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Direct Foreign Investment Strategies

What are direct foreign Investment climate investment strategies? These are strategies that help supports the corporations in creating decisions for global deployment and at the same time helping governments to enhance their appeal for capital investments as well as new employments. These strategies may concern different factors that include competitive assessments, market analysis, investment climate analysis, marketing and branding analysis, government product improvement on policies and infrastructure, qualitative factor analysis, geo-variable competitive cost analysis, geopolitical risk assessment, and human capital analysis.

The direct foreign investment strategies have greater access to foreign markets since it may involve exporting and importing, direct investments in distribution firms and foreign goods processing, and arrangements on international licensing and joint ventures. A foreign direct investment is one primary way of reaching the international markets. It refers to the investments of a foreign affiliate or entity, which is substantially held by a main firm for the reason of ownership interest and not necessarily majority of the ownership. It deals with the ownership of assets by a foreign affiliate or firm for the reason of exercising the control on the use of those owned assets. Compared to the foreign portfolio investments, the foreign direct investments have passive management roles and do not take over on the decision-making of the firm.

Most of the direct foreign investment strategies usually occur when merging of one firm with existing other firms happens instead of constructing over new facilities. Any countries receiving these kinds of strategies can be able to gain knowledge in information services, finance, management, marketing and technology. Although, these strategies normally occur through acquisitions, the main firm can still be able to do typical upgrades on the distribution systems, packing, procurement practices, environmental and quality controls, and production equipment and processes of the acquired firm. Once the production of the acquired firms increases sufficiently as well as with the net employment, the labor productivity also gets to improve. Nevertheless the main firms usually acquire firms that produce the leading brands in a particular foreign country. One reason for this is to achieve competitive advantages of acquiring the leading brands in the new markets.

Direct foreign investment strategies are usually used by countries who want to attract foreign direct investments. Along with these strategies is the creation of favorable environment on ensuring the expropriation of properties without compensation, assurance access to imported components, guaranteed repatriation of profits, and the maintenance of realistic exchange rates. As these strategies are used, there are also offered other infrastructures, export processing zones, provided industrial estates, and tax grants and incentives. An attempt is also done to simplify the bureaucratic procedures that face the potential investors. Bilateral taxes, investment treaties, and trades are negotiated as well with the countries or wherever the sources of investments are.


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