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6 July, 05:47

A firm's direct investment in international business involves building a new plant or buying an existing plant in a foreign country to produce its own products, or it may involve buying an existing firm in a foreign country. A. TRUEB. FALSE

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  1. 6 July, 06:15
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    A firm's direct investment in international business involves building a new plant or buying an existing plant in a foreign country to produce its own products, or it may involve buying an existing firm in a foreign country-This statement is true

    Explanation:

    A foreign direct investment (FDI) can be defined as a company of one nation putting up a physical investment into building a facility (factory) in another country or involves buying an existing Plant in a foreign country.

    Examples of foreign direct investments include mergers and acquisitions,

    Strategically, FDI can be categorized into three types -

    Horizontal - In case of horizontal FDI, the company carries or perform all the same activities abroad as it does at the home country.

    For example: - Toyota assembles motor cars in Japan, India and the UK.

    Vertical - In vertical assignments, different types of activities are carried out abroad.

    Conglomerate - In this type of investment, the investment is made to acquire an unrelated business abroad. It symbolizes the entry of the company into an altogether different business line.
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