Foreign Direct Investment
Expanding the business in the foreign country is not an easier function for the business marketers. In spite of the considerable benefits availed from the foreign investment process, the business companies require considering the effectiveness of the external and internal forces as well. It is notable that the diverse political, cultural, and economical scenario creates the direct impact on the FDI (Foreign Direct Investment) (Reddock, 2017). It is necessary to identify these external influences that may affect the business profits, especially during the expansion of the business in the foreign market (Young et al., 2010). The study would explore the foreign direct investment of Abbott Australia, which has captured the leading position in the pharmaceutical market. The company is focusing on expanding business in China and earning the benefits from the FDI trade. Therefore, the study would explore the external influence, such as political, economical, social, technological, and cultural factors on business. The discussion of the foreign trade investment in China and the supply demand value would also be discussed in the study.
According to Kouznetsov, Dass Schmidt (2014), foreign direct investment refers to the investment of the capital resources in a country that offers the service capabilities and best infrastructure to both the world and the native consumers. FDI is considered as the beneficial instrument that is used for bringing goods and services to the globalised market place. Campolmi & Gnocchi (2011) pointed out that the most benefit FDI holds is the capital flow between the suppliers and the host regions. It has been observed that China has acquired the leading position in capitalizing such benefits. The Commerce Ministry of China suppressed the FDI rate almost $100 billion for the first time. Over the years, the rte of FDI increased up to 17.4%, which was nearly $104.74 billion (Fisher et al., 1994). The extensive capital availability is one of the major reasons for such high level of investment. The country has overtaken the position of world’s largest recipient of foreign capital. Another major reason for developing FDI in China is the huge competitiveness. The development of the infrastructure, the adequate resource availability, development of the business value chain, and productivity and work force skills are strengthening the competitive position of the country (Loewenstein, 2000). In addition to this, some of the national government policies are enacted and enforced by aiming at the favorite state entities. It is quite helpful in generating considerable knowledge about the rules and regulations.
Factors Influencing FDI in China
The study is widely focusing on the business expansion of Abbott Australia, which is a renowned pharmaceutical company. The company pays attention to the potentiality level of the prosperity and health around the world. The major focus of the company is to promote the healthy atmosphere and strive to foster the social, economic, social, and environmental well-being in the operational areas (Childers & Rao, 1992). After achieving the greater success in Australia and New Zealand pharmaceutical market, the company is now focusing on establishing business in China by developing the sound FDI Process. It is thus essential for the company to identify the effectiveness of the external forces that create the remarkable impact on the Foreign Direct Investment. The development of the Fiscal Policy might even create the recognizable challenges on the ground of foreign direct investment. The application of the fiscal policy creates impact on the dynamic scenario of the economic field.
Environment plays the most significant role in developing the business entity. The external forces such as political, social, economical, technological and cultural atmosphere have the significant impact on the foreign business. This section of the study would analyze the external forces that influence the FDI process in China.
- Political factors
According to Fuming (2005), political factors in a country generally deals with the set of rules and policies that influence the foreign investment much considerably. It is noticeable that due to huge economic value in China, the foreign countries become much attracted towards developing political suitability as well. Central Chinese Government has offered the most preferable policies that help the foreign countries earning more capital resource. However, the instability in the political scenario may create hindrance on development of the foreign business. The pharmaceutical company requires identifying the set of rules and norms that can direct them in gathering the investment capital in a significant manner.
- Economical factors
Chinese economy has achieved the leading position in the market. The huge economic structure is much helpful in building the infrastructure, availing the benefits from the foreign investors. It is notable that the economy scenario in China is estimating the responses of employment and consumptions in the government spending (Hilgert, 2004). The development of the Fiscal Policy might even create the recognizable challenges on the ground of foreign direct investment (Childers & Rao, 1992). The application of the fiscal policy creates impact on the dynamic scenario of the economic field. Abbott Australia thus requires following up the economic condition while expanding the business in china and forecasting the budget for the FDI trade.
