Reference no: EM133070136

My attention is drawn to your intentions of expanding your operations internationally. It is essential to understand the existing difference between foreign and domestic investment before settling on the decision. As such, foreign investment is different from domestic investment as the former involves making investments in domestic companies and assets of a country different from yours. On the other hand, domestic investment is investing in own country (Knight & Voon, 2020). Expanding worldwide will require you as a CEO to locate companies and assets in a different country to expand your operations.

Before expanding internationally, there is a myriad of factors that C-executives should consider. First, foreign government consideration is a vital factor that the executives should not ignore. The consideration includes assessing the stability of the country's local authority, accessibility to affordable capital, and policies to protect the business. Secondly, the executives need to review the legal and regulatory policies of the country for expansion (Knight & Voon, 2020). Regulatory and legal guidelines are vital to the operation of a business firm in the sense that it ousts any instances of fraud. Besides, the policies will enable the C-executives to explore legal interventions whenever a crisis occurs while overseas.

One of the risk mitigation techniques is the identification of talent that aligns with the business environment. In this regard, employees who are skillful and innovative should be prioritized during the hiring process. Additionally, choosing an appropriate business partner inevitably contributes to the performance of the business while overseas (Cavusgil et al., 2020). As such, the executives are advised to partner with productive business partners whose contribution benefits the growth and expansion of the business.

References

Cavusgil, S. T., Deligonul, S., Ghauri, P. N., Bamiatzi, V., Park, B. I., & Mellahi, K. (2020). Risk in international business and its mitigation. Journal of World Business, 55(2), 101078.

Knight, L., & Voon, T. (2020). The Evolution of National Security at the Interface Between Domestic and International Investment Law and Policy: The Role of China. The Journal of World Investment & Trade, 21(1), 104-139.

Questions

1. Why should companies, hedge? What would it mean to cover 110% of a transaction exposure?

2. Briefly state your management position about management contracts versus direct foreign investment. What are the relative merits of management contracts compared with direct foreign investment?