FDI final report Coursework Example | Topics and Well Written Essays - 2750 words

FDI final report - Coursework Example This implies the robust performance of the country in the complexity of the financial crisis. The factor which has been responsible for the growth in the FDI flows is the rise in the price of the commodities and has attracted further investment in the field of the natural resources (OECD, 1999). This paper will analyze in details the FDI inflows in three of the major Latin American countries namely Argentina, Brazil and Chile. The primary objective is to compare the environment of FDI in these three countries which can aid the prosperity of business in Latin America. This paper chooses the British retail giant, Tesco and captures the benefits that it can achieve, if it follows the FDI trails and makes its presence felt in the prospering economies of Latin America (Yapp and Paulo, 2011). For this purpose, the competitive advantage of the FDI flows of the countries will be discussed in details and the decision of choosing the country will be established. Company Profile Tesco is a Brit ish multinational department store selling grocery with its headquarters at Chestnut. It is one of the major players in its genre, ranking only second to Wal-Mart in terms of profit and third in terms of revenues after Wal-Mart and Carrefour. Presently, it operates in three of the continents, Asia, Europe and North America. The company has over the years diversified its portfolio to include a variety of services like, telecom, clothing, electronics, financial services and software. Considering the business boom that it had experienced in the recent years, it would be interesting to observe the benefits that it can derive from tapping the FDI inflows in the developing economies of Latin America. FDI Literature In Foreign Direct Investment, a firm invests in the manufacturing or service facility or any other type of its assets in a foreign country and retains effective control on it (Sagepublications, 2007). FDI implies a high level of commitment as the firm which chooses to enter has to remain in the foreign country for a long time, investing high quantity of resources (Froot, 2008). FDI can be done in two different ways which include mergers or acquisition and Greenfield investment. Recent times have seen a surge in the former type. There can be two different types of integration in FDI. One in which the firm invests in the same products in the foreign country that it produces in its own country and the other type, where it chooses to invest in the value chain of the firm (Ramondo, Rappoport and Ruhl, 2013). The nature of ownership also varies in the FDI. There can be partial acquisition of the existing firm or wholly-owned investment, in which the investor owns the foreign assets or equity joint ventures, in which both the parent firms come together to create a new legal entity by investing assets and share the ownership and profits (Hauswald and Hege, 2009). This process benefits the multinational organizations immensely as they can utilize the advantages of location and learn from each other’s structural differences. They can also leverage their learning and enhance their capabilities (Blonigen, 2005). There can be three different motives for following an FDI scheme which are market seeking motives, resource seeking