wandajackson Nuovo

Iscritti

Joined: 26 Jun 2019 Posts: 7
|
|
This OLI paradigm states that a company first must have "O"- owner specific competitive advantage from a home market which might be transferred into a international market. Then the company needs to be attracted by "L"- location specific characteristics of any foreign market.
These characteristics might include low cost of raw materials and labor, a large home market, unique sources involving raw materials, or superior technological centers. Location is essential because the company have different FDI motives. By relying to location characteristics it might pursue different FDIs. It might implement either horizontal and also vertical FDIs.
The horizontal FDI occurs whenever a company locates a plant abroad so that you can improve its market admission to foreign consumers. Vertical FDI, by means of contrast, is not mainly or maybe necessarily aimed at selling in a foreign country however to cutting costs by making use of lower production costs right now there. The "I" stands for internalization.
According to the theory the organization can maintain its economical advantage if it fully controls the entire value chain in it's industry. The fully owned MNC minimizes agency expenditures resulted from asymmetric information, deficiency of trust, monitoring partners, suppliers and banking companies.
Self financing eliminates keeping track of of debt contracts on foreign subsidiaries which have been financed locally or by simply joint ventures. If an organisation has a low world-wide cost and high availableness of capital why share it with joint ventures, companies, distributers, licensees, or local banks that probably possess higher cost of funds. |
|