkpatrick, Parker and Zhang (2006) emphasize that, "FDI in infrastructure responds positively to an effective domestic regulatory framework. By implication, where regulatory institutions are weak and vulnerable to 'capture' by the government (or the private sector), foreign investors may be more reluctant to make a major commitment to large scale infrastructure projects in developing countries" (para. 1). A pattern of governmental involvement is apparent in varying degrees among the developing nations that have experienced the most significant economic growth as a result of foreign direct investment.
In an increasingly integrated global marketplace, it is apparent that increased trade will equate to increased economic growth but the level of growth will be directly related to how well developing nations are able to attract the finite amount of FDI that available.
Advantages of Foreign Direct Investment and International Trade
A distinct advantage of foreign direct investment is that it provides…
"Benefits of Foreign Direct Investment," 2010. EconomyWatch. Retrieved from http://www.
de Mello, L.R. (2010). Department of Economics, University of Kent: Studies in economics.
Retrieved from http://ideas.repec.org/p/ukc/ukcedp/9701.html .
Mexico's largest cement manufacturer, Cemex, has transformed itself from a primarily Mexican operation into the third-largest cement company in the world largely because of its obsession with efficient manufacturing and with providing top customer service. Cemex also provides attention to its distributors as well as to its marketing, but most of all Cemex is reputed for its global expansion. Cemex has its cement offices in Venezuela, Colombia, Indonesia, the Philippines, Egypt, and several other countries that include the U.S.A., Britain, Spain, India, and most recently China. CEMEX's career has been one of constant expansion and it has promised to continue this global expansion of its company in the future.
Which theoretical explanation, or explanations, of FDI best explains CEMEX's FDI?"
Foreign Direct investment (FDI) refers to a company making a direct investment in another country, either by buying a company in that other country or by expanding operations of an…
This investment would become the most prevalent in the period after orld ar 2 British economic power declined and the U.S. became predominant ("Our History").
hile in the paper industry U.S. FDI was not as prevalent till the 20th century after the Second orld ar, in the recovery and processing of minerals this occurred in the late 19th and early 20th century as gold, nickel, zinc and other nonferrous metals. This created a mining industry in which U.S. And a lesser amount of British capital soon played roles. Goldwas extracted first by individuals then by large-scale, capital-intensive methods. Established American mining companies set up Canadian branches to carry on this type of prospecting activity such as furnishing skills and capital as well as experience.
From the first, base-metal deposits were exploited in the main by companies that were established and controlled by U.S. mining firms. In the 1920s, U.S. companies…
Campbell, Bruce, and Ed Finn. Living with Uncle: Canada-U.S. Relations in an Age of Empire. Toronto, CA: James Lorimer & Co., 2006. Print.
Cranstone, Donald a. "A History of Mining and Mineral Exploration in Canada and the Outlook for the Future." Minister of Public Works and Government Services,
06 June 2009. Web. 29 Mar 2011. .
Crowley, Terry a. Canadian History: Pre-Colonization to 1867. Piscataway, NJ: REA,
Foreign Direct Investment Project in South Africa
South Africa is a largely free-market economy that encourages foreign investment in private and public sectors. The country is an attractive option for foreign direct investment since it has a transparent regulatory framework, political stability, easy access to raw materials, and a large population. Foreign direct investment (FDI) can be defined as investment made by a business organization or company based in one country into another company or business organization that is based in another country. As a result, the company making direct investments usually has significant control and influence over the one into which the investment is made. An example of a foreign direct investment project is Wal-Mart's merger with Massmart, which enabled Wal-Mart to establish a foothold in a huge consumer market in Africa.
Wal-Mart's Merger with Massmart
As previously mentioned, a good case of a foreign direct investment project is…
Alexander, K 2012, Challenges and Opportunities: The Wal-Mart Effect in South Africa, University of Witwatersrand, viewed 7 March 2016,
Bronkhorst, Q 2012, A History of South Africa's Currency, Business Tech, viewed 7 March 2016,
Kariga, R., Ngobeni, J & Ngobese, M 2012, Is South Africa a Good Investment Destination? A Relook at Conditions in Merger Cases, Compcom, viewed 7 March 2016,
Maylie, D 2011, 'Wal-Mart Gets Nod in Africa', The Wall Street Journal, viewed 7 March 2016,
Qatar's Foreign Direct Investment Law
Qatar's Foreign Investment Law
Why is Qatar Attracting Foreign Investors?
Qatar's Foreign Direct Investment
How to Apply
Qatar's Investment Environment
Qatar's Foreign Investment Law
With a population of approximately 1.7 million people, Qatar happens to be one of the tiniest states in the Arab Gulf. Although Arabic is the official state language, English remains one of the country's most widely spoken languages (CIA). The country's capital is Doha. Being a constitutional monarchy, it is also important to note that since the 19th century, this Gulf Arab State has been under the leadership of the Al-Thani family.
According to the state's Ministry of Economy and Commerce -- MEC, the country has in the recent past been striving to make economic diversification a reality. In the words of MEC, "although oil is the main contributor and component of the gross domestic…
Al Jazeera. "Qatar Business." Al Jazeera Group Ltd., 2014. Web. 2 Feb. 2014.
Beydoun, Nasser M. The Glass Palace: Illusions of Freedom and Democracy in Qatar. New York, NY: Algora Publishing, 2012. Print.
CIA. "The World's Fact Book." Central Intelligence Agency, 2014. Web. 2 Feb. 2014.
Hamdan, Roueida. "Changes in Qatari Foreign Investment Law." Meyer-Reumann and Partners, 2011. Web. 2 Feb. 2014.
Executive Summary This paper provides a proposal for the company on the most suitable country or emerging market for the company to expand its production of ready meals. Ready meals markets have been steadily growing in recent years across all geographical regions of the world. The proposal is based on the increased growth of ready meals markets and institutional analysis of India and China, which are two emerging markets that continue to experience high levels of growth. While India and China are some of the leading emerging markets worldwide, its important for the company to determine the most suitable market to enter. Therefore, this paper seeks to answer the question, “Which emerging market is suitable for expansion of ready meals production between India and China?” To answer this question, the researcher conducts an institutional analysis of each country and identifies opportunities and threats in the market. The analysis is based…
Foger, G.K 2010. Business Environment in China: Economic, Political, and Cultural Factors, University of Southern Indiana, viewed 7 June 2018,
Gaffney, C 2017. US Risk is Rising. Here are Two Emerging Markets that will Outperform, CNBC, viewed 7 June 2018,
Mourdoukoutas, P 2017. 10 Top Emerging Market Funds in 2017: China and India Take The Lead, Forbes, viewed 7 June 2018,
Pavithran, S. & Mukthar, J 2011. A Comparative Study on the Emerging Economies of the World: India or China. International Journal of Economic Issues, vol. 4, no. 1, pp.123-131.
S. billion in 1998. eported as the dominant source of inward FDI in China is that of Hong Kong, followed by Japan, the U.S. And Taiwan.
Summary and Conclusion
This study set out to examine Foreign Direct Investment in China by the multinational enterprise. At present China is a primary source for foreign direct investment due to the favorable laws and regulations governing Foreign Direct Investment in China and the attempt to make location siting of the organization equitable and fair. China has been attempting to pull the company in line with their own expectations as have the multinational enterprises who desire to directly invest foreign funds into China.
