* Where the focal firm by building a new facility ; be it manufacturing, marketing or administrative known as Greenfield investment ;
* Where the focal firm purchases an existing company or facility
* By means of a merger; wherein two or more firms join to create a new, larger company.
FDIs can also be classifies by means of the nature of ownership
* Equity participation, where the focal firm acquires partial ownership in an existing company in the target market,
* A wholly owned direct investment exists when the firm takes complete control of another firm.
* Equity joint venture, where two or more investing firms pool assets/resources to create another firm in which both parent firms have ownership.
The level of integration also serves in categorizing an FDI.
* Vertical integration exist when the investing firm owns or aims to own multiple stages of a value chain for producing, selling, and delivering a product or service
* Horizontal integration is evident when the investing firm owns or aims to own activities involved in a single stage of its value chain
An acquisition is a type of direct investment whereby the focal firm purchases an existing company or facility as opposed to Greenfield investment wherein the investing firm invests by building a new manufacturing, marketing or administrative facility.
2. Firms engage in FDIs with an ultimate goal to boost competitiveness on the global market. The motives can be categorized into 3 groups:
* Market seeking motives: aims at gaining access to new markets, follow existing customers and/or compete with major rivals in new markets
* Resource or asset seeking motives: cost of production. Firms aim to have easy/quick access or even cost effective to raw materials. Managers seek to gain access to knowledge or other assets which can be very beneficial for R&D, manufacturing and marketing
* Efficiency seeking... [continues]
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(2010, 10). Comparative Essay on Foreign Direct Investments. StudyMode.com. Retrieved 10, 2010, from http://www.studymode.com/essays/Comparative-Essay-On-Foreign-Direct-Investments-459331.html
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