- 10 Marks
AFM – May 2019 – L3 – Q1a – Economic environment for multinational organisations
Compare joint ventures and licensing for foreign expansion and explain five strategic reasons for a firm to engage in FDI.
Question
“Oil-rich Ghana’s sovereign wealth fund Ghana Development Board (GDB) has already invested in a number of real estate and infrastructure projects around the world, including a $2.5 billion joint venture with Petro Nigeria Ltd and a scheme to create a carbon-neutral city in Ghana”.
Required:
i) Compare the use of joint ventures as opposed to licensing for GDB if it wishes to expand abroad and outline the advantages and disadvantages of both joint ventures and licensing. (5 marks)
ii) Explain FIVE (5) strategic reasons for Foreign Direct Investment (FDI), for a firm wishing to expand. (5 marks)
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