ID 06007907
MGMT 3037 International Business
Assignment 1
Identify and discuss five (5) factors that would motivate a company to invest in a foreign country.
Many companies venture into international business when opportunities exist to increase financial stock as well as gain a competitive advantage over its rivals. Five factors that would motivate a company to invest in a foreign country are political, economic, legal, technological and environmental factors.
When investing in a foreign country the first thing an investor will look at is the political stability of the country. No company will want to invest in a country where there is no stability. If there is government stability that might be a motivating factor for investment. Political factors relates to government activities and administrative policies which includes legislation and regulations requiring businesses to act in a particular way. A company will be interested in the tax policies since which includes Income and business tax. Tax payable on earnings differ in each country so an investor would be looking for the best deal. The tax policies might include a tax vacation for up to a number of years, things like those would be a plus for the company to establish itself.
Secondly, the economic stability is another determining factor; if the economic stability is good it will attract investors. Economic factors includes business cycle, money supply, inflation, unemployment GNP trend, interest rate and disposable income. First of all, the company will want to know how other businesses are doing within the market. The health of the economy is determine by the per capita income once it is high it will attract investors. Industrialization brings about prosperity and affluence so a company will be interested to invest. Furthermore, the company will be interested in the interest rate since banking is the channel where remittance takes place. If the unemployment rate is...