Global Environment Of Business, Chapter 8 – Flashcards
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Greenfield Investment
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establishing a new operation in a foreign country
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Flow Of FDI
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the amount of direct investment into a country in a defined time period undertaken by foreign entities, or the amount of direct investment into foreign countries made by entities resident in a country in a defined period of time
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Stock Of FDI
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the cumulative value of direct investments that have been made by foreign entities in a country at a given point in time
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Outflows Of FDI
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flow of foreign direct investment out of a country
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Inflows Of FDI
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flow of foreign direct investment into a country
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Eclectic Paradigm
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argument that combining location specific assets or resource endowments and the firm's own unique assets often requires FDI; it requires the firm to establish production facilities where those foreign assets or resource endowments are located
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Exporting
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sale of products in one country to residents of another country
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Licensing
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occurs when a firm licenses the right to produce its product, its production process, or its brand name or trademark to another firm; in return for giving the license these right, the licensor collects a royalty fee on every unit the licensee sells
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Internalization Theory
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the argument that firms prefer FDI over licensing in order to retain control over know-how, manufacturing, marketing, and strategy or because some firm's capabilities are not amenable to licensing
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Market Imperfection
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imperfections in the operation of the market mechanism
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Oligopoly
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an industry composed of a limited number of large firms
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Multipoint Competition
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arises when two or more enterprises encounter each other in different regional markets, national markets, or industries
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Location-Specific Advantages
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advantages that arise from using resource endowments or assets that are tied to a particular foreign location and that a firm finds valuable to combine with its own unique assets
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Externalities
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knowledge spillovers
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Balance-Of-Payments Accounts
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national accounts that track both payments to and receipts from foreigners
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Current Account
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in the balance of payments, records transactions involving the export or import of goods and services
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Offshore Production
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FDI undertaken to serve the home market
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Dunning's Theory
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Location-Specific Advantages
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Pragmatic Nationalism
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In some sectors, FDI could be more productive than in others; government plays a direct role in what is permitted and not permitted
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Home Country Benefits (FDI)
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Earnings and learning new skills as a result of FDI
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Host Country Benefits (FDI)
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employment increases, investment, and transfer of knowledge as a result of FDI
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Home Country Disadvantages (FDI)
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lost employment due to outsourcing as a result of FDI
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Host Country Disadvantages (FDI)
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exploitation and repatriated earnings as a result of FDI
