Foreign Direct Investment
The growth of multinational sales has outpaced the remarkable expansion of trade in manufactures in the last two decades (Marc J. Melitz, 2003). Foreign direct investment (FDI) is one of channels firms can service foreign customers， it can be defined as a company from one country making a physical investment into building a factory in another country (Jeffery P., 2013). The main methods of foreign direct investment can include: ①Joint venture and strategic alliances. ②Portfolio investment. ③licensing and technology transfer. ④reciprocal distribution agreements (Jeffery P., 2013).
Nigeria is one of the countries Shell investment in the form of joint venture. The reasons Shell chose joint venture to invest in Nigeria include the following three points: Firstly, there is a regulation from the government of Nigeria that as a condition of entry, the entering companies need allow some local ownership (Annual report of Shell, 2014). Secondly, joint venture can force companies to share revenues and profits, but also share the risks and failure. Finally, economies of scale can be achieved when two or more firms pool their resources together, maximizing efficiency based on their project’s needs (referenceforbusiness, 2014).
Jeffery P. Graham and R. Barry Spaulding, (2013) Understanding foreign direct investment, [online] Available from: http://www.going-global.com/articles/understanding_foreign_direct_investment.htm [Accessed by 6th Mar, 2015]
Marc J. Melitz, Elhanana Helpman and Stephen R. Yeaple, (2003), National bureau of economic research, [online] Available from: http://time.dufe.edu.cn/spti/article/helpman/helpman008.pdf [Accessed by 6th Mar, 2015]
Reference for business.com, (2014), Encyclopedia of business-joint ventures and strategic alliances, [online] Available from: http://www.referenceforbusiness.com/management/Int-Loc/Joint-Ventures-and-Strategic-Alliances.html [Accessed by 6th Mar, 2015]
Nigeria is one of the countries Shell investment in the form of joint venture. The reasons Shell chose joint venture to invest in Nigeria include the following three points: Firstly, there is a regulation from the government of Nigeria that as a condition of entry, the entering companies need allow some local ownership (Annual report of Shell, 2014). Secondly, joint venture can force companies to share revenues and profits, but also share the risks and failure. Finally, economies of scale can be achieved when two or more firms pool their resources together, maximizing efficiency based on their project’s needs (referenceforbusiness, 2014).
Jeffery P. Graham and R. Barry Spaulding, (2013) Understanding foreign direct investment, [online] Available from: http://www.going-global.com/articles/understanding_foreign_direct_investment.htm [Accessed by 6th Mar, 2015]
Marc J. Melitz, Elhanana Helpman and Stephen R. Yeaple, (2003), National bureau of economic research, [online] Available from: http://time.dufe.edu.cn/spti/article/helpman/helpman008.pdf [Accessed by 6th Mar, 2015]
Reference for business.com, (2014), Encyclopedia of business-joint ventures and strategic alliances, [online] Available from: http://www.referenceforbusiness.com/management/Int-Loc/Joint-Ventures-and-Strategic-Alliances.html [Accessed by 6th Mar, 2015]