Investing Overseas

The decision to acquire or implant a commercially productive company in a foreign country involves a large capital investment and the movement of technological and human resources. These efforts can be pursued: lower costs, more market power, improve the range of the target company, to diversify the business and overcome barriers to entry, among other objectives. Others including author, offer their opinions as well. Direct investment abroad generates an uppercase commitment to the purchasing organization. Therefore, factors like technological capabilities, commercial or financial of the acquired company, location, growth, market positioning or labor costs, a strong impact on the modalities and strategies used by the purchaser at the time of landing in a foreign country. Found there are arguments about whether cultural distance or not it is willingness to commit resources by acquiring organizations.

As demonstrated by numerous investigations, there is no consensus on this issue. The Spanish Journal of Business, ICE, published in the April 2875 bulletin number 2006, a study that tries to resolve this issue. Reza a speculation: “The first argument contends that the slightest familiarity with the destination country hinders integration and increases costs to make an IDE (the acronym for foreign direct investment), so that the company will prefer a lesser commitment of resources “(Randoy and Dibrell, 2002). “Additionally, most cultural distance may require the company seeking local support to facilitate the adaptation of the product, to share risks and avoid mistakes, and learn how to run locally and even delegate tasks more culturally sensitive (Hennart and Larimer, 1998).

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