Question

In: Finance

Why do firms go global (beyond the obvious reason of reaching more customers)? How do companies...

Why do firms go global (beyond the obvious reason of reaching more customers)?

How do companies invest abroad?

In your own words or experiences provide an overview of the different modes of foreign investment.

Solutions

Expert Solution

Why do firms go global

The firms go global so as to capture new markets, apart from that the firms also go global to look for the opportunities so as to minimize the costs by opening their manufacturing units in the country where the labor and the production is low. The companies also go global to reduce the dependency on the current market. By diversifying to the new markets, the companies can mitigate the risk.

How do companies invest abroad

the companies can invest abroad by investing in the shares, having commercial loans, foreign direct investment and foreign portfolio investment.

Different modes of foreign investment

The foreign inmvestment can be done in form of:

Exporting: Where the domestically produced goods are sold to other country.

Licencing: When the company acquires a licence of the company to trade in the other country. The licence is usually in form of trademarks, patents etc

Joint venture: When the company joins their hands with some othe company of other country. Then this is a joint venture.

Foreign direct investment:This is the form where the one directly invests its capital and resources in other country.


Related Solutions

Why do firms expand internationally? What are the main advantages for firms to go global? What...
Why do firms expand internationally? What are the main advantages for firms to go global? What are the main disadvantages? Give examples to explain.  
Why is it important for companies to go beyond financial and accounting data in accessing their...
Why is it important for companies to go beyond financial and accounting data in accessing their performance?
Business Effects of Globalization: 1. What does it mean to be global (Beyond the obvious sense...
Business Effects of Globalization: 1. What does it mean to be global (Beyond the obvious sense of doing business in multiple countries)? 2. What is exchange rate regime? Analyze different types of currency regimes and the history of exchange rate regimes.
Why do firms go for vertical mergers and acquisitions? Are more such integrations better than less?...
Why do firms go for vertical mergers and acquisitions? Are more such integrations better than less? Comment on their importance in the future.
why are firms whose customers are individuals much more likely to advertise than firms that sell...
why are firms whose customers are individuals much more likely to advertise than firms that sell primarily to other firms?
What is the over-riding reason why many large companies take an aggressive approach to Global Strategies?...
What is the over-riding reason why many large companies take an aggressive approach to Global Strategies? From this over-riding concept, using the Reactive/Proactive Model to determine the Global Strategy, briefly describe what may prompt an organization such as Google and/or Yahoo towards further Global Expansion?
More and more global business firms are becoming stateless corporations. Do you think this may benefit...
More and more global business firms are becoming stateless corporations. Do you think this may benefit the world economy? Why or why not?
How do global firms manage the global financial environment and the foreign exchange market?
How do global firms manage the global financial environment and the foreign exchange market?
How do global firms manage the global financial environment and the foreign exchange market?
How do global firms manage the global financial environment and the foreign exchange market?
1. What is the reason(s) that companies do Marketing Research? In other words, why is it...
1. What is the reason(s) that companies do Marketing Research? In other words, why is it valuable? 2. Please explain and provide an example of Secondary Research. 3. Please explain and provide an example of Primary Research. 4. Which is more reliable, secondary or primary research/data? 5. Briefly describe each of the four steps of Marketing Research. 6. Please list the advantages and disadvantages of the following contact methods in Marketing Research: mail, telephone, personal interviewing, and online. 7. Please...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT