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To Investigate the Impact of Foreign Direct Investment on Profits in Romania

   

Added on  2020-10-23

42 Pages10514 Words152 Views
Research Project

Table of ContentsTITLE:.............................................................................................................................................1ABSTRACT ....................................................................................................................................1ACKNOWLEDGEMENT...............................................................................................................1INTRODUCTION...........................................................................................................................1Research Aim: .......................................................................................................................2Research Questions: ..............................................................................................................2Research objectives:...............................................................................................................2Background Of Company ......................................................................................................2Rationale of the research .......................................................................................................2Significance of the research ...................................................................................................3Literature review .............................................................................................................................3Methodology ...................................................................................................................................6Introduction ...........................................................................................................................6Research philosophy...............................................................................................................6Research Approach: ...............................................................................................................7Research Strategy...................................................................................................................7Research Choice: ...................................................................................................................7Techniques and procedures of data collection: .....................................................................8Research sampling: ................................................................................................................9Data analysis techniques: ......................................................................................................9Access Negotiations ..............................................................................................................9Research Limitation: .............................................................................................................9Ethical issue: ........................................................................................................................10Cost:......................................................................................................................................10Gantt Chart...........................................................................................................................11Findings and Analysis ...................................................................................................................13CONCLUSION .............................................................................................................................23RECOMMENDATION ................................................................................................................24REFELECTION ............................................................................................................................24

REFERENCES .............................................................................................................................26Appendix .......................................................................................................................................28Questionnaire........................................................................................................................28Research Proposal Form.......................................................................................................29.......................................................................................................................................................39

TITLE:“To investigate the impact of foreign direct investment on profits in Romania. A study onTesla. ABSTRACT Foreign direct investment is essential type of entry mode strategies used by an enterpriseto enter into international market successfully. It introduces as a direct ownership of facilities inthe specific nation. It basically involves the transfer of different resources such as technology,personnel and capital. It may be created via the acquisition of a present entity or theestablishment of a unique organisation. Literature review have been done with the view point ofdifferent authors and writers regarding the impact of FDI. Data about the topic have been donewith the support of different methods of research such as research philosophy, approach, design,Gantt Chart, data collection and analysis techniques etc. Along with this, research findings andanalysis have been completed through questionnaire. It is a most essential method helped aresearcher to accumulate reliable as well as valid information about the topic. Conclusion andrecommendation have been completed via addressing all aims and objectives. ACKNOWLEDGEMENTI would like to thank my friends, they help me to carry out this research. I must sayspecial thanks to my friends and relatives who were very helpful of me via this time when I wasdoing the research. I am also thankful to my tutor who given me with direction and patience sothat I could have executed the research successfully.INTRODUCTION Foreign direct investment refers as an useful form of investment which is made by anorganisation on a person in one nation into business interests located in another nation (Alfaro,2015). Mainly it takes place when a capitalist set up foreign business operations as well asacquires business assets, covering setting ownership and monitoring interest in an internationalorganisation. For this project, Tesla is given American automotive organisation based in Palo,Atlo, California. It was founded in year 2003 by Martin Eberhard, Marc Tarpenning, Elon Musk,J. B. Straubel, Ian Wright. Company mainly specialise in in manufacturing electric car via itssolar panel manufacturing, solar city subsidiary. Apart from this, Tesla decide to expand theirbusiness activities in Romania market through foreign direct investment. 1

Research Aim: Main intent of this project is “To investigate the impact of foreign direct investment onprofits in Romania. A study on Tesla. Research Questions: What is the impact of Foreign Direct Investment on profits for Tesla in Romania?What are the ways through which Tesla can overcome the drawbacks of foreign directinvestment ?Research objectives:To analysis the impact of Foreign Direct Investment on profits for Tesla in Romania?To identify the ways through which Tesla can overcome the drawbacks of foreign directinvestment ?Background Of Company For this Tesla is chosen multinational organisation. They wants to expand their businessactivities in Romania. It is a market with excellent or fabulous potential, favourable businessclimate and a strategic location. Its economy is among the European Union's quickest growing;approximately 4.8% growth in year 2016 and around 6.9% growth in 2017. This growth ismainly based on primarily consumption which is driven by the legal authority of Romania's. It isrelated with Romania's tax fiscal policy, including tax cuts, pension increase, minimum wagemaximise and public sector (Boghean and State, 2015). Therefore, it is a best market for Tesla toexpand their business activities and accomplish competitive benefits easily. Business activities ofTesla is mainly related with designing of goods and services, location strategy, job design andhuman resources, inventory management, maintenance of financial records etc. Thus, all theseare major activities for an enterprise which will help them in its development and success atglobal level (Ciocoiu and et. al., 2013). Rationale of the research Main rationale behind choosing this topic is to to investigate the impact of foreign directinvestment on profits of Tesla in Romania It is a multinational corporation which will help ingrowth of economy of Romania by providing job opportunities to citizen. Along with this,globalisation is a large topic which will help a researcher to enhnace their literature review skill,data analyses and data interpretation skill (Dachs, Stehrer and Zahradnik, 2014). These kind of2

