The foreign organisation may invest in the outside country or purchase the goods of the external economy or a company merges with another company in the other country.
Hence, Inward investment leads to formation of new business, mergers, acquisitions and collaborations etc. Many transnational and multinational corporations invest money outside their local economy by introducing new industrial sites to an area, in order to produce more of their products.
A common example of Inward Investment is Foreign Direct Investment (FDI).
Wal-Mart opening up its retail stores in India would mean an Inward Investment by an outside company (Wal-Mart in US) in another country (India).
Advantages of Inward Investment:
1)They increase the geographic reach of a business
2)They help the company grow through expansion/ mergers.
3)They help in creating synergies in many circumstances