Investment (2008) Multinational Corporations. Cush & Wakefield. etrieved from: http://www.cushwake.com/cwglobal/jsp/audienceDetail.jsp?audienceId=18&Country=900095&Language=EN&groupBy=audience
Kroll, CA and Bardhan, a. (2007) Globalization and the eal Estate Industry: Issues, Implications, Opportunities Haas School of Business, UC Berkeley, Paper Prepared for the Sloan Industry Studies Annual Conference.…
Investment (2008) Multinational Corporations. Cush & Wakefield. Retrieved from: http://www.cushwake.com/cwglobal/jsp/audienceDetail.jsp?audienceId=18&Country=900095&Language=EN&groupBy=audience
Kroll, CA and Bardhan, a. (2007) Globalization and the Real Estate Industry: Issues, Implications, Opportunities Haas School of Business, UC Berkeley, Paper Prepared for the Sloan Industry Studies Annual Conference. Cambridge, April 2007. Retrieved from: http://web.mit.edu/sis07/www/kroll.pdf
MULTINATIONAL CORPORATIONS (nd) Cush and Wakefield. Retrieved from:
Yet, what is important to accomplish at this stage is the presentation of the direct effects of the foreign direct investments. If these impacts materialize in growths of the Panamanian economy, it will be safe to conclude that the country reveals an efficient bi-direction foreign direct investment system. In this order of ideas, the following lines reveal some of the most notable impacts of FDIs onto Panama's socio-economic status (they are written in bulleted form to increase readability and clarity):
The first and foremost important impact was given by the massive investments made in the enlargement of the Panama Canal; the effects of such an endeavor were tremendous. On the one hand, the enlarged canal offered greater opportunities for traffic, which in turn materialized in greater revenues from offering services in the canal. Then, this enlargement translated into an increased demand for workforce, which in turn created new jobs, reduced…
Woolford, P., Panama Has the Highest Foreign Direct Investment to GDP Ratio in Latin America, Panama Real Estate Investment, 2008, http://panamarealestateinvestment.org/2008/08/04/panama-has-the-highest-foreign-direct-investment-in-latin-america / last accessed on October 28, 2009
Panama, SICE -- Foreign Trade Information System, http://www.sice.oas.org/ctyindex/USA/ftbpan1999_e.pdf last accessed on October 28, 2009
Panama: Country and Foreign Investment Regime, Low Tax, 2009, http://www.lowtax.net/lowtax/html/jpacfir.html#forinv last accessed on October 28, 2009
Panama FDI Grows 19% in First-Half 2007, Reuters, 2007, http://www.reuters.com/article/economicNews/idUSN1928223720070919 last accessed on October 28, 2009
For instance, McDonald's has a solid partnership with Starbucks that came as a natural solution to the increased consumption of coffee in its restaurants. Starbucks happens to be the world's leading specialty coffee retailer with a worldwide presence that matches that of the fast food producer.
Other factors affecting decision
Vietnam is an Asian country with strong oriental cooking habits, which might not be very compatible with McDonald's typical menu of cheeseburgers and fries with a Coke on the side. Furthermore, the local food seems to be relatively healthy, which again is not something that cam be said by McDonald's food.
In 1990s, the company tried to enter this market, but didn't due to the lack of suitable business partners. A few years later, KFC and Lotteria entered the market and consolidated their position. Therefore, at this point the restaurant chain would need a couple of strong breakthrough strategies…
IMF -- International Monetary Fund, accessed June 09, World Economic Outlook - Vietnam.
Ministry of Foreign Affairs, accessed June 09, http://www.mofa.gov.vn/en/cs_doingoai/
Ministry of Planning and Investment: http://fia.mpi.gov.vn/
Thuy, L.T. 2005. Technological Spillovers from Foreign Direct Investment: the Case of Vietnam. University of Tokyo, www.e.u-tokyo.ac.jp
Foreign direct investment (FDI) is the net inflows of investment to acquire management interest in an enterprise functioning in an economy other than that of the investor. Besides providing inflow of foreign capital and funds, foreign direct investment also enhance in the transfer of skills, technological innovations and job opportunities in an economy. Statistical data have suggested that foreign direct investment in the developing countries have also boost the local productivity growth.
A foreign direct investment can take-up the form of investment by an individual, a group of related individuals, public or private limited company, group of companies, trust, social institutions, government body or any combination of these. Foreign direct investment can be made in an economy through the method of completely owned subsidiary or company; acquisition of the listed company; merger of the related or unrelated enterprises and equity joint venture with another enterprise or business entity.…
Berry T. (2010) A Standard Business Plan Outline. Retrieved through:
Pitelis, C. & Roger S. (2000). The nature of the transnational firm. Through http://books.google.com/books?id=mXjeiQYR088C&printsec=frontcover#v=onepage&q &f=false
Schermerhorn, R. (2009). Exploring Managemen.Through
International Business Across Chinese Border
Heightened global interdependence characterizes Today's economic world. Currently, the world is experiencing an unprecedented degree of cross-border economic and capital interdependence, both with developed and developing economies. The global economic system has dramatically transformed; we are experiencing power being transferred to new players. India and China have become two stars of global interconnectivity and economic expansion.
In fact, just recently, the government of China opened their markets to international investors by implementing laws and regulations that match the World Trade Organization (WTO) policies. Such a philosophical change encourages foreign direct investors in China. Nonetheless, there are various risks involved in expanding to China. One of them is that China's culture is rooted on the Chinese communist, socialist philosophy, which affects the political climate thus the future FDI (Balasubramanyam & Wei, 2004).
Looking at India, they recorded a decline regarding economic growth than most OECD economies…
Agarwal, M. (2009). India's Economic Future: Education, Technology, Energy, and Environment. New Delhi: Social Science Press.
Balasubramanyam, V. N., & Wei, Y. A. (2004). Foreign Direct Investment: Six Country Case Studies. Cheltenham: Elgar.
Lederman, D., Olarreaga, M., & Perry, G. (2009). China's and India's Challenge to Latin America: Opportunity Or Threat? Washington, D.C: World Bank.
Morrissey, O., & Zgovu, E. (2011). The Impact Of China and India On Sub-Saharan African Countries: Opportunities, Challenges, And Policies. London: Commonwealth Secretariat.
Direct investment / Political risk
A distinction between the project and parent perspectives when capital budgeting in a global situation
There are two different viewpoints in capital budgeting known as project and parent. The project is a locally addressed perspective that is child to the parent. The parent is the main organization in which the projects financial and operating cash flows will be directed. The project perspective is very useful in local purposes. However, it is subordinated to the evaluation from the parent's viewpoints (Moffett, Stonehill & Eitemen, 2012). A project evaluation will guarantee cash returns based on the host-governments bonds. In case a project were to fail in receiving cash equal to the bond yield, a parent firm should buy host government bonds instead of investing in a risky project or investing somewhere else. Multinational firms should invest only if they can earn a risk-adjusted return greater than locally-based…
3. A contrast of the various factors that impact foreign direct investment
Foreign direct investment is an investment made by a company and/or entity that is based in one region into another company and/or entity based in another one. There are many things that differ from direct and indirect investments such as the portfolio flow (Moffett, Stonehill & Eitemen, 2012). Therefore, overseas institutions invest in equities listed on a nation's stock exchange. Entities that make direct investments will typically have significant degrees of influence and control over the company into which the investment is made. Nevertheless, the open economies that consist of well-trained workers and project good growth prospects will tend to attract a larger amount of foreign direct investment than the closed economies which are highly regulated economies. Determining the best method that a company will adopt may make its overseas investment encounter different depending on the circumstances of the economic environment.
Some examples would be to set up a subsidiary or associate company in the foreign country, by acquiring shares of an overseas company, through a merger, or joint venture. The regulated threshold for a FDI relationship (defined by the OECD) is at least 10% (Moffett, Stonehill & Eitemen, 2012). In other words, the foreign
Though this research will not provide all necessary data for such a project to be undertaken, it will explore the issue form a side and perspective not often utilized, shedding light on an essential yet often-overlooked aspect of the foreign trade relationship.
Qualitative research is perhaps not the first thing thought of when conducting a trade analysis, but its importance to a proper understanding of the trade relationship cannot be overstated. Such research and analysis requires that the situation be examined in its human terms in addition to the numeric values and inferences drawn from quantitative research and analysis. In determining the perceived motivations and barriers to direct investment, this research will essentially be attempting to analyze and predict responses to changing business situations, and such research almost necessarily takes on a qualitative form (Bavdaz 2009). The predictive value of the proposed qualitative research is, in this instance,…
Bavdaz, M. (2009). "Conducting research on the response process in business surveys." Statistical Journal of the IAOS 26(1/2), pp. 1-14.
Diefenbach, T. (2009). "Are case studies more than sophisticated storytelling?: Methodological problems of qualitative empirical research mainly based on semi-structured interviews." Quality & Quantity, 43(6), pp. 875-894.
MOFA. (2003). "Saudi-British Relations." Ministry of foreign affairs. Accessed 6 March 2010. http://www.mofa.gov.sa/Detail.asp?InSectionID=2306&InNewsItemID=28862
Lavery, B. (2005). "World Business Briefing | Europe: Britain: Saudi Prince Buys the Savoy." NY Times 20 January, pp. 6.
