The Bridgestone Tire Company is the largest tire producer in Japan, with 50 percent of the Japanese market. During the 1970s its sales grew sixfold. Between 1978 and 1987 it grew from the fifth-largest to the third-largest tire company in the world, a position that it still holds. Although most of the company’s sales...
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INTRODUCTION Foreign sales are increasingly being made from foreign-controlled production facilities; this is called foreign direct investment (FDI). No one explanation or theory encompasses all the reasons for this increase.2 The preceding case illustrates the multiplicity of factors influencing the decision of one firm to produce in a foreign country. Before deciding to invest...
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THE MEANING OF FOREIGN DIRECT INVESTMENT The Concept of Control In Chapter 1 we saw that for direct investment to take place, control must follow the investment. The amount of ownership share necessary for control is not clear-cut. If stock ownership is widely dispersed, then a small percentage of the holdings may be sufficient...
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The Concern over Control Governmental Concern Why should anyone care whether an investment is controlled from abroad? Many critics are concerned that the national interest will not be best served if a multinational firm makes decisions from afar on the basis of its own global or national objectives. For example, General Motors (GM) owns...
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Methods of Acquisition Direct investment has traditionally been considered an international capital movement that crosses borders when the anticipated return (accounting for the risk factor and the cost of transfer) is higher overseas than at home. Although most direct investments involve some type of international capital movement, an investor may transfer many other types...
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