Foreign Direct Investment Strategies

To broaden reach to new countries, diversify strategy, address too much competition in home country, and enable economies of scale.

Flexibility to withdraw, testing the market without obligations, lower initial investment cost, and potential experience curve benefits.

High transportation costs, trade barriers, potential inefficiency compared to manufacturing abroad, and lower loyalty from foreign agents.

<p>It involves granting the right to intangible property to licensees in exchange for royalty fees.</p> Signup and view all the answers

<p>They are inversely related, with exporting having lower risk and investment but less control/ownership, while direct ownership has higher risk and investment but more control.</p> Signup and view all the answers

<p>Pros: Rapid way to grow, low developmental costs, low risk transferred to licensee. Cons: Low control over marketing/manufacturing, risk of know-how theft.</p> Signup and view all the answers

<p>Franchising works best with services. Pros include building global presence quickly and franchisee assuming costs and risks. Cons include lack of experience curve realization, location economies, and no quality control.</p> Signup and view all the answers

<p>Benefits of FDI include bypassing trade barriers, moving towards democratic economies, and positive effects of globalization. Drawbacks include risks, costs, and lack of quality control.</p> Signup and view all the answers

<p>Strategic alliances involve sharing resources for a common project. Pros include complementing knowledge and facilitating foreign market entry. Cons include less formal agreements, short-term nature, and potential for competition to access technologies.</p> Signup and view all the answers

<p>Joint ventures involve local and foreign firms creating a new entity. Pros include access to joint resources and gaining credibility. Cons include tensions over ownership, potential competition from partners, and high costs/risks.</p> Signup and view all the answers