MGCR 382 Study Guide - Greenfield Project, Maquiladora, Factor Endowment

• School: McGill University
• Department: Management Core
• Course: MGCR 382
• Professor: John Saba

Document Summary

Production abroad is cheaper than at home. Transportation costs to move goods/services internationally are too ex. Foreign gov restricts import of foreign products. Buyers prefer products originating from a particular country (country bias) [monitoring & enforcing contractual performance of local firm is expensive, could jeopardize mnc"s proprietary tech by misappropriation and reputation & brand name by poor behaviour: e. g. Theory suggests that when transaction costs are low with a 2nd firm, the 1st firm is more likely to contract with foreign firms & internationalize by licensing its brand name or franchising its biz ops: e. g. Macdonalds: option 2: to internalize ops by owning & operating its own foreign facilities. Theory suggests that when transaction costs are high (i. e. negotiating, monitoring & enforcing a contract), firm more likely to engage in fdi & try to own & operate its own foreign ops: e. g.