logo image

Foreign Direct Investment (FDI) Essay

Foreign direct investment is the overall volume of capital stock directed by companies to a country, where its main headquarters are not located. In short, this is tantamount to capital outsourcing, albeit wide in scope and generally involved with high risks. The more companies investing in a country (compared with countries that have similar conditions) – foreign direct investments – the less risks are involved. In short, because foreign direct investments in India is increasing yearly and is expecting to double in 30 years time, the implication is that associated risks would be less or insignificant.

It is well argued in economics that as a giant corporation is located in a certain place, associated firms will also follow. The relationship between the giant corporations and the associated firms would last so long as economic atmosphere is good, that is, conducive to economic activities. Once, the giant corporation is out of business, those associated firms will lose their financial stability (collapses) – although this may not be true in some cases.

Since Nokia has a large number of associated firms – some of them are Nokia’s longtime partners – it would be profitable for them to invest collectively in India. This would reduce

Need essay sample on "Foreign Direct Investment (FDI)"? We will write a custom essay sample specifically for you for only $ 13.90/page

the overall risks associated with “lone” investment. Nonetheless, this would also reduce financial costs (both variable and fixed costs), and would drive the companies to the stage of economies of scale (increasing rates of return). Hence, the outsourcing activity of Nokia became a stimulant tool for other associated firms to direct their capital stock to India.

Coupled with economic growth, the overall risks and uncertainty can be reduced.

References AMR. 2007. Supply Chain (BusinessWeek Advertisement). NY: McGraw-Hill Companies Inc. URL http://www. businessweek. com/adsections/2005/pdf/0515_supply. pdf. Retrieved September 23, 2007. Nokia: Supplier Requirements. 2007. URL http://www. nokia. com/A4359278. Retrieved September 23, 2007. Nokia: Supplier Assessments. 2007. URL http://www. nokia. com/A4359279 Retrieved September 23, 2007.

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!
×
Sorry, but copying text is forbidden on this website. If you need this or any other sample, please register

Already on Businessays? Login here

No, thanks. I prefer suffering on my own
Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.
Sign in / Sign up
No, thanks. I prefer suffering on my own
Not quite the topic you need?
We would be happy to write it
Join and witness the magic
Service Open At All Times
|
Complete Buyer Protection
|
Plagiarism-Free Writing

Emily from Businessays

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/chNgQy

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy