February 20, 2013
Chapters 7, 8, 9
In the chapters we have read and discussed I have found international business to be very sensitive in several areas. One can see the importance of understanding the business in a global aspect; also management needs to know concepts and strategies of international business to be prepared for the unexpected. In other words one has to continuously keep up with the times as generations change, develop, and advance in the technological world. (FDU). One of those concepts is foreign direct investment the purchase of physical assets or a significant amount of the ownership (stock) of a company in another country to gain a measure of management control (Wild& Wild Pg.188). Foreign direct investments differ substantially from indirect investments such as portfolio flows, wherein overseas institutions invest in equities listed on a nation's stock exchange. Entities making direct investments typically have a significant amount of influence and control over the company into which the investment is made. Open economies with skilled workforces and good growth prospects tend to attract larger amounts of foreign direct investment than closed; highly regulated economies. This process is the core of the international flows of capital. Driving FDI growth are more than 82,000 multinational companies with more than 810,000 affiliates abroad, roughly half of which are in developing countries. Developed countries remain the prime destination for FDI because cross-border M&A’s are concentrated in developed nations (Deresky Pg.190). Developed countries account for about 57 percent of Global inflow, on the other hand the FDI inflow to developing countries was 37 percent. Some of the developed countries are U.S., Japan, and Europe Union Nations; in which the three account for the vast majority of world inflows.