Globalized Property Investment - Essay Example

Globalized Property Investment Entering the Global Market It is essential for investors to consider venturing into overseas markets to diversify their business investments. Choosing to invest in foreign competitive markets sometimes offsets the weak performance by counterparts from the United Kingdom (Punnett, 2004, p. 56). Global investments provide a means for deriving profit from different but related foreign exchange transactions. In most cases, business companies considering they small prefer buying mutual funds as a basis of entering a global market. It is important for top executives to categorize foreign investments as per the risks before fully making investment choices. Firstly, the management ought to carry out a review of the financial statements of the company and evaluate the total amount of money that the company can allot to international investment. It is significant for company managers to understand that the foreign markets remain riskier compared to the United Kingdom market. The author of this discourse recommends that the real estate company maintain its foreign investment below fifteen percent of its entire investment. This is despite the fact that company aims at diversifying the investment into the overseas market away from the current United Kingdom market. Secondly, managers need to make a clear difference among classes of assets. Entering the foreign market as a multinational corporation will serve the company better considering the fact that it is a real estate company. Coming in form of multinational will offer the company the best option for sustainable stability. Company chief finance officers should isolate mutual funds using class concentration on assets. They ought to know that mutual funds are in two categories constituting bond funds and stock. If they choose a blended option, it means that the company will invest in the types of funds. The management should categorize the market based on the degree of economic development as well as nationality. Understanding the Strategy in the International Environment It is important for the management of the real estate company to understand the strategy important in operating within the global market. Scholars define globalization as the growth of investment and trade along with growth in global business. Globalization results in integration of world economies. Scholars including Punnett, (2004) posit that the concept of globalization entails several simple features. First, developments in information and communication technology increase the speed surrounding communication and travelling in the international spheres. Baum & Hartzell, (2012) hold that faster travelling and communication makes the world smaller. This is the source of the term global village. A small world means that people continue to be aware of activities and events in other areas including those taking place outside their countries of origin. Travelling to other countries for various activities including doing business is easy. These activities make people comprehend opportunities available in other countries referred to as the international market. On the other hand, experts define international strategy as the constant and wholesome management mechanism crafted to help managers run and compete effectively in the global market. According to Baum & Hartzell, (2012), understanding opportunities available in the international market expands investments. Furthermore, the number of businesses operating within the global market such as the real estate investment analyzed in this discourse also increases. Chief Executives as well as other managers need to understand supplies, markets, partners, locations, as well as competitors present in the international market to invest in the same market effectively. A successful business operates based on taking advantage of opportunities presenting them, forecast shortfalls and put mitigation measures in place, and prepare for downfalls to avoid surprise attacks. This type of business environment requires managers with full knowledge of the differences and similarities among various regions in the global market. This allows them to make use of opportunities, forecast potential troubles, and prepare for downfalls efficiently. Although it is a responsibility of executive managers to design international strategies, they take a lot of information from managers at all levels in their entire management structure because they also depend on the same people to execute the developed strategies. Techniques pursued by companies to attain set goals differ and take variant forms. They include among others forming partnerships, acquiring ownership of local companies, licensing of existing companies to run their operations, developing ser vies, products, and promotional companies developed to attract the interest and attention of potential clients. Scholars put forward various differences between domestic and international strategies. Categories of Real Estate Investment Various ways exist through which this company can invest in real estate to earn substantial income. Residential real estate investments are the first option. These properties include apartment buildings, houses, vacation houses, as well as townhouses. Vacation houses entail houses that pay people pay to live in during their short-term residence at a particular place. The duration of the stay of people in these houses depends on lease and rental agreement. Commercial real estate investments are other options. These are mostly office buildings. The company can take part of the one hundred million and construct building containing individual offices. The company could in turn lease to companies, small businesses, and private offices for individuals. The third option constitutes the industrial real estate investments. These are storage warehouses, car washes, and other particular purpose real estate generating sales from clients for temporary use of the facility. These types of investments have essential service and fee revenue channels including having cleaner vacuums that operate with coins at a specified car wash. This increases returns on investment for the company. The other perspective is the retail real estate investments. This puts together strip malls, shopping malls, as well as other retail storage units. Circumstances exist where the property owner receives a particular percentage following the use of the building besides the rent. The company could also use mixed-use real estate investments. These types of investments entail those that combine any of the stated categories producing one project. Implementation I recommend to the company to combine low income homes with low interest rates because it provides the best option to a real estate investor. Furthermore, the real estate market across the globe continues to improve. The company needs to understand the options available because not all investment properties witness similar returns on investment. The company should identify the type of property from the list above that fits into its strategy. Important questions for the company management include understanding whether they stakeholders want to be property owners, interested in restoring property, or reselling the property. The second step is of the company to collaborate with experience. This is essential because the company will be investing in the foreign market for the first time. This means that the company should find a real estate agent with a lot of experience in investment property dealings. The agent will help the company in locating promising and most appropriate properties. Relational brokers are good bets in such contexts. The company also needs to identify the right location. Location is central to buying property with the aim of renting them out to tenants. Investing in high-populated areas or high-rent zones remains ideal. Merits of International Investment Strategies Preference by investors to invest in overseas market continues to increase every year. A company that applies international strategies stands a chance to draw many advantages from taking the risk. The first important reason explaining why this company should invest in international markets is the concept of diversification. The company will be in a position of diversifying its portfolio. Retaining its business within the United Kingdom puts this company at a risk of losing everything should the UK market crush. When the domestic market crushes, the effects rarely spread over to other foreign markets. The developed countries for instance the United States experienced the World Economic Depression of two thousand and eight. The influence did not reach the emerging markets. Recently, the economy of Greece, Italy, and Ukraine almost crushed forcing the European Union to step in and offer assistance (Punnett, 2004, p. 92). The crushing did not affect other economies such as the United Kingdom, Germany, and Denmark. This reason is perfect to influence this company to venture into international market. By putting part of the money in the domestic UK market and the rest in the overseas market, the company positions itself for development and growth even during difficult economic times. The second advantage would consider putting money in the emerging market. Investing in the real estate within these economies gives room for the company to grow substantially. Description of these markets as emerging emanates from the fact that they are late in developing compared to other giant economies. When these countries take the development path, many companies carry the potential to grow among them the real estate. Investing in emerging markets will help this company draw more profits compared to those within the developed economies. Important is for this company to understand that real estate is one of the fasted growing and most profitable industries in the emerging market. The third merit entails tax advantages. It is definite that the company will remit taxes as regulations provide. However, as a multinational investment company, the company will enjoy some tax exemptions going by the fact that it is a foreign direct investment. The final aspect is that the company will enjoy currency fluctuations. Certain moments exist where the company enjoys from fluctuations in exchange rates. Conclusion Global strategy for real investment business entails the allocation of resources of the company in a way that carries advantages of profit beyond the domestic market. In this context, international marketing strategies take three broad perspectives. The decision on whether to engage in business or not, the specific target market to invest including geographic, product, as well as demographic besides participating in the identified markets that entail financing, product planning, marketing, and pricing. The managers have the responsibility of accomplishing the broad economic needs and goals set by stakeholders of a specific company. It is significant for company managers to understand that the foreign markets remain riskier compared to the United Kingdom market. The author of this discourse recommends that the real estate company maintain its foreign investment below fifteen percent of its entire investment. Bibliography Punnett, B. J. (2004). International Perspectives on Organizational Behavior and Human Resource Management. Armonk, N.Y.: MESharpe Inc. Baum, A. E., & Hartzell, D. (2012). Global property investment: strategies, structures, decisions. Chichester, West Sussex, Wiley-Blackwell. Read More