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Question 1 “Foreign direct investment” (FDI) has emerged as a major economic booster in recent times and is the key for business organizations to internalise and expand their businesses. However, there are certain costs (negative impact) and benefits as discussed below that FDI brings to the home and the host country. “Cost of FDI to the home nation” FDI largely affects the home country in terms of employability and capital. For example, if any country wants to invest in another country, it will cause an addition of financial as well as and technological resources to the host country from the home country. Moreover, for any future advancement, much of the focus will be on the extension (host country).This often leads to a decrease in domestic production and may also cause the shutdown of its activities while concentrating completely on the host nation. Thus, FDI often affects the economy as well as employment opportunities in the home country. Benefits served by “FDI to the home country” Benefits served by FDI to the home country include some of the common factors that are available with the host country. Considering balance payment, a debit to the host country is also the credit to the home country. Also, the outward FDI leads to the creation of a new employment market with greater expertise and skills.Moreover, the profit earned from the host country also goes back to the domestic country. As a result, the home country gets enhanced exposure to develop new market share, business opportunities and employment in future and is further liable to create many in near future. Cost of “FDI to the host country” The arrival of FDI brings advanced technical skills that can manufacture premium goods at cheaper prices and can be a bigger threat to the domestic producers. Moreover, the import of foreign goods will also affect current account debts.FDI can considerably impact the market and economic stability of the country, because it can only concentrate on benefit. Finally, inhabitants may also get an emotional outburst because of the potential threat to the national sovereignty. Benefits of “FDI to the host country” There seem to be three major benefits of FDI to the host nation. It includes the effect of resource transfer, job benefits and the effect on the balance of payments. Hosting country will also have a better financial status in terms of capital and the advancement in technology and management skills coming through FDI would cause a significant impact in the local business environment.
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Question 2 Seeking a balance between localization and standardization has always been a challenge faced by businesses as it taps into foreign markets. Localization policy is actually the growth strategies of multinational corporations. It aims to increase its profitability by tailoring the company's goods or services in order to provide a better match for needs and interests in various national markets. Companies often implement this mechanism to make some changes to get them accommodated into the local market. Localization is, therefore, preferably used by organizations whose consumers have diverse needs and is located in different places. That is why any organization in any sector with a large consumer base would most likely employ localization factors to change their goods or services in order to satisfy particular market demand. Companies like KFC, Dominos, Coca-Cola et cetera are efficiently using this localization policy for their benefits. Whereas, global standardization strategies are used when minor differences exist between countries and global competition. This strategy lets businesses have greater leverage over global product marketing; introduce a global standardization policy that not only eliminates marketing challenges but also concentrates marketing capital. Such standardization strategies are also helpful in creating a unified global product image, improving the credibility of companies and allowing consumers to identify products. McDonald is the most prominent example of a company usinga global standardization strategy for businesses purposes.Thus, a corporation that doesn't have extremely diverse clients do not need to understand such market and consumer scope aspects. Global standardization strategy is ideally suited for those organizations, as it creates international awareness and recognition for the brand. Question 3 No matter what people think the greatest problems in the world are, it is unlikely one can think of clothing as either a concern or a solution. In fact, ethical and sustainable clothing can be of greater help to address some of the issues that one might not expect. Moreover, clothing is the basic need and everyone wants them, making it an incredibly accessible avenue that could trigger progress. However, with diverse global distribution networks powered by consumers and a labour-intensive manufacturing process, the clothing industry is becoming a central focus for debates on the social responsibilities of business organizations. Therefore the below steps present a framework that can be used by companies to ensure their clothing suppliers are operating ethically.
