Economics
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Factors /criteria to be considered by BSFI before entering the foreign market
Due to the decision to go international the company has to consider the following highlighted factors.
The resources the BFSI have. The company should have enough resources of going abroad which will involve providing insurance to customers and extending credit (Bardhan, 2010). The resources for whole sale financing and purchase of retail installment contracts from franchised dealers.
Expected returns from the investment. The establishment franchising and subsidiary abroad should be to realize higher returns to meet the target of the BFSI .The main of the board that lead to assigning thisduty of instigation is actually to maximize the profit of the company.
Foreign exchange risk. Exports and Imports expose the company to foreign risk fluctuations in the global market therefore the company has to consider whether the host country usually intervenes to correct the extreme fluctuation in the foreign market to enable the company consider its safety in terms of occurrence of the fluctuations (Ohlin, 2007).
The method of going international. According to the case study BMC considers this factor very crucial as the completion will really determine the future growth.to circumvent the some completion where the local customers favor the home country products the parent company have to use the direct foreign investment or the use of franchising and addition licensing to have contact with the customers and avoid tariffs from the host country.
Technology required.in order to efficiently manage the overseas investment the company has to invest on online communication with employees, partners, among other stakeholders.
expertise knowledge in managing the international subsidiary, franchisers,licencee with some background knowledge in the environment in which the business operates be closely monitored with the environment to cater for the risks of the know how that may arise.
Best countries suitable for the foreign investment by BFSI include
Algeria
Is suitable country because of the economic stability with high purchasing power due to income derived from oil exploitation. Oil and gas industries are the main industries in Algeria.it has a forecast growth of 4.0% in 2016.has good modernization forms and official foreign exchange reserve of USD 190.7 billion at end of 2012.sevices industry serves 31.5% and unemployment rate of only 9.8% by estimate in 2013 hence the best country to invest with good infrastructure (Grimwade, 2000).
Ghana
Ghana being the member of COMESA has liberised economy with political stability that attracts foreign investment. Has is the suitable country because it has over 90,000 multinationals with over 1.24 million lines of data. The economy comprises of mainly agricultural sector of approximately 60% and averageservice sector of 50.6% in 2013.the economic sector includes manufacturing, telecommunications, privatebanking, stockexchange, energy hence suitable country (Salter, 2011).
India
Is a much recommended country because it has stability with high advancement in agriculture, fishing, and industry with a highly growing GDP at the rate of 7.5%.
Indonesia
Another suitable country is Indonesia characterized by agriculture, manufacturing raw materials and tourism.Exp orts include oil gas, timber cloth, and imports include food, chemicals and machinery. Has GDP per capita $10, 700 and exports amounts the estimation of $199.1 billion in 2012.
Brazil
Is among the most countries for foreign investment owing to the best legal property rights, freedom from corruption and has good economy with well-developedinfrastructure and notable success in the trade both international and local.
Unsuitable Countries
Argentina
The only main reliable economic activity of Argentina is tourism industry of both cultural and landscape attraction which is usually subject in fluctuations hence not reliable source of income.
Qatar
Critics argue that Qatar lack transparency, and it has personal connections in government. There is allegations of corruption .migrants workers are denied property rights and is also argued that its judiciary is not independent
Romania: High public debt and accompanied by high rate of inflation is a major challenge.
Slovenia
Slovenia is a developing country with high unemployment and poor infrastructure for investment.
Philippines
It is faced with poverty, unemployment and poor infrastructure.
Czech Republic
It is a country of unsuitable economy of high inflation and protective policies hence not suitable for investment in its economy.
References
Arestis, P., & Saad-Filho, A. (2007). Political economy of Brazil: Recent economic performance. Basingstoke [England: Palgrave Macmillan.
Bardhan, P. K. (2010). The political economy of development in India. Oxford, UK: B. Blackwell.
Birmingham, W., Neustadt, I., & Omaboe, E. N. (2009). The economy of Ghana. London: Allen & Unwin.
Grimwade, N. (2000). International trade: New patterns of trade, production & investment. London: Routledge.
Ohlin, B. (2007). Interregional and international trade. Cambridge, MA: Harvard University Press.
Salter, A. (2011). Foreign investment. Princeton, NJ: International Finance Section, Dept. of Economics and Social Institutions, Princeton University.
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