What are the strengths of the eclectic theory of FDI? Can you see any short-comings? How does the eclectic theory influence management practice?

The eclectic paradigm is an FDI theory that offers a company a three-tiered structure to follow when defining if it is helpful for foreign direct investment. The effective foreign investment depends not on ownership of resources and internal skills in organizations, but on its overallorganization to get a competitive advantage over an indigenousorganization. These mightcomprise a strong brand, development and research services, physical assets, patents and innovation and also other structural efficiencies, for example, more expertise based strategic tools or large scale functioning compensations. The international company must have anexclusive competitive benefit that will overwhelm the competing disadvantages with local companies in the country (Business-to-you.com, 2016).

 Location benefits of the company can be double. The company might get help from the location advantages as it is closeto the market. It would not justpermitcontinuous and stable supply, but also will allowit to save more costs such aswarehousing and transportation, advantages ofdeveloping cost. Furthermore, organizations can also get advantage from place benefits once they are closer to raw materials suppliers. It will allow them to decrease the transportation time taken and will help preserve more quality. Though, there are alsoeras when foreign investments acquiremore benefits like low-priced labor or making the organization visible to occasionalsteady resources that are availableto the local businesses. It will also cause the FDI being accepted. The eclectic theory also have the influence on the management practice in the organization. The eclectic theory also helps the managers to optimize the management process in the organization. The advantages location will form a benefit if accomplishment activities are money-making in foreign location as opposed to a country in which organizations is operational (CHEN, 2018).

It can be said that the eclectic theory major strength is that bring the good features of different theories together and as it describes the locational advantages that much depending on the resource or assets usagethat is linked with the specificforeign location that is expected to be more beneficial for the business in the future.  It is also very important to know that in case the firm did not have any marketing, management and technological abilities then it would be very difficult for the firm to accomplish all of the requirements. For example, it is very important for the MNCs to have some of the advantages that would further help the organization to deal with the local competitors in the country. It is quite obvious that if the firm is closer to the market, then it is more visual to the customers that also adds up to its competitor’s advantage (CHEN, 2018).

Summing up the discussion it can be said that under the FDI theory is very effective for the organization’s business. The business must have some of the competitor’sadvantages in the market to deal with the competitors effectively. A company can get help from the location advantages as it is close to the market. It would not just permit incessant and stable supply. It will allow the company to decrease the time for transportation taken and will help preserve the quality of the brand.