Direct investment is a strategy for entering a foreign market by developing its own assembly or manufacturing facilities that are based abroad. It is the riskiest, but potentially the most profitable, method of entering an international market because it requires significant capital commitments.
Through direct investment, a company gains full control over its manufacturing and marketing operations, reduces costs (for example, labor or raw materials), and builds a strong image as a local manufacturer. It also allows the company to fully adapt to the local business environment, but exposes it to currency and political risks.
