What is strategic-asset-seeking and does it help explain why Chinese Essay

What is strategic-asset-seeking and does it help explain why Chinese business groups internationalise their operations - Essay Example In addition to increasing foreign direct investment (FDI) inflows, China’s outward FDI investments have been increasing at a phenomenal rate and drawing the attention of scholars and researchers (Fung & Garcia-Herrero). In attempting to understand and predict location choices of FDI outflows, researchers use a number of hypotheses including asset-seeking explanations (Makino, Lau, & Yeh). In this research study, trends in China’s FDI outflows are examined and analysed with a view to determining whether or not strategic asset-seeking provides a satisfactory explanation for China’s FDI outflows. This paper is therefore divided into three main parts. The first part of this paper defines asset seeking. The second part of this paper explores and discusses trends in China’s FDI outflows. Some examples of Chinese firms’ internationalisation will be highlighted in the second part of this paper. The final part of this paper analyses whether or not strategic asset-seeking provides a satisfactory explanation of China’s FDI outflows or internationalising trends. In order to test the hypothesis that strategic asset seeking explains China’s trends toward internationalization, references will be made to examples of Chinese companies that have become internationalized. ... 72). One of the ways in which strategic asset seeking organizations attempt to invest abroad as a means of gaining or maintaining a competitive edge is to invest in research and development or in â€Å"design facilities† (Buckley, et. al., p. 114). As Buckley, et. al. explain, these kinds of investments are intended to put the organization in a position to access current know-how and to be able to take part in the production of new products and to set standards for maximizing the organization’s competitive edge. According to Buckley, et. al.: The investor normally intends to benefit from spillover effects deriving from agglomerations of similar minded companies and from complementary industries in the host country (p. 114). In addition, strategic asset-seeking behaviour of organizations usually takes place when there are improvements in popular brands, the national supply chain and in management and expertise talent via directly purchasing or from â€Å"proximity of op erations† (Buckley, et. al., p. 144). In the latter scenario, the organization gains from operational proximity via the spillover effects and/or â€Å"demonstration effects† (Buckley, et. al., p. 114). According to Dunning’s eclectic paradigm suggest that firms will usually invest abroad to gain an advantage that is not usually available at home. These advantages can include the acquisition of knowledge, expertise, and distribution channels (Dunning). According to Dunning and Lundan, strategic asset seeking is not about exploiting conditions abroad, although it may be an important and complimentary motive. However, the impetus for asset-seeking behaviour is the acquisition of an organization’s â€Å"global portfolio of physical assets and human

OUTSOURCING ARTICLE Coursework Example | Topics and Well Written Essays - 500 words

OUTSOURCING ARTICLE - Coursework Example Further, imports from the entity were suspended (Larson). This will result into increased pressure on parties in the restaurant industry to take charge of the supply chains. A national survey revealed that 19% of the soil in the country is polluted as well as 44% of the rice that was tested was found to be impure (Larson). This article is important to outsourcing in restaurants in Hong Kong. Restaurants will be forced to thoroughly scrutinize companies that provide their supplies. This mainly applies to rice, meat and other products that grow on the soil. This is following the revelation that 19 percent of the land was polluted. Shanghai Husi Food was owned and operated by the OSI Group that is an Illinois based entity (Larson). It is clear those well-established diners in Hong Kong including Pizza Hut and KFC (Larson). These and other companies that outsourced from the Shanghai Husi Food were forced to stop doing business with entity following the release of the report and the suspension of its operations. The article is relevant to long-term contracts that restaurants and other parties had established with the entity. Being a well known supplier of meat and other products that are used in the food industry Shanghai Husi Food had formed business partnerships that resulted to the formulation of long-term contracts. Following the publication of the report in the last week most of these long term contracts would have to be cancelled. This is owing to the fact that no company would risk continuing to engage with a supplier that was clearly supplying contaminated products. Shanghai Husi Food would be forced to compensate the companies it had entered into long-term contracts with for breaching the terms of the contract. Short-term contracts would have to be terminated as well. This is because the food industry is highly sensitive and any slight