In the today’s corporate world the business activities are on the rise. The business activities include the international trade and the foreign direct investments (FDI) into other countries. FDI has become very popular as it is a better way of reaching the targeted market and it is mostly done by carrying out foreign manufacturing activities or just selling another country’s commodities directly to the consumers from the hosting country.
Foreign manufacturing is the practice of producing commodities in the outside countries. It normally takes place as a result of a mutual agreement between the investor and the host country. However, there are more key components that should be considered before the establishment of such an investment activity. For instance, the investor should ensure that the necessary raw materials for the manufacturing process are available and are within reach in that country. There should also be consideration of the workforce; the investor should ensure that there is sufficient source of labor (New Zealand Trade & Enterprise, 2012). In addition, the foreign country should also consider the availability of the market for the manufactured products and the presence of adequate security as well as infrastructural facilities such as roads. Finally, also of great importance are the various business regulations and standards set by the targeted country (Ryan, 2009).
On the other hand, it is noted that there are some influencing cultural issues that should also be put into consideration before implementing the manufacturing process. These cultural factors include the life styles and beliefs of the hosting country’s people. However, they may also just be in a particular region within the host country. For instance, in a Muslim dominated country, a fashion designer may just find it relevant to produce more of the Muslim robes instead of the other kinds of clothes. There are also other traditions that only prefer the naturally obtained commodities such as the food. Such group of people is normally very adamant to purchase the manufactured products. In such a case, therefore, the food manufacture has to find a country or regions where the sales of their products are not negatively influenced (Ryan, 2009). Similarly, some religions may be very strict when it comes to some products, such as beer, for example. A beer manufacturer may not sell much in such a region and may consider another country (Thorburn, 2010).
In conclusion, for an investor to come up with a successful foreign manufacturing firm, he or she has to do a thorough market research to ensure that all the necessary resources are available. The existence of the market for the manufactured products is of similar importance.