IBUS1101 Lecture Notes - Lecture 11: Market Entry Strategy, Portfolio Investment, United Nations Conference On Trade And Development
Document Summary
Week 11 foreign direct investment and collaborative ventures (textbook. Foreign direct investment (fdi) is an internationalisation strategy in which the firm establishes a physical presence abroad through direct ownership of productive assets such as capital, technology, labor, land, plant, and equipment. Fdi is the most advanced and complex foreign market entry strategy. Firms use fdi to establish manufacturing plants, marketing subsidiaries, or other facilities in target countries. Because this involves investing substantial resources to establish a physical presence abroad, fdi is riskier than other entry strategies. Fdi is differnet to international portfolio investment, which refers to passive ownership of financial securities, such as stocks and bonds, to generate financial returns. An international collaborative venture is a cross-border business alliance in which partnering firms pool their resources and share costs and risks to undertake a new business venture; also referred to as an international partnership or an international strategic alliance.