Additional revenue related motive is to enter profitable markets. If nike clearance store
other companies in your industry have proved that superior earnings is usually realized in certain real estate markets, a National Company also can decide to sell within those markets. Some Companies exploit monopolistic advantage. That a National Company possesses superior technology and has taken a benefit of it in home market, the company can hope to exploit it internationally in the process. In fact, the company could possibly have a more distinct advantage in markets which may have less advanced technology. Apart from revenue ulterior motives companies engage in FDI so that you can reduce costs. One of typical attitudes of Companies that are attempting to cut costs is to use foreign factors of generation. Some Companies often attempt to set up production facilities in spots where land and job costs are cheap. Several U. S based MNCs including, Ford Motor and Common Motors established subsidiaries in Mexico to obtain lower labor costs.
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to above stated motives companies may decide on foreign raw materials. Due to transportation costs, a company may leave out importing raw materials from your given country if it plans to offer the finished goods returning to that country. Under such circumstances, a more attractive way could be to produce a product in the country where the raw materials can be found. After defining their attitudes managers of National Companies have to examine their domestic competitive advantages that enabled them to remain in a home marketplace. This competitive advantage have to be unique and powerful sufficient to recompense for possible disadvantages of operating in another country. The first comparative advantage National Companies can have is of economies associated with scale. It can be developed in production, money, marketing, transportation, research plus development, and purchasing.
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large in size on account of domestic or foreign treatments. Economies of production appear from large-scale automated place and equipment or rationalization with production through worldwide specializations. For example, automobile manufacturers rationalize production of automobile parts in a single country, assemble it in another and sell within the third country with the positioning being stated by relative advantage. Marketing economies occur any time companies are large enough to work with most advanced media that can provide with worldwide identification. Financial economies can be produced from availability of diverse economical instruments and resources. Obtaining economies come from great scale discounts and marketplace power. Apart from economies associated with scale flourishing Companies profit by comparative advantage in managerial in addition to marketing expertise. Managerial expertise is definitely an ability to manage significant scale industrial organizations throughout foreign markets.
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managerial expertise through preceding foreign experience. Before making investments some people initially source raw resources and human capital with other countries and conquer the supposed superior local information about host country companies. The third comparative advantage can be a possession of advanced technological innovation. Usually, companies located in developed countries deal with up-to-date technologies and correctly use them as superiority. The fourth advantage is developing differentiated solutions so other firms struggle to copy. Such products develop from profound research dependent innovations or marketing payments. It is difficult and also costly for competitors that will duplicate such products the way it takes time and resources. A National Company this created and marketed such products profitably from a home market can do so within a foreign market with significant efforts.