Factors for Investment Decisions

MNCs want to minimize the cost and maximize their economies of scale. They invest in different locations to operate better in their home base. It motivates firms to expand and invest abroad and become multinational. Looking for new markets, want of cheaper raw materials, and managerial knowledge or technology and cheaper production are the major motivations for global expansion.

International companies want the perfect mix of the factors for finding “where to invest”. Labor costs and skill and educational levels of workforce, the purchasing power of the market and proximity to other markets are considered while making an investment decision.

factors Affecting Investment Decisions
FactorsPercentage of companies that believe factor is important
Market Opportunity100%
Patent Protection85%
Regulatory Environment60%
Competitor Pressure60%
Consumer Acceptance55%
Availability of Skilled labor40%
Technology Transfer mechanisms35%
Availability of Equity Capital20%
Scale and Quality of Public R & D15%
Access to Innovative Suppliers80%


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