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Foreign Investments

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Discuss and explain why managers make foreign investments? What are the benefits and risks involved in this? Give examples. Response is 150 words

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As you may know, the bottom line in any business is profit maximization. Foreign investments focus on maximizing returns and minimizing risks. Generally, when production cost and wages are high domestically, firms will move to countries/invest in countries with lower labour costs. A good example is Nike Inc.'s operations in China.

"Foreign direct ...

Solution Summary

This solution explains the benefits of foreign investment and risks associated with it.

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Direct Foreign Investment Decision Proposal

Direct Foreign Investment Decision Proposal and Presentation

Prepare a 2000-word proposal in which you select the optimal financing and investment strategy for your scenario. Include a PowerPoint file summarizing your proposal with at least 5 slides.
Include the following information in your proposal:

o Identify which country you chose and why. Use India and Brazil

o Identify foreign exchange rate data.

o Use foreign exchange and cost of capital data to determine appropriate capital sources.

o Conduct a sensitivity analysis, based on the following questions:

What if funds are blocked? How does this affect the parent organization?

What if the subsidiary provided funds?

How does the source of capital affect the subsidiary and parent organization?

What sources of capital would minimize the cost of capital to the subsidiary?

What happens if the country you chose provides incentives to invest? Now that your organization is profitable, the country is taking incentives back. How do you determine the residual value at the end of the project life?

How is the value of an organization determined from the following perspectives?

o Expiration of project life
o Friendly or unfriendly buyout
o Economic decision to change locations
o Nationalization or confiscation of organization

Format your paper according to APA standards.

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