Thursday, December 01, 2005

International Business Chapter 7 - Foreign Direct Investment - terms

foreign direct investment -- the purchase of physical assets or a significant amount of the ownership (stock) of a company in another country to gain a measure of management control
portfolio investment -- investment that does not involve obtaining a degree of control in the company
international product lifecycle -- theory stating that a company will begin by exporting its products, and later undertake foreign direct investment as a product moves through its life cycle
market imperfections -- Theory stating that when an imperfection in the market makes a transaction less efficient than it could be, a company will undertake foreign direct investment to internalize the transaction and thereby remove the imperfection
eclectic theory -- theory stating that firm's undertake foreign direct investment when the features of a particular location, combined with ownership and internationalization advantages to make a location appealing for investment
market power -- theory stating that a firm tries to establish a dominant market presence and an industry by undertaking foreign direct investment
vertical integration -- extension of company activities into stages of production that provide a firm's inputs (backward integration). Or obsorb its output (forward integration)
rationalized production -- system of production in which each of a product's components is produced, where the cost of producing that component is lowest
balance of payments -- a national accounting system that records all payments to entities and other countries and all receipts coming into the nation
current account -- a national account that records transactions involving the import and export of goods and services, income receipts on assets abroad, and income payments on foreign assets inside the country
current account surplus -- when a country exports more goods and services and receives more income from abroad than it imports and pays abroad
current account deficit -- when a country imports more goods and services MPs were a broad that it exports and receives from abroad
capital account -- a national account that records transactions involving the purchase or sale of assets