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Course BUSI1358: Global Enterprise & Innovation Course School/Level BU/PG

Coursework Individual report Assessment Weight 60.00%
Tutor R De Vita Submission Deadline 11/11/2010

Coursework is receipted on the understanding that it is the student's own work and that it has not,
in whole or part, been presented elsewhere for assessment. Where material has been used from
other sources it has been properly acknowledged in accordance with the University's Regulations
regarding Cheating and Plagiarism.

000601343

Sharmila Gurung
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Introduction

Its a big site selection plunge for any company to choose which country do business with. The chosen
country for research is the USA, United States; the world’s largest and most dynamic economy which
accepts foreign direct investment (FDI). The United States is the prime market for any global company
with the largest economy in the world and a population of more than 300 million. The United States
perceives FDI’s good impact on economic growth and job creation. More than 5 million U.S. workers
are employed by the U.S. associates of foreign companies and support millions more indirectly.
Without any questions, united states can be invested which brings along greater advantages.
Furthermore, the American work force stands out as one of the best educated, most innovative and most
productive in the world.

USA has been powerful in sectors like Transport Equipment, ICT and Business & Financial Services.
As a place to do business, the United States offers a predictable and transparent legal system,
outstanding infrastructure, and access to the world’s most lucrative consumer market.
The U.S. government is committed to attempt economic growth, as is evidenced by the American
Recovery and Reinvestment Act of 2009 (ARRA) passed by Congress in February 2009. ARRA created
many new government incentive programs to uplift economy. This policy of equal treatment enhances
America’s credibility for openness to foreign investment. U.S. bureau of foreign-owned firms can
cooperate with other U.S companies in the programs.

Pros of Investing in the United States:

Research and Development: The United States has expenditures of 40% of the total research and
development across the world. The nation ranks 1 st in capital investment and is the center for global
innovation. Also, the United States publishes 60% of the worlds 'cited publications' and employs almost
three-fourths of the distinguished living Nobel scholarly.

Economy: We are all aware that the United States has the largest and most technologically advanced
economy in the world, with approx.$48,000, Gross Domestic Product (GDP). The U.S. gives the
investors unparalleled freedom of operation with their regulation and taxation system. The United
States frequently ranks at or near the top of most major indicators of an attractive business and
investment climate. The United States is the most consistently innovative, competitive and has open
economy in the world.

Education: There are more than 4,000 universities and colleges in the United States, which
incorporates six of the top 10 universities and five of the best full-time MBA programs in the world. In
the year 2008-09, more than 671,000 international students enrolled in American institutions. Federal,
state, and local governments spend billions money on work-force training each year and surplus
community colleges have accommodated training programs to investors who locate facilities in their
area.

Transportation/Infrastructure/Hospitality: The Nation has the largest paved roadway system,

networks of railway and huge number of airports in the world. It has the busiest cargo airport and has 3
of the top ten airports in the world. The United States is home to many foreigners who lives and
invests. It is a friendly country with immigrants with largest cultural migration.

Consumer Market: The United States has a diverse and dynamic market and hence the companies like
operating with the suppliers and customers to be closer. In the year 2007, the United States was
responsible for 42% of the global consumer goods market. Also, the United States has free-trade
agreements with 17 partner countries which have a combined GDP of approx. $5.1 trillion, which
allows the foreign investors unparalleled access to operate in dynamic markets.

Technology: The US companies are the pioneers in technological advances and innovation. U.S.
Among Business Week’s Top 100 Information Technology companies, forty-four are U.S. firms. Also,
the Economist ranked the nation as the most e-ready country in the world in 2008. In the 2008–2009,
United States was first for innovation, sophistication of business operations/strategy and labor market
efficiency according to the World Economic Forum.

Intellectual Property Rights Protections: The one of the advantages investing in the United States is
that it provides a strong regime of intellectual property rights protection and enforcement. Of the
167,000 patents granted by the U.S. Patent Office in 2009, just over 50% of the applications were from
a foreign country.

Work Force: The United States has the highest labor productivity per person employed at around
$63,885 per year. Also, foreign investors has access to a highly productive and adaptable work force.
According to the International Labor Organization (ILO), the “productivity gap between the United
States and most other developed economies continues to widen.”

