Apple Foreign Direct Investment (FDI) PDF

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Name(s) 1) WAN ABDUL MUHAIMIN B WAN MUHAMMAD PAISAL 2) NURUL AINI BINTI ZULKIFLI 3) NURUL IZZAH BINTI AHMAD ZAIDI 4) MUHAMMAD ZAID IMRAN B MOHD ZAMROS

5) AMMAR FAIZ B AHMAD 6) NURULHUDA LOTPI BINTI MOHD LOTPI 7) NURUL IZZAH BINTI HALIM HAFED

ID Number(s) 1) AM1909006400 2) AM1905005663 6) AM1909006147 7) AM1909006274

3) AM1905005656

4) AM1809004584

5) AM2001006563

Lecturer DR. NISRIN ALYANI BT ISHAK

Lab group / Tutorial group / Tutor (if applicable)

Course and Course Code INTERNATIONAL BUSINESS - BUS301 / BUS4033 (SEC 02)

Submission Date: 11/06/2021

Assignment No. / Title FIELDWORK ASSIGNMENT APPLE- FOREIGN DIRECT INVESTMENT (FDI)

Extension & Late submission: Allowed / Disallowed

Assignment type: Individual/Group

% of Assignment Mark

Returning Date:

Penalties: 1. 10% of the original mark will be deducted for every one-week period after the submission date 2. No work will be accepted after two weeks of the deadline 3. If you were unable to submit the coursework on time due to extenuating circumstances you may be eligible for an extension 4. Extension will not exceed one week

Declaration: I/we the undersigned confirm that I/we have read and agree to abide by these regulations on plagiarism and cheating. I/we confirm that this piece of work is my/our own. I/we consent to appropriate storage of our work for checking to ensure that there is no plagiarism/ academic cheating. Signature: Full Name: WAN ABDUL MUHAIMIN, NURUL AINI, NURUL IZZAH, MUHAMMAD ZAID, AMMAR FAIZ, NURULHUDA, NURUL IZZAH HALIM

Table of Contents

Identify type of entry strategies ............................................................................................. 1 Discuss the advantages and disadvantages of your chosen entry strategy ........................... 3 Suggestions/ Recommendations to sustain in the market ..................................................... 5 Conclusion ............................................................................................................................ 7 References ........................................................................................................................... 8 Appendix ............................................................................................................................... 9

1. Identify type of entry strategies

Many people know about the existence of foreign direct investment but do not know what this industry does. Foreign direct investment or better known as FDI invests their companies in foreign countries instead of where they live. These investments are made either by individuals or a firm that lives in one country but invests in another country. In general, FDI occurs when an investor makes an investment to open an industry such as a company or factory in a foreign country to further expand his business but in a different country. One of the interesting things about FDI is that it is still considered part of FDI if the investor works with a local firm in the country There are three types of foreign direct investment that have been categorized which are horizontal, vertical and conglomerate. These three types are different from each other where horizontal direct investment means investors who do the same business either in their own country or in a foreign country. Second, vertical direct investment that conducts different business activities in foreign countries but is related to their main business. Third, which is a foreign investment conglomerate that is directly different and unrelated to the existing business in the country of origin, where the investor may have no previous experience. But, based on the Apple industry that we do, it is categorized as a horizontal direct investment because it is just like the Apple branded phone manufacturer based in Malaysia but wants to expand and grow the business by opening a factory in India. It is undeniable that there are that we as direct investors have many options to choose which country, we should choose to do direct investment. However, we have agreed to choose India as a place for us to do direct investment for a number of specific reasons. First, this is because we can save costs when using local workers because the currency of India is lower compared to ours where the value of our one ringgit is equivalent to seventeen point eighty one Indian rupees. This is indeed profitable to the company where if we employ local workers, the wages charged to them are high for their currency but not too high if converted to our currency. So, although the quantity of local workers that we will employ is quite large, but the capital used is not too high.

