Chapter 7 Notes

Chapter 7 Notes - Mos1020AFall2009RaymondLeduc ReadingNotes

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Mos 1020A – Fall 2009 – Raymond Leduc Reading Notes GLOBAL BUSINESS TODAY 2 nd  Edition, CHAPTER 7 – FOREIGN DIRECT INVESTMENT     Foreign direct investment  – the acquisition of physical capital by a firm from one (source)  country in another (host) country Example: when Starbucks invested $10 million in Starbucks Coffee of Japan in 1996 it was  engaging in its first foreign direct investment initiative According to the U.S. Department of Commerce, FDI occurs whenever a U.S. citizen,  organization, or affiliated group takes an interest of 10% or more in a foreign business  entity Once a firm undertakes FDI, it becomes a multinational enterprise Takes two forms: o 1.  Greenfield investment – establishing a new operation in a foreign country o 2.  Acquiring or merging with an existing firm in the foreign country Acquisitions can be minority (10-49%), majority (50-99%), or full outright stake Majority of FDI is acquisitions/mergers Multinational enterprise  – a firm that owns business operations in more than one country Foreign Direct Investment in the World Economy Flow of FDI  – the amount of foreign direct investment undertaken over a given time period  (normally one year) o Outflows of FDI  – flow of foreign direct investment out of a country
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This note was uploaded on 03/22/2010 for the course MOS 1020 taught by Professor Leduc during the Fall '09 term at UWO.

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Chapter 7 Notes - Mos1020AFall2009RaymondLeduc ReadingNotes

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