...International Management Homework Completed by : Christiana Wijaya Kinshi Perdana Cari info 6 besar FDI di Indonesia ( 6 negara besar yang investasi di Indo & apa investasinya ) ! Being a developing country, Indonesia requires a substantial amount of cash for national development. This large amount of fund is there as there is a need to catch up with other developments, especially in developed countries, either regional or global. Indonesia is not being capable enough in providing the funds for those developments. Besides digging up domestic incomes, the government has also tried to invite financing from other countries which is called Foreign Direct Investment According to Krugman (1994), FDI is a flow of international capital whereby a company from a country sets up or widens its company in another country. Hence, not only there is a redeployment of resources, but also there is an implementation of control towards companies abroad. The main objectives of FDI are to look for resources, look for market, look for efficiency, and also to look for political security. In short, Foreign Direct Investment is known as an investment made by a company or entity based in one country, into a company or entity which is based in another country. * According to BKPM (Indonesia Investment Coordinating Board), the realization of Foreign Direct Investment, usually mentioned as FDI, could be differentiated based on several aspects, namely sector, location, and also country...
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...Jollibee has become the number one fast food chain that serves burgers, sandwiches and rice meals in its originating country, Philippines (Beamish and Bartlett, 2014). It first started its foreign expansion to Singapore, and today it has expanded to 9 countries including United States. There are countless countries withholding potential for Jollibee’s expansion, and several of them will be discussed in the following discourse. INDONESIA One of the countries in which Jollibee should be expanding to is Indonesia. One of the main reasons Jollibee should expand to Indonesia is due to their strong growth of middle class. According to Kerschener and Huq (2011), middle class consumers are important drivers for consumption and growth. The growth of middle class will lead to increased disposable income, meaning consumers are likely to consume more. In Indonesia, the middle class have shown positive outlook from its growth. In 1999, only 25% of populations are classified as middle class, but in 2010, there was an increase in middle class population to 57% of the entire population (Afif, 2014). The increase in the middle class would allow Jollibee to have potential customers who are ready to spend their disposable income. Urbanization have also promoted to the growth of consuming class in Indonesia. Mckinsey Global Institute (2012) predicted that by 2030, an additional 90 million Indonesian would join the consuming class. the taste and preferences of a potential customer is an essential...
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...Foreign Direct Assessment: Analyzing the Mobility of FDI Models in Emerging Markets Kyle Himmelwright & Damian Zaccaria, Villanova Business School In this article, the authors will explore foreign direct investment in emerging markets. Applying a two prong investment model, they’ll assess three emerging Southeast Asian marketplaces; Indonesia, Thailand, and Malaysia. Additionally, they’ll explore the impact a variety of explicit and implicit factors have on the outcome. The research will indicate which of the three markets has the most potential for investment. Keywords: Foreign Direct Investment (FDI), emerging markets, investment, economic factors, growth, defense Foreign direct investment (FDI) plays a prominent and growing role in the global marketplace. FDI is defined as an investment made by a company or entity based in another country. The investment provides the firm with an opportunity to access new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing (Goingglobal.com 2015). Accurately assessing marketplace factors is essential when evaluating whether to invest in a foreign market, especially when it comes to making decisions requiring foresight and conviction. “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.” Rupert Murdoch’s quote concisely illustrates the current state of the global marketplace; it simply isn't as big as...
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...Indonesia Country Report Q1 2012 POLITICAL AND SOCIAL BACKGROUND Indonesia has excellent prospects for long term growth, based on macroeconomic stability, supported by strong domestic consumption and stable political conditions. President Susilo Bambang Yudhoyono’s reputation remains high in international circles, boosted by the country’s focus on re-establishing its leadership role within ASEAN and as the incoming Chair of APEC 2013. The country has a demonstrated desire to take on a global role by promoting itself as the world’s third largest democracy and largest moderate Muslim-majority country, but also as a new Asian economic powerhouse with stable economic growth and sound macroeconomic outlook. A more influential role in G20 highlights how Indonesia now is placed alongside giants China and India as one of the most important emerging economies in the world. Yudhoyono has two and a half years left in office and should further accelerate the reforms of the country, before his term ends in 2014. However, the most pressing reform on subsidised fuel price has yet again been postponed. In late March Indonesia’s revised 2012 budget was discussed in parliament. Following violent demonstrations, the President lost crucial support within his coalition failing to push the fuel price hike vote through parliament. The President’s Party has taken a hit in terms of popularity. A survey by the Indonesian Survey Institute showed that domestic support for the ruling Democratic Party...
