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INTERNATIONAL BUSINESS FINANCE Two Cases of Foreign Direct Investments

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INTERNATIONAL BUSINESS FINANCE Two Cases of Foreign Direct Investments Rohit Sharma and Rajesh Upreti INTERNATIONAL BUSINESS FINANCE Two cases of foreign direct investments Thesis CENTRIA UNIVERSITY OF APPLIED SCIENCES Business Administration May 2020 ABSTRACT Centria University Date Author/s of Applied Sciences May 2020 Rohit Sharma and Rajesh Upreti Degree programme Business Administration Name of thesis INTERNATIONAL BUSINESS FINANCE. Two Cases of foreign direct investments Language Instructor Pages Sandor Kovács 43 Supervisor Katarina Broman The purpose of this thesis was to find the best way of doing business on global platforms. Foreign investment is one of the main tools to attract global economic integration in any economy. It acts as a bridge between investment and savings. The authors aimed to show the challenges, opportunities, and risks in international trade. The theoretical framework of this research examined the circumstances of the international business environment, foreign investment, and its types. In this research work, the authors analyzed and reviewed the literature on capital movements under direct foreign investment. The existence of a positive influence on the economy of the country where these substitutions introduced should lead to an improvement in overall GDP and an increase in national production. The same goes for economic development and people's living standard. The main goal is to give a general idea of international trade while simultaneously presenting, analysing, and describing the human side of international trade. This thesis concluded that business organizations and governments around the world should know about international aspects of governance. Moreover, the authors discussed how a business organization could enter global markets. In conclusion, it is suggested that companies should consider various risks and opportunities before embarking on their internationalization activities. Key words business environment, foreign direct investment, international business, investment, risk CONCEPT DEFINITIONS CAPM Capital Assets Pricing Model ETF Exchange Trading Form FDI Foreign Direct Investment FII Foreign Indirect Investment FMAGX Fidelity Investment´s Magellan Funds FPI Foreign Portfolio Investment GATT General Agreement on Tariffs and Trade GNP Gross National Product IFRS International Financial Reporting Standard IMF International Monetary Fund MNC Multinational Corporation MNE Multinational Enterprise MPT Modern Portfolio Theory NBER National Bureau of Economic Research NGO Non-Government Organization OECD Organization for Economic Co-operation and Development OTC Over the Counter PMPT Post Modern Portfolio Theory REIT Real Estate Investment Trust SMF Students Managed Fund WTO World Trade Organization ABSTRACT CONCEPT DEFINITIONS CONTENTS 1 INTRODUCTION ................................................................................................................................ 1 2 INVESTMENT: DEFINITION, PRODUCTS, AND TYPE ............................................................ 3 2.1 Investment products....................................................................................................................... 4 2.1.1 Stocks ..................................................................................................................................... 4 2.1.2 Bonds ..................................................................................................................................... 5 2.1.3 Mutual funds......................................................................................................................... 6 2.2 Foreign investments and types ...................................................................................................... 7 2.2.1 Foreign direct investments .................................................................................................. 7 2.2.2 Foreign indirect investments ............................................................................................... 8 2.2.3 Commercial loans and official flows ................................................................................... 8 2.3 Student-managed investment fund and its challenges ................................................................ 9 3 INTERNATIONAL BUSINESS ENVIRONMENT ....................................................................... 11 3.1 Social and cultural environment ................................................................................................. 13 3.2 Technological environment ......................................................................................................... 13 3.3 Economic environment ................................................................................................................ 14 3.4 Political environment ................................................................................................................... 15 4 RISK, OPPORTUNITY, AND CRISES INVOLVED IN INTERNATIONAL BUSINESS ....... 16 4.1 Risks and opportunity in international business ....................................................................... 16 4.1.1 Currency Volatility ............................................................................................................ 17 4.1.2 Operational risk ................................................................................................................. 17 4.1.3 Political risk ........................................................................................................................ 18 4.1.4 Market risk ......................................................................................................................... 18 4.1.5 Inflation ............................................................................................................................... 19 4.2 Opportunity .................................................................................................................................. 19 4.3 International business and the crises.......................................................................................... 20 5 PORTFOLIO THEORIES ................................................................................................................ 22 5.1 Modern portfolio theory .............................................................................................................. 22 5.2 Post-modern portfol io theory ..................................................................................................... 23 6 THE ACTORS IN THE FIELD OF FOREIGN INVESTMENT ................................................. 25 6.1 The multinational corporations .................................................................................................. 26 6.2 State corporation .......................................................................................................................... 27 6.3 International institutions ............................................................................................................. 27 6.4 Non-governmental organizations ................................................................................................ 27 6.5 Individuals .................................................................................................................................... 28 7 CASE STUDY: FOREIGN INVESTMENTS IN FINLAND ......................................................... 29 7.1 Finland flows of Foreign Direct Investment .............................................................................. 29 7.2 Finland inward foreign direct investment ................................................................................. 30 7.3 Investment according to the ultimate investing country .......................................................... 31 7.4 Reasons for investment in Finland ............................................................................................. 32 7.5 Business opportunities in Finland............................................................................................... 33 7.6 Weaknesses for investment in Finland ....................................................................................... 35 7.7 Conclusion ..................................................................................................................................... 35 8 CASE STUDY: HMD GLOBAL ...................................................................................................... 37 8.1 Introduction .................................................................................................................................. 37 8.2 Background ................................................................................................................................... 38 8.3 The downfall of Nokia .................................................................................................................. 39 8.4 The comeback of Nokia ............................................................................................................... 39 8.5 Conclusion ..................................................................................................................................... 40 9 CONCLUSIONS AND DISCUSSION ............................................................................................. 42 REFERENCES ...................................................................................................................................... 44 FIGURES FIGURE 1. Characteristics of investment ................................................................................................
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