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The second reason why India is our first choice is because we want to employ local workers, who are citizens of the country we want to invest in. This is because we want to avoid the lack of employment expertise, where if we bring workers from our country to work in foreign countries, it will bring a huge loss to our country. This is because, the expertise and skills possessed by workers in our country must be used in their own country and not wasted for the good of other countries. Therefore, it is better for us to let our workforce continue to work in our country, while using local workers where we want to invest. Next, for India's economic development, foreign direct investment (FDI) is a major source of funding. It creates a favorable economic environment for India's economic development. Foreign direct investment (FDI) assists India to improve its infrastructure, acquire advanced technology, increase productivity, and create jobs. As a result, FDI plays a critical role in the expansion of the Indian economy, as it aids in the development of new technologies, the creation of jobs, and the enhancement of corporate operations, and so on. The Indian economy is prepared for more growth in the days ahead (Fdiindia, 2020). In conclusion, the reason why we choose India to do direct investment because first, India's currency is lower, we can save money by hiring local people. This is beneficial for the business because the salaries charged to local workers are high in their currency but not too high when converted to our currency. Secondly, we want to hire local workers who are citizens of the country where we wish to invest. Thirdly, foreign direct investment (FDI) is an internal source of capital for India's economic development. It promotes India's economic development by creating a favorable economic environment. Thus, in recent years, FDI has made a significant contribution to India's overall economic growth. Inflows of foreign direct investment (FDI) have an impact on India's ability to transfer new technology and innovative ideas, as well as improve infrastructure, resulting in a more competitive economic environment.

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2. Discuss the advantages and disadvantages of your chosen entry strategy

2.1 Advantages of Foreign Direct Investment in India In India, the lower rate of labour cost gives Apple Inc. to produce more with efficient labour cost. Besides, Indian’s worker was expertise in IT technology so there was easy to produce mobile phone, computer, electronics and many more. Apple Inc. was like focuses on the productivity of Apple’s product to ensure every unit of Apple’s product can be export to the global demand. Regarding our company, the investment in India gives our company some benefits and advantages in our businesses. The advantages were increased employment and economic growth that can boost the manufacturing and services in India. In mean, increasing of employment can give job opportunity to Indian’s people and slightly would have the higher incomes because of the powers of buying and boosting the production of the economy in the country. As investor, the economic growth goes fast that attract the investor to invest in India. Besides, the advantages were the technology. The technologies that had been used in India were the latest and updated due to the production Apple’s product. The latest technology in India was attract investor around the world and also the lower labour rate becomes one of the factor that investor want to invest in India. The introduction of latest technologies gives the result to the company’s distribution into the local economy and also enhanced the effectiveness and efficiency of the industry. As investor, the production and manufacturing in India can create a new design or applications in Apple’s product for the globally demand. Next, the advantages were improving the capital inflow. Apple Inc. chooses India to produce the Apple’s product because of improving the capital inflow. There is because Apple Inc. origin has the limited domestic resources and also Apple Inc. wants to get in the global capital markets (Research FDI, 2021). As investor, there is also beneficial to our company that India have many human capitals to give the rolling of the capital inflow in the country. The advantages doing investment in India was human capital development. The human capital developments have gaining the knowledge and competence of workforce. In mean, the skills such as expertise in IT technology that have in India can make the Apple’s product more effective and efficiency. Last but not least, the advantage was exchange rate stability. Thus, the continuous of flow foreign exchange will help the Central Bank to maintain the prosperous reserve of foreign exchange due to result in stable exchange rates (Research FDI, 2021).

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2.2 Disadvantages of Foreign Direct Investment in India Despite its numerous advantages, foreign direct investment has significant disadvantages. The admission of huge corporations, for example, may result in the displacement of local enterprises and the repatriation of earnings if the corporations do not reinvest revenues back into the host nation. This will also result in significant capital outflows from the host country. It is general knowledge that India is one of the world's fastest expanding economies, with several developments potential. Recognizing the country's enormous economic potential, the Indian government recently modified its FDI policy in order to encourage FDI equity inflows. To make India more investor-friendly, the government has implemented reforms and eased investment constraints in areas such as digital media, contract manufacturing, coal mining, and singlebrand retail commerce. Next, political corruption is one of the disadvantages if our company wants to make investments in India. This is because in order to get access to the overseas market, FDIs have gone so far as to corrupt top authorities or political leaders in several nations. Japan's Lockheed affair is one example. In certain nations, FDIs influence the political structure in order to achieve personal benefit. The majority of Latin American countries have encountered such an issue. For example, drug trafficking, laundering of money and others. Foreign direct investment is extremely dangerous since political situations in other nations can change in an instant. Furthermore, the majority of the risk variables that we will encounter are exceedingly high. Not only that, inflation in the Economy also will happen if our company makes investment in this country. The presence of FDIs has also contributed to the country's inflation. They invest much on advertising and consumer marketing. This is done at the expense of the consumers, and the price is raised as a result. Cartels are also formed in order to dominate the market and abuse the customer. OPEC, the world's largest cartel, is an example of FDI exploiting consumers.

