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 | |
| Factors | Percentage of companies that believe factor is important |
| Market Opportunity | 100% |
| Patent Protection | 85% |
| Regulatory Environment | 60% |
| Competitor Pressure | 60% |
| Consumer Acceptance | 55% |
| Availability of Skilled labor | 40% |
| Technology Transfer mechanisms | 35% |
| Availability of Equity Capital | 20% |
| Scale and Quality of Public R & D | 15% |
| Access to Innovative Suppliers | 80% |