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...Cemex and the host nations. Cemex had to face some challenging questions; What are the primary factors in why Cemex has chosen Direct Foreign Investments versus some alternatives; What is the impact of their choice in FDI on the host-country, as well as home-country. What are the primary factors in why Cemex has chosen Foreign Direct Investments versus some alternatives? There are several options to consider when a company wants to move into the international global market. The biggest questions firms usually ask is, “Why do firms go to all of the trouble of establishing operations abroad through foreign direct investments when two alternatives, exporting and licensing, are available to them for exploiting the profit opportunities in a foreign market?” (Hill, 2008). This question was undoubtedly debated heavily by Cemex prior to investing in foreign markets. One of the industry specific novelties of cement manufacturing, is the product itself. “The company sells ready-mixed cement that can survive for only about 90 minutes before solidifying, so precise delivery is important” (Hill, 2008). This industry is already at a predisposed peril if it were to consider exporting their goods. The cement industry requires this product to be made on site. Due to this requirement, Cemex could have considered Licensing, “Occures when a firm grants a foreign entity the right to produce its product, use its production processes, or use its brand name or trademark in return for a royalty...
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...in Indonesia Foreign Direct Investments By: Pamala Kimbrel Florida Institute Of Technology International Business Professor May 09, 2015 Growing Records in Indonesia Foreign Direct Investments International business is when two or more countries, regions, or nations make transactions between one another for goods, services, or resources. This can involve many different types of companies, including private and small businesses. There are also multinational corporations (MNC) that have gone worldwide, and have operations in more than one country. This article talks about how approved foreign direct investment (FDI) in Indonesia is climbing. FDI refers to investment in things like equipment, structures, and organizations bringing business to a foreign country (Ball et al, 2013). Assessment of the Article In recent years the previous president signed a Negative Investment List (NIL) that placed certain conditions on FDI and some business fields were even closed form starting any new FDI projects in Indonesia. Despite the restrictions and closers, the FDI continued to grow and reached a record high. Since the election for a new leader in October 2014, JoKo Widodo has became president and promised to boost the economy by lifting restrictions and attracting more FDI. Total investment rose 16.9% to a quarterly record of 124.6 trillion rupiah ($9.6 billion) in the first three months from the previous year, and approved foreign investment rose...
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...Cemex and the host nations. Cemex had to face some challenging questions; What are the primary factors in why Cemex has chosen Direct Foreign Investments versus some alternatives; What is the impact of their choice in FDI on the host-country, as well as home-country. What are the primary factors in why Cemex has chosen Foreign Direct Investments versus some alternatives? There are several options to consider when a company wants to move into the international global market. The biggest questions firms usually ask is, “Why do firms go to all of the trouble of establishing operations abroad through foreign direct investments when two alternatives, exporting and licensing, are available to them for exploiting the profit opportunities in a foreign market?” (Hill, 2008). This question was undoubtedly debated heavily by Cemex prior to investing in foreign markets. One of the industry specific novelties of cement manufacturing, is the product itself. “The company sells ready-mixed cement that can survive for only about 90 minutes before solidifying, so precise delivery is important” (Hill, 2008). This industry is already at a predisposed peril if it were to consider exporting their goods. The cement industry requires this product to be made on site. Due to this requirement, Cemex could have considered Licensing, “Occures when a firm grants a foreign entity the right to produce its product, use its production processes, or use its brand name or trademark in return for a royalty...