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3. Suggestions/ Recommendations to sustain in the market

Foreign direct investment (FDI) related to Apple Inc. in international business trade between an original home which is California and a foreign host which is India. There is because the Apple wants to increase their profit through foreign direct investment. In Foreign direct investment, Apple more focus on manufacturing their product including an R&D center. Foreign direct investment can be used to regulate foreign subsidies because it is a financial contribution granted by a third party that can gain benefit to an undertaking engaging in economic activity in the internal market. Contribution confers is limited in law or to an individual undertaking or industries. If the Apple foreign subsidies get provided by governmental authorities in India, it will become a great source to sustain in the market thought foreign direct investment (FDI). Apple can join an investment promotion agency in India. Investment promotion agency will become the between Apple and the domestic economy. From one side, it can be a one-stop shop for the requirements investors demand from a host country like India. On the other side, it also will give action to the host’s domestic economy such as ready access to skilled workers, technicians, engineers to attract investors such as Apple. Apple also can use free trade zone in India because propose importing and exporting goods easily. Apple can save tax on imports when stored inside the free trade zone. Consider which sectors or activities should be addressed. Suppliers' investment and location selections may be influenced by the host economy's major multinational investors. For this part we need to choice proper location for our factory in term of where the supplier of material it is good to have a close location between manufacturer and supplier as it can help us produce the product as quickly and efficiently as possible. Environmental factor also need to be consider as it help us built a positive view from the local if the factory is loud we need to choose a distinct location from the local so that they will not be disturb by the noise. Also flora and fauna need to be consider too so that we the newcomer not become the cause of environmental damages to help built and maintain our reputation as a phone manufacture. Another factor need to be consider is the deliverable of the product, if the product is finish how fast we can distribute it to the neighbor country or in this case our target consumer are the Asian country.

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Waves of investors may arrive. Investors in thermionic tubes, valves, and transistors, for example, come first, followed by television and broadcasting systems, and then computers, computer peripherals, and data processing systems. FDI might help diversify and upgrade indigenous industry along these lines. As we invest on a well-known company worldwide we can use our advantage on helping the economy of the host country which is India, and it also help us built a relationship with the host which is trust that will be handy when we need to expand more at the India or even better built a reputation so we can invest more in other foreign country. As did not just help them increase their economy but also open a job opportunity for them which benefit the country and the people.

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Conclusion

As a conclusion from this fieldwork assignment, we can conclude that most countries in the world are doing different type of business with different density, output and input and also with the variety of strategies in order to maintain their market sales, product development and business longevity and sustainability. As we can see, China and India are the leading countries in monopolizing economic sector and product research development, raising rapidly in term of technologies and specialist in different economic sector. They have a lot of strategies and ideas on how to penetrate the market nowadays and we can take an example of their effectiveness of their strategies and implemented in our own economy in Malaysia. To do so, managers have to learn and revise variety of strategies and techniques so that they will be less able to repeat the same pattern and use any flexible approach such use of sales subsidiary or joint ventures strategies. Last but not least, a high level of knowledge and experience also are the key to know and adapt in any situation. Not all strategies implemented in business are effective and flexible but at least we can manage the most basic requirement for the business to sail smoothly before changing towards the better ways.

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References

1. Green, J. (2017, October 16). Attracting quality foreign direct investment in developing countries.

IGC.

https://www.theigc.org/blog/attracting-quality-foreign-direct-

investment-developing-countries/ 2. (2021, May 22). Free Trade Zone in India- Features and Benefits. OnnSynex Ventures Pvt. Ltd. |. https://www.onnsynex.com/free-trade-zone-in-india-features-and-benefits/ 3. IMF. External Relations Dept. (2002). Finance & Development, September 2002. Finance

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Development.

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https://www.imf.org/external/pubs/ft/pdp/2002/pdp03.pdf 4. Foreign Direct Investment (FDI). (2021). Retrieved June 10, 2021, from Investopedia website: https://www.investopedia.com/terms/f/fdi.asp 5. fdiindia. (2020, April 28). FDI India. Retrieved June 9, 2021, from Fdi.finance website: https://www.fdi.finance/blog/fdi-and-economic-growth-in-india/ 6. Broking, A. (2020, August 31). FDI Disadvantages and Disadvantages. Retrieved from https://www.angelbroking.com/knowledge-center/share-market/advantages-of-fdi 7. Chen, J. (2021, February 12). Foreign Direct Investment. Retrieved from https://www.investopedia.com/terms/f/fdi.asp 8. FDI, R. (2021, March 11). 16 Advantages and Disadvantages of Foreign Direct Investment.

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https://researchfdi.com/foreign-direct-investment-

advantages-disadvantages/ 9. India, F. (2019, October 19). Advantages and Disadvantages of Foreign Direct Investment.

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Appendix

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