The nation also has an estimated budget surplus of over one-hundred billion dollars, making a continued expansion of infrastructure spending as well as stimulus money -- if needed -- and the provision of incentives to future domestic and foreign business development in the country highly likely (Siddiqi 2008). Oil money, though not the sole source of Saudi Arabia's significant wealth and stability, has played a major part in the country's ability to ride out this economic storm largely unscathed, with hardly a misstep in their march of progress (Siddiqi 2008).
A repetition of a similar analysis at the end of 2009 shows that the country has in fact taken a hit form the global economic downturn, which could hardly be avoided, but the picture is far from dire for Saudi Arabia (Siddiqi 2009). Infrastructure investment is still taking place, and a more in-depth analysis of Saudi Arabia's long-term spending and…
Bushnak, A. (2001). "Investment Needs and Privatization of Water Services in Saudi Arabia." International Journal of Water Resources Development (17(2), pp. 257-60.
Siddiqi, M. (2005). "The rise and rise of an equity culture." Middle East (361), pp. 44-9.
Siddiqi, M. (2008). "Saudi Arabia: Bucking the global trend?" Middle East (392), pp. 44-8.
Siddiqi, M. (2009). "Responding to international crisis.." Middle East (401), pp. 46-50.
In addition, a series of joint ventures in which West German steel firms joined with East German firms and Krupp, Klockner, and Thyssen of Germany was pursuing other developmental initiatives in eastern Europe as well. Likewise, Arbed of Luxemburg was involved in steelmaking facilities in the former East Germany. According to Mangum et al., "The rising market for improved galvanizing for automobiles, appliances, canning, and other uses is producing a rash of joint ventures throughout the world. Some of these are internal to various countries and others involve international partners" (p. 74).
As a result, nearly 30% of the world's steel supply is now produced by plants belonging to companies that did not exist just 3 decades ago (Ahlberg, Pitkanen & Storsch 1999). As these authors point out, "Such upstarts have entered a global market that since 1980 has grown by less than 1% a year -- an average combining…
Ahlberg, J., A. Pitkanen and L.L. Schorsch. 1999. "Forging a New Era for Steel." The McKinsey
Altunisik, M.B. And O. Tur. 2004. Turkey: Challenges of Continuity and Change. New York:
Wiles (2003) note ways in which Chinese practices of technical communication are affecting foreign businesses operating in China and some of the Western methods that China has to learn to be effective. Specifically, Wiley notes how Western companies have developed single-souring skills that the Chinese will have to adopt to be successful in technical communication. Chinese culture is a high-context culture in which information is more tacit and less explicit, and Chinese culture therefore places less focus on the user. The explicit nature of Western communication works in the Chinese context because it is based on making the user understand, and the Chinese will have to adopt this same approach in order to trade with the West, where the user wants to be the center of attention and wants to be informed directly.
A report by Anthony (2003) also suggests that China's business culture is being changed by foreign…
Anthony, T. (2003, December 12). U.S. companies changes Chinese lives - and corporate culture, too. AP Worldstream. Retrieved August 11, 2007 at http://www.highbeam.com/doc/1P1-88501330.html .
Bates, C. (2005, July 1). Leveling the international playing field: while some foreign trade practices are simply unfair, recognizing that is one thing; doing something about it is another. American Machinist. Retrieved July 13, 2007 at http://www.highbeam.com/doc/1G1-134386431.html .
Bodeen, C. (2006, January 25). Google Launches Search Engine in China. AP Online. Retrieved August 13, 2007 at http://www.highbeam.com/doc/1P1-117759613.html .
China Compulsory Certification (CCC Mark) (2006). http://www.export.gov/china/exporting_to_china/CCCUpdatedInfo.pdf .
Determine which institutional and risk factors must be considered and whether they support entry or not.
The company needs to evaluate critically the risks and institutional factors before deciding on entering the foreign market. The institutional and risk factors must be relevant to the ambitions and expectations of the company. Institutional factors constitute three principal aspects. The first aspect of institutional factors is the political institutions for instance the nature of policymaking, regulations, and adjudications in the foreign market. The company intending to enter the foreign market must ensure that the political institutions support its mission and vision in the process of exploiting the scarce resources within the economy (Baek, 2011). The second institutional factor is the economic situation of the foreign country. Economic nature of the nation would be in the form of structure of the national factor markets and accessibility of the international factors of production.…
Baek, K., & Qian, X. (2011). An Analysis on Political Risks and the Flow Of Foreign Direct
Investment In Developing And Industrialized Economies. Economics, Management & Financial Markets, 6(4), 60-91.
Seyoum, B. (2011). Informal Institutions and Foreign Direct Investment. Journal of Economic
Issues, 45(4), 917-940.
Foreign Policy of China (Beijing consensus)
Structure of Chinese Foreign Policy
The "Chinese Model" of Investment
The "Beijing Consensus" as a Competing Framework
The U.S.-China (Beijing consensus) Trade Agreement and Beijing Consensus
Trading with the Enemy Act
Export Control Act.
Mutual Defense Assistance Control Act
The 1974 Trade Act.
The Operational Consequences of Chinese Foreign Policy
The World Views and China (Beijing consensus)
The Managerial Practices
Self Sufficiency of China (Beijing consensus)
China and western world: A comparison
The China (Beijing consensus)'s Policy of Trading Specialized Goods
The versions of China (Beijing consensus)'s trade development
The China (Beijing consensus) Theory of Power Transition
Foreign Policy of China (Beijing consensus)
ACD arms control and disarmament
ACDA Arms Control and Disarmament Agency
ADB Asian Development Bank
ADF Asian Development Fund
APEC Asia-Pacific Economic Cooperation
AF ASEAN [Association of Southeast…
Barnett, A.D. (1977). China (Beijing consensus) and the Major Powers in East Asia. Washington, DC: The Brookings Institution. Retrieved September 10, 2011, from Questia database: http://www.questia.com/PM.qst?a=o&d=34158088
Boorman, H.L., Eckstein, A., Mosely, P.E., & Schwartz, B. (1957). Moscow-Peking Axis: Strengths and Strains (1st ed.). New York: Harper & Brothers Publishers. Retrieved September 10, 2011, from Questia database: http://www.questia.com/PM.qst?a=o&d=53424557
Sardesai, D.R. (1974). Chapter 6 India: A Balancer Power?. In Southeast Asia under the New Balance of Power, Chawla, S., Gurtov, M., & Marsot, A. (Eds.) (pp. 94-104). New York: Praeger. Retrieved September 10, 2011, from Questia database: http://www.questia.com/PM.qst?a=o&d=14691923
Chawla, S., Gurtov, M., & Marsot, A. (Eds.). (1974). Southeast Asia under the New Balance of Power. New York: Praeger. Retrieved September 10, 2011, from Questia database: http://www.questia.com/PM.qst?a=o&d=14691822
Foreign business environment: Columbia
A. What events (political, economic, and technological) are the most important in recent years that might have impacted the business culture in Colombia?
Individuals who perceive Colombia as still being paralyzed by crime networks and drug cartels are skeptical and bewildered by the notion of a confederation of politicians, business leaders, and academicians visiting the nation. However, in reality, the situation in Colombia is far different from what it was a mere ten years ago.
Colombia’s infamous cruel and powerful drug cartels emerged during the latter part of the seventies era and developed in the subsequent two decades. Specifically, the Cali Cartel and Pablo Escobar’s Medellín Cartel were politically, socially and economically influential in the nation in this period. During the last two decades of the twentieth century, the world regarded the nation as being well on its way to becoming a failure as a state.…
This also implies inadequacies in fiscal sustainability, which influences investments in private sectors.
The second channel happens through the level, composition and quality involved within the public investment, which shows the level at which the public investment replaces the private investments (Schmidt- Hebbel, Serven, & Solimano, 1996).
The final channel regards the level of taxation on the corporate earnings and the rules applicable in depreciations.
There have been arguments that fiscal policy and public expenditure reduces the private investments in two different manners. These include increasing the interest rates or lowering the private funds involved in financing the investments.
According to the neoclassical theory, the interest rate is also an imperative variable in finding the level of investment. Consequently, it results into a negative effect because it upsurges the interest payable in investments. Concurrently, McKinnon and Shaw, contends that this is likely to cause a positive relationship between the investment…
Shrestha, M.B. (2005), "ARDL Modelling Aproach to Cointegration Test," Proceedings of the 46th Annual Conference of New Zealand Association of Economists, Paper
No. 13, Wellington, July 2005.
