Role of Foreign Direct Investment in Growth of Organisation

ROLE OF FOREIGN DIRECT INVESTMENT
IN GROWTH OF ORGANISATION

TABLE OF CONTENTS
PART 1............................................................................................................................................4
1.Background..........................................................................................................................4
Overview of organisation.......................................................................................................4
Aim.........................................................................................................................................5
Objective.................................................................................................................................5
Research questions.................................................................................................................5
Rationale of research..............................................................................................................5
2. LITERATURE REVIEW............................................................................................................6
Theme 1 : Concept of globalisation in achieving growth of organisation............................6
Theme 2 : Benefits of FDI in achieving growth of organisation...........................................6
Theme 4 : Recommendations to manage challenges faced by company in managing FDI...7
3. RESEARCH METHODOLOGY.................................................................................................8
Research type..........................................................................................................................8
Research philosophy...............................................................................................................9
Research Approach.................................................................................................................9
Sampling.................................................................................................................................9
Data collection........................................................................................................................9
Data Analysis........................................................................................................................10
Ethical consideration............................................................................................................10
4. TIMELINE.................................................................................................................................10
PART 2..........................................................................................................................................11
RECOMMENDATION AND CONCLUSION.............................................................................26
Recommendation..................................................................................................................26
Conclusion............................................................................................................................28
REFERENCES..............................................................................................................................43

PART 1
1.Background
Globalisation simply means breaking the barriers of trade, and increasing the reach of the
products and services across nation. Globalisation means integrating markets in the global
context and increasing interconnections with different economies which enhances trade relations
between nations. Globalisation leads to development of economy, suppliers, individuals as well
as producers of the product. It has emerged as a positive vibe in UK since 2008 and lead to
overall development of UK's economy.
Globalisation lead to sharing of variety of products and services to different customers
and individuals across nation, it enhances competition that lead to increase in quality of goods
and services. Globalisation has increased inter personal relation between different counties and
has increased GDP and economic growth and leads to development of the country. It also helps
in maintaining balance of payments which is consider to be important aspect of any country.
It has increased per capita income of the consumers and also enhanced living standard of
people and provided them with quality of life. It helped in breaking barriers of culture
differences and has led to creative and innovative products that are available to everyone across
boundaries which helps people in respecting and understanding each other's culture
Globalisation has eventually given rise to foreign direct investment and has impacted
economy and companies in earning profits and in gaining investment opportunities across nation.
It gave rise to mergers, acquisition, takeovers which helped companies in achieving economies
of scale, utilisation of resources etc.
Overview of organisation
Arcadia Group is a British Multinational retail company which owns high street clothing
retailers like Topshop, Topman, Dorothy Perkins, Burton, etc. The core business activity is
Retail sale of clothing in specialised stores and the company is listed as Active. The brands of
Arcadia Group trade from around 2,750 outlets which comprise 1,170 and few in 35 international
locations. The company operates approximately in 40 brand-specific websites and nearly 30s
smartphone application and also its products are found on certain third-party e-commerce
sites. The firm has 3 UK distribution centres and Singapore & US hubs handle more than 130
million products a year.

Aim
''To examine the role of foreign direct investment in growth of organisation. A case study
on Arcadia''
Objective
 To understand the concept of globalisation in achieving growth of organisation
 To analyse benefits of FDI in achieving growth of organisation
 To assist challenges faced by companies in context to FDI
 To recommend ways to manage challenges faced by company in managing FDI
Research questions
 What is concept of globalisation?
 What are the benefits of foreign direct investment in achieving growth?
 What are the challenges faced by companies in context to FDI?
 What are the recommendations to manage challenges in managing FDI for the company?
Rationale of research
The study is being carried out for academic interest as this research project will help in
understanding the role of foreign direct investment in achieving growth of the organisation and
will help in understanding challenges faced by companies and will increase the knowledge and
will enhance the understanding of the topic. It will increase learning and will develop conceptual
understanding of how globalisation and foreign direct investment are related.
Another reason for conducting research is to assess the importance of FDI and its impact
on success of the organisation which will help in increasing knowledge about market trends.
Another reason for research is that globalisation and foreign direct investment are burning issue
which caught an eye of the researcher. The other reason for conducting research is personal
interest that includes writing, analysing, and sharing important information as it nourishes mind
and develop logical thinking and ability which leads to creativity and innovation. Another
reason for conducting research is that it will improve various skills like communication skills,
research skills, rationality thinking and confidence as it will involve people and communicating
with them for the outcomes.

