gb10 - Debates Relating to Foreign Direct Investment The...

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Debates Relating to Foreign Direct Investment The FDI vs. Outsourcing Debate Foreign direct investment is only one of the many forms of foreign market entry. Another possibility is outsourcing. Overseas outsourcing from a foreign location is called off- shoring. In contrast, foreign direct investment involves performing an activity in-house, in a foreign country. Managers must weigh the costs and benefits of outsourcing and foreign direct investment when deciding which approach will benefit the firm the most. In general, outsourcing is best when the following conditions apply: --The activity in question is not critical to the firm’s core mission and competitive advantage --The activity in question can be provided by proven talents in other countries --The activity in question is similar across many end-user industries. If these conditions do not apply, then foreign direct investment will probably provide more ownership, location, and internalization advantages than outsourcing. The Debate over Inbound Foreign Direct Investment
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gb10 - Debates Relating to Foreign Direct Investment The...

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