GMS200 Lecture 2.docx

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Global Management Studies
GMS 200
Helene Moore

Direct Investing Strategies- Foreign Direct Investment (FDI) is building, buying all, or buying part ownership of a business in another county In sourcing- Job creation through foreign direct investments (call Types of direct investment strategies  Joint Ventures- Operates in a foreign country through co-ownership by foreign and local partners----->risk sharing --need complex contacts-less control-sometimes takeover Criteria for choosing a joint venture partner:  Familiarity with your firm's major business.  Strong Local workforce  Future expansion possibilities  Values its customers  Strong Local Market for partner's own products  Good Profit Potential  Sound financial standing.  Global Strategic alliances- a partnership in which foreign and domestic firms share resources and knowledge for mutual gains ------>potential win win for the local partner and outside partner  Foreign Subsidiaries- Local operation completely owned by foreign firms.  Greenfield investment-builds an entirely new operating in a foreign country Types of Risks on going global Political Risk- the potential loss in value of a foreign investment due to instability and changes in host country Local Legal Systems- Complex and unfamiliar laws can create problems World Trade Organization- resolves trade and tariff disputes among countries Protectionism- discourage foreigners to come into there country to sell to protect there own local business. TRG( Tariff Rate Quotes) Quotes- After a certain amount you can not import anymore Tariffs- allowed to import but need to provide money every time you import Will be on exam- NAFTA Agreement- Includes Canada, USA and Mexico European Union- Switzerland Type of Global Businesses
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