Keynes, J.M. (1936). General Theory on Employment, Interest and Money., London,
The State is just taking back its rightful property under the contractual obligations of the agreement signed between the host State and the foreign investor who' assets are being seized in the expropriation. Another cause for direct expropriation is the concept that the State will in some way gain financially, socially, or economically from the expropriate assets beyond their value of compensation. If a particular investment can generate more positive results in the hands of the State, it is legal to file expropriation proceedings if the full value of compensation is covered as determine by an international tribunal.
In the European Union, direct expropriations are most common. Based on a common peace and favorable diplomatic relations between the countries within the European Union, there is little need for many investors to worry about unlawful and forceful expropriation, as seen in developing or communist nations. Some investors may invest within a…
Dolzer, Rudolf & Schruer, Cristoph. (2008). Principles of International Investment Law. Oxford University Press.
Edsall, Rachel D. (2007). Indirect expropriation under NAFTA and DRCAFTA: potential inconsistencies in the treatment of state public welfare regulations. Boston University Law Review. Vol 86:931-962.
Hober, Kaj. (2007). Investment Arbitration in Eastern Europe: In Search of a Definition of Expropriation. Juris Publishing Inc.
Merriam-Webster. (1998). Collegiate Dictionary. 1 oth ed. Merriam Webster Publishing.
When this happens, the standard of living and income levels will remain stagnant. (Bhargava, 2006, pp. 341 -- 362) (Cazurra, 2008, pp. 12 -- 27)
Moreover, corruption will increase the costs of doing business inside a particular area. This is troubling, as it will lead to less employers relocating to the region. Instead, they will seek out locations where there are lower amounts of corruption. This is a part of an effort to keep their costs as low as possible so that they can increase their overall returns and remain competitive in the global marketplace. For the region, this will result in less high paying jobs (which helps contribute to an increase in the unemployment rate). (Bhargava, 2006, pp. 341 -- 362) (Cazurra, 2008, pp. 12 -- 27) (Heineman, 2006, pp. 75 -- 86)
How can MNCs deal effectively with these problems?
The ways that MNCs are able to deal…
Berg, N. (2004). How Multi-National Corporations Deal with their Social Political Stakeholders. Asian Business and Management, 3 (3), 299 -- 313.
Bhargava, V. (2006). Global Issues. Washington DC: World Bank.
Cazurra, a. (2008). The Types of Corruption and FDI in Transition Economies. Journal of International
Management, 14 (1), 12-27
Dell, HP, Microsoft, Exxon Mobil and Wal-Mart has emerged as the strong candidates in the international market, which has been possible only because the companies have avoided and curtailed the possible security risk either through strategy in which the focus has been to aver the security concerns either through provisions for the social welfare of the people in the region, or through relocation (Erik, 2004). The United States has therefore maintained its lead in the war of trade in the field of globalization with the weapons of research, technological advancement and services fully active and supportive.
It is proposed that the country should devise a strong security monitoring system which should be compatible to the economic and trade system and linkages of other countries, the government of the United States should not design its economic policies as per the security concerns prevalent in the certain regions, rather areas of…
Dell Champlin, Paulette Olson. The Impact of Globalization on U.S. Labor Markets: Redefining the Debate. Journal of Economic Issues. Volume: 33. Issue: 2. 2001. Association for Evolutionary Economics.
Kunihiko Imai. The Impact of Globalization on Civil Liberties: Asian vs. Non-Asian States. International Journal on World Peace. Volume: 19. Issue: 1. 2002. Professors World Peace Academy.
Erik S. Reinert. Globalization, Economic Development and Inequality: An Alternative Perspective. Edward Elgar Publishing. 2004. pp. 23-67.
Jonathan Michie, John Grieve Smith. Globalization, Growth, and Governance: Creating an Innovative Economy. Oxford University Press. 2001. pp. 103-129.
S. has unilaterally imposed sanctions to punish ran for its support of these activities. To address the shortages from this embargo, the ranian government has been working on developing nuclear power. They claim that this will help to tackle the nation's current and future energy needs. (Khan, 2010, pp. 77 -- 110)
This has led to the UN imposing another embargo against the slamic Republic for their continuing incompliance with international law. At the heart of the issue, are concerns that ran is using their nuclear energy program as a cover for developing an atomic bomb. The fear is that the ranians will pass on nuclear related materials to terrorist groups or they will use these weapons to attack the U.S. To prevent this from happening, America is leading an international effort to further isolate ran. n response, ran has been defiantly working on their program. This has caused the…
In the case of Iran, they are at the far end of the spectrum by wanting to destroy the U.S. And everything that it stands for. This has increased the amount of covert actions that are taken against the Islamic Republic. At the same time, this helps the U.S. To push its trading partners to isolate Iran (which is causing their economic situation to become even worse). This is showing how America's approach can be used as way to reward or punish a country for their activities. (Sutter, 2012, pp. 37 -- 59)
In the case of China, the fact that they were willing to work with the U.S. And implement many of the economic reforms led to improved relations between both countries. This is when China received favored trading status and was provided with tremendous amounts of foreign direct investment capital (which helped to increase economic development). These changes were occurring despite China's terrible human rights record and lack of political changes. This is showing how efforts to implement at least some of the reforms led to more support in the future from the U.S. (Sutter, 2012, pp. 37 -- 59)
These different approaches are illustrating how the U.S. is rewarding those countries that are in support of international standards with various forms of economic and military aid. While nations that are unwilling to do this, will face the possibility of isolation. This is designed to put pressure on
China and Foreign Policy
With reference to any ONE country you have studied, how far does interdependence shape its foreign policy and in what ways
A Brief History of Chinese Foreign Affairs
Current Foreign Policy
Foreign elations and Interdependency
China is an emerging force in the world, and it seems only to be natural, as the Chinese civilization is one of the ancient civilizations of the world. In fact theorists seem to question the reasons for its downfall, as it is the largest and has historically been the cultural and educational center for the world.
As far as its foreign policy is concerned, the Chinese government deals with it in a unique way, where the foreign affairs are the business of the Ministry of Foreign Affairs, which falls under the ambit of a department called the "Foreign Affairs Leading Small Group of the Communist Party of China."…
Barboza, D. 2011. Entrepreneur's Rival in China: The State. New York Times .
Chen, J. 1979. China and the West . Hutchinson.
China. n.d. [Online] Available at: (26 January 2012)
China's Foreign Affairs and International Relations. 2012. . [Online] Available at: (26 January 2012)
The global carmaker work investing automobile assembly facility Chennai, India a local partner. Explain potential reasons investment. Will company exercise a great deal control operation? Why ? Over areas company exercise control, areas cede control partner? If required resources http://hbswk
Automotive company: Investing in Chennai, India
While the automotive market of the developed world could be described as supersaturated, the market for cars in the developing world is growing. Establishing our company as a multinational firm could be an important cushion against potential economic downturns in the future. Our company, like so many automobile companies, was hard-hit by the economic recession. "On average, establishments with multinational ownership performed better than local competitors, but there was considerable differentiation in the role of foreign direct investment" (Alfaro & Chen 2010). Although all sectors of the global economy felt repercussions from the crisis, not all nations were equally hard-it and some…
Alfaro, Laura & Maggie Chen. (2010). Surviving the global financial crisis. HBS. Retrieved:
Park, Daniel. (2008).Managing alliances, joint ventures. B2B International. Retrieved:
185). Components for these products may be manufactured and put together in branches in various countries throughout the world. Thailand, Malaysia, Singapore, and Hong Kong were involved in the earliest types of production sharing, which included assembling electronic components manufactured in other countries. Production sharing, one World Bank study determined, currently contributes to approximately 30% of manufacturers' total global trade. Foreign affiliates' international exports approach over 7% of global GDP, approximately $2 trillion.
The World Trade Organization (WTO), which came into being in 1995, the only worldwide international organization that deals with rules of trade between countries, maintains their goal to be to assist producers and manufacturers of services; goods; exporters; importers in carry out business. ("What..., 2006, para. 1) "One of the youngest of the international organizations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second…
Andrews, R., Biggs M., & Seidel, et al. M. (Eds.). (1996). The Columbia World of Quotations.
New York: Columbia University Press. Retrieved on June 7, 2006 at http://www.bartleby.com/66/50/1950.html& ;
Barrera, A. (2004). "Who Benefits from Outsourcing?" Retrieved on June 7, 2006 at http://www.religion-online.org/showarticle.asp?title=3115.
