The paper 'Make-or-break Decisions in Choosing Foreign Direct Investment Locations' is a good example of a Management Assignment. Foreign Direct Investment is a significant basis of getting capital and growing the economy in most developing nations (Bromiley, Miller & Rau 2001). It offers a platform for management techniques, new technologies, investment, and access to the market for the manufacture of goods or the provision of services. However, the attraction of Foreign Direct Investment remains a major concern for host nations since it faces a key challenge of establishing the major elements that encourage and affect Foreign Direct Investment’ s location decision.
Several pieces of literature exist regarding the determinants of location for when choosing a foreign market location, but most of them do not offer much information on location factors for Foreign Direct Investment in various countries (Buckley, Devinney & Louviere 2007, p. 6). Therefore, this article tries to fill the previous research gaps by analyzing how decisions can make or break the plans to invest in a foreign country. Description of the article The article “ Make-or-Break Decisions in Choosing Foreign Direct Investment Locations” by Lailani Laynesa Alcantara and Hitoshi Mitsuhashi is empirical research; it gives a clear summary of the whole article and a comprehensive literature review of the current and past researches.
This article provides an abstract, introduction, literature review, methodology, results, discussion, conclusion, and references. It begins by giving out a brief explanation of the rationale need, and the importance of the study. The abstract also gives a brief outcome of the study by stating that small companies with business relationships are more expected to enter foreign nations with intense political instability compared to larger companies with such a relationship.
The introduction also clearly states the main objectives of the study connecting what has been mentioned in the abstract to the whole content of the journal article. It also links various studies carried out mentioning different risks organizations face in their global expansion plans. This literature gives examples of companies that have taken risks to enter new foreign markets while their local competitors have stayed away. A case in point is the Honda Motor Company that decided to set up its first company in the US in 1979, whilst other Japanese auto manufacturers consisting of Nissan and Toyota hesitated (Alcantara & Hitoshi 2012, p. 336).
Another example stated in the article is a Tokyo-based credit card company; Japan Credit Bureau that took risks to establish its company India in 1979 despite uncertainties. Gulf Oil and Shell also set up their companies in Nigeria despite political and economic turmoil in the 1960s (Alcantara & Hitoshi 2012, p. 336). The author compared previous studies and even points out some inconsistencies with the current studies. The main objective of this journal article was to report the outcome of the investigation on the circumstances under which companies make risky choices of location concerning their foreign direct investments (Alcantara & Hitoshi 2012).
Another objective of the article is to assess the two risks associated with global expansion without proper research of the market. Alcantara & Hitoshi (2012, p. 337) argue that one of the risks is the unpredictability of prospective demand and viability of carrying out business in the foreign nation market; marketplace opportunity risk. The second risk is the uncertainty of political, legal, and regulatory situations which could affect business in foreign markets such as political risk.
Alcantara, L & Hitoshi, M 2012, Make-or-break decisions in choosing foreign direct investment locations, Journal of International Management, Vol. 18, No. 4, p. 335-351.
Banerji, K & Sambharya, RB 1996, Vertical keiretsu and international market entry: the case of the Japanese auto ancillary industry, Journal of International Business Studies, Vol. 27,No. 1, p. 89–113.
Bromiley, P., Miller, K & Rau, D 2001, Risk in strategic management research, In: Hitt, M.A., Freeman, R.E., Harrison, S.J. (Eds.), The Blackwell handbook of strategic management, Blackwell Publishers Ltd., Oxford, UK.
Buckley, P., Devinney, M & Louviere, J 2007, Do managers behave the way theory suggests? A choice-theoretic examination of foreign direct investment location decision-making, Journal of International Business Studies, Vol.1238, No. 7, p. 1-26.
Gavetti, G & Levinthal, D 2000, Looking forward and looking backward: cognitive and experiential search, Administrative Science Quarterly, Vol. 45, No. 1, p. 113–137.
Howell, LD 2001, The Handbook of Country and Political Risk Analysis, third ed, The PRS Group, East Syracuse, NY.
Martin, X., Swaminathan, A & Mitchell, W 1998, Organizational evolution in the interorganizational environment: incentives and constraints on international expansion strategy, Administrative Science Quarterly, Vol. 43, No. 3, p. 566–601.
Reimann, F., Ehrgott, M., Kaufmann, L & Carter, C 2012, Local stakeholders and local legitimacy: MNEs' social strategies in emerging economies, Journal of International Management, Vol. 18, No. 1, p. 1–17.
Rugman, A 2010, Reconciling internalization theory and the eclectic paradigm, Multinational Business Review, Vol. 18, No. 2, p. 1–12.