Dynamics of multinational companies Essay Example | Topics and Well Written Essays - 1250 words

Dynamics of multinational companies - Essay ExampleHowever, it should be noted that the gain grounds that come about as a result of FDI can only be possible if totally the three parties follow the proper(a) regulations, and the ethical ways of doing billet is strictly adhered to. This paper sheds some light on the be, and benefits of FDIs to the investors, the home region, and the army country. In addition, it allow for also review how the country, and the firms level of development, and growth play a role in determining the costs, and benefits accrued from the FDIs (Weigel, Wagal & Gregory 1997, 56). Benefits and costs for The host country One of the core benefits of global foreign orchestrate investment is that it creates an opportunity for money to freely flow to any business around the world that shows any signs of potential growth in the future. This is in light of the concomitant that when investors choose to invest their money, the main system of logic behind this is that they expect some forms of return from the investment. Additionally, the home countrys capital account pull up stakes benefit from the inward flow from the returns on the investment. There are no standard criteria on who deserves the investment, and who doesnt. This ensures that all the businesses get equal competitive advantage, and no particular business is favored over the others. Subsequently, economists observed that the high hat money pull up stakes be invested in the best business anywhere in the world disrespect the race or color or culture. This in turn means that the goods, and services will go across the market just in time as compared to an instance when unrestricted FDI wouldnt gravel been available. Benefits and costs for home country The foreign direct investment has an advantage to the investors too. The investors get to receive global benefits. The fact that the investors can freely invest in different countries reduces the risks likely to be suffered f rom the investment. Diversification brings about decrease in the risks likely to be incurred, and an increase in the returns that will be enjoyed from the investment (Stephan 2013, 43). Secondly, the other benefit to the home country that comes with FDIs is that the investors can learn new valued skills that may come in handy from the foreign markets. Thereupon, these skills are then transferred to the home country leader to even further growth, and development for the countrys economy. Moreover, the businesses also get to benefit in that when an investor chooses to invest in a particular business, it is practically expected that the investor will ensure that the staff is competent enough to give the investment a return. Additionally, the investors will introduce new technology to the business to ensure that it has a competitive edge over its competitors.(Chung 1997, 40) The business will get to be enlightened on ways of doing business they would likely not have been aware of bef ore the investors come into the picture (Jones & Wren 2007,54). As a result, there will be improved general living standards of the employees of the business with all these new incorporation. To add to this, since there are no kinds of favoritism in choosing which business to invest in, it would be expected that the government will have slight influence on the business, and that the government isnt able to put up poor economic policies that will affect the business. The other advantage for the host country is that there is a general improvement on the standards of living for the people in the country.