Foreign Direct Investment

Foreign direct investment (FDI) is a business strategy in which a company

expands its operations into a foreign country by investing in a subsidiary or
opening a branch office.
The Advantages of FDI

Access to New Markets Enhanced Efficiency Collaboration

FDI can provide businesses with FDI often brings with it new FDI helps build relationships
access to new markets, customers, skills, knowledge, and technology between countries and encourages
and resources which can lead to that can help improve productivity cross-cultural exchange between
increased revenue. and efficiency. management and employees.
The Disadvantages of FDI
Risk Exposure Cultural Differences Economic Dependency

FDI carries inherent risks FDI can often result in

stemming from political clashes between corporate FDI can create an unhealthy
instability, exchange rate and local cultures, leading to level of dependency on
volatility, and regulatory misunderstandings and foreign investment, which can
uncertainty. conflict. hinder domestic economic
growth and development.
Factors Influencing FDI

1 Market Size & Growth

Companies are more likely to invest in countries with large and growing markets.

2 Regulatory Environment

Investors prefer countries with transparent and favorable business regulations.

3 Infrastructure

Access to modern transportation, communication, and utilities infrastructure is a key consideration

for many investors.
Trends in FDI
Geographic Trends
FDI is increasingly shifting
towards emerging markets,
particularly in Asia and Africa.
Industry Trends
FDI is becoming more prevalent
in the manufacturing and service
sectors, and technology-driven
industries like e-commerce and
fintech.
Social Trends
FDI is seeing an increase in
impact investment, social
entrepreneurship, and sustainable
development initiatives.
Successful Case Studies of FDI

1 Starbucks in China

Starbucks' expansion into China has been a roaring success, with over 4,000 stores in operation
across the country.

2 Tesla in Germany

Tesla's decision to build its European Gigafactory in Germany is expected to create thousands of
new jobs and boost regional economic growth.

3 Mcdonald's in India

Mcdonald's entered the Indian market with a unique and innovative menu tailored to local tastes
and preferences.
Conclusion and Key Takeaways
FDI is a powerful
tool.
It can bring numerous benefits to
businesses and communities, but
it is not without risks and
challenges.
FDI requires strategic
planning.
Before investing, companies
must carefully evaluate market
opportunities, regulatory
barriers, and cultural nuances in
order to mitigate risk and
maximize success.
FDI has wide-
reaching implications.
As FDI continues to evolve, it
will spur economic growth,
stimulate innovation and foster
global cooperation in new and
exciting ways.