Market demand is unsaturated there are differences in

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Market demand is unsaturatedThere are differences in market sophisticationIncreasing Return from Ownership Advantages16 |P a g e
Ownership Advantagescome from the application of proprietary tangible and intangible assets in thehost country.Reputation, brand image, distribution channelsTechnological expertise, organizational skills, experienceCore competence– skills within the firm that competitors cannot easily imitate or match.Ensuring Growth from Organizational LearningMNEs exposed to multiple stimuli, developing:Diversity capabilitiesBroader learning opportunitiesExposed to:New marketsNew practicesNew ideasNew culturesNew competition17 |P a g e
The Impact of FDI on the Host CountryEmploymentFirms attempt to capitalize on abundant and inexpensive labour.Host countries seek to have firms develop labor skills and sophistication.Host countries often feel like “least desirable” jobs are transplanted from home countries.Home countries often face the loss of employment as jobs move.FDI Impact on Domestic EnterprisesForeign invested companies are likely more productive than local competitors.The result is uneven competition in the short run, and competency building efforts in the longerterm.It is likely that FDI developed enterprises will gradually develop local supporting industries,supplier relationships in the host country.18 |P a g e
Foreign Direct Investment in IndiaThe economy of India is the third largest in the world as measured by purchasing power parity (PPP), with agross domestic product (GDP) of US $3.611 trillion. When measured in USD exchange-rate terms, it is the tenthlargest in the world, with a GDP of US $800.8 billion (2006), is the second fastest growing major economy inthe world, with a GDP growth rate of 8.9% at the end of the first quarter of 2006-2007. However, India's hugepopulation results in a per capita income of $3,300 at PPP and $714 at nominal.The economy is diverse and encompasses agriculture, handicrafts, textile, manufacturing, and a multitude ofservices. Although two-thirds of the Indian workforce still earns their livelihood directly or indirectly throughagriculture, services are a growing sector and are playing an increasingly important role of India's economy. Theadvent of the digital age, and the large number of young and educated populace fluent in English, is graduallytransforming India as an important 'back office' destination for global companies for the outsourcing of theircustomer services and technical support.India is a major exporter of highly-skilled workers in software and financial services, and software engineering.India followed a socialist-inspired approach for most of its independent history, with strict government controlover private sector participation, foreign trade, and foreign direct investment. However, since the early 1990s,India has gradually opened up its markets through economic reforms by reducing government controls on

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Term
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