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Essay / Research Paper Abstract
This 10 page paper discusses some of the issues facing organizations doing business overseas. Bibliography lists 8 sources.
Page Count:
10 pages (~225 words per page)
File: D0_HVForMar.rtf
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Unformatted sample text from the term paper:
culture may be exotic and strange. This paper discusses some of the issues facing organizations doing business overseas. Why Invest in Another Country? Companies of any size can
do business overseas, though we usually think of large multinational corporations when we consider foreign operations. But the intriguing question is why any company would want to risk opening
an office or plant in another country. Business scholars have developed various answers to this question, including the idea that there must be a monetary advantage to such operations
(Kogut, 1998). But profit doesnt seem to be the driving force behind the expansion into foreign markets; the question that was finally considered was why "any firm would invest
physical capital (exposed as it is to commercial and political risk) in one country when it could spread small amounts of financial capital across many companies and countries?" (Kogut, 1998,
p. 152). The answer appears to be that if a company wants to "invest and own physical capital in a foreign country, it must believe that there is some
additional advantage that outweighs the added costs of operating at a distance in an unknown business environment" and it must also believe that the only way to exploit the advantage
is to own and control foreign operations (Kogut, 1998, p. 152). If this were not the case, the company could simply send exports to foreign markets and avoid all
the problems associated with investing and doing business abroad (Kogut, 1998). The almost universal consensus on the matter is that "the distinctive characteristic of direct investment is the intent
to control" (Kogut, 1998, p. 152). This means that governments have set up different definitions for various types of investment; the one of most consequence here is "foreign direct
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