ADMASUNI

VERSTY
Depar
tmentOfMar
ket
ingManagement
I
nter
nat
ional
Mar
ket
ing
I
ndi
vi
dual
Assi
gnment

Name:
Muker
em Degf
e

I
D:0303/
22
 Cont
ent
s

Ti
tl
e Page

Di
rectI
nvest
mentAct
ivi
ti
es 1

Joi
ntVent
ure 2

Whol
l
yOwnedSubsi
diar
ies 3

I
nter
nat
ional
Acqui
sit
ion 3

Ref
erence 4
Di
rectI
nvest
mentAct
ii
ti
es

Therearemanyway sthatanent er
pri
secanent eramar ketabroad.Itcantakeanindir
ect
approach,
li
kebuyingstocksandbondsf rom aforei
gnbusiness,oritcaninvesti
naneconomy
di
rectl
ybysetti
ngupsubsi di
ari
esorcr eatingj
ointvent
ures.Thedirectapproachtofor
eign
i
nvestmentiscall
edforei
gndirectinv
est ment.

•Di
rectI
nvest
mentDef
ini
ti
on

Di
rectinv
est
mentistheshor
tert
ermforfor
eigndir
ecti
nvest
ment(FDI
).For
eigndir
ect
i
nvestment(
FDI
)involv
esanindi
vi
dualoror
ganizat
ioni
nvest
ingi
nabusinessabroad.

ButFDIismor ethanjusttr
ansf
erri
ngfunds.Ital
soprovi
desthei
nvest
orsignifi
cantcontrol
over
thebusiness'
smanagement .Forei
gndir
ectinvest
orscantakeupalar
geper centageofa
company '
sequit
y .I
nextremecases,t
heymi ghtpur
chasetheent
ir
ebusinessandst artnew
operat
ionsfrom scrat
ch.

Akeyfeatureofdir
ecti
nvestmenti
slast
ingint
erest
,meaningtheinvestorsaregoi
ngf
orthe
l
onghaul.Whi l
esomebeliev
elong-
terminvest
mentenhancest hel
ocal economyandcr
eates
morej
obs, other
sseeitasacauseofint
erdependencyandinequali
ty.

•Di
rectI
nvest
mentMar
ketEnt
rySt
rat
egy

Dir
ectinvestmentmarketentryst
rategyrefer
stohowani nvestorcani
nvestinabusiness
abroad.Thethreedi
recti
nv est
mentmet hodsincl
ude:set
tingupasubsidiar
yinanother
economy ,acqui
ri
ngormer gingwit
hanexi sti
ngfor
eignbusiness,andi
nit
iat
ingajoi
ntv ent
ure
wit
haf oreignfi
rm.

Di
recti
nvest
ment
:Subsi
diar
ies

Asubsidi
aryi
safi
rmt hatbel
ongstoaparentf
irmi
nanot
hercountr
y.Thepar
entfi
rm canown
over50%to100%ofthesubsidi
ary
'sequi
ty.Whent
heowner
shipis100%,t
hesubsi
diaryi
s
cal
ledawholl
yownedsubsidiar
y.

Asubsi
diar
yisabusi
nessoper
ati
onpur
chasedorsetupbyapar
entcompanyabr
oad.
Compani essetupsubsi di
ari
estocreatesyner
gy(combi ningtheval
ueoft woormoref i
rmsto
benefitf
rom theircapabi
li
ti
es,makingthem st
ronger),di
versi
fyri
sk,
av oi
dtari
ff
sandi mprov
e
thei
rearnings.Whi l
etheparenthassigni
fi
cantcontroloverit
ssubsi
diary
,thesubsi
diaryi
sstil
la
separatelegalenti
tyandisli
ablefori
tstaxandgov ernance.

Di
recti
nvest
ment
:Mer
ger
sandAcqui
sit
ions(
M&A)

MergersandAcquisit
ions(
M&A)meansbuyi
ngt heenti
rebusi
nessormergingwit
hittocr
eatea
newbusiness.Thetermsmerger
sandacqui
sit
ionsareoft
enusedint
erchangeabl
y,t
houghthey
aresl
ight
lydif
fer
ent.

Mer
ger
sar
ethecombi
nat
ionoft
wobusi
nessest
ocr
eat
eanewbusi
nessent
it
y.

Anacqui
sit
ioni
nvol
vesonef
ir
mtaki
ngov
eranot
herf
ir
m andest
abl
i
shi
ngi
tsel
fast
henew
owner
.

Di
recti
nvest
ment
:Joi
ntVent
ures(
JV)

•
Joi
ntVent
ure

j
ointventureisoft
endescr
ibedast
hejoiningtoget
heroft
woormorebusi
nesspar
tner
sfr
om
separat
ej ur
isdi
cti
onst
oexchangeresources,
shareri
sksanddi
vi
derewar
dsfr
om ajoi
nt
enter
pri
se

Thef
inal
typeofdi
recti
nvest
mentmar
ketent
ryst
rat
egyi
saj
ointv
ent
ure.

