Since the liberation in the 1990s, Columbia has offered national treatment for foreign investors. A wide range of controls and remittance of capital and profit was also improved and foreign investment was initiated in most sectors. Usually, foreign investment does not need prior authorization, except when developed in the restricted regions. Although investments involving sensitive sectors are subject to prior approval, foreign investors are treated as domestic investors. This indicates doing American car business in the Columbia will be a feasible investment. Therefore, I will evaluate the opportunities and challenges of investing the American cars in Columbia.
The America car business will be a success in the Columbian market due to its economic and human development. In general, the education, income, and global competition in Columbia is performing better currently (David 37). Likewise, Colombia’s purchasing power and competitiveness rankings are average compared to most South American countries. This will be a great opportunity because this economic stability will create a market for the American cars. Export in based on product with little added value such as coffee, coal, petroleum, and bananas among others. Therefore, investing America cars in Columbia will be a great investment because it had high added value and will generate more income than possible. Since there is increased competition via globalization and relative high labor, exports of America cars will experience certain future.
Americans cars have a distinctive image attached based on the level of manufacturing. For some consumers in other part of the world, America cars are associated with pleasant features like exotic, durability, and environmental friendly and strong. This will increase marking knowledge in Columbia with respect to international markets. This knowledge will enhance production capacity of America cars where I will be required to have a factory in Columbia to capture complete market.
The mushrooming business sector presents the new opportunity for America cars in Columbia. The country lags behind in terms of technical manpower and technology infrastructure. The advantage of the FDI inflows will enable America cars to progress in Columbia. The business will capture unexploited market because there has been limited involvement of the business sector, which has impaired innovative activities in Columbia. The country has promoted a growing economy with an increasing middle class, the need for investors, and a government that is committed to maintaining success and regional leadership (Peter and Goldfield 22). Columbia also wants to establish free trade agreements with the America, which will promote the America car business significantly.
Although the political stability has improved significantly, internal security remains a challenge for investors. However, the presence of guerrillas in Columbia is a factor that will impede the America cars business. Likewise, political stability and lack of violence measures perceptions of the possibility that the government will be destabilized by terrorism or domestic violence, which will be a challenge for America cars in the country. Columbia is not also seen as best for travelling by car due to insecurity issues. This will affect the America car business because car theft is properly established which will influence people willing to purchase cars.
The cumbersome legal process will affect favorable America cars in Columbia. Although the legal climate is conducive for investors, legal processes are extensive, and the judiciary is considered to be unjust in several occasions (Steve 54). This is so because fair judgment is prohibited from imposing pressure by vested interests. Therefore, this will affect the process of business registration according to CSR principles.
Establishing a factory in Columbia and having manufacturer will encounter shortcoming and strength for both the home country of the product and Colombia. The improved security will be an advantage that both countries will benefit from because there will be the constant business without any insecurity interferences. Establishing a factory will create job opportunities for the skilled workers, which will reduce unemployment levels in Columbia. Likewise, it will open outsourcing opportunities, which will help to control capital costs and increase efficiency. This is so because the economy of scale will provide the factory a significant competitive advantage that will be beneficial for both countries. The existing market of about 45 million people, adequate natural resources, and increasing middle class will improve the trade and investment between two countries (Alejandra 42). This will promote the FDI flow, which will increase the government reserve for both countries
On the other establishing factory and having manufacturer in Columbia will reduce the chances of creating employment for local citizens. In the case of political insecurity, the loss will affect the economy of both countries. It will also exhaust resources in Columbia, which will lead to diminishing law of returns. Since Columbia has recorded in drug crime, this will lead to the exportation of drugs in America. It will lead to one country to gain advantage of the other because of particular unintentional advantages (Liliana 48). Likewise, it can lead to war in case they decide to compete with each other in search for new market and resources. Therefore, doing car business in Columbia will have great opportunities and challenges for both countries. This is so because it will open international trade that have strength and weakness for both countries.
Alejandra, María. "Foreign Direct Investment (FDI) and Social Responsibility Networks (SRN) in Colombia." Revista de Globalización, Competitividad & Gobernabilidad5.1 (2011): 42-59.
David, Seale, and Gomez Lina. "Investment continues to grow in Colombia." E&P 81.2 (2010): 37-38.
Liliana, Sandra. "Laissez Faire And International Trade: A Critique Of The Proposed United States -- Colombia Free Trade Agreement.” Journal of International Business Research. 10.3 (2011): 47-58.
Peter, Brake, and Goldfield David. "Colombia: New Government Promises Fresh Approach.” Export Wise 3.1 (2009): 22-24.
Steve, Cota. "Doing Business in Colombia." Feature Edition 6.3 (2011): 54-76.