About 'Invest in America':

In March 2007, the U.S. Department of Commerce created Invest in America to promote and support
foreign investment in the United States. The Invest in America strives to strengthen the U.S. investment
climate, it also promotes the United States as great place to do business. Invest in America reaches out
to foreign governments and investors, addresses business climate concerns in the United States, and
complements state and local efforts to attract foreign investment.

Investing in the United States is straightforward. Unlike some countries, the United States does not
maintain a screening body for foreign investments. Investments are reviewed only under limited
circumstances, where national security may be involved. With few exceptions, foreign companies enjoy
the same treatment as domestic companies in the United States.
More specifically, Invest in America welcomes all inquiries and can serve as a foreign investor’s first
point of contact for an investment in the United States. Invest in America is part of the Commerce
Department’s International Trade Administration (ITA), which maintains a global network in 77
countries and works to improve the global business environment and helps U.S. firms to compete and
win both at home and abroad. Initial investor outreach may result in gaining information about the
United States economy as a whole, making contacts with appropriate federal agencies, or describing
U.S. policies and basic investment procedures.
Invest in America provides potential investors an investment contact list encompassing the 50 states,
the District of Columbia, and U.S. territories. This guide provides a person designated by each state’s
governor to field international investment inquiries.
Individual state governments manage investment transaction details and can provide individualized
services to potential foreign investors. States compete for investments on a global scale, employing
highly skilled investment officials and maintaining field offices in major business centers throughout
the world. This decentralized system provides foreign investors the individualized attention they need.
Invest in America also maintains a list of federal incentives and programs available to investors, both
foreign and domestic. This document includes information regarding program guidelines, points of
contact, and additional information about the agencies offering the programs. It is regularly updated by
Invest in America staff.
Capital goes where it is well treated. In addition to helping foreign investors locate in the United States,
Invest in America addresses business climate concerns raised by the international investment
community. Invest in America works across various agencies to act as a voice within the federal
bureaucracy to ensure the United States remains the premier location for foreign direct investment.
Through its ombudsman role, Invest in America also supports potential and current foreign investors
with regard to difficulties encountered within the federal bureaucracy.

Legal and political system in Unites States:

There are legal and political environments within which all business operate which cannot be ignored.
The legal and political environment of a business has a very great weight on the success and prosperity
of a business. Business ventures a rapid growth in taken correct laws and ethics with positive political
experience. This is due to the fact that a conducive working environment is created in the work place
whereby the workers perform their work in a highly appreciable way, adopting high levels of
motivation and leading to high output . USA has the largest and powerful economy with well
established legal business environment. US business greatly adopts e- business as well as very high
level of information and communication technology . This is as opposed to their counterparts in Europe
whereby the technology is still on their way up . E-business and ICT has enabled business in USA to
grow and establish very fast since they can adopt new and effective marketing means or ways whereby
their products as well as services can reach far and wide Furthermore, the legal environment for
business in the USA has been favorable and as opposed to business in Europe , there has been a wide
adoption of technology in US business . This adoption of technology has lead to many innovations and
new products and sold in US markets . Which hence had resulted in expansion of US market .

In terms of ethics , all the business operates under the governing business laws even in USA . There is
high respect for human rights and business crimes. Also, good interpersonal relationships and moral
values among the co workers highly encouraged . These values have ;ed to improved production with
was the result of increased motivation, and team spirits. One of the important fact is that the job
opportunities in the USA are secured even by foreign investors. This has led to acquirement of new
ideas and new approaches in the business . This allows business in the USA to stand better chances of
fast growth since there is diverse and different useful strategies provided by different people for
example managers with different ethnic
background and job experiences .

Evaluating Risk and Opportunities in the United States:

Rising unemployment:
Since the mid 1970s unemployment in the service sectors and manufacturing has stagnant. Foreign
companies seeking to access the U.S. market will find that there is ample available labor in all areas of
the talent spectrum. So, the staffs will offer job incentives to generate employment which might
increase the number of location alternatives which gives the companies to attract and develop talented
workers and retain them over the long term. The economic recovery might be slow, and the companies
that attract the best talent in the short term will likely be placed with someone whose economic
recovery is well on its way.

