BUSI 2701 Chapter Notes - Chapter 7: Foreign Direct Investment, Greenfield Project, Oligopoly
20 Apr 2016
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Foreign firms could improve distribution sys, storage facilities for wheat, keep food processing in check etc. Wal-mart entered india, consumers liked the constant in-stock products, no fluctuating prices etc. Faster to execute and better for constantly evolving than greenfield. Established firm already has a brand, brand loyalty, customer relationships, distribution/production sys etc. If company does not act and acquire desirable company quickly the competition will move in. Flow of fdi: amount of fdi undertaken over a given time period. Stock of fdi: total accumulated value of foreign owned assets at given time. Outflows of fdi: flow of fdi out of a country, cndian firms buying property/setting up ops in other nations. Inflows of fdi: flow of fdi into a country. Although decline in trade barriers firms still fear protectionist pressures avoidable w/ fdi (japanese automakers) Executives see fdi"s a way to get around trade barriers. + efficient production, cheap labour/resources, new tech, + customers.