2. LITERATURE REVIEW
Theme 1 : Concept of globalisation in achieving growth of organisation
According to (Hopper, 2017), globalisation means free movement of good and services across
nation without any restriction and barriers. It means integrating economies of world which
increase interactions and interpersonal relationships between different nations that boost the
economy and leads to development.
As per the views of (Psimmenos, 2018.), globalisation plays an very important role in
achieving success of the organisation as it allows organisations to create employment
opportunities and have employees from different nations which helps the company in having
new creative employees with different perspective and ideas. On the contrary (Thomas, 2017)
suggests that, globalisation helps the company in having updated technology which improves its
quality of products and give innovations to the products and helps the organisation in achieving
growth.
According to (Jones, 2016.), globalisation helps the organisation in market expansion
which enable the organisation to optimum utilisation of resources and make use of resources
efficiently that are available with the company. It enables the company in expanding its
operations as globalisation helps the company in reaching top large base of customers that
ultimately increases sales of the company and increase profit. It helps organisations in merging
with companies that are across boundaries so they can have cultural and political benefits as the
company working there would be aware about the norms and policies and to attract customers
and have operational synergies that help I achieving growth.
Theme 2 : Benefits of FDI in achieving growth of organisation
As per the views of (Chan, 2016), foreign direct investment means an investment done by
company or an individual in another country. FDI happens when investor or individual establish
relationship with foreign business operations in order to earn return. On the contrary (Alfaro,
2009), suggests that FDI increases the flow of income for the companies and generate revenues
for the company. It benefits the organisation as it contributes in creation of job opportunities for
people which increase work efficiency of the organisation as organisation gets skilled labour
force.
It helps organisation with the benefit of exchange of technology advancements,
knowledge etc. which lead to innovation in organisation and attract customers. As per the views

of (Ali, 2018), it increases the competitiveness of organisations working in domestic territory
and helps in capturing their market.
It helps developing economies in integrate and expand into international market where
domestic firms of the company gain foreign investors which increases profit of the company.
(Bitzenis, 2016. ) contradicts that FDI attract foreign investors in the company by reducing risks
as companies get government support and subsidies as it increase GDP of the country which
lead to development of companies as then foreign investors get more attracted to invest in the
companies.
Theme 3 : Challenges faced by companies in context to FDI
According to (Neelankavil, 2015), globalisation leads to foreign direct investment and the
challenges faced by the companies are facilitating FDI are vast. The first challenge faced by the
company are resources challenge as when the companies are investing in other countries to have
investment opportunities and get optimum returns. The resources need to be fully utilised
whether its investment, human resource or anything ned to be deployed at right place and to
efficiently use the resources a task for the company.
(Pastor, 2018) stated that the challenge emerge in the context of company is that of
equity, when companies does FDI it somewhat affects equality as for investing in other countries
the company needs to hire people that belongs to the country in which they are planning to invest
which creates a sense of dissatisfaction among existing employees of the country. As per the
views of (Iamsiraroj, 2016.),the another challenge faced by the company is political challenge
which is the most crucial challenge that a company needs to deal with. When government of
different countries are politicly in stable and come up with strict policies and procedures for
foreign investors it lead to trade barrier and globalisation gets lost somewhere and companies get
affected as they cannot enter in foreign markets. The foreign direct investment of UK is 21
percent which helps it In increasing its GDP.
Theme 4 : Recommendations to manage challenges faced by company in managing FDI
The company should regularly assess the climate of investment and should consider the
reports of international agencies to make sure about the investment returns they will make in
global market and investment they are seeking for from the global companies. According to
(Sekaran, 2016), the company should develop local capital markets which will create wide range
of financing sources and will promote and develop local capital market and will attract investors.

As per the views of (Potrafke, 2015), the company should address legal risks that may
arise in investing abroad or getting investments in the company and for that the company should
keep an eye on economic development programmes. The company should have proper
knowledge of rules imposed by the government of both the countries in relation with foreign
investment so that it can occur smoothly and efficiently.
3. RESEARCH METHODOLOGY
Research type
This is one of the fundamental element that is very important for researcher consider as it
is because the entire study is based on the type of research. Qualitative and Quantitative are two
types of research on which the study is based on (Ashournia, 2017). The data or information
produced in this method are always numerical and they are analysed using statistical and
mathematical methods are called as quantitative research methods. On the other hand, the data or
information produced in this method are non-numerical figures and numbers and the information
collected are on words, emotions and feeling.