in that respect are tether different types of FDI. First, there is the so-called Greenfield Strategy which means that a political party invests in completely new production sites in a foreign country by building these up. Second, companies drive out buy up shares of already existing companies in the host country. That is the Brownfield strategy; the shares are also called Acquisitions. The third type of FDI is a Joint-venture (or Alliance) of two companies, unrivaled from the home country and the other one being from the host country, that work to scotchher to create a new product. With every type of FDI the company invests directly in the host country which is the main difference between FDI and other types such as exporting or licensing, where the production site remains in the home country.
(Griffin and Pustay, 2009)
FDI is mostly used by large Multinational Enterprises (MNEs) and Transnational Corporations (TNCs) which outsource their production sites out of various reasons such as low production costs. (Johnson et al, 2008) For the company itself FDI has several advantages as well as disadvantages. In the end, the company has to choose whether FDI is a suitable firm strategy or not based on a variety of factors.
There are several models and tools that can be used when regard the international strategy of a company. Johnson et al (2008) determined the most important ones. Some are mentioned here:
1. Porters Diamond model
2. yelp diagram of Internationalisation of firms with 4 determinants
3. The PESTLE framework...If you want to get a full essay, order it on our website: Ordercustompaper.com
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