China's Economy And Foreign Policy
There have been radical changes in the internal political and economic scenario of China during the last two decades. (Lampton, 2001) The growing economic stability and control has increased the status of china to a great extent among its trading counterparts. Further, it has become obligatory on the part of the Chinese Government to make it certain that the economic development to restructure the political discipline whose ideology had a severe jolt with the fall of Soviet Union. (Part Two - Chinese Foreign Policy) Ever since the inception of economic reforms in China during 1978 there is a considerable enhancement in the Gross Domestic Product to the tune of 9.5% per annum on average. It is pertinent to probe on the factors responsible for such a great success. The success is attributed to the adoption of institutions and policies by the Chinese Government that could…
Burns, Robert (1997) "Gore, Gingrich set missions to woo China" The Associated Press.
Carr, Earl. (February 19, 2004) "U.S. Diplomacy Needs Chinese Characteristics" Asia Times. pp: 5-7
Chinese Foreign Policy. Program for Contemporary Silk Road Studies. Retrieved from http://www.silkroadstudies.org/china.htm Accessed on 18 March, 2005
Chow, Gregory. (2000) China's Economic Reform and Policies at the Beginning of the 21st Century. Perspectives. Vol: 2; No: 1; pp: 47-53
In a sense, a foreign acquisition target is assessed in much the same way that any other target would be, but the specifics of the evaluation may differ. All acquisitions must be priced, and this price needs to take into account all of the different risks. The difference with foreign acquisitions is that the risks are going to have different weights. For example, there is little incremental political risk involved in a domestic acquisition, but there is with an international one. Sometimes, there is a lot of incremental political risk. Foreign acquisitions will typically involve foreign exchange rate risk, to a higher degree than the firm currently faces. Post (2006) notes that there are often risk premiums associated with foreign acquisitions, and these risk premiums can increase the price and reduce the return
So because the risk profile of international acquisitions is different, the hurdle rate for such…
Investopedia. (2014). Real option. Investopedia. Retrieved October 15, 2014 from http://www.investopedia.com /terms/r/realoption.asp' target='_blank' REL='NOFOLLOW'>
GM's Chevy Volt and its all-electric design, as well as diesel-electric and conventional gas-electric hybrids could and must replace the image of the 'old' GM in the public's imagination. The company has shed the Hummer stigma, now it must create a new image for itself in the future, not just domestically, but internationally.
Gas-free cars future priority. (2009, April 20). China Daily. Retrieved August 6, 2009
General Motors. (2009). Company history. Updated August 4, 2009. The New York Times.
Retrieved August 6, 2009.
Hu, Lei. (2008). GM's joint venture is China's top-selling brand in 2007. Edmunds.
Retrieved August 6, 2009.
Jason. (2004). The global hybrid race: Is Europe catching the fever. GreenHybrid. Retrieved August 6, 2009 at http://www.greenhybrid.com/wiki/index.php/The_Global_Hybrid_Race:_Is_Europe_Catching_The_Fever%3F
ald, Matthew. (200, August 5) $2 million in grants to speed up electric car manufacturing.
The New York Times. Retrieved August 6, 2009.
Ying, Tina &…
Gas-free cars future priority. (2009, April 20). China Daily. Retrieved August 6, 2009
General Motors. (2009). Company history. Updated August 4, 2009. The New York Times.
Retrieved August 6, 2009.
usinesses experience profit cycles implying that market fluctuations are inevitable in an economy. Market demand plays a crucial role in the profitability of an enterprise and consequently affects the investment trend. A profitable firm is more likely to invest money to improve production facilities or to extend its business into other domains. Investors will analyze the profitability of any undertaking and only if the expected revenue is greater than the cost of capital will they invest in the project. Keynesian theory also states that the Marginal efficiency of Capital is inversely related to investment. "[t]o induce new investment 'the rate of return over cost must exceed the rate of interest'. [Richard C.. Johnsson] For all businesses profit is the ultimate motivation and any new venture is undertaken only if the internal rate of return is above the cost of capital defined by the prevailing rate of interest. Hence…
J. Bradford DeLong, From Investment Demand to the IS Curve: Low Interest Rates," Accessed on June 7th 2004, http://www.j-bradford-delong.net/multimedia/ISLM2.html
Richard C.B. Johnsson, 'The Liquidity-Trap Myth', Accessed on 7th June 2004, http://www.mises.org/fullstory.asp?control=1226
Foreign Corrupt Practices Act: What it Is and What it Does
The Foreign Corrupt Practices Act of 1977 as amended was passed in response to the discovery of numerous corporate misdeeds, including accounting irregularities, by Northrop, Lockheed, Gulf Oil by the Watergate special prosecutor and a subsequent investigation by the Securities and Exchange Commission that found these practices were prevalent in American business, including nearly a quarter of the Fortune 500 companies. This paper provides a review of the relevant literature to determine the rationale in support of the passage of the Foreign Corrupt Practices Act and what it prohibits. An analysis concerning the impact that the Act has had on American business at the national and international level is followed by a discussion concerning penalties for violations of the Act. An assessment of the impact on U.S. commerce is followed by a discussion concerning enforcement responsibility for the Act…
Boedecker, K.A. (2011, July 1). Rising risks and uncertainties for U.S. firms' gifts, travel and entertainment expenses for marketing in foreign countries: The implications of increased
Foreign Corrupt Practices Act enforcement. Journal of Legal, Ethical and Regulatory
Issues, 14(2), 73-77.
Culp, C.L. & Niskanen, W.A. (2003). Corporate aftershock: The public policy lessons from the collapse of Enron and other major corporations. Hoboken, NJ: Wiley.
Foreign Direct Investment
Why has foreign direct investment (FDI) increased in recent decades?
According to the OECD, (Organization for Economic Co-operation and Development), one of the major trends in the global economy during the recent decades is the increase in the foreign direct Investment (2001, p.101). Foreign direct Investment is the process of establishing, owing and controlling the production of goods and services in the foreign country or in simple words, it can be defined as the real assets which are abroad. It is associated with the transitional corporations which expand their global activities.
If we go back 50 decades, we find out that foreign direct Investment was considered as an unhelpful, unconstructive, negative and a method of introducing improper technology for the developing countries. However, a completely different view of FDI has emerged in the last two-three decades and today it is considered as very beneficial for the economic…
Aghion, P & Howitt, P., 1998, Endogenous growth theory, MIT press, Cambridge Massachusetts.
OECD, Organization for Economic Co-operation and Development. 2001, New horizons for foreign direct investment, Global Forum on International Investment.
Urata, Shuijro & Kawai, H., 2000, "The Determinants of the Location of Foreign Direct Investment by Japanese Small and Medium-sized Enterprises," Small Business Economics 15.
UNCTAD., 1999. World Investment Report, UNCTAD, Geneva.
The Risk of Trade ith India
Over the course of the last decade, the once stagnant Indian economy had become among the fastest growing in the global community. The opening doors of free trade have made India a top destination for high-tech companies, a major service industry provider and host to countless foreign trade and production endeavors. However, just as its fortunes have improved with the proliferation of globalization, so too have its recent fortunes felt the decline of the global recession. As reported in an article from Businessline, Chennai, "due to the difficult financing conditions prevailing in the international credit markets and increased risk aversion by the lending counterparties, gross inflows of short-term trade credit to India declined in 2008-09 and this trend continued in 2009-10." (Anonymous, p. 1)
Still, India remains an economy rife with growth potential for foreign investors. An important factor in…
Anonymous (2010). NEWS: Export credit shows declining trend. Businessline, Chennai, pg. 1. Retrieved from library portal via coursenet.
Gill, A., Biger, N., & Tibrewala, R. (2010). Understanding and Mitigating Direct Investment Risk in the Indian Real Estate Market. Business and Economics Journal, 2010, 1-10. Retrieved from http://astonjournals.com/manuscripts/Vol2010/BEJ-2_Vol2010.pdf
However, the Thai government's guidance on growth has been conservative; if we take the orld Bank's pre-crisis estimate of 6.2% (Thailand Business News) and factor in Chatikavanij's warning, Thailand's near-term growth potential comes in at a healthy 4.2%.
