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Essay / Research Paper Abstract
This 16 page paper looks at why multinational firms may undertake a strategy of foreign direct investment. The paper looks at different theories and considers various motivations that are present, including the benefits of comparative advantage and the application of Dunnings OLI paradigm and then discusses the way motivations may vary between different types business strategy. The bibliography cites 17 sources.
Page Count:
16 pages (~225 words per page)
File: TS14_TEwhyFDI.rtf
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Unformatted sample text from the term paper:
References 17 1. Introduction Foreign Direct Investment is often known colloquially as FDI. This is where there is an investment made directly in
a country by a foreign government, company or other organisation. By direct investment it means that money is used to create facilities in that country these may be manufacturing facilities
or assembly facilities, or some types of physical presence, usually developing a green field site. There are many reasons that a firm may wish to undertake foreign direct investment, when
looking at the motivation it is highly likely that the decision to undertake FDI is not based only on a single factor, just as globalization has been the result of
the convergence of many influences the same is true of for FDI, with a convergence of different influences and factors. 2. Motivations for FDI
There are a number of motivations for a company to undertake foreign direct investment; these motivations may be present regardless of the developmental stages reached by potential host countries.
Firms perceive even financial and logistical incentives that will benefit the company. A key element may be access to resources, which includes labor thats may be more readily available, or
available at a lower cost than in the companys home country. In many instances the potential host nation has the ability to offer either low cost, high quality inputs which
reduces the total capital expenditure of the firm. Increased levels of globalization also allow for fragmentation of the production process, so that each stage may take place in an area
that is beneficial to the company (Chaisse and Gugler, 2009). In addition to this, foreign direct investment may be considered as a
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