Foreign Direct Investments in Bulgaria Assignment

Foreign Direct Investments in Bulgaria - Assignment Example This paper looks at these problems using a strategic analysis framework and proposes a few key solutions that will help the country find clear answers. The investment climate is a country's ability to attract or encourage foreign individuals or corporations to invest or bring in funds that will start or develop an ongoing business (Kotler et al., 1997, p. 189). Foreign investors pay attention to at least four attributes of a country's investment climate: its comparative and competitive advantages, its domestic economic and political stability, property rights protection, and foreign trade zones. Foreign investors will put in money in another country only if the investment climate is attractive, which means that there is a good chance the funds invested will make money and profits, that the government will not give the business difficult problems, and that the country can also benefit from the investment. Examples of FDI are funds to construct public roads and schools, to modernize the country's telecommunications facilities, or to develop energy generation plants. Countries like Bulgaria that want to develop its economy are doing its best to attract foreign businessmen so they will invest. Investors will know the four attributes of a country's investment climate by using a strategic analysis approach, where the country is treated like a bus... strategic analysis approach, where the country is treated like a business that wants to attract capital from foreign investors for business projects that will result in long-term profits for the investors and give benefits to the country and its people. There are many strategic analysis frameworks to choose from: Porter's Five Forces (1980) or Ansoff's Strategy Matrix (1965) applied to firms, or Porter's Diamond (1990) and Yip's Drivers (2003) used to analyse countries and firms strategically. A simple framework that applies to both firms and countries combines both the SWOT (Andrews, 1971/1987; Ansoff, 1965; Chandler, 1962) and PESTEL (Steiner, 1979; Andrews, 1987) techniques of strategic analysis into what is called the SWOT-PESTEL approach. We will use this to analyse Bulgaria's investment climate. Method of SWOT-PESTEL Analysis SWOT analysis is a review of the country's internal (Strengths and Weaknesses) and external (Opportunities and Threats) environment. PESTEL analysis studies the effects on the country's foreign direct investment environment of six general factors: Political, Economic, Social, Technological, Environmental, and Legal. The strategic analysis combines four SWOT and six PESTEL factors. We will do this by conducting a SWOT analysis of each of the six PESTEL factors based on literature available from our research and summarise our findings on table format, before we conclude with a list of four investment climate attributes as they apply to Bulgaria. This will help foreign investors make decisions, allowing them to compare Bulgaria's investment climate with that of other countries. We begin the paper with a brief write-up on Bulgaria, highlighting important issues the country is currently facing. Then, we proceed with our analysis by