Aj
ointv
ent
urei
sapar
tner
shi
poft
wof
ir
msf
ormut
ual
benef
it
.

Joi
ntventureshelpfi
rmslev
erageeachot
her
s'resources(
incl
udi
ngl
ocal
wor
kfor
ce,exper
ti
se,
andinf
rastr
ucture)andachi
eveeconomi
esofscale.JVsareal
soacommonwayfor
busi
nessest oenteranewmarket.

Ty
pesofFor
eignDi
rectI
nvest
ment

Ther
ear
ethr
eemai
nway
saf
orei
gni
nvest
orcani
nvesti
nabusi
nessabr
oad.

Ver
ti
cal
dir
ecti
nvest
ment

Hor
izont
aldi
recti
nvest
ment
Congl
omer
atei
nvest
ment

Whol
l
yOwnedSubsi
diar
ies

Tokeepfullcontrolovertheirventure,t
hismethodofinter
nati
onalbusi
nessisincor
por
atedby
or
ganizat
ions.Thepar entor gani
zationmakes100%i nvestmenti
nitsequit
ycapital
andinthi
s
waytakesfullcontr
ol overtheforeignorgani
zati
on.Therearetwoway stosetupawholly
ownedsubsidiaryintheinternati
onal market
:

Setti
ngupanot
herorgani
zat
iont
hor
oughl
ytobegi
nact
ivi
ti
esabr
oad–al
soknownasa
greenfi
eldv
ent
ure,
or

Acqui
ringareadyor
gani
zat
ionint
heforei
gnnat
ionandut
il
izi
ngt
hator
gani
zat
iont
odel
i
veror
marketit
sservi
cesi
nthehostnat
ion.

Adv
ant
agesofWhol
l
yOwnedSubsi
diar
y

Thepar
entor
gani
zat
ioncanexer
tful
lcont
rol
overi
tsoper
ati
onsi
naf
orei
gnnat
ion.

Theparentor
ganizat
iondoesnotr
equi
ret
or eveal
itst
echnol
ogyorcompet i
ti
veadvant
agest
o
other
sastheparentorgani
zat
ionl
ooksaf
terthewholeact
ivi
ti
esofsubsi
diaryal
lal
one.

Di
sadv
ant
agesofWhol
l
yOwnedSubsi
diar
y

Theparentorgani
zati
onneedstomake100%equityi
nv est
mentinitssubsi
diar
y.Subsequent
ly,
thi
sty
peofi nter
nati
onalt
radei
s,notr
easonabl
eforl
it
tleandmedi um-si
zeorgani
zati
onswhich
havel
imitedassetswit
hthem t
oputresour
cesint
oforeignnat
ions.

Addit
ional
l
y,theparentor
ganizat
ionneedstotol
erat
ethewhol
emisfor
tunescomi
ngabout
becauseoflossesofit
sforei
gnactiv
iti
esonit
sown, asi
towns100%equity
.

Af
ewnat
ionsar
ehesi
tantt
osetupent
ir
elyownedsubsi
diar
iesbyout
sider
sint
hei
rnat
ion.

•
Int
ernat
ional
Acqui
sit
ion

Acquir
ingani
nternat
ionalcompanycanbestructur
edinafewdiffer
entway
s.Acompanymay
choosetobuytheentir
ecompany ,
buypartsofthecompany,oracquir
easi
gni
fi
cantpor
ti
onof
thecompanythatgiv
esi tcer
tai
nownershi
pright
s.

Adv
ant
ages
Ingeneral,
therearemanyr easonswhyani nternat
ionalacquisit
ioncanbeopt i
mal f
or
expansion.Inmostcases,internat
ionalbusinessisexpectedt obef ull
yintegr
atedand
compliantwithint
ernati
onallawsandr egulati
ons.Inthi
sr egard,keepingmember softhe
curr
entmanagementt eam andmostoft hecurrentexecutive-
levelprocessesinplacewoul
dbe
benefi
cialtoanexpansion.

Di
sadv
ant
ages

Evenifanacqui si
tionisthemostcost -
effect
ivechoice,
however
,iti
simportanttokeepi
nmi nd
thatsomecav eatsmi ghtexist.Onemainpotent i
ali
ssueist
hatwhenbuyingacompany ,t
here
mayber egul
atorybarri
ersthatinhi
bitt
heacqui si
ti
onbecauseofthescal
eoft hetwocombined
businessesaftertheacquisiti
onorforotherreasons.

Ref
erence

I
nvest
opedi
a.com

t
oppr
.com

St
udy
smar
ter
.co.
uk