International Business Strategy : International Marketing Strategy

Foreign direct investment FDI is an investment of a company from one country to another whereby assets are acquired, operations are set up and joint ventures with local firms are made (Financial Times , n.d.). FDI is a risky and more expensive method of venturing globally as compared to licensing and exporting, however it does not stop companies from doing so due to its many advantages. FDI is one of the key drivers in speeding up the development and economic growth in Malaysia. Sound macroeconomic management, presence of a well-functioning financial system and sustained economic growth has made Malaysia an attractive country for FDI. Moreover, FDI plays a crucial role in Malaysia economy as it generates economic growth by increasing capital formation through the expansion of production capacity.

The concept of foreign direct investment (FDI) is closely related to the definition of transnational corporation (MNE, MNC, transnational corporations). In the literature, there are several definitions describing the features that should have a firm considered as multinational enterprises.

The OLI theory refers to ownership, location, and internationalization (Dunning, 2000). It is a basic theory proposed by John Dunning in an attempt to explain the incentives behind the MNEs going overseas (Dunning, 1993), organizational forms of MNEs, the MNE’s location choices, and the decision choice that lay between FDI and its alternatives like international licensing, trade and outsourcing (Javorick, 2004). The Ownership advantage is how a firm’s tangible and intangible assets are used in overcoming extra costs of doing business in the global market and explain why a home-grown country firm as opposed to a foreign firm manufactures in a foreign country. Location advantage offers explanation to why a home-based MNE may choose to manufacture in a foreign country instead of home country (Helpman et al., 2004). Lastly, internationalization advantage is attributed to why a home-based MNE may choose FDI instead of licensing to gain production in a foreign country (Athreye and Chen, 2009).

He argued that three conditions all need to be present for a firm to have a strong motive to undertake direct investment. He named these three components as the “OLI” framework which means ownership advantages, location advantages and internalisation advantages.

This paper contributes to the global strategy literature by outlining the four debates that we believe to be frontier issues with which the field will engage in the years to come. Its purpose is to review four current debates taking place in the field of global strategic management and international business. The review provides in-depth coverage of the four major global strategic management debates, comprising: (1) cultural vs institutional distance; (2) global vs regional geographic diversification; (3) convergence vs divergence in corporate governance, and (4)

J., & Ghauri, P. N. (2015). International business strategy: theory and practice. London: Routledge, Taylor & Francis Group.

It may be necessary to change the objectives, alter the scale of international plans, or abandon them. One market may offer immediate profit but have a poor long-term outlook, while another may offer the opposite. Only when corporate objectives are clear, such differences can be reconciled clearly.

The aim of this essay is to look at the evolution of both inward and outward foreign direct investments in Britain and then discuss the impact of the direction and level of FDI in Britain on the success or failure of British Business. This will lead us to question ourselves on whether the level and direction of FDI determine the success/failure of British firms. In other words, is there a correlation between these two key features of FDI and the performance of British firms and if this correlation implies causation.

Foreign direct investment by multinational corporations is the action of obtaining controlling equity share of a firm in a foreign country. There has been many discussions about the role of FDI in affecting a country’s unemployment rate and economic growth. Of which many believed

Dunning’s OLI paradigm (1976) is used to support firms to locate its production in countries that are financially beneficial for them. According to Dunning, “the paradigm offers a holistic framework to take in consideration all of the important factors that influence the decision of a MNE.” (Stefanović, 2008, p.241) FDI is determined through the composition of the three powerful advantages; ownership, location and internationalisation as shown in figure 1. The thesis is to assess, ‘why go multinational?’, ‘how to choose the best location?’ and ‘what actions have to be taken to enter a foreign market?’

Two important issues Adler focuses on within the essay are; the nationality of their investment projects and financing sources and whether they depend on the structure of the corporation itself. Can a multinational corporations use the planning objectives structure of the parents and its subsidiaries if the ownership of the corporation is multinational?

However, while the OLI paradigm centers around a single expansion decision, the Uppsala model views internationalisation as a gradual process with an incremental increase of knowledge of the target region and subsequent commitments in that region. Hence, internationalisation occurs faster in the OLI paradigm. Another difference between the two models is their respective focuses. The OLI paradigm focuses more inward, on the attributes of the expanding company, comprising ownership, location, and internalisation advantages and argues that companies need to combine these to minimise risk and succeed with FDI. On the other hand, the Uppsala model concentrates on the actual process of internationalisation, stating that companies should begin with low risk commitments - such as exports - to acquire knowledge of the target country and then increase their commitment based on the gathered knowledge. With higher commitment, more knowledge can be gained to be used for further commitment (Peng & Meyer

Foreign direct investment (FDI) can be defined as a process whereby residents of one country (the source country) acquire ownership of assets for the purpose of controlling the production, distributions and other activities of a firm in another country (the host country). FDI also have another definition like ‘an investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor, the investor’s purpose being to have an effective voice in the management of the enterprise’- International Monetary Fund’s Balance of Payment Manual and ‘ an investment involving a long-term relationship and reflecting a lasting interest and control of a resident entity in one economy (foreign

Multiple theories have been developed to explain the link between Multi-National Corporations (MNCs) and Foreign Direct Investment (FDI), however, for the purpose of this essay, the theory titled ‘Dunning’s Eclectic Paradigm’ will be used to analyse the workings of MNCs and FDI (Neary 2016). In order to determine whether the Eclectic Paradigm is effective in its aims, its three main tenets which will be applied to a real-estate MNC named ‘Juwai’. These tenets include: ownership advantages, location advantages, and finally internalisation advantages, all of which can be used to create an argument stating that the Eclectic Theory is the superior concept to explain the workings of MNCs, particularly when compared to other concepts such as the New International Division of Labour theory (Erdener & Shapiro 2005).

Business Strategy approach: - this is based on the idea of Pragmatism (Welford and Prescott, 1994) with the company making trade-offs between a number of unstable decision to internationalize and the way it adopts to do so Reid (1983) argues that foreign expansion is contingency based and