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Foreign country investments

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There are two ways companies can invest in a foreign country. They can either acquire an interest in an existing operation or construct new facilities. In a short essay, describe the advantages and disadvantages of each alternative.

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The solution provides a detailed answer to the two ways that companies can invest in foreign countries. Advantages and disadvantages of the methods have also been discussed.

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A foreign investment (FDI) is a company controlled through ownership by a foreign company of foreign individuals.
Control must accompany the investment; otherwise it is a portfolio investment.

Companies want to control their foreign operations so that these operations will help achieve their global objectives. Investors who control an organization are more willing to transfer technology and other competitive assets. The idea of denying rivals access to resources is called the appropriability theory.

Governmental authorities worry that this ...

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