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Global Business - Part A

Conclusion: 1

 In this globalized world, the Foreign Direct Investment (FDI) plays an important role in developing economies and providing them with foreign capital. Investment through FDI in the host country has many advantages such as transfer of knowledge and technology, increased employment opportunities as well as infrastructure development. However, the entry of FDI is impacted by the rate of inflation, labor laws, the ease of doing business, exports, and imports, etc. High rates of inflation hamper economic growth and thus impacts the FDI inflows (Sahoo & Sethi, 2020). Moderate and stable inflation rates indicate that the economic conditions are stable, there is a reduction in fluctuations and encourages the confidence of investors (Sahoo & Sethi, 2020). Thus, more FDI flows in. The stable inflation rate is one of the factors that impacts the FDI flows in the host country. From the socio, economic data, country B is a more attractive destination for FDI. Moreover, another factor that impacts the FDI flow is Gross Domestic Product (GDP), FDI will invest in a country if they see the growth potential in that country, Thus, higher GDP levels indicate, the economy is flourishing, the resources are used efficiently;y and hence has potential to growth (Maheswari, 2015). Thus, Country B is a more preferred destination for FDI as the GDP is higher as compared to country A. 

Conclusion: 2

There are various socio, economic and political factors that impact the selection of the new export market. When selecting a new export market, the business needs to take into consideration the demand as well as supply factors (Miecinskiene, Stasytyte, & Kazlauskaite 2014). The type of export products that are allowed in the host country impacts the selection of new export markets. If the goods and services produced by the foreign company are permissible in the host country then only the entrance of the foreign company is allowed. Country A can export Iron ore, soybeans, coffee, footwear, transport equipment while country B exports Motor vehicles, machinery, chemicals, electrical equipment, pharmaceuticals, textiles., thus if the business is looking to export soybeans then it would go for Country A rather than country B. Moreover, GDP per capita is another factor that influences exports in new markets (Macedoni, 2015). Since a higher GDP per capita means people have higher purchasing power thus they can buy they have the potential to buy exported goods. Since Country B has a higher GDP per capita thus, it will be a more preferred export market

Conclusion: 3

There are various prices as well as non-price factors that impact imports of the country by an organization (Hassan, Wajid, Irfan & Tahir, 2014). A business seeking an import source takes into consideration all the products that are allowed to be imported by their home country. Country A is allowed to import machinery, chemical products, electronics, electrical equipment or crude oil can import these goods only while Country B can import data processing equipment, automotive parts, oil and gas foodstuffs, agricultural products, hence the type of products that the firm is seeking to deal in will impact their selection of country A and country B. If the government regulations in the home country permit the product then only the business could bring that product in the home country. Moreover, the labor force employed by occupation also impacts the imports. Since, if the company wants to deal in primary products, it would choose country A over Country B since the relative share of agriculture is higher in country A as compared to country B.

Global Business - Part B

Table: The GDP growth rate annual from 2014-2024

Country Name

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

United Kingdom

2.61

2.36

1.92

1.89

1.34

1.41

1.40

2.01

2.00

1.80

1.80

Singapore

3.94

2.99

3.24

4.34

3.44

0.73

1.88

2.43

2.45

2.45

2.45

Source:

 GDP growth rate from 2014-2019 from World Bank

(Projected) GDP growth rate from 2020-2024 from USDA

Global Business - Part C

Greenfield FDI can be understood as the type of investment in the host country wherein the foreign country investor invests in new assets in the host country (Loayza, Calderon, Serven, 2016). Exporting can be understood as selling goods and services in the country other than the country it was produced (Grozdanovska, Jankulovski, & Bojkovska, 2017). Greenfield FDI has an upper hand as compared to exporting as the organization os involved from the initial phase, it can choose the location, administer the construction and governance of the building (Marinescu, 2016). The human resources are taken from the host country, their knowledge and skills can be taken advantage of (Marinescu, 2016). Moreover, institutionalizing new products and technologies becomes relatively easier and can have friendly relations with the government of the host country. (Marinescu, 2016). Through FDI, the foreign capitalist can take advantage of the resources of the host country while exporting only suggest selling goods in the other country which are produced somewhere else. Exporting can be impacted by the risk of exchange rates and other financial risks as well as other legal documentation associated with licensing (Tekle, n.d.). The administration cost is relatively higher in the case of exporting as the company needs to tale care of all the rules and regulations imposed by the other country. Furthermore, it is difficult to maintain a relationship that is thousand of miles away (Tekle, n.d.). Moreover, the companies need to modify their goods according to the standards and codes in the host country, however, Through FDI, the company can produce according to the local requirements, thus the cost is saved (Tekle, n.d.).

Reference List for International Business and Trade

Grozdanovska, V., Jankulovski, N. & Bojkovska, K. (2017). International business and trade. International Journal of Sciences: Basic and Applied Research, 31(3), 105-114. https://www.researchgate.net/publication/329487447_International_Business_and_Trade

Hassan, S. M., Wajid, A., Irfan, M.Q. & Tahir, N. M. (2014). Some price and non-price factors affecting imports in Pakistan. Pakistan Journal for Applied Economics, 24(2), 159-177. https://www.researchgate.net/publication/303856120_Some_Price_and_Non-Price_Factors_Affecting_Imports_in_Pakistan

Loayza N., Calderon, A. C. & Servén, L. (2016). Greenfield Foreign Direct Investment and Mergers and Acquisitions: Feedback and Macroeconomic effects. SSRN papers. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=636612

Macedoni, L. (2015). The effect of per capita income on the product scope of exporters. Working Paper. https://www.freit.org/WorkingPapers/Papers/FirmLevelTrade/FREIT945.pdf

Maheswari, J. (2015). Macro- economic determinants of foreign direct investment in India. International Journal of Economic and Business Review, 3(2), 59–65. https://eprawisdom.com/jpanel/upload/articles/447pm10.Dr.J.Maheswari.pdf

Marinescu, N. (2016). Greenfields and acquisition: a comparative analysis. Bulletin of the Transilvania University of Braşov, Economic Sciences, 9 (58), 1. https://pdfs.semanticscholar.org/e265/6d4530bf7618e1f8105392acaedf91cc7e56.pdf

Miecinskiene, A. Stasytyte, V. & Kazlauskaite, J. (2014). Reasoning on an export market selection. Procedia-Social and Behavioral Science 110, 166-1175. DOI: 10.1016/j.sbspro.2013.12.963

Sahoo, M. & Sethi, N. (2020). The dynamic relationship between export, import, and inflation: Empirical evidence from India. The Indian Economic Journal, 1-18. DOI: 10.1177/0019466220935552

Tekle, S. (n.d.) Advantages and challenges of exporting. Retrieved from https://www.expertbase.org/a238-advantages-and-challenges-of-exporting

The World Bank (2020). GDP growth annual percentage. Retrieved from https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

USDA (2020). Projected Real Gross Domestic Product (GDP) and Growth Rates of GDP for Baseline Countries/Regions (in billions of 2010 dollars) 2011-2024. Retrieved from https://www.ers.usda.gov/webdocs/DataFiles/51832/ProjectedRealGDPValues.xls

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