04/27/2008WHAT IS THE CONNECTION BETWEEN FOREIGN DIRECT INVESTMENT AND MULTINATIONAL companies?
- AND, WHAT IS A MULTINATIONAL ENTERPRISE? IS ENTERPRISE SAME WITH COMPANY?
thanks for any help, and please explain it with a simple english. because my english is not good enough to understand difficult terms. thanx.
- Best Answer:Multinational companies are companies that operate internationally; Like Coca Cola or IBM.
Foreign direct investment is investment made directly in a foreign country; Like building a plant to bottle Coke in Mexico.
Multinationals may make foreign direct investments in order to support their overall operations; Like IBM buying a chip maker in China.
Here is the connection: Multinationals make foreign direct investments to support their international businesses or to save money. Bottom line, they invest in a foreign country to get a return on their Investment (ROI) in the form of increased product sales, cost savings or more productivity. This could include operational efficiency (cheaper manufacture) or access to foreign labor markets.
- Answer:They are really all the same thing.A multi-national company operates in many countries.It might make things in it's own country and exports to many countries,other times they will spend money in another country to set up a factory to make their own products,this is directly investing in foriegn countries.Enterprise is roughly the same,except it can be the multinational is financially assisting a business from that country to set up a business,rather than directly investing.