Question

Imagine yourself as the leader of a global business currently considering foreign direct investment in Europe. What are some of business issues to which you need to pay attention? How does the current situation affect strategy?Imagine yourself as the leader of a global business currently considering foreign direct investment in Europe. What are some of business issues to which you need to pay attention? How does the current situation affect strategy?

Answer 1

Before making foreign direct investment, one must consider and assess risk factor associated with particular country. Following issues must be considered while analyzing risk factors:

• Economic risk: judging if country would be able to pay off its debt easily or it refers to ability to pay off debt. Vulnerability of country to pay off debts would not be right destination for investments.
• Business risk: It refers to the conditions of demand and prospective opportunities.
• Political risk: political instability is not good for investments.

After long phase of recession and economic crisis, European economies are moving towards the high growth trajectories. European countries are receiving investment more than even before. Interest rate is low which in adding up investment and positive sentiments. It projected that European economies would growth at the average rate of 1.8 %.

Hence, better business prospectus and political stability makes ample ground for making more investments in European countries.