Week 3 Discussion Post

Week 3 Discussion Post - Week 3 Discussion Post: Horizontal...

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Week 3 Discussion Post: Horizontal FDI is when a company decides to invest in another country but in the same industry as the one the company operates in its own country. This helps the company to avoid trade barriers and gain better access to the local economy. Another reason for a company to use horizontal FDI is to gain a profit by having a technical expertise in the area that they chose to invest in. Vertical FDI is separated into two forms, backward and forward vertical FDI. “Backward vertical FDI is an investment in an industry abroad that provides inputs for a firm’s domestic production process” (Hill, 2010). This typically happens in the extractive industries like oil extraction and copper mining. “A second form of Vertical FDI is forward vertical FID in which an industry abroad sells the outputs of a firm’s domestic production process” (Hill, 2010). Automakers use this to set up companies abroad at lower cost wages then in home countries.
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This note was uploaded on 05/22/2011 for the course MGMT 3105 taught by Professor Jennyswearingen during the Spring '11 term at Walden University.

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