Global Business Foreign Direct Investment Notes

Global Business Foreign Direct Investment Notes - Foreign...

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Foreign Direct Investment Two main categories: 1. Portfolio Investment: investment in a company’s stocks, bonds, or assets, but not for the purpose of controlling or directing the firm’s operations or management 2. Foreign Direct Investment: investment in or the acquisition of foreign assets with the intent to control and manage them -Purchasing the assets of a foreign company -Investing in the company or in new property, plants, or equipment -Participating in a joint venture with a foreign company It’s a long term strategy Companies expect to benefit through access to local markets and resources- in exchange for expertise, capital and technicalities Can be inward or outwards There are factors that influence a company’s decision to invest, such as:
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Unformatted text preview: -Cost: is it cheaper?-Logistics: cheaper to produce locally if the transportation costs are significant?-Market: significant local market?-Natural resources: obtaining access to local resources or commodities?-Know-how: access to local technology or business process knowledge-Customers and competitors: company’s client or competitors operate in the country?-Policy: local incentives for investing in one country versus another?-Ease: straightforward to invest and set up operations in the country?-Culture: workforce already skilled for the company’s need or will training be required -Impact: will it impact company’s revenue?-Expatriation of funds: easily take profits out of the country-Exit: easily exit from a local investment?...
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  • Spring '13
  • KenjiKlein

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