International Law Describe Two Major Term Paper

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What possible restrictions might the business face in conducting its business operations?

There are two types of foreign investment: indirect investment and direct investment. Direct investment involves placing physical assets in the foreign country such as building a plant, or establishing a store front. Indirect forms of investment involve activities such as financing, forming strategic partnerships, joint marketing efforts or other activities in which the foreign company does not physically occupy the country of investiture.

Foreign investment of any type is risky simply due to the unfamiliarity of the location. The company will have to explore different customs and deal with different laws and regulations than they are used to. They will have to establish brand equity in the new country, which can be difficult due to language and cultural restrictions.

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The company will have to confront any political situations that may exist as well as the stability of the currency. Hiring employees may pose an issue depending on local unemployment and wage issues. There are many risks associated with foreign investment. For these reasons obtaining financing can be difficult, if not next to impossible. However, foreign direct investment can hold many opportunities for expansion if one can only overcome all of the challenges.

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