McDonalds Foreign Direct Investment and Distribution strategy Essay

McDonalds Foreign Direct Investment and Distribution strategy - Essay Example McDonald’s foreign direct investment focuses primarily on investment in restaurants and the food industry. The company made its foreign direct investment for the long term, with the distinct purpose of making a profit. As a multinational firm, McDonald’s has significant foreign investment assets that comprise of the parent company in the US and foreign affiliates domiciled in host countries. The company has the capacity to derive and transfer its capital resources globally and operate restaurants and penetrated markets in other countries worldwide. McDonald’s foreign direct investment not only focuses on controlling affiliate restaurants in developed countries but developing countries, as well. Investing overseeing has generated immense benefits to McDonald’s and its investors. Inward investors continue to gain easy access to markets in foreign countries, particularly since the company’s products can be made using local ingredients.It makes apparent commercial sense for McDonald’s to set up local restaurants, which make use of local ingredients instead of exporting ingredients directly from the US.McDonald’s establishment of affiliate firms in other nations allows the company to gain access to a vast array of resources, which include among others cheap and skilled labour, as well as local expertise and knowledge inherent in the foreign nation. McDonald’s builds restaurants in other countries thereby exploiting the economies of scope.