Trying to be early in running down the best talent will risk of scaling up too soon, and it is expected
that most companies will be conservative about scaling their operations. This will give and advantage
for the employers to negotiate salaries and introduce a mix of direct- and incentive-based wage
systems. Also, the rising unemployment affects the confidence of consumer negatively and results in
low quality goods and service, which then will have an impact on the manufacturing and services
companies. The companies will need to fix their revenue potential with new talent access and
development. Existing employees can be cross-trained to achieve greater efficiencies with training in
the competitive market.

Cap and Trade:

The United States has recently made a cap-and-trade bill which can become a law. Several major
corporations have broken with trade associations that oppose the cap and trade. Under Cap and Trade,
the government will set limits, or “caps,” on the level of pollutants that can be emitted into the
atmosphere from all industrial operations. The number of multinational corporations supporting Cap
and Trade grew from 23 to 150 since 2005-08. Nevertheless, many corporations do not support Cap
and Trade, but instead promote a carbon tax that could lower other taxes and make overall taxation
revenue neutral. This can force manufacturers to innovate, and will increase the initial cost of
operations. The countries that do not approve with the bill might have to come across the import tariffs
at the U.S. border. Hence, this might result in high cost goods. Also, if there is opposition from many
countries regarding the cap and trade bill, it could fuel a conflicting, global tariff war.

Devaluation of the U.S. Dollar

The value of the dollar is usually inversely related to risky assets such as stocks. A devaluation of US
dollar will negatively affect its value. Investors usually borrow in a low-yielding currency and invest in
a high-yielding one. If the U.S. dollar devalues, it will make U.S. exports more competitive and foreign
imports more expensive. If imports are costly and the buying power of Americans decreases, only
products manufactured with American resources will be affordable or attractive to local buyers only.
The devalued dollar will also create opportunities for foreign investors, since their currency will buy
more in the United States. This is already creating a resurgence in U.S. R&D activity funded by
overseas corporations.

Due Diligence
The United States has a largest market, pro-business environment, good infrastructure, and skilled work
force. But with the recent economic down turn had created some risks that are not impossible, but have
to be considered by foreign companies investing in the United States. New risk factors and state
measures to attract business mean that there will be regulations, but there will also be economic
incentives to gain. This makes due diligence during site selection critical. These economic factors need
to be carefully considered by foreign investors and corporations to mitigate risk associated with
business location.
Conclusion

Regardless, the United States continues to be the leading destination for foreign direct investment
(FDI) and the foremost investor in other economies. From 2008 to 2009, the United States received
$320 billion of investment and invested nearly $344 billion in various parts of the world (Aaron
Brickman, Director of Invest In America). Considering these figures, it appears that the United States
has been a very attractive investment destination due to its low-risk profile as compared to other
leading global economies. However, the economic downturn, its effects, and resulting public policies
have created new risks and opportunities for companies planning to invest in America. With all the fact
taking into consideration, we have chosen the country United states of America.

References:

Afuah, A. (2003), Innovation Management

Bessant et al (2009), J. Managing Innovation

The National Academies, “An Assessment of the Small Business Innovation Research Program,” 2007

http://www.locationusa.com/UnitedStatesGovernmentAssistance/aug10/foreign-direct-investment-
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http://www.locationusa.com/foreignDirectInvestmentUnitedStates/aug10/foreign-direct-investment-
risks93012.shtml (accessed on 9/11/10)

http://www.gdi-solutions.com/directory/invest_usa.htm (accessed on 9/11/10)

http://www.iamc.org/dispatch/0806/pg02a.shtml(accessed on 10/11/10)

http://www.ococonsulting.com/resources/publications/iedc_report_final.pdf(accessed on 10/11/10)

http://www.locationusa.com/UnitedStatesGovernmentAssistance/aug10/foreign-direct-investment-
United-States.shtml(accessed on 10/11/10)

http://wiki.answers.com/Q/What_impact_does_a_politicallegal_environment_have_on_business_organ
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