From a pure value perspective, Thai stocks are already trading at relatively cheap levels (Reuters). The SET is valued at roughly 12 times estimated 2010 earnings, which makes it the second-cheapest market in Asia (behind Pakistan) and significantly undervalued compared to Indonesia (14 times 2010 earnings) or Malaysia (15.7 times 2010 earnings). hile it may be time to reconsider our sector weightings in order to take advantage of bargains in Bangkok (and dump stocks that are looking rich or in danger of deteriorating further as the political crisis continues), it would probably not be prudent to move money away from the market entirely.
The idea of reallocating some or all of the…
Peck, Grant. "Emergency Declared in Thailand Protests." The Associated Press. 7 Apr. 2010. Web. 27 Apr. 2010.
Plessis, Prieur de. "Mobius Sees Value in Thailand." Daily Markets. 26 Apr. 2010. Web. 27 Apr. 2010.
Globalization and Education
Globalization involves a number of different elements, including economic integration, freedom of capital movements, and the increasing "transfer of knowledge, cultural stability" and an increase in cultural interactions (Al-odhan, 2006). The process of globalization has been fostered by industrial-age improvements in transportation, communication and through political and economic liberalization. One of the antecedents of the era of globalization was the creation of the European Common Market. When this was extended to not only allow for goods and capital to move more easily across borders but labor as well, this ushered in a new era of mass migration. Today, many of the world's leading cities have incredibly diverse populations, as people from all over the world are drawn by the economic promise of major urban hubs. One of the areas where this trend can be seen is with education. For decades, education has been trumpeted as a pathway…
Al-Rodhan, N. (2006). Definitions of globalization. Geneva Centre for Security Policy. Retrieved November 17, 2015 from http://s3.amazonaws.com/academia.edu.documents/30929642/Definitions_of_Globalization_-_A_Comprehensive_Overview_and_a_Proposed_Definition.pdf?AWSAccessKeyId=AKIAJ56TQJRTWSMTNPEA&Expires=1447724149&Signature=KHFcmax%2BQD8oIUr9BWJZz%2BFEzb4%3D&response-content-disposition=inline%3B%20filename%3DDefinitions_of_Globalization_A_Comprehen.pdf
Grootaert, C. (1994). Education, poverty and structural change in Africa: Lessons from Cote d'Ivoire. International Journal of Educational Development. Vol. 14 (2) 131-142.
Kwiek, M. (2001). Globalization and higher education. Higher Education in Europe. Vol. 16 (1) 27-38.
Vaira, M. (2004). Globalization and higher education organizational change: A framework for analysis. Higher Education. Vol. 48 (2004) 483-510.
Wal-Mart Accounting and Finance
Determine whose rate of return (i.e., local or parent currency returns) Wal-Mart should use when evaluating foreign direct investment opportunities and justify the position.
Foreign Direct Investment (FDI) is an international flow of capital that provides a parent company or multinational organization with control over foreign affiliates. The behavior of exchange rates influences FDI activity. Exchange rates are defined as the domestic currency price of a foreign currency. Exchange rates can influence both the total amount of foreign direct investment that takes place and the allocation of this investment spending across a range of countries (Bogoslaw, 2009).
Wal-Mart is among many multinational companies that have expanded production and distribution networks globally to take advantage of opportunities for higher local rates of return, market share, and accessibility to production inputs (Nathan, 2012). This -- along with foreign government import restrictions, opening of new markets and invitation for…
Bogoslaw, D. (2009). Emerging Markets: Time to Invest?. Businessweek Online, 8.
Huang, Q., Nijs, V., Hansen, K., & Anderson, E. (2012). Wal-Mart's Impact on Supplier Profits. Journal Of Marketing Research (JMR), 49(2), 131-143. doi:10.1509/jmr.10.0256.
Marshall, J. (2000). Minor Change, Big Impact. Financial Executive, 16(6), 11.
Nathan, A.J. (2012). Wal-Mart in China. Foreign Affairs, 91(3), 190-191.
International expansion is one of the growth strategies that are embraced by companies in order to improve their bottom-line/profitability. In this paper, we present an elaborate international marketing strategy for ed Bull energy drink. The marketing plan begins with an introduction into the concept of international expansion and marketing and a brief overview of the company. A review of the main conclusions and recommendations is then presented. This is then followed by a discussion of internalization strategy. In this section, the context as well as context and reasons for the firm's internationalization initiation or expansion decision, as well as a discussion of the stage of internationalization at which your chosen firm finds itself. The next section is a discussion of the foreign market segmentation and targeting strategies. Under this section, we justify our choice of a market concentration or diversification strategy, incremental vs. simultaneous entry, the number of countries you…
Doodle, I. And Lowe, R., 2004. International Marketing Strategy: Analysis, Development and Implementation, ThomsonLearning, London.
EastBridge Import & Export Co., LTD, The Import Procedure of Food and Drink, Viewed 14 March 2012, http://www.eastbridgechina.com/En/Show.asp?id=33.
Encyclopedia of the Nations, China Country overview, Viewed 30 April 2012, http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/China.html .
Euromonitor International, Red Bull plans Asian expansion, Viewed 14 March 2012, http://www.marketresearchworld.net/index.php?option=com_content&task=view&id=1232&Itemid=77
. Lack of tax incentives for infrastructure development including
broadband penetration. The key elements of the infrastructure
including electricity, telephone and internet service are at time
unpredictable in their performance. The biggest weakness of India
today is its infrastructure, and with only 30% of the workforce
relying on communications links to other nations, India will be forced
to spend greater and greater percentages of their GNP on making their
infrastructure world class.
. Growth of Instant Messaging and convergence applications may make e-
mail a secondary approach to communicating in India in the next ten
years. According to the (Internet in India Report, 2006) the
corresponding growth of the Instant Messaging and all other forms of
peer-to-peer communications from cellular and PDA devices is expected
to be dominated by the Chinese and Indian markets according to
(Tekelec, 2006) as well. The findings of Ovum Consulting are provided
in the white…
CIA FactBook (2007) - CIA FactBook page on India. Provides an overview of
the Indian economy and political structure. Accessed from the Internet on
July 27, 2007 from location:
Columbus, Louis (2005) - Selling Into India: Lessons Learned From Silvio
Napoli. CRM Buyer Magazine, April 22, 2005. Downloaded from the Internet
It is noteworthy that most recently the government started soliciting opinions from legal academies, interested groups and the general public when drafting a major piece of legislation, to achieve democratic lawmaking and advance further compliance with the law (Lo, V.I., 2007).
The most important economic event at this stage or in the years following the 1978 economic reform in China is undoubtedly its accession to WTO at the end of 2001. Following 15 years of numerous negotiations and adjustments of policies, China eventually entered the mainstream world economy and started enjoying the benefits and facing the challenges of WTO.
In response to WTO requirements, China underwent a "make-over" in many aspects. A brief summary of China's WTO promises is shown in Figure 9A. According to the WTO agreement, China is subject to reviews by the WTO in the 8 years following its accession. The most recent one was announced in…
Bailey, P., China in the Twentieth Century. 2nd ed. 2001: Wiley-Blackwell. 296.
Brainard, S. Lael, "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinationals Sales and Trade," American Economic Review, Sep. 1997, pp. 520-544.
Chow, G.C., THE IMPACT OF JOINING WTO ON CHINA'S ECONOMIC, LEGAL AND POLICAL INSTITUTIONS, in International Conference on Greater China and the WTO. 2001:Hong Kong.
Clarke, D.C., Legislating for a Market Economy in China. The China Quarterly, 2007(191): p.567-585.
Pakistan is the South Asian country and was established in 1947. It shares border with India, Tajikistan, Afghanistan, Iran and China. It has a coastline spanning of 1,046 km with Arabian Sea. The country has highest peaks in the world that are K2 and Nanga Parbat of Karakorum and Pamir in the northern and western highlands of Pakistan. Islamabad, Lahore and Karachi provide the major by air gateways to Pakistan. India and Iran also provides the way to reach Pakistan by train.
There are several favorable characteristics that make Pakistan an ideal country for an international business. However, the country is facing imbalanced economic, societal and political conditions since independence due to which investors gets reluctant to invest in the country. This report reviews the favorable and unfavorable aspects of Pakistan for U.S. investors.
Investors need to consider various factors before making investment for an international business. First…
Dawn. (2012, May 27). Taxation and Foreign Investment. Retrieved July 23, 2012, from Dawn: http://dawn.com/2012/05/27/taxation-and-foreign-investment/
Khan, A.H. (2012, January 31). Instability and Economy. Pakistan.
