Quick Summary
Diagram
Important Table
| Point | Meaning | Example / Use |
|---|---|---|
| Equity Capital | Foreign ownership investment | Shares in company |
| Reinvested Earnings | Profit reinvested | Expansion |
| Intra-company Loans | Loans between parent and subsidiary | Funding support |
| Benefits | Capital, technology, jobs | Economic development |
Best 10 Marks Answer
Foreign Direct Investment is an important topic in International Business Environment. It helps managers understand how global economic, political, legal, cultural and technological forces affect business decisions.
Foreign Direct Investment is an investment made by a company or individual from one country into business interests located in another country with significant control or ownership.
In international business, this concept is useful because firms operate across countries where markets, laws, currencies, cultures and competition are different. A business must analyse these factors before entering a foreign market or expanding globally.
For example, a company planning to sell products in another country must study customer culture, exchange rate, trade barriers, legal rules, political stability and local competition.
Conclusion: Therefore, Foreign Direct Investment helps businesses reduce risk, identify opportunities and make better global business decisions.
Tips and Tricks to Remember
- ✅ Differentiate FDI from portfolio investment.
- ✅ Mention ownership and control.
- ✅ Write benefits and concerns.
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