- Cultural Factors
Abbott Australia Business Expansion
Culture plays the much significant role in dealing with the foreign countries. It has been observed the cultural scenario of China affects the preferences of the international pharmaceutical companies. The foreign countries generally look for a country that can deliver the demand products by creating the value (Loewenstein, 2000). It is necessary to ensure that the product outcome that should be based on the demands of the customers. The acceptance of the products and major demands develop the clear understanding regarding cultural effects on the foreign direct investment. It is notable that the diverse political, cultural, and economical scenario creates the direct impact on the FDI (Lau & Ng, 2001). The acceptance of the local people in using pharmaceutical products is essentially needed to be monitored.
- Environmental Factor
Chinese government determines the capital market, which has the significant impact on the entire environment. The increasing expenditure has the potentiality to increase the money supply and make the capital market boom (Hooker, 2008). In fact, the labour market is also associated with the employees with the better skills and the costs of the labors from different regions. However, China is looking forward to establish the environmental-friendly society. On the other hand, the entry of Abbott Australia needs to determine the major environmental factors during the formulation and implementation of the FDI in China.
The emergence of the global competition has helped in developing the products and services to meet the needs and expectations of the global customers. Similarly, the foreign countries even opt for the better country where the resources, infrastructure, and employee strength are determined (Escalas &Bettman, 2003). Therefore, the foreign countries generally look for a country that can deliver the demand products by creating the value. It is necessary to ensure that the product outcome that should be based on the demands of the customers. The economy scenario in China is estimating the responses of employment and consumptions in the government spending (Childers & Rao, 1992). The development of the Fiscal Policy might even create the recognizable challenges on the ground of foreign direct investment. Therefore, it is essential for the company to pay attention to such supply and demand factors that may create the value for the future prospects.
Conclusion
Abbott Australia is focusing on expanding business in China and earning the benefits from the FDI trade. The company is focusing on expanding business in China and earning the benefits from the FDI trade. Therefore, the study would explore the external influence, such as political, economical, social, technological, and cultural factors on business. Central Chinese Government has offered the most preferable policies that help the foreign countries earning more capital resource. However, the instability in the political scenario may create hindrance on development of the foreign business. The huge economic structure is much helpful in building the infrastructure, availing the benefits from the foreign investors. However, the increasing level of the expenditure might affect the economic filed due to which the FDI may face the obstacles. The foreign countries generally look for a country that can deliver the demand products by creating the value.
It is necessary to ensure that the product outcome that should be based on the demands of the customers. The economy scenario in China is estimating the responses of employment and consumptions in the government spending. However, the instability in the political scenario may create hindrance on development of the foreign business. the foreign countries generally look for a country that can deliver the demand products by creating the value. It is necessary to ensure that the product outcome that should be based on the demands of the customers. The economy scenario in China is estimating the responses of employment and consumptions in the government spending. Fiscal Policy might even create the recognizable challenges on the foreign direct investment.
References
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Escalas, JE &Bettman, JR (2003), “You Are What You Eat: The Influence of Reference Groups on Consumers’ Connections to Brands”, Journal of Consumer Psychology, Volume 13, Issue 3, Pages: 339-348.
Fisher, M. L., Hammond, J. H., Obermeyer, W. R., & Raman, A. (1994). Making supply meet demand in an uncertain world. Harvard business review, 72, 83-83.
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Kouznetsov, A., Dass, M., & Schmidt, P. (2014). Entry mode decisions: the effects of corruption and weak law enforcement on foreign manufacturing SMEs in post-communist Russia. Baltic Journal of Management, 9(3), 277-293.
Lau, G. T., & Ng, S. (2001). Individual and situational factors influencing negative word?of?mouth behaviour. Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l’Administration, 18(3), 163-178.
Loewenstein, G. (2000). Emotions in economic theory and economic behavior. American economic review, 90(2), 426-432.
Reddock, J. (2017). Seven parameters for evaluating universal health coverage: Including supply- and- demand perspectives. International Journal Of Healthcare Management, 10(3), 207-218. doi:10.1080/20479700.2017.128798
Young, W., Hwang, K., McDonald, S., & Oates, C. J. (2010). Sustainable consumption: green consumer behaviour when purchasing products. Sustainable development, 18(1), 20-31.
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