FDI Essay
By Bardia Dariush and Maria Ramirez
When considering the nature of our firm’s product, as well as our need to stay compe!!ve in
this growing industry, it is important to consider which global markets have cost advantages, as well as
posi!ve demand outlook, that helps mi!gate the risk of domes!c reliance. As many know, the trend in
manufacturing has been to shi’ produc!on to Asian markets because of cost advantages. It’s important
for our firm to relocate produc!on to Asian markets to take advantage of these cost-savings, as well as
strategically place opera!ons in those areas so that we may opportunis!cally take advantage of
intellectual capital and trends that may arise in those markets rela!ng to our products. More specifically,
China has been known as the most advantageous because of its emerging market status and its low cost
of produc!on. These low costs will weigh in favorably on our gross margins since our products are priced
compe!!vely in comparison to peers. China also provides further advantages because of its “green
procurement” policy that was fairly recently adopted, in order to provide eco-friendly alterna!ves in
both consump!on and manufacturing. This ini!a!ve by the Chinese government also raises awareness
for eco-friendly products and services, which may provide upside for our firm’s sales down the road.
These economies of scale are very important in e-ec!vely posi!oning ourselves for maintaining a
comple!ve advantage throughout our expansion. In regards to specific sales posi!oning, we see target
markets as those that sta!s!cally support progressive trends in consumer preference. More specifically,
we target markets in which there is a high demand and awareness of eco-friendly products in everyday
consump!on. A survey by U.S. based consultancy, Dual Ci!zen LLC, published that Sweden, Norway,
Germany, Denmark, Finland, and Austria were among the top na!ons that ranked highest in
performance of environmentally-friendly economies based on growth, percep!on, and reputa!on. Based
on this, it would make sense for our firm to develop a European-centralized sales strategy, and slowly
expand throughout those borders, and then opportunis!cally into other regional markets that present
trends that we may take advantage of.
The next strategy would be based on the execu!on of our expansion. In this scenario, I think that
able to have more control over our pricing and our brand. All in all foreign direct investment is the
smartest choice.