What Is The Meaning of Direct Investment?

Direct Investment:- The Ultimate form of foreign involvement is direct ownership of foreign based assembly in manufacturing facilities. The foreign co. can buy part of full interest in a local co. or build its own facilities.

Advantages:-

1. Cost economics in form of cheaper labour or raw materials, foreign govt. investment, foreign savings etc.

2. Better image and g/w because of certain of jobs.

3. Stronger relationship with investors/ govt./ local suppliers.

The main disadvantage of this method is that the co-exposes itself to a larger investment risk.

Thus, it may be said that all methods if entering into a foreign market have their advantages and disadvantages. The company can choose from these modes according to its policies and objectives as regards international marketing.