AFM131 Chapter Notes - Chapter 1-12: Foreign Direct Investment, Joint Venture, Contract Manufacturer

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM131
• Professor: David H A

Document Summary

Dynamic global market: co(cid:373)pa(cid:374)ies (cid:373)ust (cid:272)o(cid:374)ti(cid:374)uousl(cid:455) (cid:396)est(cid:396)u(cid:272)tu(cid:396)e pla(cid:374)s to e(cid:374)su(cid:396)e p(cid:396)ofit is (cid:271)ei(cid:374)g (cid:373)ade: Comparative and absolute advantage theory: comparative advantage theory: country should sell to countries those products it produces most efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently. E. g. japan with cars and electronics; can with forestry products. Zambia has absolute advantage over other countries in production of copper due to its copper ore reserves. Global trade (getting involved): can small businesses account for 48% of total private labour force; 85% exports, 3 categories of merchandising represent 65% of imports: machinery & equipment, industrial goods. Simplest with the lowest investment, having the lower risk :. Most appropriate when selling a new product or service with no current market. Needing assistance from an export trading company when trying to find new customers. Licensing: firm (licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (royalty)