Asia Pacific Business

Asia Pacific Business

Question 1:

Essentially the term foreign subsidiaries usually reflect on a business entity which is located and operates on a foreign country apart from where its parent company originates. Whereas, a multinational company is a large business empire which is operates from various countries around the world. In countries like Malaysia where dominant businesses enterprises usually are nationally monitored and regulated, foreign subsidiaries usually find it hard to operate in these regions. Thus this aspects usually prompts multinational companies to perform little research and development than foreign subsidiaries. Why is this so? Malaysia is a developing state and so most multinational firms are keen to invest in such regions, as the government offers incentives to foreign investment for the growth of the economy. Usually a government like Malaysian will offer low cost market, which means that one or more factors of production in this state are low cost. Multinational firms through their foreign direct investment links will be informed of this incentives and cease this opportunity to produce goods at very low cost without incurring the expensive cost of research and development

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