Foreign direct investment

Examples of Foreign direct investment in the following topics:

• The North American Free Trade Agreement (NAFTA)

  • NAFTA was created to eliminate barriers to trade and investment between the US, Canada and Mexico.
  • Foreign direct investment of Canada and Mexico in the US (stock) was $237.2 billion in 2009, up 16.5% from 2008.
  • According to the Department of Homeland Security Yearbook of Immigration Statistics (2006), 73,880 foreign professionals were admitted into the US for temporary employment under NAFTA.

• Global Marketing in the U.S.

  • It is typically the least profitable method for entering a foreign market, and it is a long-term commitment.
  • A joint venture is a partnership between a domestic and foreign firm.
  • Both partners invest money, share ownership, and share control of the venture.
  • Multinational organizations may choose to engage in full-scale production and marketing abroad by directly investing in wholly-owned subsidiaries.
  • However, because the subsidiary is responsible for all the marketing activities in a foreign country, this method requires a much larger investment.

• Return on Investment

  • Pricing objectives or goals give direction to the whole pricing process.
  • Return on investment is one way of considering profits in relation to the capital invested.
  • Hence, it is important to keep all investments in mind when setting prices.
  • The purpose of the return on investment metric is to measure per period rates of return on dollars invested in an economic entity.
  • Return on investment is often compared to expected (or required) rates of return on dollars invested.

• Political and Regulatory Environment

  • For example, foreign governments can intervene in marketing programs in the following ways:
  • Most firms prefer to engage in the export business rather than invest considerable sums of money in investments in foreign subsidiaries.
  • Most nations encourage free trade by inviting firms to invest and to conduct business there, while encouraging domestic firms to engage in overseas business.
  • These nations do not usually try to strictly regulate imports or discriminate against foreign-based firms.
  • That is, the foreign government takes ownership of plants, sometimes without compensating the owners.

• Marketing Performance Metrics

  • The numeric data allow marketers to not only justify their efforts, but also highlight the direct relationship between marketing and larger organizational goals.
  • Return on marketing investment is one of the most difficult organizational aspects to measure.
  • ROMI, a relatively new metric, is marketing contribution attributable to marketing (net of marketing spending), divided by the marketing "invested" or risked.
  • This metric is best used to determine marketing effectiveness and steer investments from less productive to more productive activities.
  • Marketing return on investment (ROI) is another term that refers to measuring company sales and profits.

• Political Environment

  • the U.S. is capitalist society, it operates an economic system where both the government and private enterprise direct the economy.
  • One of the results of trade agreements like NAFTA is that many products previously restricted by dumping laws - laws designed to keep out foreign products - can be marketed.
  • Not surprisingly, US companies with a strong business ties in a foreign country may support tariffs to discourage entry by other US competitors.
  • Expropriation occurs when a foreign government takes ownership of plants and assets.
  • Because of the risk of expropriation, multinational firms are at the mercy of foreign governments, which are sometimes unstable and can change the laws they enforce at any point to meet their needs.

• Sales Training

  • Simply put, training in business is the investment of resources in the employees of a company so that they are better equipped to perform the tasks of their job.
  • The type of resources invested may include time to learn, money to create programs and develop training materials, training effectiveness evaluation systems, etc.
  • The pre-departure training consists of formal language training, training with respect to the local culture (culture sensitivity), education about the country (history, geography, government, etc.), and education about the company's operation in the foreign country.

• Purpose of the Marketing Plan

  • Establishes a future direction that everyone in the organization should both understand and support;
  • Marketing plans are included in business plans, offering data showing investors how the company will grow and what kind return on investment they will receive.

• Methods for Evaluating Marketing Performance

  • The methods for evaluating the performance of, and responses to, these materials range from simple calculations measuring return on investment, to tallying the number of visits to a website.
  • Using different measurements to evaluate different communications activities, competitors, and markets does not allow direct comparison and results in lost synergies.

• Consumer Income, Purchasing Power, and Confidence

  • If the value of the dollar increases relative to foreign currency, consumers have greater buying power.
  • For example, if manufacturers anticipate that consumers will reduce retail purchases, especially for expensive and durable goods, they will cut down their inventories in advance and may delay investing in new projects and facilities.