Foreign Direct Investment and Collaborative Ventures (Describe the…
Foreign Direct Investment and Collaborative Ventures
Understand international investment and collaboration.
Foreign direct investment (FDI): Strategy in which the firm establishes a physical presence abroad by acquiring productive assets
International collaborative venture: A cross-border business alliance in which partnering firms pool their resources and share costs and risks of a venture.
Joint venture (JV): A form of collaboration between two or more firms to create a jointly-owned enterprise.
Describe the characteristics of foreign direct investment.
The most advanced, expensive, complex, and riskiest entry strategy
Undertaken by firms from both the advanced economies and emerging markets.
Target countries are both advanced economies and emerging markets.
Occasionally raises patriotic sentiments among citizens
Explain the motives for FDI and collaborative ventures.
Resource- or asset-seeking motives
Identify the types of foreign direct investment
Greenfield investment vs. mergers and acquisitions
Nature of ownership
Level of integration:
Vertical vs. horizontal FDI
Understand international collaborative ventures
A partnership between two or more firms
Includes equity joint ventures and non-equity, project-based ventures
Sometimes called partnerships or strategic alliances.
Collaboration helps overcome the often substantial risk and high costs of international business
Discuss the experience of retailers in foreign markets.
Built huge U.S.-style parking lots
Failing to understand the market
Families do their big shopping on payday
Walmart’s red-white-and-blue banners, reminiscent of the U.S. flag