Question

2-3 page paper on foreign direct investment -use 3M, Cargill, General Mills or Medtronic as an example

Answer 1

A foreign direct investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets in a foreign company.Foreign direct investments are commonly made in open economies that offer a skilled workforce and above-average growth prospects for the investor, as opposed to tightly regulated economies. Foreign direct investment frequently involves more than just a capital investment. It may include provisions of management or technology as well. The key feature of foreign direct investment is that it establishes either effective control of or at least substantial influence over the decision-making of a foreign business.The Bureau of Economic Analysis (BEA), which tracks expenditures by foreign direct investors into U.S. businesses, reported total FDI into U.S. businesses of $253.6 billion in 2018. Chemicals represented the top industry, with $109 billion in FDI for 2018.Foreign direct investments can be made in a variety of ways, including the opening of a subsidiary or associate company in a foreign country, acquiring a controlling interest in an existing foreign company, or by means of a merger or joint venture with a foreign company.The threshold for a foreign direct investment that establishes a controlling interest, per guidelines established by the Organisation of Economic Co-operation and Development (OECD), is a minimum 10% ownership stake in a foreign-based company. However, that definition is flexible, as there are instances where effective controlling interest in a firm can be established with less than 10% of the company's voting shares.Foreign direct investments are commonly categorized as being horizontal, vertical or conglomerate. A horizontal direct investment refers to the investor establishing the same type of business operation in a foreign country as it operates in its home country, for example, a cell phone provider based in the United States opening stores in China.

A vertical investment is one in which different but related business activities from the investor's main business are established or acquired in a foreign country, such as when a manufacturing company acquires an interest in a foreign company that supplies parts or raw materials required for the manufacturing company to make its products.

A conglomerate type of foreign direct investment is one where a company or individual makes a foreign investment in a business that is unrelated to its existing business in its home country. Since this type of investment involves entering an industry in which the investor has no previous experience, it often takes the form of a joint venture with a foreign company already operating in the industryExamples of foreign direct investments include mergers, acquisitions, retail, services, logistics, and manufacturing, among others. Foreign direct investments and the laws governing them can be pivotal to a company's growth strategy.

Cargill plans $70M investment in Thai seafood, poultry business

Cargill Inc. is investing $70 million to advance its seafood and poultry business in Thailand, the latest in a string of investments aggressively expanding the company’s protein presence in Asia.The funds will cover a new facility for cooked poultry products at an existing plant in south-central Thailand. It will also cover renovation and upgrade costs at its aquafeed plant and technology research center southwest of Bangkok.Rising demand for cooked and prepared protein in Thailand’s largest export markets, like Japan and Hong Kong, is fueling Cargill’s growth, a company spokeswoman said. Poultry is Cargill’s primary business in Thailand, from which it exports chicken products to 28 nations. Cargill employs more than 17,000 people in country.

The company’s poultry business has grown rapidly in recent years throughout Asia and Latin America. Cargill has recently invested more than $1 billion in joint ventures in Indonesia, the Philippines and the United Kingdom, and through acquisitions in Colombia. The Minnetonka-based agribusiness has built new processing plants in Nicaragua, the Philippines, Thailand, China and the United Kingdom.