UNIT 4 - FOREIGN DIRECT INVESTMENT

FPI - foreign portfolio investment

the purchase of shares and long-term debtobligation from a foreign entity. Portfolio investors do not aim to take control of a corporation. They can liquidate their investmentat at market value any time

FDI - foreign direct investment

the establishment of a plantor distribution network abroad. Investors can acquire part or all of the equity of an existing foreign corporation either to control or share control over sales, production, and research and development

strategic approach

FDI decisions based on business strategies. Investors seek access to raw materials, markets, product efficiency, and “know-how“

cash flow

the total amount of cashthat remains in a company after it has paid taxes and other cash expenses

investment incentives

benefits such as cash grants, tax credits, accelerated depreciation, and low interest-bearing loans, which are sponsored by national or local authorities to attract foreign investment

exclusive distributor

an independent sales agent who is given the sole right, under contract, to sell a foreign manufacturer’s products

multiple distributor

a sales agent who represents more than one manufacturers

royalty payments

the payment made by a foreign manufacturer to a company that has licensed the manufacturer to produce its products

joint venture

a subsidiary fromed by two or more corporations

multinational corporation - MNC

a corporation controlling production and marketing system in several countries beside its own

an acquisition

when one country takes over another and clearly establish itself as the new owner, the purchase is called an acquisition

a raid

buying as may of a company’s stocks as possible on the stock markets

a takeover bid

a public offer to a company’s stockholders to buy their stock at certain price (higher than the current market price) during a limited period of time

buyout

the purchase of a company’s shares in which the acquiring partly gains controlling interest of the targeted firm

a merger

when 2 firms agree to go forward as a single new company rather than remain seperately owned and operated

horizontal merger

2 companies making the same products combined

vertical merger

a company either acquires or mergers with another company in an immidiately-related stage of production and distribution

diversification

a company acquires another company in an entirely different sphere