The paper "International Business: Theory, Concepts and Cases" is a good example of management coursework. The aim of this essay was to identify the major findings and the implication of Foreign Direct Investment (FDI) on international business. It reviewed international business concepts, theories and evaluated their contextual significance. Globalization improved international business through increased investment outlook in cross-border Mergers and Acquisitions (M& A) and also FDI Greenfield projects. China and India are also experiencing a change in the global balance of productive power (UNCTAD, 2014). It concludes that though there are clear positives, the Sustainable Development Goals (SDGs) draft fails to inspire and guide an international effort eradicate severe poverty. Recent trends discussed in the WIR 2014 In 2013, there was a general growth in Foreign Direct Investment (FDI) despite volatility in international investments.
Inflows were a result of greater retained earnings in the European Union’ s foreign affiliates. Asia remained the world’ s biggest recipient of these inflows. This was attributed to the rising inflows to China. The decreasing inflows to Latin America were due to the 30 percent slump in Chile despite Mexican acquisition of Grupo Modelo by Anheuser Busch, a Belgian brewer.
The influence of globalization on production became an advantage to Spain. This was attributed to lowered production costs (labour) while transaction costs were associated with mergers and acquisition of Canadian oil and gas companies by Chinese corporation (UNCTAD, 2014). Similarly, globalization of markets was evident in the takeover of a US firm, Smithfield by Chinese Shuanghui for $4.8billion marking a start of American economic recovery. FDI outflows remained stagnant in developed countries at $857billion with their Transnational Corporations (TNCs) holding a large number of cash reserves in retained earnings.
Lopes and Casson (2007) note that the influence of cross-border transactions slows the global value chain by reducing FDI mobility. There was a drop in the level of US investments to $338billion by 8 percent especially negative intra-company loans and purchases. Kearney (2001) argues that globalization experience is associated with divestment on non-core businesses and the movement of capital to start-up businesses in developing countries. Increased investment outflows to $349billion were a result of a 53 percent share in global acquisitions of TNCs. The value of announced FDI Greenfield projects increased by 9 percent to 643billion, with a remarkable increase in the level of services (365billion-20 percent) and a corresponding decrease in manufacturing (258billion-4percent).
The primary sector increased to $27billion in 2013. In manufacturing, there was a limited decrease in Greenfield project values by 4 percent. On the contrary, the share of FDI in the extractive sector of developing countries rapidly decreased in the last 10 years. Investment in extractive industries is more significant in the least developed countries and Africa. Special industries like pharmaceuticals, retail, oil and gas had dramatic changes in the patterns of FDI (UNCTAD, 2014).
The stakeholder theory argues that the firm puts the needs and value to its owners first, but normative approach notes that the function of the corporation is to offer philosophical and moral guidelines in management and operations (Luo, 2000). The shale gas revolution in the US became a game-changer in the US with regard to economic and environmental sustainability. After an economic recession, there was a paradigm shift in strategy by European and American retailers to invest in South-East Asia, South America and Sub-Saharan Africa.