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f involvement and is a direct ownership in manufacturing facilities. It provides the controlling company with access to certain resources or to a market (Daniels & Radebaugh, 2002).

 

A major reason for many firms make expand investment is to capitalize on lower labor costs. In other words, the aim is often to transfer production to locations where labor is cheap. For example, through direct investment in China, Disney can enter China’s cheap labor market. The foreign company can buy part or full interest in local company or build its own facilities. If the market is large enough, foreign production facilities offer distinct advantages. First, the firm secures cost economies in the form of cheaper labor or raw materials, government investment incentives, and freight savings. Second, the firms can strength their image in the host country as it creates job. Third, the firms build up a deeper relationship with government, customers, local suppliers, and distributors, enabling it to adapt its products better to local environment. Fourth the firms can retain full control over its investment and therefore can establish manufacturing facilities and marketing policies that serve in the long –term international objectives. Fifth, firms can assure themselves access to the market in case the host country starts creating pressure that locally purchased goods have domestic content. In addition to these advantages the main disadvantages is because of direct investment the firms expose a large investment to risks such as blocked or devalued currencies, worsening markets or expropriation (Kotler, 2008).

 

Daniels & Radebaugh (2002) stated that investment is an integral means of carrying out global, multi domestic, and transnational practices. Indeed, most successful domestic companies, especially those with unique advantages, invest abroad. Investment coordination will assist governments to collaborate particularly when dealing with investment flows.

 

Operations in the other country may be established either as starts-up (green fields) or via acquisition. It may take the form of wholly-owned subsidiaries or joint ventures in the foreign operations. There are advantages and disadvantages to either acquiring an interest in an existing operations or build up new facilities. There are various reasons for seeking acquisition such as the difficulty of transferring some resources to a foreign operation or for acquiring new opportunity locally. In other case when attaining resource for personnel is especially difficult. Acquisition helps to build good will and promote brand identification particularly where the costs and breaking of new brand are high even acquisition does not add any further capacity to the market. That means acquisition decreases costs and risks as well as give good results. Besides through acquisition it is easier for the company to enter to local capitals that rely on largely on local financing. Finally, during the start up period acquisition helps investors to avoid high expenses caused by inefficiencies and results an immediate cash flow (Daniels & Radebaugh, 2002).

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