Beruflich Dokumente
Kultur Dokumente
investment
(FDI)
Content
• Introduction
• Definition
• Types
• Positives and negatives
• Factors affecting selection of FDI destination
FDI can be done in the following ways
outward
vertical
On the basis of investment objectives
Resource seeking
market seeking
Efficiency seeking
On the basis of entry modes
Greenfield investments
Mergers and acquisitions
Non-industrial
Export replacement
On the basis of strategic modes
Export platforms
Domestic substitution
On the basis of direction of investment
• Inward FDI
• Outward FDI
Inward FDI
• Horizontal FDI
• Vertical FDI
• Conglomerate FDI
Horizontal FDI
Vertical FDI
• the need for a forward vertical FDI stems from the problem of
finding distributors for a specific market
• For example, assume that the before-mentioned American car
manufacturer wants to sell its cars in the Japanese auto market.
Since many Japanese auto dealers do not wish to carry foreign
brand vehicles, the American car manufacturer may have a very
difficult time finding a distributor. In this case, the manufacturer
would build its own distribution network in Japan to fulfill this
niche.
Conglomerate FDI
• Greenfield investments
• Mergers and acquisitions
Greenfield investments
• The biggest completed deal of 2015 so far, this merger between the
two food and beverage giants was valued at $62.6 billion. The
newly created Kraft Heinz Company is the third-largest food
company in the U.S. and fifth-largest in the world, measured by
annual sales.
Dell to Buy EMC in Deal Worth About $67 Billion
• Industrial FDI
• Non-industrial FDI
Industrial FDI
• Export replacement
• Export platforms
• Domestic substitution
Export replacement