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    Direct Foreign Investment Decision Proposal

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    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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    Solution Preview

    Foreign Direct Investment Decision

    Foreign Direct Investment Decision
    Foreign direct investment has become the biggest factor for economic growth in any country. It has been found out that most of the investors from the European and American countries putting their investment into the emerging country in the foreign direct investment mode. The main reason behind this investment is a good economic growth improved infrastructure, government commitment and eased regulations. If we look at the study conducted by study on globalization by Ernst & Young in the year 2009, emerging markets grabbed a higher share of FDI almost 51.6 per cent of the world total investment it's a way high to the figure of investment in the developed countries.
    FDI in India
    Global sentiment has improved as far as the investment in India is concerned and the main reason for this improvement is the good growth and strong industrial output along with low cost manpower. Apart from this improved consumer confidence and increased purchasing power has attracted many investors to the country. Also If we look at the data gathered by planning commission of India the country has done a good investment in its national infrastructure projects and due to this investments in the country's infrastructure sector have doubled from 4 per cent in 2004-05 to 8 per cent of the gross domestic product (GDP) over the past five years. This is the reason that India has been ranked at the third place in global foreign direct investments this year despite global economic meltdown. According to the research report "World Investment Prospects Survey 2009-2011" by United Nations Conference on Trade and Development (UNCTAD) India is expected to remain the hotcake for the investor for the next two years.
    If we look at the past record of FDI inflow in India we can find that the country attracted FDI inflows of US$ 1.74 billion during November 2009, a 60 per cent increase over the US$ 1.08 billion achieved in same month in the year 2008. According to a research data released by Department of Industrial Policy and Promotion (DIPP) the cumulative amount of FDI inflows from August 1991 to December 2009 stood at US$ 127.46 billion.
    Even in economic downturn the country has seen an all round growth with the services sector comprising financial and non-financial services attracted FDI worth US$ 3.54 billion during April-December 2009-10, while IT sector garnered about US$ 595 million in the same period. While the telecommunications sector, it has attracted US$ 2.36 billion FDI during the months of April-December 2009-10.
    According to the data generated by of Industrial Policy and Promotion (DIPP) the biggest investors During the April- December 2009-10 periods are from Mauritius with US$ 8.91 billion worth of FDI, followed by Singapore with US$ 1.7 billion and the US with US$ 1.58 billion.

    Investment Scenario
    If we look at the investment scenario in the country we can find that the total value of domestic mergers and acquisition (M&A) deals in January 2010 stood at US$ 2,167 million with a total of 32 deals as compared to US$ 1,324 million with eight deals and US$ 223 ...

    Solution Summary

    Direct foreign investment decision proposals are examined.