Question

1. What advantages would a manufacturing company expect to gain from an investment in production facilities overseas?
2. To what extent can governments
(a) encourage, and
(b) hinder the development of world trade?
Give examples :
3. Why is it important for firms pursuing a strategy of international expansion to under-stand the implications of micro-electronic technology for communications and decision-making?
4. What benefits may be experienced by a nation that encourages overseas investment in its economy?

Answer 1

1. Advantages that a manufacturing company will have from investing in production facilities overseas are costs savings, skill development of its work force , lower costs of labor and resources, risk diversifications. The company will diversify its risks and develop more capabilities by strategic investment in production facilities.

2. The governments can encourage by having favorable policies and regulations in the region encouraging FDI and providing incentives for foreign investment. Government can develop necessary infrastructure for supporting world trade and liberal market conditions.

Government can hinder development of world trade as by increasing the barriers to enter a particular industry or market, by introducing strict regulations that do not support foreign investment. Frequent policy and government changes can also hinder foreign trade.

3. It is important for firms pursuing strategy of international expansion to understand the implications of micro electronic technology for communication and decision making as it affects the company processes. The use of micro electronic technology for communication and decision making can help the company in accurate decision making and faster decision making. It can make company operations more efficient and effective. It helps in organising the business and manage it well across different locations. It increases accessibility of the information.

4. A nation that encourages overseas investment in its economy ensures growth for the economy, availability of capital and skills increasing the capabilities, creating competitive conditions for better processes and outcomes, scope of partnerships between company that can provide strategic advantage and defining policy measures to enable foreign investment and business in the country. It helps in providing better infrastructure and processes that are developed for better performance and benefits for the stakeholders including customers.