ADMN 417 Lecture Notes - Lecture 6: Tim Hortons, Franchising, Foreign Portfolio Investment
27 May 2018
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Lesson 6 – Chapter 7 – Foreign Direct Investment
1. Which of the following are main reasons for the growth of FDI flows over the past decade?
a. diversity and communications
b. telecommunications and transportation
c. globalization and M&A
d. diversity and globalization
2. Which of the following statements is not true?
a. Entrepreneurs and small businesses do not play an important role in the expansion of FDI
flows.
b. Increasing globalization is causing a growing number of international companies from
emerging markets to undertake FDI.
c. Many cross-order M&A deals are drie a desire to irease a fir’s gloal
competitiveness.
d. Companies may pursue M&A deals to fill gaps in their product lines.
3. How does foreign direct investment differ from foreign portfolio investment?
FDI involves control of an investment in physical assets by a non-domestic firm, whereas FPI
involves investment in financial instruments by a foreign firm.
4. From a national government's standpoint, why is FDI more desirable than FPI?
FDI has the potential to make a relatively long-term and wider contribution to a
national economy. Direct investment is often considered to be an important engine
of growth because it has positive effects not only on industries that support the
industry in which FDI occurs, but also on social aspects of the domestic economy.
For example, FDI creates jobs and can increase consumer well-being.
5. Discuss one benefit of FDI for consumers.
FDI can benefit consumers by making available to them a wider array of goods and services that
may be cheaper or of better quality in relation to domestic alternatives.
Unit 3 – Configuring Firms for International Business
Lesson 7 – Chapter 12 – Analyzing International Opportunities
1. Companies considering entry into emerging markets often face special problems related to a lack
of information. True or false?
2. Oe ay to estiate arket reeptiity is y deteriig a atio’s olue of iteratioal trade
as a percentage of GDP. True or false?
3. The first step in the screening process for potential markets and sites is to:
a. select the market/site.
b. obtain government approval for research.
c. identify basic appeal.
d. assess the national business environment.
4. Cultural elements in the business environment can affect all of the following with the exception of
which one?
a. site selection process
b. what kind of products are sold
c. how products are sold
d. tariffs and quota regulations
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5. What factors should be evaluated when assessing the overall national business environment?
• Cultural Forces
o Cultural elements (taste, tradition)
o Cultural elements requiring product modification
o Qualified workforce (work ethic)
• Political and Legal Forces
o Government regulations
o Government bureaucracy
o Political stability
• Economic and financial forces
o Currency and liquidity problems
o Investment policies
• Other forces
o Transportation
o Country image
6. Discuss the issues that managers should consider when entering new markets via the Internet.
Market Access:
• Infrastructure. Before investing heavily in e-business, investigate whether your potential
customers have easy access to the Internet. Determine whether their government is developing
advanced digital networks.
• Content. Companies must be informed about the different policies of each country through
which their information travels in order to avoid liability. Key topics are truth in advertising;
fraud prevention; and violent, seditious, or graphic materials.
• Standards. It’s ot alas etirel lear hih outr has the poer to establish standards of
operations for e-business. Standards might be set up as trade barriers to keep international
companies out of a domestic market.
Legal Issues:
• Privacy. One strength of e-business is that consumer data can be collected easily and used to
generate sales. But consumer groups in some countries view the collection of such data as an
invasion of privacy. Consumers are particularly vehement if they are unaware this information is
being collected and how it is being used.
• Security. Companies must ensure their data communications are safe from unauthorized access
or modification. Security technology, such as encryption, password controls, and firewalls, still
needs support from a global infrastructure.
• Intellectual Property. International agreements govern and protect copyrights, databases,
patents, and trademarks. Yet these issues will remain a global concern for e-business until a
widely accepted legal framework is established for the Internet.
Financial Matters:
• Electronic Payments. Online use of credit cards remains a security concern for many consumers.
Global electronic payment systems such as stored-value, smart cards, and other systems are in
various stages of development and will alleviate many security issues.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Fdi has the potential to make a relatively long-term and wider contribution to a national economy. Direct investment is often considered to be an important engine of growth because it has positive effects not only on industries that support the industry in which fdi occurs, but also on social aspects of the domestic economy. For example, fdi creates jobs and can increase consumer well-being: discuss one benefit of fdi for consumers. Fdi can benefit consumers by making available to them a wider array of goods and services that may be cheaper or of better quality in relation to domestic alternatives. Unit 3 configuring firms for international business. Lesson 7 chapter 12 analyzing international opportunities: companies considering entry into emerging markets often face special problems related to a lack of information. True or false: o(cid:374)e (cid:449)ay to esti(cid:373)ate (cid:373)arket re(cid:272)epti(cid:448)ity is (cid:271)y deter(cid:373)i(cid:374)i(cid:374)g a (cid:374)atio(cid:374)"s (cid:448)olu(cid:373)e of i(cid:374)ter(cid:374)atio(cid:374)al trade as a percentage of gdp.
