国际商务第七章教材重点讲义

Market Imperfections (Internalization)
Company undertakes FDI to internalize a transaction that is being made inefficient by a market imperfection � Trade barriers
Current account Records transactions involving the import and export of goods and services, income receipts on assets abroad, and income payments on foreign assets inside the country
6
Host Restriction Methods
Ownership restrictions
Prohibit investment in certain industries or businesses
Performance demands demands
Local content reqts. Technology transfers Export targets
Obtain Obtain resources resources and and benefits benefits
Access Access management management skills skills Create Create employment employment
+ +
Why Home Intervenes in FDI
Explanations for FDI
• control • purchase-or-build decision • productions costs
Management Government • intervention of host intervention country • customer knowledge issues in the in FDI FDI decision • intervention of home
Following Following clients clients
Balance of Payments
National accounting system that records all payments to entities in other countries and all receipts coming into the nation
Home Promotion Methods
Insurance on assets abroad
Байду номын сангаасLoans and loan guarantees
� Purchase of physical assets or significant amount of ownership of a company in another country to gain some measure of management control
� By contrast, portfolio investment does not involve obtaining a degree of control in a company
with 690,000 affiliates
3
International Product Life Cycle
A company begins by exporting its product and later undertakes foreign direct investment as a product moves through its life cycle
Location advantage
(optimal location)
Ownership advantage
(special asset)
Internalization advantage
(efficiency)
4
Market Power
A firm undertakes FDI to establish a dominant presence in an industry
Host Promotion Methods
Financial incentives
Low Low or or waived waived taxes taxes Low Low interest interest loans loans
Infrastructure improvements
Improved Improved seaports, seaports, roads, roads, telecommunications telecommunications networks networks
••Partnership Partnershiprequirements requirements ••Benefits Benefitsof ofcooperation cooperation
Production Production costs costs
••Rationalized Rationalizedproduction production ••Cost Costof ofR&D R&D
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Foreign Direct Investment
Global Business Environment
16.Hiring & managing employees
Int. Business management
15.Managing int. operations 14.developing & marketing products 13.Seclecting & managing entry modes 11.Int.strategy 12.Analyzing int. & organization opportunities 10.Internationl monetary system
• following clients • following rivals
Government policy instruments and FDI
country • promotion (host/home country) • restriction (host/home country)
Foreign Direct Investment
Worldwide FDI Flows
World FDI inflows
� �
70,000 multinationals
Developed (65%), developing (29%) European Union: 40% of world FDI
Developing nations
� �
China: 5% of world FDI All of Africa: 3% of world FDI
Capital account Records transactions involving the purchase or sale of assets (including assets such as property and shares of common stock in a company)
Market power = Greater profits Vertical integration
Extends company ’s activities company’ into stages of production that provide its inputs (backward integration) or absorb its outputs (forward integration)
Management Issues and FDI
Control Control Purchase-or-build Purchase-or-build decision decision Customer Customer knowledge knowledge Following Following rivals rivals
Global environment
Financial system
1.globalization
Trade & investment
9.International financial markets 5.International trade
6.BG Trade relations 8.Regional 7.Foreign economic investment integration
FDI
– Removes resources from the nation – Can eliminate an export market – Might eliminate domestic jobs + May improve national competitiveness + Can offshore ‘sunset ’ industries sunset’
Growth of World FDI vs. GDP
2
Reasons for FDI Growth
Increasing globalization International mergers and acquisitions Entrepreneurship and small firms
Value of Cross-Border M&As
(e.g., tariffs)
� Specialized knowledge
(e.g., managerial ability)
Eclectic Theory
A firm undertakes FDI when location, ownership, and internalization advantages combine to make a location appealing
5
Why Host Intervenes in FDI
Initial Initial FDI FDI boosts boosts economy economy
Balance Balance of of Payments Payments
+ +
FDI may decrease import demand FDI FDI may may generate generate exports exports Access Access technology technology
8. Regional Economic Integration
1
Chapter 7: Foreign Direct Investment
Patterns of foreign direct investment
• ups and downs of foreign direct investment • Worldwide flows of FDI • international product life cycle • market imperfections (intemalization ) ( intemalization) • eclectic theory • market power • balance of payments
National environment
3.Politics, law, business ethics 2.Cross-cultural business
4.Economic systems & development
International trade and investment
5. International Trade International Trade & Investment 6. Business-Government Trade Relations 7. Foreign Direct Investment