Chapter 15 - Foreign Direct Investment and Collaborative Ventures

Question 1

Foreign Direct Investment FDI

Answer 1

An internationalisation strategy in which the firm establishes a physical presence abroad through the acquisition of productive assets such as capital, technology, labour, land, plant and equipment

Question 2

International Collaborative Venture
International Partnership
International Strategic Alliance

Answer 2

A cross-border business alliance in which partnering firms pool their resources and share the costs and risks of the venture

Question 3

Joint Venture

Answer 3

A form of collaboration between two or more firms to create a jointly owned enterprise

Question 4

International Portfolio Investment

Answer 4

Passive ownership of foreign securities such as shares and bonds for the purpose of generating financial returns

Question 5

Greenfield Investment

Answer 5

Direct investment to build a new manufacturing, marketing or administrative facility, as opposed to acquiring existing facilities

Question 6

Acquisition

Answer 6

Direct investment to purchase an existing company or facility

Question 7

Merger

Answer 7

A special type of acquisition in which two firms join to form a new, larger firm

Question 8

Equity Participation

Answer 8

The acquisition of part ownership in an existing firm

Question 9

Wholly Owned Direct Investment

Answer 9

A foreign direct investment in which the investor owns the foreign assets

Question 10

Equity Joint Venture

Answer 10

A type of partnership in which a separate firm is created through the investment or pooling of assets by two or more parent firms that gain joint ownership of the new legal entity

Question 11

Vertical Integration

Answer 11

An arrangement whereby the firm owns, or seeks to own, multiple stages of a value chain for producing, selling and delivering a product or service

Question 12

Horizontal Integration

Answer 12

An arrangement whereby the firm owns, or seeks to own, the activities performed in a single stage of its value chain

Question 13

Joint Venture

Answer 13

A form of collaboration between two or more firms to create a jointly owned enterprise

Question 14

Project-Based, Non-Equity Venture

Answer 14

A collaboration in which the partners create a project with a relatively narrow scope and well-defined timetable, without creating a new legal entity

Question 15

Consortium

Answer 15

A project-based, non-equity venture initiated by multiple partners to fulfil a large-scale project

Question 16

Cross-Licensing Agreement

Answer 16

A type of project-based, non-equity venture where partners agree to access licensed technology developed by the other, on preferential terms