International Financial Management Essay Example | Topics and Well Written Essays - 2500 words - 1

International Financial Management - Essay ExampleMoreover, Wall-Mart also has projected externalize to invest further 37% of its US $ 13.05 million and 38 percent of US $ 12.5 million of capital investment in the international market for the socio-economic class 2013 and 2014 respectively. real portion of the above mentioned investment is aimed at adjustments and capturing e-commerce retail sales in US, Brazil and China (Wal-Mart, 2013). In light of the Wall-Marts decision to invest and since the conditions of the realism are constantly changing therefore, underlying report is aimed at exploring factors that affect the foreign direct investment in specific context to China. The report leave provide comprehensive review of foreign direct investment arena of China that determines its attractiveness. Furthermore, assessment of the FDI scenario of China with reference to global financial crises and the current sit will be highlighted. Finally the improvement recommendations will be made. IMPORTANCE OF INVESTMENT AVENUES ASSESSMENT Foreign Direct Investment, in accordance with the definition of knowledge domain Bank, is investment leading to ten percent stake ownership by an organization that is not domestic by origin. MNCs have been making investments in foreign investments since past 200 years but these investments centrally constituted portfolio investments than green field business purpose, wholly owned subsidiaries or joint ventures (Vardar, 2011). relaxation behavior of economies led to the relaxation of paths for the foreign investors by removing barrier (Vardar, 2011). Factors that drive multinational corporations towards investment in international arena are concretely dependent on either the objective of growth of diversification. Though increasingly important driver of the countrys economies FDI also benefits extensively to the investing companies in response to fetching risks and costs in international markets. Companies usually undertake fore ign investment decisions when export and licensing such as tariffs and quotas etc are prone to increased costs and risks than benefits. Alike, Wall-Mart many a(prenominal) other corporations such as Coca-Cola, Exxon Mobile, Tesco, Starbucks, Nokia etc all have invested their stakes in the foreign markets. Complimenting to growth and diversification, factors that influence international investment are highlighted as follows Significant reduction in transportation cost is gained. Attractive markets may turn unprofitable on shipping or transporting of products in bulk from local market to long distance markets. Internationalization and FDI stake in market, according to internationalization strategy, gets attractive once the cost, difficulties and limited level of control in licensing mode restrains corporations from gaining substantial benefits from international markets. Investment in international markets also forms an important dimension of strategic behavior of gaining dominant p osition in the international market. This factor adds satisfying value to the firm in comparison with competitors by gaining first movers advantage. Stages of the products conduct cycle where demand of the product increases to broad extent in the international markets leads to firms investment in the international market. In most instances, the maturity stage of products life cycle leads to FDI in international market. Each country in the world offers some advantages that are not offered by many other markets or locations in the world. Other than market