Mgmt 425 Ch 7

  1. 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
    foreign direct investment
  2. investment that does not involve obtaining a degree of control in a company
    portfolio investment
  3. theory stating that a company begins by exporting its its product and then later undertakes foreign direct investment as the product moves through its life cycle
    international product life cycle
  4. theory stating that wen 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
    market imperfections
  5. theory stating that firms undertake foreign direct investment when the features of a particular location combine with ownership and internationalism advantages to make a location appealing for investment
    eclectic theory
  6. theory stating that a firm tries to establish a dominant market presence in an industry by undertaking foreign direct investment
    market power
  7. extension of company activities into stages of production that provide a firm's inputs (backward integration) or that absorb its output (forward integration)
    vertical integration
  8. system of production in which each of a product's components is produced where the cost of producing that component is lowest
    rationalized production
  9. national accounting system that records all receipts coming into the nation and all payments to entities in other countries
    balance of payments
  10. when a country exports more goods and services and receives more income from abroad than it imports and pays abroad
    current account surplus
  11. when a country imports more goods and services and pays more abroad than it exports and receives from abroad
    current account deficit
  12. national account that records transactions involving the purchase and sale of assets
    capital account
Card Set
Mgmt 425 Ch 7
Mgmt 425 Ch 7