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...Indonesia – Asia’s Stumbling Giant Case Prepared for Prepared by Case Analysis The political, economic, and legal systems are the most important implication for international business. Those systems influence each other and build the attractiveness of a country as an investment site. This attractiveness is connected with potential long-term benefits and costs, and related with both those sides risk of running business activity. The central issue of this case is solving the problem which is connected with inappropriate, low level of foreign investment in Indonesia which is strictly related with the current economic, legal, and a lesser extent political systems. Indonesia was under the strong, totalitarian leadership of President Suharto over 30 years and this country has still struggled with problems deriving from lack of free market and democracy. The political system in Indonesia was an example of right-wing totalitarianism where some individual economic freedom was permitted. The corruption was rampant and bribes were necessary to running any businesses. Investments in this totalitarian country were not effective because even the economics was growing up, most benefits were consumed by Suharto and his “crony capitalism”. Nowadays, Indonesia is a young democracy with the excessive red tape and the endemically high level of corruption. In my analysis, I would like to define Indonesia’s goals which can enhance the economic development. I will...
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...population of 294 million and an annual growth rate of 0.6%. Indonesia is the fourth most populated country with a population of 218 million and an annual growth rate of 1.6%. Brazil is the fifth most populated country with a population of 179 million and an annual growth rate of 1.3%. Pakistan is the sixth most populated country with an annual growth rate of 159 million and an annual growth rate of 2.4%. Russia is the seventh most populated country with a population of 144 million and an annual growth rate of -0.6%. Bangladesh is the eighth most populated country with a population of 141 million and an annual growth rate of 2.1%. Nigeria is the ninth most populated country with a population of 137 million and an annual growth rate of 2.9%. Japan is the tenth most populated country with a population of 128 million and a annual growth rate of 0.1%. (2004 World Population Data Sheet, 2004, p. 2-12) China, as of 2002, became the largest recipient of foreign direct investment at $53 billion. While this is by far the largest amount, it only represents a per capita foreign direct investment of $30 per person. The compares poorly to other developing nations such as Brazil with a per capita foreign direct investment of approximates $195 per person. This represents a significant opportunity for our company to leverage the discrepancy and harness a under utilized market. (Reforms Could Boost China’s Ability to Attract Foreign Investment, March 7, 2003,...
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...1.0 Question 1 Indonesia began a process of rapid government decentralization in 1999 from a formerly strong centralized government structure (Keith Green, 2009). According to Darmawan (2008), under former president Habibie, this reform process was conducted due to the introduction of new decentralization guidance in 2001 under Law 22/1999 on regional governments and Law 25/1999 on fiscal balance between the central and regional governments have changed the intergovernmental relations in Indonesia. Then, they were replaced by Law 32/2004 and Law 33/2004. The World Bank declared that decentralization is defined as “the transfer of authority and responsibility for public functions from the central government to intermediate and local governments or quasi-independent government organizations and/or the private sector”. Decentralization is also regarded as a way of diffusing social and political tensions and ensuring local cultural and political autonomy (Bardhan, 2002, p. 185). Local governments in Indonesia started to develop and to govern their regions by gaining huge transfer of authority and ability to make their own decision-making from central government with these laws. Indonesia begins with the components in political decentralization and then move forward to fiscal decentralization and finally the administrative decentralization. According to Cheema, Nellis and Rondinelli (1999), political decentralization aims to give citizens or their elected representatives more...
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...Summary Report Executive Summary After analyzing PEST analysis of Indonesia and Saudi Arabia, I came to know it has some advantage and disadvantage in term of legal policy, economic factor, social, geographic and technological factor. Although GDP growth rate, labor force, and lending interest rate are more in Indonesia, they have unstable central government, huge population, high inflation, persistent corruption and natural disaster. Indonesia’s investment climate ranks poorly in international comparisons. The World Bank’s Doing Business 2007 report ranks Indonesia 135th out of 175 economies on ease of doing business. Macroeconomic instability is still viewed as the biggest obstacle, followed by poor transportation service and corruption in electricity such as stealing. Other major obstacles include labor skills, tax administration, cost of financing, and labor regulation which raise the cost and uncertainty of doing business. In Indonesia FDI is restricted in most of the sectors and the business environment is not good，so I recommend do not invest in Indonesia and Saudi Arabia has the strongest political, economic, legal systems providing the best opportunity and potential for overseas expansion. Friendly government business regulations and vast petroleum reserves might be indicative of low political and financial risk for foreign direct investment and therefore a strong candidate for overseas growth. The year over year increase in GDP might also indicate that the general...
