GLOBAL FINANCE
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GLOBAL FINANCE
8 FDI is the most costly and riskiest method of foreign trade, but
offers the most rewards in some cases. FDI only works if you
have a transferable competitive advantage. Most firms start out
by exporting before making heavier commitments.
9 Buying a foreign firm can be the cheapest and most cost-effective
way of direct investment into a foreign market (FDI). Make sure
you don't pay too much and that you fully understand how the
host government will behave. How will you get local customers
on your side?
10 MNCs are judged by their consolidated returns, which may
fluctuate if they are overly reliant on particular markets. Inter-
national portfolio theory is a way of looking at all the MNC's
businesses to see if their relative weighting can be adjusted
to reduce the fluctuation in the overall return. This might be
done, for instance, by postponing further expansion in certain
countries in favor of projects in others.
