Final answer:
Companies pursue direct foreign investment for market expansion, access to resources, reduced costs, technology transfer, infrastructure development, market proximity, joint ventures/partnerships, and strategic positioning.
Step-by-step explanation:
- Market expansion: Companies pursue direct foreign investment to enter new markets and expand their customer base.
- Access to resources: Foreign direct investment allows companies to gain access to important resources such as raw materials, energy, and skilled labor.
- Reduced costs: Companies may choose to invest directly in foreign countries to take advantage of lower production costs, including labor costs and taxes.
- Technology transfer: Direct foreign investment can facilitate the transfer of technology and knowledge between countries, allowing companies to benefit from innovation and improve their competitive advantage.
- Infrastructure development: Investing directly in foreign countries can contribute to the development of infrastructure such as transportation, communication, and utilities, which can help companies operate more efficiently.
- Market proximity: By investing directly in foreign countries, companies can be closer to their target market, allowing them to better understand local preferences and respond to customer needs.
- Joint ventures and partnerships: Direct foreign investment can involve forming alliances with local companies, allowing companies to leverage local market knowledge and establish strong relationships.
- Strategic positioning: Companies may pursue direct foreign investment to position themselves strategically in foreign markets, gaining a competitive advantage over rivals.