The Wadson Company is a management research firm headquartered in New Jersey. The company was recently hired


The Wadson Company is a management research firm headquartered in New Jersey. The company was recently hired by a large conglomerate with a wide range of products, from toys to electronics to financial services. This conglomerate wants Wadson to help identify an acquisition target. The conglomerate is willing to spend up to $2.5 billion to buy a major company anywhere in the world.
One of the things the research firm did was to identify the amount of foreign direct investment in the United States by overseas companies. The research group also compiled a list of major acquisitions by non-U.S. companies. It gathered these data to show the conglomerate the types of industries and companies that are currently attractive to the international buyers. "If we know what outside firms are buying," the head of the research firm noted, "this can help us identify similar overseas businesses that may also have strong growth potential. In this way, we will not confine our list of recommendations to U.S. firms only." In terms of direct foreign investment by industry, the researchers found that the greatest investment was being made in manufacturing (almost $100 billion). Then, in descending order, came wholesale trade, petroleum, real estate, and insurance. 

On the basis of this information, the conglomerate has decided to purchase a European firm. "The best acquisitions in the United States have already been picked," the president told the board of directors. "However, I'm convinced that there are highly profitable enterprises in Europe that are ripe for the taking. I'd particularly like to focus my attention on the UK and Germany." The board gave the president its full support, and the research firm will begin focusing on potential European targets within the next 30 days.

1. Is Europe likely to be a good area for direct investment during the years ahead?
2. Why is so much foreign money being invested in U.S. manufacturing? Based on your conclusions, what advice would be in order for the conglomerate?
3. If the conglomerate currently does not do business in Europe, what types of problems is it likely to face?

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