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Friday, 30 October 2015
Factors that entrepreneurs should consider before investing in foreign nations.
This article can add value to government officials for the purpose of attracting foreign investments, however, I will be focusing on entrepreneurs. The Porter's Diamond model will be used to let you know what factors to consider when you want to open a branch of your business in another country. According to this model, there are four factors which are:
- The Factor Conditions
- Firm Strategy, Structure and Rilvary
- Related and Supporting Industries
- The Demand Conditions
The Factor Conditions
This relates to the nature of the country, as such you must consider the natural resources of the country, the availability of cheaper labour, the availability of lowly skilled staff as well as a well educated work force. That way you can be sure that a percentage of the population possess the skills required to execute the tasks needed for the achievement of your business goals. The weather condition, the security in the country , the infrastructures of the country (such as good roads, constant power supply) are amongst all the factors you must consider.
Firm Strategy, Structure and Rilvary.
The way in which businesses are developed and managed in a country should influence your decision as a foreigners to invest in the country. The structure and style of management should influence your decision as well. The level of competition must also influence your decision.
Related and Supporting Industries
Within that country, there has to be a set of strong related and supporting industries for the industry your business falls into. That way, you will be sure your industry can get the adequate support needed. A related industry uses the same skills as yours to execute business tasks. The existence of supporting industries makes companies competitive.
The decision to open a branch of your company in another country should also be influenced by the market size for the goods and services you produce. That is there is a huge market for your products in that country.
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