qualities will help a researcher to conduct each activities of research systematically andsuccessful manner. Significance of the research There are different advantage of foreign direct investment such as it provides localeconomics benefits in multiple locations, foreign income can maximise, it improves humansresources etc. All these benefits help an organisation by increasing its profit and market sharewithin given time duration (Bradshaw, 2017). Thus, with the the help of research, a researchercan easily identify significance of Foreign direct investment and its benefits to TESLA. Literature review A literature review is a form of comprehensive summary of past topic. It includes, books,scholarly articles, and many other useful sources relevant to the research or topic. Main purposeof literature review is to provide a completed and accurate accounting of the actual state ofunderstanding for whichever investigation question is being addressed. Thus, it is an essentialand important aspects of scholarship because without it, scholar cannot judge or evaluatewhether the author is well-sophisticated or whether the activity that is being shown is originaland novel (Buettner, Overesch and Wamser, 2018). It is a more useful section for completingresearch project in systematic manner. With the help of this section, an investigator can easilycritically analyse about the impact of foreign direct investment on profitability of businessactivities in Romania market. The impact of Foreign Direct Investment on profits for Tesla in RomaniaAs per the view point of JAMES CHEN, 2019, FDIintroduces as an effective kind ofinvestment which is mainly made by an enterprise as well as individual in individual nation intobusiness interests laced in another nations. It mainly takes place when a capitalist or investorestablishes confirmed international business operations. FDI is critical for emerging anddeveloping market nations. Their organisations requires the multinationals' expertise and fundingto enlarge their global sales. Their nations require private finance in infrastructure, water andenergy to maximise wages and jobs. It offers different benefits to both the foreign host nationsuch as Romania and the investor also. In a growing globalised economy, Foreign directinvestment by transnational organisation is introduced a main factor in the development of3

economy of less developed economies, covering the economics of eastern Europe and centralEurope. Foreign direct investment in Romania measure to USD around 5.1 billion in year 2017,up by approximately 3% compared to the similar time duration of 2016, according to informationby the Romanian National Bank and UNCTAD. Illustration 1: Doing Business, 2019Source: Doing Business, 2019From the above given graph, it has been concluded importance of Foreign directinvestment for profitability of Tesla. As in Romania index of transaction transparency is high ascompare to other countries such as United State, Germany, Eastern Europe and Central Asia. It iswill help a Tesla to enhance their profitability and market share within given time duration.Along with this, index of manager's responsibility is moderate in Romania market which willalso support an enterprise to retain employees for long time (Foreign direct investment (FDI) inRomania, 2016). As it will be more effective and important for success and growth of companywithin given time duration. Index of shareholders power is also moderate in Romania countrywhich will also help a stakeholders within Tesla to take legal action and gain competitivebenefits easily. At last, the investor protection is around 6.0 % which will highly impact onprofitability and market share of Tesla. FDI in Romania has positive impact on profitability of Tesla. As it will help them byproviding different benefits such as market diversification, tax incentives, preferential tariffs,4

lower labour costs and subsidies. There are also some advantages of FDI for Romina economyincluding evolution of human capital, maximise in employment, economic stimulation andaccess to administration skills, expertise as well as technology.These are consider mainadvantages which will directly support a company to gain competitive benefits and increase theirprofit ration also. Along with this, FDI has positive impact on profitability of Tesla. Some otherbenefits of foreign direct investment will be defined as under: Access to market: According to the Shawn Grimsley, (2019), Foreign direct investmentcan be effective and essential way for Tesla to enter into Romania. With the help of FDIcompany can easily access to their domestic market which will also support an enterprise toaccomplish long term goals and competitive benefits within given time duration. Access to resources: Foreign direct investment also consider as an effective and usefulway for an organisation to enlarge their business operations or functions in successfully manner.Therefore, with the help of FDI, Tesla can easily acquires natural resources which will help themby maximising its profitability ratio. Reduce cost of production: FDI is a means for Tesla to overcome their production cost ifthe labour market is not expansive and regulations or rules are less restrictive in the Romania. The ways through which Tesla can overcome the drawbacks of foreign direct investmentAccording to the Crystal Ayres, 2019, there are different drawbacks of foreign directinvestment on profitability of Tesla within Romania. Some risk of FDI and ways to overcomethat risk have been determined as under: FDI stops domestic investment from happening: It is a major drawbacks of foreigndirect investment which will unfavourably effect on business success and growth of Tesla inRomania market. Minimum ten percent investment into an international nations is amount ofmoney that isn't going into home companies. Along with this money comes backs into generalpeople with foreign direct investment. Therefore, it is biggest drawbacks or risks of FDI whichwill impact on Tesla in negative manner. In order to overcome that issue, large number ofemployment opportunity is a best option. Risks from political chance: It is also consider biggest issue of FDI in Romania whichwill effect on business activities and functions of Tesla in negative manner. Political issues inRomania can instantly change in which FDI is more risky for automotive industry. Politicalchanges in specific nations is highly and negatively impact on profitability of an organisation. As5

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