- Investigate a recent significant example of FDI. The decision by a European auto firm to set up assembly operations in the US (e.g. BMW), the acquisition of a major "local" firm by a foreign-based multinational, or the decision by a "local" multinational to purchase a firm in another country or build a new factory are all things that make headlines in the business pages. Then find several published stories about an example of FDI and decipher how different business publications have reported the story. Often there is a formal press release that states the official rationale, but journalists and investment analysts may often cite additional reasons for the investment. List all the reasons cited, and then compare these with the reasons listed in the text before giving your assessment of the important reasons for the FDI. This analysis can also be extended for chapter 7 by considering in more detail the political reasons for FDI. A good way to start on this is to look in the short business news section of the Wall Street Journal (www.wsj.com). More extensive stories can then often be found in other publications (Fortune www.fortune.com or the Economist www.economist.com) and on web sites providing business news and analysis (Bloomberg www.bloomberg.com or Financial Times www.ft.com). Frequently a firm's own web site will publish a copy of the full news release regarding the investment. By looking at multiple sources of information on a topic, you should be able to get a fairly good picture of the range of considerations that took place when making the investment decision.
- An interesting variant on the above is to investigate the ownership of a particular "local" firm that is really owned by a foreign firm. Examples include Burger King in the US (owned by Grand Metropolitan of the UK), Jaguar in the UK (owned by Ford of the US), Pripps in Sweden (owned by Orkla of Norway), etc. While not mentioned in the opening case, Electrolux owns several well known North American brands, including Frigidaire. In many cases the foreign ownership may have taken place many years ago, yet the firm or firms are viewed as local by most residents. Explain the rationale for the original FDI and evaluate if the reasons would still be valid today if the firm were to consider making the decision now.
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