1. INTERNATIONAL
BUSINESS
MADE BY
TALHA JALAL BBA 5th

2.  FOREIGN DIRECT INVESTMENT
 PORTFOLIO INVESTMENT
 REASONS OF FDI
 WHAT IS MNC’s
 WHY FIRM BECOME MNC’c
 CHARACTERISTICS OF MNC’c
TOPIC’S

3. Foreign direct investment (FDI)
Is a direct investment into production or business in
a country by a company in another country, either by buying a company
in the target country or by expanding operations of an existing business
in that country. Foreign direct investment is in contrast to “portfolio
investment” which is a passive investment in the securities of another
country such as stocks and bonds.

4. Portfolio investment
Is a passive investment in securities. Portfolio investment is
investments made by an investor are not particularly
interested in involvement in the management of a company. It
is also the investment in securities that is intended for
financial gain only and does not create a lasting interest in or
effective management control over an enterprise. It includes
investment in an assortment or range of securities, or other
types of investment vehicles, to spread the risk of possible loss
due to below expectations performance of one or a few of
them.

5.  Increasing Sales And Profit
 Enter Rapidly Growing Markets
 Reduce Cost
 Gain A foothold in economics blocs
 Protect domestic markets
 Protect foreign market
 Acquire technological and managerial know-how
Reasons of FDI

6. What is MNC’s
MNC means multinational corporation. If any
company's head office in one country and its
business activities are in many countries, that
company will be called multinational corporation.
Its other popular name is multinational enterprise.
These corporation is also called transnational
corporation. Multinational corporation starts from
their own country but they increase their business
level and they do business many countries as per
the rules and regulations of different countries.

7. Why Firm Become Multinational
Enterprise
 International Diversification:
First reason is to diversify themselves against
the risk and uncertainty of the domestic business cycle. By setting
up operations in another country.
 Globalization:
Second reason is to tap the growing world
markets for goods and services. It is the process of growth in an
integrated world market.
 Protect Home Market share:
MNE’s in response to increase foreign
competitions and a desire to protect their home market share. By
using a “follow the competitors” strategy.

8.  Reduce Cost:
By setting up operation close to foreign customer,
these firm can eliminate transportation expense, responde more
accurately and rapidly to customer needs, take advantage of
local resources.
 Avoid tariff barriers :
protective device such as tariff and non-tariff
barriers by serving a foreign market from within. In it firm
producing goods within the host country. And avoid tariff on
export goods.
 FDI:
last reason is to take the advantage of technological
expertise by manufacturing goods directly (by FDI) rather then
allowing others to do it under a license.

9. Characteristics of MNC’s
 Affiliates must be responsive to a number of important
environment forces.
 Labor
 Technology
 Growth
 Large scale operations
 Integration of economies
 Benefits of participants countries
 Keen competition
 Special role of science and technology
 Creation of new projects
 Large size plants and machinery
 Huge amount of capital
 It draws common pool of resources incuding, assets,
patents, Trademark, HR

10. THANK YOU