ABSTRACT

For companies that want to expand overseas, an assortment of investment vehicles are at their disposal, depending on their business strategies, financial means, human resources, familiarity with the foreign market, and the legal environment of the host country. A manufacturer may just want to export its products, in which case, it will have to commit the least amount of resources and assume the least amount of risk. At the other end of the spectrum, the manufacturer may want to establish a wholly owned subsidiary in the foreign country, which will engage in production, distribution, and after-sale services. In that case, the manufacturer will have to commit abundant resources and will be likely to encounter the greatest amount of risk. Taking the middle course, the manufacturer may find a local partner to form a joint venture, with the local partner taking responsibilities for sale and distribution while it concentrates on production. In such a case, the manufacturer will share control, profits, and risks with the local partner.