Mahmood, J. (2012, 07-16). Pakistani Stock Market, Rupee Exchange Rate Rise. Karachi, Pakistan.
Masood. (2010, June 3). Foreign Direct Investment in Pakistan. Pakistan.
isks of Trading and Investing:
Involving a Developing Country with a Developed Country's Business
Description of XYZ Corporation
It will be the assumption within this paper that the multinational corporation depicted resides within the United States, a developed country, while it is trying to generate business with Ecuador, a developing country. A multinational corporation is a corporation that operates by supervising or transports products or services to more than one country. XYZ Corporation is a competitive multinational corporation deeply interested in expanding its business to countries in which they have not already established business in. The company currently focuses on the manufacturing and the wholesale of products in the oil and petroleum industries. Most of XYZ Corporation's foreign entities are located in the Middle East. ecently, a member of the XYZ team has given vital information to corporate executives explaining that Ecuador has enormous oil and petroleum potential that could…
Carroll, A.B. (1991). The pyramid of corporate social responsibility: towards the moral management of organizational stakeholders-balancing economic, legal, and social responsibilities. Retrieved January 14, 2011 from http://findarticles.com/p/articles/mi_m1038/is_n4_v34/ai_11000639/pg_2/
Ecuador.us. (2009, December 21). Ecuador economy, Ecuador exports, Ecuador business.
Retrieved January 15, 2010 from http://www.ecuador.us/business.htm
EconomyPoint.org. (2006). Rate of exchange regime. Retrieved January 13, 2011 from http://www.economypoint.org/r/rate-of-exchange-regime.html
Additionally, its taxation advatantages may erode due to pressure from EU and implicitly its wages will increase as taxes increase. Competition from emerging countries, namely Eastern Europe will become stronger as Ireland allings its strong points to EU standards. Moreover, the country's inflationary problem persistance may strengthen EU pressure on the authorities to reduce it through its fiscal policy.
BBC news channel. 2004. Ireland is Named 'Best Country', published on Nov 17, http://news.bbc.co.uk/1/hi/world/europe/4020523.stm.
Barry, F. And Bradley, J. 1997. FDI and Trade: The Irish Host-Country Experience. The Economic Journal, vol. 107(445): pp. 1798-1811, http://www.res.org.uk/
Berry, . 2001. U.S. Foreign Direct Investment in Ireland: Making the Most of Other's People Money. Perspectives on Business and Economics, vol. 19.
Cassidy, Mark, 2002. The Irish Economy: ecent Experience and Prospects. in: Aronson, ., Munley, V., Thornton, . (Eds.). The Irish Economy in Transition: Successes, Problems and Prospects. Elsevier Science, Amsterdam: pp.…
BBC news channel. 2004. Ireland is Named 'Best Country', published on Nov 17, http://news.bbc.co.uk/1/hi/world/europe/4020523.stm .
Barry, F. And Bradley, J. 1997. FDI and Trade: The Irish Host-Country Experience. The Economic Journal, vol. 107(445): pp. 1798-1811, http://www.res.org.uk/
Berry, R. 2001. U.S. Foreign Direct Investment in Ireland: Making the Most of Other's People Money. Perspectives on Business and Economics, vol. 19.
Cassidy, Mark, 2002. The Irish Economy: Recent Experience and Prospects. in: Aronson, R., Munley, V., Thornton, R. (Eds.). The Irish Economy in Transition: Successes, Problems and Prospects. Elsevier Science, Amsterdam: pp. 5-30.
Business plan for a Multi-National Enterprise that conducts Foreign Direct Investment
Description of the MNE
Paradise Baby Food Company (PBFC) proposes to invest in a factory in India, one of the countries where Foreign Direct Investment (FDI) is growing at a momentous pace, and from there not only create its unique product but also have access to a growing market that is interested in western products. PBFC intends to develop a complete line of health food products for children, using minimal processing techniques. All products will contain wholesome ingredients such as herbs and naturally derived vitamins, minerals, and other supplements. They will be free of chemicals and additives. The herbs are more plentiful in, and cheaper to gain and process, from India. Other companies claim to sell healthy and nutritious baby food, but their herbs are either processed so finely that little remains, or they are imported from long distance…
IBEF. Foreign Direct Investment (May, 2011) http://www.ibef.org/india/economy/fdi.aspx iloveindia.com
Merinews.com. Fast Food Industry in India on the Rise.
The localized supply chains are also critically important for better understanding how market requirements change over time in OP-based regions and nations of the world. The many steps required to create an effective supply chain in a given OP-based region differ drastically from creating one in a more affluent region of the world. The focus on speed and transactions and the ability to increase velocity is the priority in these markets. In OP-based nations the perspective shifts to understanding the dynamics of the market first, and then using these insights to create local competitive advantage. These lessons learned, specifically in the case of SAMiller and others lead to a more effective supply chain formation, management and optimization strategy over the long-term.
Creating and executing effective Corporate Social Responsibility (CSR) programs that serve as market frameworks, defining and executing more effective direct Foreign Direct Investment (FDI) strategies with host nations…
Chattopadhyay, Subho and a.K. Sarkar. 2011. "Market-Driven Innovation for Rural Penetration." IUP Journal of Business Strategy 8 (3): 42-52.
Gouillart, Emily. 2008. "An Interview with C.K. Prahalad." Journal of International Affairs 62 (1): 215-227.
Kennedy, Carol. 2004. "The Fortune at the Bottom of the Pyramid." Director, 36-36.
Prahalad, C.K. 2004. "Why Selling to the Poor Makes for Good Business." Fortune, Nov 15, 70-72.
But when the village is being rebuilt, consensus is not easy (Kurup)." This is a pointed criticism of using a U.S. model where the financial sector is doing well (the speculative economy) as opposed to the "real" economy on the street. Dr. Kurup feels that the infrastructural problems that have dogged India for years need to be solved as well so the recovery is even and across the board. He further remarked in the article that "You have to see the context. Just because we were not affected by the crisis, it does not imply we are safe. One has to look at what is the purpose behind the changes. There is a perception if you develop the bond market, infrastructure will develop. Infrastructure will not develop if the bond market alone is developed. In fact, no country in the world, except for partly the U.S., developed infrastructure through the…
Globalization in India." Economy Watch. Economy Watch.com, n.d. Web. 21 Nov 2010.
Comparison Studies." I Watch. Wake Up Call for India, 2010. Web. 22 Nov 2010.
Airbus is one of the leading producers of commercial and military aircraft in the world. The company has been successful because of the commitment it has to excellence and a global vision. The purpose of this discussion is to focus on the ways and which Airbus functions in various parts of the world given the differing cultures, political, economic and trade issues that differ from country to country. The research will also focus on the ways in which Airbus can deal more effectively with these issues as they arise.
Company information: summary, products, size, etc. Note: (no history)
Airbus is Headquartered in Toulouse, France. The company is owned by European Aeronautic Defense and Space Company (EADS). At the current time the company employs 52,500 people and has many fully owned subsidiaries throughout the world. These subsidiaries are located in the China, United States, Japan and in the Middle East. In…
"A350 XWB Family." Retrieved from: http://www.airbus.com/aircraftfamilies/passengeraircraft/a350xwbfamily/
"A330/A340 Family." Retrieved from: http://www.airbus.com/aircraftfamilies/passengeraircraft/a340family/
"A320 Family." Retrieved from: http://www.airbus.com/aircraftfamilies/passengeraircraft/a320family/
("A380 Family." Retrieved from: http://www.airbus.com/aircraftfamilies/passengeraircraft/a380family/
An interesting trend has been registered in the service industry, especially in the field of tourism. One of the main engines of Spanish economy in the past, now tourism in this country faces fierce competition from Eastern Europe countries. The beautiful resorts in Palma del Majorca and Costa rava must compete with low cost sea side resort, which offer similar services at incredibly low prices. Another field which needs reforms and reformulation policy is the agricultural and fishery one, which accounts only 4.1% out of GDP, although the important political forces attached to this sensible sector.
In order to be able to face the challenges and the opportunities on the regional and global market, Spain needs reforms in most fields of activity. Unemployment level is one of the highest in EU 9.2% at the end of 2005, while the rate of inflation was around 3.4 per cent in 2005, which…
1) Carol Matlack and Joan Tarzian - 'Spain: Immigrants Welcome', Business Week, May 21, 2007
2) 'Plain sailing no longer', the Economist print edition, 3rd of March 2007.
