What are the motives FOR initiating direct foreign investment?
MNCs may be motivated to initiate direct foreign investment in order to attract new sources of demand or to enter markets where superior profits are possible. These two motives are normally based on opportunities to generate more revenue in foreign markets.
Why would foreign governments provide MNCs with incentives to undertake DFI there?
Why would foreign governments provide MNCs with incentives to undertake DFI there? ANSWER: Foreign governments sometimes expect that DFI will provide needed employment or technology for a country. For these reasons, they may provide incentives to encourage DFI. 15.
What are the motives for internationalization?
The Motivations for Internationalization of a Firm
- ·A firm’s desire to grow by expanding from small or saturated domestic markets to international markets.
- ·Unsolicited orders received from abroad.
- ·Obtain prestige in the domestic market.
- ·Compensate a strong seasonality in the local market.
What is MNC and its advantages and disadvantages?
Accesses to Labor – MNCs enjoy access to cheap labor, which is a great advantage over other companies. Overall Development – The investment level, employment level, and income level of the country increases due to the operation of MNC’s. Level of industrial and economic development increases due to the growth of MNCs.
What are the motives of DFI?
Other motives for using DFI are typically related to cost efficiency, such as using foreign factors of production, raw materials, or technology. In addition MNCs may engage in DFI to protect their foreign market share, to react to exchange rate movements, or to avoid trade restrictions.
What is proactive internationalization?
Proactive motives represent stimuli to attempt strategy change, based on the firm’s interest in exploiting unique compet- ences (e.g. a special technological knowledge) or market possibilities. The fundamental reasons – proactive and reactive – for internationalization.
What are the benefits and problems of MNCs?
Taxes and Other Costs – Taxes are one of the areas where every MNC can take advantage. Many countries offer reduced taxes on exports and imports in order to increase their foreign exposure and international trade. Also countries impose lower excise and custom duty which results in high profit margin for MNCs.
What does the IRS mean by profit motive?
BREAKING DOWN Profit Motive. According to the Internal Revenue Service (IRS), taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business.
When does an activity have a profit motive?
Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit, that is, a profit motive. Profit motive must be assessed for some transactions in order to determine the deductibility of any expenses involved.
Is the profit motive a factor in decision making?
While the idea of profit being part of the motivation behind all manners of economic activity is not controversial in itself, there has been more scrutiny and analysis around applying it as the only factor in decision making. In practice, the profit motive is one of many factors that influences how people and businesses act.
What is the legal definition of a motive?
Legal Definition of motive : something (as a need or desire) that causes a person to act Note: Motive is distinguished from intent or mens rea. Although motive is not an element of a crime, evidence of motive can be introduced to help establish intent.
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