The management issues in Foreign Direct Investment decision are:
Control: the host countries are threatened by the investment of large multinationals. In fact, big companies impose their rules due to the size of their business activities. Actually, big multinational controls the price and quality of production abroad. As a matter of fact, the issues have a negative impact on the local market and workers. Some governments implement special policies to limit the ownership of foreign investors in their markets.
Purchase or build: foreign investors face the challenge of weather develops an existing business or start a new one abroad. From one point of view, developing an existing business requires general reforms in terms of business structure, labor, and managerial strategies. On the other side, building a new business requires hiring new employees, building from the stretch, and obtaining different licenses to operate abroad.
Production cost: foreign investors invest in training the local workers to ensure the quality standards required by the international market are met. Also, the foreign investors tend to rely on different locations and regions in the world to acquire the lowest production cost. For example, the production process of on single car is based on collecting the different parts of one single care from different regions of the world; the motor from Germany, design from Italy, and assembly in China. As a result, any issue encountered during the production process in one country could delay the whole production process.
Customer knowledge: some countries are reputed of making high quality of specific products such as the Frenc...
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...ing the haven of cheap production such as China, which is even cheaper than Mexico. In this scenario, we notice that regional blocs could limit the opportunities that international trade could offer. Equally, the European Union is another example of regional blocs that gathers most of the European countries, such as, France, Germany, Italy and others. The European countries have special agreements in which each country could trade with one another at a lower tariffs and reduced restrictions. As a result, this could causes isolation from using the opportunities offered from the other regions of the world such as production cost, cheap labor, technology transfer, and production quality. Regional blocs reshape the world in terms of economic entities and geographic locations, which is contrary to the concept of global free trade adopted by the World Trade Organization.
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