V.1.

FOREIGN DIRECT INVESTMENT

 FOREIGN DIRECT INVESTMENT

Acquisition abroad of plant and equipment identifies those market to the firms expansion overseas.

 THE PROCESS OF OVERSEAS EXPANSION

1. EXPORTING

2. OVERSEAS PRODUCTION

3.

LICENSING Legally authorizing a person or group of persons to own or do something.

 MARKET IMPERFECTIONS

Distribution of goods and services is not efficient.

 MARKET IMPERFECTIONS

1. Product 2. Factor 3. Financial

For Product and Factor Imperfections

INDUSTRIAL ORGANIZATION THEORY

According to this theory multinational corporation have intangible capital in the form of trademarks, patents, general marketing skills and other organization abilities.

For Financial Market Imperfection

Reasons why MNCs engage in foreign direct

investments (FDI)

1. Reduce tax
Investing in tax haven countries

2. Avoid exchange rate fluctuations 3. Reduce transportation cost

 FACTORS TO CONSIDER IN THE DETERMINATION

OF WHERE MNCs INVEST

THANK YOU !