Choosing Between Exporting and Fdi

Topics: International trade, International economics, Government Pages: 2 (429 words) Published: April 10, 2013
1. Choosing between exporting and FDI, as well as complementarities between these strategies Exporting: choosing this strategies it can easy and quick to know the market trend, it helpful to improve the production and improve the production on international market adaptability and competitiveness; however it have many advantages such as increase the burden of capital turnover, increased the risk; and it need to add the specialized institutions and personnel, the cost must be increased. Compare the FDI. It suitable for the Elecdyne situation. First, a company often restricted in their home countries to its growth stage, the possible reason is the fierce competition, So one possible solution is to consider that it have the potential demand of the foreign markets, so it support the reason why the multinational companies to enter the new market, meanwhile, the local employment situation will be damage because of other country company export too much productions, therefore, the local government will be make some policies to restrict, but the FDI could be help more people to obtain the work, so it can avoid the government restriction. 2. Agglomeration and networks as substitutes and complements to market structures As we know , if a production could be substitute for other production, so it will influence the marker share, therefore the Elecdyne company should pay more attention for the market research, and make a reasonable strategies. 3. Exchange rates

“Exchange rates are the amount of one country's currency needed to purchase one unit of another currency”  However, for multinational companies, dealing with very large amounts of money in their transactions, the rise or fall of a currency can mean getting a surplus or a deficit on their balance sheets, meanwhile it will bring the serious problems. So Elecdyne should master the change of exchange rate, and make the different decisions. 4. Government policy

The government policy play an very important role...
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