Ans-FDI refers to Foreign Direct Investments that are made by firms or individuals into another country that has an interest in the business. It occurs when the foreign operations of business acquire the assets into another company of the foreign.
Benefits of FDI to the recipient nation:
Benefits of FDI in the home country:
Ans- Localization strategy helps in understanding the behaviors of the customers and also the habits of purchasing and differences in the culture generally in every country it operates. It helps in providing a rich solution and will be in a position that is better and helps in meeting the needs of the customer effectively (Joshi et al., 2019). By understanding the behavior of the customers, localization strategy helps in increasing the base of potential customers and avoids the pitfalls in the marketing of cross-culture.
Nowadays, localization is referred to as strategic marketing assets as if there is any mishap then the image of the brand will have a negative impact on sales. Certain factors should be considered very carefully like age, income, gender, etc. and the required cost-benefit should be assessed so as to check the potential growth opportunity and the revenue. Localization strategy can opt for regulated industries like Pharmaceuticals or telecoms etc.
Global standardization refers to the ability that is used for marketing in standard ways internationally. It is a method by which the company can use one marketing strategy from one country to all the others and also in different cultures. The global standardization purpose makes most sense when the company is global and its functioning in all the countries is the same as a brand Coca-cola whose packaging, distribution, and brands are the same all throughout the international market. Global standardization helps in saving the cost for the company and also creates a strong brand all throughout the world in various different areas.
It can be applied to all the MNE i.e. Multi-national enterprise so as to maintain the quality and similarity in the product.
Ans: The companies for making sure that importers are following the quality control check and are doing responsible manufacturing of markets can check the certified license for an organic product or sustainable manufacturing of the company. This certification helps in ensuring the organic status of textiles from harvesting the required raw materials to socially and environmentally manufacturing for labelling the order. Also, there are IFOAM accredited national standards (Madanhire&Mbohwa, 2016). The companies can check whether the importers are following any standards. Also, the certifications will help in understanding or give proof that the company is doing the appropriate manufacturing of the clothes.
These certifications are received after the audit or the quality check controllers check the process and then when they are satisfied, certification is provided to them for maintenance of quality. By this process, companies are able to judge whether the importers are following the required quality control check for organic or sustainable manufacturing.
There are also various institutes that certify for the Organic Content like organic Control Standard by Control Union Certifications. It helps in ensuring the claims in the organic content so as to ensure the presence of organic material in the product that is produced finally. This is a way that will also provide a way where companies can understand that companies are following the quality control check.
The floating exchange rate system is the exchange system where the market of foreign exchange determines the value of the currency. It includes the U.S. dollar, European Union’s Euro, Japanese Yen and also the British pond.
While the fixed rate of exchange fixes the currencies against each other at a value that has been fixed. In terms of discipline in the monetary system, to maintain rate the government needs to ensure the supply of currencies even at the rates in inflation. When there is speculation that is prevailing in the market fixed exchange rate provides a degree for certainty and helps in reducing the volatility in the rates of exchange.
Another advantage of the fixed rate of exchange is that it helps in the movement of capital by private firms. The currency that is stable reduces the uncertainties about the loss of capital due to changes in the rate of exchange. Thus, the fixed rate will help in attracting more foreign capital.
Another merit of the fixed rate of exchange is that it prevents the speculations in the market of foreign exchange. Operators try to take benefit of the exchange rate fluctuations that are determined by supply and demand forces and also can manipulate it. A fixed exchange rate prevents this presumption.
Floating exchange rates are set according to the demand and supply related to other currencies. It is in contrast to the fixed rates of exchanges. Short term movements in them speculate about disasters, rumors, etc. If supply is more than the currency will fall while if demand is more than the currency will rise.
The advantage of a floating exchange rate involves the automatic stabilization of the currency rates. Any disequilibrium is set straight by the exchange rates. It also helps in improving or correcting the deficits in the balance of payments. This can be done by changing the external prices of the currency (Dellas, Harris &George, 2018). In this situation, if the fixed-rate policy is adopted then for reducing the deficit, overall deflationary prices are to be adopted that in turn will lead to unemployment in the economy. Also, the rate of exchange that is floating helps the country to avoid inflation.
For international business, it is better to adopt a floating exchange rate regime as fixed rates will not help in managing the demand and supply or the inflationary pressure of the exchange rates. So, it is better to adopt floating rates of exchanges in the country for international business.
Logistic refers to the overall process of co-ordination of resources from the point of origin to the destination it is desired as per the requirement of the corporation, business or consumer. In international business, logistics helps in the integration of components that includes forecasting of demand, planning production, facility location, inventory, etc.
Transport and services of logistics play an important role in the development of international trade. It is required that logistic services are appropriate or it will create hindrance in the global integration of trade. If the transfers are fast and steady and also the materials are of quality and are available at the time of need then overall it impacts the import or exports of the country positively (Chu et al., 2019). When the logistic facility is good then it becomes easy for the companies to do the import and export as materials are available easily and promptly. It also speeds up the process and creates a competitive advantage as a customer likes to get their product as early as possible. The appropriate logistic system will help in doing so and will make them have a competitive advantage over others in the international market.
Chua, W. C. A., Chana, M. H. E., Cheunga, J., &Nguyenb, H. O. (2019). International Logistics and Trade. Journal of International Logistics and Trade, 17(1), 21-32.
Dellas, H., &Tavlas, G. S. (2018). Milton Friedman and the case for flexible exchange rates and monetary rules. Cato J., 38, 361.
Joshi, L., Narayanan, N. C., Venkateswaran, J., Solanki, C. S., & Kumar, P. (2019). Adoption of solar photovoltaic lighting in rural India: Role of localization strategy. Energy and Buildings, 202, 109370.
Libanda, J., Marshall, D., & Nyasa, L. (2017). The effect of foreign direct investment on economic growth of developing countries: The case of Zambia. Journal of Economics, Management and Trade, 1-15.
Madanhire, I., &Mbohwa, C. (2016). Application of statistical process control (SPC) in manufacturing industry in a developing country. Procedia Cirp, 40, 580-583.
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