OTHER FOREIGN DIRECT INVESTMENT PROCESS

By : Neil P. Dueñas

FOREIGN DIRECT INVESTMENT

DUNNING ECLECTIC’S VIEWJOHN DUNNING (1977)

-He pionerred the research to find a comprehensive framework for explaining F.D.I and known as the O.L.I paradigm or O.L.I. framework

O.L.I Framework :O – (Ownership Specific Advantages)

-refers to the competitive advantages of the enterprise seeking to engage in FDI-the greater the competitive advantages of the investing firm, the more they are likely in foreign production-trademark, production technique, entrepreneurial skills, returns to scale are characteristics of ownership advantages

RolleyGolf Trolley

Ownership Advantage

SAAB’S Car

FOREIGN DIRECT INVESTMENT

L – (Location Specific Advantages) -locational attractions refer to the alternative countries or regions , for undertaking the value adding activities of MNE (multi-national enterprise)

-are linked to specific factors of a foreign country that could include cheap labor, superior production processes, local image, governmental trade barriers or others, which justify to undertake production in that country in order to obtain new competitive advantages, - it can internally exploited, through complementary resources of the firm like an international distribution network, or finance capability.

Location Advantage

IKEA AND WALMART SHOP IN INDIA

FOREIGN DIRECT INVESTMENT

I – (Internalisation Advantages) - advantages by own production rather than producing partnership arrangement- benefits of retaining assets and skills in the firm, market controls among others

Internalisation - a transaction conducted within the confines of a corporation rather than in the open market

INTERNALISATION ADVANTAGE

FOREIGN DIRECT INVESTMENT

DISINVESTMENT- It is the action of an organization or

government selling or liquidating an asset or subsidiary

- a company or government organisation will divest an asset or subsidiary as a strategic move for the company , planning to put the proceeds from the divestiture to better use that garners a higher return on investment

DISINVESTMENT

DISINVESTMENT HAPPENED IN MONSANTO CORPORATION

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