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...Foreign Direct Investment Learning objectives • Be familiar with current trends regarding FDI in the world economy. • Understand the different theories of foreign direct investment. • Appreciate how political ideology shapes a government’s attitudes towards FDI. • Understand the benefits and costs of FDI to home and host countries. • Be able to discuss the range of policy instruments that governments use to influence FDI. • Articulate the implications for management practice of theory and government policies associated with FDI. The focus of this chapter is foreign direct investment (FDI). The growth of foreign direct investment in the last 25 years has been phenomenal. FDI can take the form of a foreign firm buying a firm in a different country, or deciding to invest in a different country by building operations there. With FDI, a firm has a significant ownership in a foreign operation and the potential to affect managerial decisions of the operation. The goal of our coverage of FDI is to understand the pattern of FDI that occurs between countries, and why firms undertake FDI and become multinational in their operations as well as why firms undertake FDI rather than simply exporting products or licensing their know-how. The opening case describes the international growth of Starbucks. The closing case explores Cemex’s foreign investments. OUTLINE OF CHAPTER 7: FOREIGN DIRECT INVESTMENT Opening Case: Starbucks’...
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...opportunities of Direct Foreign Investment in Bangladesh. It also identifies the overall direct foreign investment system in Bangladesh. Problems and opportunities of direct investment in Bangladesh follow the rules and regulation prescribed by the investment forum for schedule countries on companies. The functions of the country or company cover a wide range of investment and functional activities to individual, firms, corporate bodies and other multinational agencies. It is very important to the national economy as a whole because the expansion and condition of the company or firm affect the level of business activity through their effect on the nation’s money supply. The direct foreign investment extended its credit facilities to different sectors to diversify its credit portfolio in compliance with credit policies of direct investment of the foreign country such as Industrial, Housing, Contract work, Working capital for trades, manufacturing processing plants and export oriented industries and other business. Introduction This Century is” Century of Globalization of trade and economy”. The world is facing competition in marketing of the products in global market. In this circumstance the companies goes to investment, those has available capital to invest out side the country where they can get competitive advantages in terms of cost, Expansion of market, Raw materials. The countries have available work force, Natural resource or agro-products, expertise to attract the foreign investors...
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...In the Foreign Direct Investment by Cemex talks about that Cemex is rising to global status. Cemex is the world’s third largest cement company in the world and Mexico’s largest multinational company. In Mexico, Cemex is known for its efficient manufacturing and excellent customer service. Cemex began its international expansion in an effort to reduce its reliance on the Mexican market, to capitalize on demand in developing countries and its knowledge of developing company’s needs, and finally, to increase its value by acquiring inefficient companies and transferring its skills to those companies. Cemex plans to continue its foreign expansion, and believes that China and India will be important markets in the future. Discussion of the case can revolve around the following questions: Which theoretical explanation, or explanations, of FDI best explains Cemex’s FDI? Cemex is a cement company it is consentingly exporting. It is difficult to export because of the weight of the product. Cemex can expand into new markets, but they would either need to get a license of a local company or make an investment in the market directly. Cemex’s success is due in part to its top notch customer service, and relationship with distributors, but these advantages could be difficult to allocate, the company will probably choose to invest directly. What is the value that Cemex brings to the host economy? Can you see any potential drawbacks of inward investment by Cemex in an economy? Cemex has...
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...firms to capitalize on global market opportunities while carefully managing its inherent threats in order to attain long-term victory. Multinational corporations (MNCs) are companies who move across their home countries borders to conduct business in foreign markets. They ordinarily consist of a parent company located in the home country and at least 5 subsidiaries. These MNCs are company who deals with the globalization. They specialize in production and export those goods that they can produce with the highest relative efficiency and import those good that other nations can produce relatively more efficiently. The emergence and activities of MNCs played an important role and had impacted a huge extent on the concept of globalization. The MNCs create foreign direct investment (FDI), which is defined as a company from one country making a physical investment into building a factory in another country. The FDI are important to a country as it helps to attract the foreigners to invest in their local market which generate cash flow to country. Besides, it boasts the local market and yet increases the GDP of the country. Well, it is said that there are always two sides to a coin. FDI also bring trouble to country where the foreign investors do not have to be completely obedient to the economic policies of the country where they have invested their...
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