Adherence to a living wage:Clothing suppliers need to pay a decent living wage to all their staffs in developing countries. Companies can do this by ensuring that the cost rates that the company pays to the suppliers are sufficient to pay a reasonable wage and to ensure that employees are given the cost price benefits. Collective bargaining rights to workers:Supplier should ensure their workers to have a right to form/join a union, and collective bargaining rights. It should be a condition for suppliers to do business with the company. As an essential condition for working with the company, all the clothing suppliers must adhere to strict ethical considerations including: Facilitating a safe and healthy working environment Treating employees with respect and dignity Limits over overtime Fair wage pay Periodic audit by independent third-party auditors. A lot of people view fashion and clothing industry as problematic when it comes to ethical and fair sourcing. Moreover, this is not something different or unachievable because H&M is aleadingexamplethathasdemonstrateditscommitmenttoethicalstandardswhile maintaining profits. Thus, it can be achieved by others as well.Thus, all the suppliers need to adhere to strict ethical and international standards as the basic condition for doing business with the company. It includes periodic health, safety and fire checks and the company source its material only from private occupied factories. Moreover, building safety also becomes a necessityespeciallywhenthesupplierisindevelopingcountries.Thus,independent assessment of building safety must also be satisfied. Question 4 The exchange-rate system representsthe currency exchange processto promote trade practices between various countries and the goods are purchased in the local currency of the country. In this aspect, fixed and floating exchange rates play a crucial role in the internal business perspective. Each country sets a fixed exchange rate for its currency, which are often politically motivated steps. The political motive is to theoretically inflate the economy of a country by artificially making the economy seem better than it really is. With respect to monetary discipline, fixed exchange rates help a country in ensuring that the government does not exceed its money supply at inflationary rate. Having a fixed-exchange- rate regime precludes the possibility of speculation. While considering uncertainty by a reduction of volatility in exchange rates, a fixed rate regime can be used to introduce a degree
of certainty in the international monetary system.Finally, in the context of adjusting trade balance, critics often challenge the relationship existing between exchange rates and the trade balance. On the other hand, the floating exchange-rate regime is a system in which currency values are determined by the market. Thus, in this system value of the currency is allowed to float in the market and their values are determined by comparison against other currencies. In this era of the globalised economy, floating exchange rates are applicable to most of the currencies. One primary merit of floating exchange-rate is that it makes monetary policies useful for certain purposes.Monetarypoliciesareorientedtowardspreservingtheexchange-rateatits stated/fixed rates. These floating exchange-rates also set policymakers to freely pursue other objectives, like stabilizing employment or costs. Free-floating exchange rates also facilitate greater flexibility to the economy while reducing the need of keeping massive foreign reserves because of not having any requirement to conduct trading operations, needed for maintaining the currency value. Question 5 Logistics can be defined as the process of coordinating resources from their origin to the target locations, depending on consumers or corporate requirements.Therefore, international trade logistics can be stated as the aggregation of components such as demand forecasting, planning, material handling, production, location of warehouses, packaging regulations, hipping or transportation activities, resource storage, distribution and protection. Today, in thehigh-pacedcompetitiveenvironment,businessesrequireanefficientlogistics management system to keep them afloat in the international market rivalry. Thus, below are some of the key advantages served by efficient logistics that helps organizations to efficiently sustain and compete in this global business environment: Having an effective and efficient logistics functions is an asset to large multinational companies. It helps them to anticipate which parts of their market are required to be downsized, underlined or cut altogether. Thus, a perfectly calibrated functions and logistics teams are helpful to larger organizations to decide which investment is worth the risk and options that are available as per overall gains. Logistics drives businesses and brings reality to reduce overuse and unnecessary risk. A company that has strong logistics will keep a better track of inventory movements and easily transfer goods or information to the right locations. It has many important marketing effects, which in turn is also related to logistics strategies. Businesses can easily monitor product specifics with a highly effective logistics strategy. This helps a
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company to determine exactly which product was initially ordered and delivered, and what is required to be done to fix the issues faced by the customer. A company can quicklyappeasecustomerwiththeseexpertmonitoringandcommunication procedures and turn a tragic situation into marketing opportunities.