Chavez Forum

Forum di prova - According to the theory the provider can maintain
wandajackson - 26 Jun 2019 05:38:02
Post subject: According to the theory the provider can maintain
Your OLI paradigm states that
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a company first need to have "O"- owner specific competitive advantage from a home market which can be transferred into a overseas market. Then the company have to be attracted by "L"- location specific characteristics of a foreign market.

These characteristics might include less costly of raw materials as well as labor, a large home market, unique sources connected with raw materials, or leading-edge technological centers. Location is vital because the company
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have different FDI attitudes. By relying to location characteristics it could pursue different FDIs. It could implement either horizontal or maybe vertical FDIs.

The horizontal FDI occurs when a company locates a plant abroad as a way to improve its market access to foreign consumers. Vertical FDI, by contrast, is not mainly and even necessarily aimed at selling in
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a foreign country although to cutting costs by making use of lower production costs at this time there. The "I" stands for internalization.

According to the theory the corporation can maintain its competitive advantage if it fully controls the entire value chain in the industry. The fully possessed MNC minimizes agency expenditures resulted from asymmetric
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information, loss of trust, monitoring partners, suppliers and lenders.

Self financing eliminates overseeing of debt contracts on foreign subsidiaries which are financed locally or by way of joint ventures. If a firm has a low world wide cost and high accessibility of capital why share it with
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joint ventures, manufacturers, distributers, licensees, or nearby banks that probably possess higher cost of investment.
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