Corporate Strategy and Foreign Direct Investment - Essay Example

The main reason why market seekers habitually practice global expansion is for them to broaden their customer base. In as much as organizations such as Coca-Cola have productively gone through the global expansion process, the efforts of several other entities have been unsuccessful. Consequently, market seekers should ascertain that they introduce strong and competitive brands into the foreign market and similarly make sure that they establish good customer relations for the investments to be rewarding (Hill, 2014).

Cost Minimizers

Cost minimizers take part in worldwide expansion by establishing low-cost production sites in a foreign country in order to make sure that they remain cost-competitive both locally and internationally.  For such ventures to be successful, the entities should ensure that they put reasonable and affordable price tags on their products, as such an approach will directly benefit the customers, hence ensuring that they widen their clientele.  

Question 2

How is the nature of IBM’s competitive advantages related to its becoming a multinational firm?

Discussion

Since its establishment in 1911, IBM has unquestionably developed into one of the most reliable technological firms globally. Technology experts argue that the organization has remained relevant because of its competitive advantages that include continuous innovation, routinely introducing solid technology into the market, and at the same time embracing the outside and inside practice where it listens to the input of both its employees and customers. Such advantages have fairly supplemented IBM’s efforts in global expansion. By listening to the input of its customers, the organization has for example established operations in smaller markets like Vietnam, the Philippines, and the Czech Republic while at the same time taking advantage of growing economies like China as recommended by its market analysts.

Question 3

Explain how the cost-benefit analysis is different from the Capital Budgeting Analysis.

Discussion

Cost-benefit analysis is different from capital budgeting analysis on the basis of their objectives, as the former focuses on both the benefits and costs of carrying out a given project over a specific period, while the latter examines the productivity of foreign investment by incorporating the economic, political, social, cultural and legal risks (Shapiro et al, 2009). Capital budgeting analysis is similarly different from cost-benefit analysis in that it heavily relies on the net present value, which is determined by deducting the initial investment from the discounted net cash flow. On the other hand, the cost-benefit analysis focuses on future discounted net cash flows and establishing the ideal value of the benefits and costs.