WHAT IS THE CONNECTION BETWEEN FOREIGN DIRECT INVESTMENT AND MULTINATIONAL companies?

Question

AND, WHAT IS A MULTINATIONAL ENTERPRISE? IS ENTERPRISE SAME WITH COMPANY?

thanks for any help, and please explain it with a simple english. because my english is not good enough to understand difficult terms. thanx.

Answer 1

Multinational companies are companies that operate internationally; Like Coca Cola or IBM.

Foreign direct investment is investment made directly in a foreign country;  Like building a plant to bottle Coke in Mexico.

Multinationals may make foreign direct investments in order to support their overall operations; Like IBM buying a chip maker in China.

Here is the connection: Multinationals make foreign direct investments to support their international businesses or to save money. Bottom line, they invest in a foreign country to get a return on their Investment (ROI) in the form of increased product sales, cost savings or more productivity. This could include operational efficiency (cheaper manufacture) or access to foreign labor markets.

Answer 2

They are really all the same thing.A multi-national company operates in many countries.It might make things in it's own country and exports to many countries,other times they will spend money in another country to set up a factory to make their own products,this is directly investing in foriegn countries.Enterprise is roughly the same,except it can be the multinational is financially assisting a business from that country to set up a business,rather than directly investing.