3) 'Spanish property - the pain in Spain', 26th of April 2007.
4) Human Development Index report, for the year 2006
The differences in culture with the American culture will meant the American staff that may go to help open the branches in China will have to take quite some time to learn the culture and the ways of the people there.
The other difficulty will be the language barrier that may exists between the Americans and the Chinese. It may even call for a translator in the initial days as transactions between the American sales people and the Chinese customers, or interaction between the staff themselves may be a big challenge.
On the technical side, the Wal-Mart may have it hard when it comes to acquainting themselves with the market trends and the competition from the older players who are already in operation in China. It will take a lot of research work to be able to know the finer details of the market trends and the ways through which…
Abacus CPA, (2007). Register a company in Hong Kong / Hong Kong Company Formation.
Retrieved June 24, 2011 from http://www.abacushkcpa.com/english/english_Company_Formation_Hong_Kong_Limited_Company_55.htm#55
Center for Creative Leadership, (2009). Developing a Leadership Strategy: A Critical Ingredient
for Organizational Success. Retrieved June 24, 2011 from http://www.ccl.org/leadership/pdf/research/LeadershipStrategy.pdf
59-84). A lack of rule of law equates to lawlessness and high levels of violence and theft.
In aggregate the factors of investment, fertility, schooling, and socio-political openness to new venture create statistically significant differences in economic performance between the regions. What De Gregorio (et. al.) also found was Latin American nations are continually coming in and out of economic crises, which makes their banking system, money supply and balance-of-payments highly risky and difficult to invest in even when there is a growth opportunity. Latin America's greatest challenge will be in overcoming the tendency to continually cycle from one economic crisis to another.
De Gregorio (2004) - "Growth and Adjustment in East Asia and Latin America"
Econom'a Journal. Jose De Gregorio - Volume 5, Number 1, Fall 2004, pp. 69-134.
Brookings Institution Press. Accessed from the Internet on February 7, 2007 from location: http://muse.jhu.edu/journals/economia/toc/eco5.1.html
De Gregorio (1992). "Economic Growth…
De Gregorio (2004) - "Growth and Adjustment in East Asia and Latin America"
Econom'a Journal. Jose De Gregorio - Volume 5, Number 1, Fall 2004, pp. 69-134.
Brookings Institution Press. Accessed from the Internet on February 7, 2007 from location: http://muse.jhu.edu/journals/economia/toc/eco5.1.html
De Gregorio (1992). "Economic Growth in Latin America." De Gregorio, Jose Journal of Development Economics 39(1): 59-84.
Economists can demonstrate how, in the aggregate, consumers and industry benefit from free trade. In the process of creative destruction, however, some industries and workers are displaced by the changes wrought by free trade.
The measurement of benefit in the case of Volkswagen continues to reverberate today, after over 25 years. When VW entered the Chinese market, it did so over the objections of its local labour unions and politicians. Part of the objection came because the State of Lower Saxony controlled 20% of the shares, and the government was concerned about the loss of jobs in its domestic sector. The managers of VW saw it differently: by creating a successful and growing subsidiary in China, the reasoning went, the company could increase its generated cash and derive strategic benefits from finding a lower-cost supplier of parts.
There were, however, forces to overcome:
Unions threatened to strike in Germany unless…
Chase, S. (1947). A Generation of Industrial Peace: Thirty Years of Labor Relations at Standard Oil Company. New York: Standard Oil Company.
Chunli, L. a. (2003). The Chinese Automobile Industry and the Strategic Alliances of China, Japan, the U.S.'s Firms. Cambridge: MIT International Motor Vehicle Program.
Dubois, C.P.-D. (2007). Thrombin-initiated platelet activation in vivo is vWF independent during thrombus formation in a laser injury model. Journal of Clinical Investigation, 953-960.
Economist. (2007). 2008 World Almanac. London: Economist.
How would you characterize the differences in corporate structuring and ownership rights for various countries around the world?
There are different ownership types. People can structure their businesses or organizations under one of several organizational structures. The types include: sole proprietorship; general partnership (composed of two or more persons who agree to contribute money, labor, and/or skill to a business and run it together); a limited liability company (LLC) (formed by one or more individuals or entities through a special written agreement that details the structure of the LLC); a Corporation; a limited partnership; and a limited liability partnership (LLP).
A limited partnership is composed of one or more general partners and one or more limited partners. The general partners manage the business and share in its profits and losses. The limited partners share in the profits of the business, but losses are limited to the extent of their…
CPA The Development of International Standards on Auditing http://www.nysscpa.org/cpajournal/1999/1099/Features/F141099.htm
Peter L. Rousseau and Richard Sylla (2003), Financial Systems, Economic
Growth, and Globalization
India is becoming a popular destination for foreign FDI as a result of that country's large and growing economy and economic reforms (Chakraborty & Nunnenkamp, 2006), meaning that capital inflows to India are not likely to meet with major challenges. The country can also be used as a springboard to the rest of Asia, with Indian production going to other Asian nations. Entering the market with a joint venture for both production and sales is important as well because it creates an operating hedge, thereby reducing the amount of foreign exchange risk faced by the company, important given that the rupee is not a hard currency and the derivatives markets for the rupee are relatively illiquid as a result.
Entering the U.S. market is the most straightforward. Hamilton is no more than 90 minutes from the border and the I-90. Shipping westward is also easy, due to the plant's proximity…
Datamonitor. (2010). Consumer electronics -- North America (NAFTA) industry guide 2010. Datamonitor Retrieved May 9, 2011 from http://www.datamonitor.com/store/Product/consumer_electronics_north_america_nafta_industry_guide_2010?productid=9C7B124D-02FA-4122-95D0-6C9107383852
Harper, D. (2011). How companies use derivatives to hedge risk. Investopedia. Retrieved May 9, 2011 from http://www.investopedia.com /articles/stocks/04/122204.asp
Johnson, J. & Tellis, G. (2008). Drivers of success for market entry into China and India. Journal of Marketing. Vol. 72 (3) 1-13.
Johnson, K. (2011). Canadian dollar surges as CPI sharply exceeds expectations. Wall Street Journal. Retrieved May 9, 2011 from http://online.wsj.com/article/BT-CO-20110419-713715.html
In spite of the progress undergone by poor countries, things are still critical in these areas and it is impossible for one to even compare the situation there with the one in developed countries. The advancements experienced by developing territories are impressive, but put side by side with those in the west they are quickly made mediocre. hereas individuals in developed countries can rapidly adapt new technologies in their everyday lives, those in poor countries are less likely to do so, since "many developing countries lack the technical skills necessary to master new, or even older, technologies" (Picture This).
Globalization practically means that most countries turn from their old systems to a more general one, which is capitalist-based. Even though for some globalization is a new topic, it actually goes back to the expansionist era, when people were determined to interact with new cultures and to increase their sphere of…
1. Masood, Ahmed. "The Next Frontier." Retrieved August 05, 2010, from the International Monetary Fund Web site: http://www.imf.org/external/pubs/ft/fandd/2008/09/ahmed.htm
2. "Picture This." Retrieved August 05, 2010, from the International Monetary Fund Web site: http://www.imf.org/external/pubs/ft/fandd/2008/06/picture.htm
3. "World-System Theory." Retrieved August 05, 2010, from the Globalization Web site: http://www.sociology.emory.edu/globalization/theories01.html
Consequently, his observations concerning the business climate in Saudi Arabia with respect to the significance of religion in the Kingdom can be considered authentic. According to Indris, with respect to the perception of performance and contractual obligations among Saudis, "It should be noted that the issue is not with the belief itself but rather with people's misguided interpretations of the belief and Islam teachings. While Islam teaches that ultimate control is in the hands of God, it also teaches that people should exert their utmost efforts to better their lives" (p. 38). These issues have special salience for foreign direct investors who may experience disputes based on such misinterpretations that cannot be predicted but must be expected. In this regard, Idris concludes that, "Misguided interpretations have a strong impact on the business environment and the commitment to setting and meeting goals and targets in the kingdom. Accountability in running businesses…
Aleisa, Eisa A. & Dibooglu, S. Sources of Real Exchange Rate Movements in Saudi Arabia.
26 Journal of Economics and Finance 1, 101-103 (2007).
Applications & Procedures, Kingdom of Saudi Arabia: Ministry of Commerce and Industry,
[online] available: http://mci.gov.sa/english/moci.aspx?PageObjectId=814 (2011).