Monopoly advantage theory: American scholar Heimer said that various monopoly advantages obtained by enterprises under conditions of imperfect competition, such as technological advantages, scale economy advantages, capital and currency advantages, are the determining factors for the enterprise to engage in foreign direct investment.

Location theory: The size of the location advantage determines whether a company will conduct foreign direct investment and the choice of investment region.

Product life cycle theory: American professor Vernon said that due to different technological levels, products have different life cycles in different countries.

Internalization theory: Emphasizes the ability of enterprises to transfer advantages internally at lower costs through the internal organizational system, and regards this ability as the real motivation for enterprises’ foreign direct investment.

Eclectic Theory of International Production: British Dunning

Hymer discusses the oligopolistic reaction behavior of multinational enterprises: Oligopolistic enterprises in various countries strengthen their position in international competition by establishing sites in competitors' territories.

Knickerbocker's oligopoly reaction theory: Foreign direct investment depends largely on the mutual behavioral constraints and reactions among competitors.

The main motivations for overseas investment by multinational corporations in developing countries

The main competitive advantages of developing countries’ multinational companies’ foreign investment

Target market selection

Select entry strategy

Choosing Distribution Channels and Export Marketing

Pricing strategies in the export market

Foreign securities investment: purchasing stocks and bonds of foreign companies without controlling the company or participating in its management, making indirect investments

Foreign direct investment: establishing and operating a business in a foreign country

A new method of international market entry that has been widely used since the 1970s

Form: The multinational company does not participate in the host country's enterprises, but signs contracts with the host country's enterprises related to technology, management, sales, project contracting, etc.

Main methods: contract manufacturing, service outsourcing, order farming, franchising, licensing, management contracts, etc.

Decision-making: mainly reflects the interests of the parent company and the parent company, and the decision-making power is highly concentrated in the parent company

Functional division of labor: R&D functions are concentrated in the home country, and the host country is to establish manufacturing and marketing functions, while the headquarters exercises strict control over them

Applicable enterprises

Advantages and Disadvantages

Decision-making: decentralized management system

Division of functions: product development for the domestic market, sales and transformation by foreign subsidiaries

Applicable enterprises

Advantages and Disadvantages

Functional division of labor: Arrange production and operation facilities in the most favorable countries, coordinate their strategic actions, connect activities in different countries, transfer results in technology development and management innovation in a timely manner, and make full use of the company's core competition force

Decision-making: core departments and decisions are controlled by the home country headquarters

Applicable companies: do not adjust their products and marketing strategies according to local conditions, suitable for situations where there is great pressure to reduce costs but little pressure to take into account regional differences.

Advantages and Disadvantages

Decision-making: Neither the parent company nor the subsidiary is the center, and a management system that combines centralization and decentralization is adopted.

Function: The company's skills and products flow in both directions between the parent company and subsidiaries, forming a global learning effect

Applicable to: situations where the pressure to reduce costs and the pressure to take into account regional differences are both high

Advantages and Disadvantages

市场发展潜力巨大的发展中国家

Local enterprises understand the competitive advantages of their industry, accurately assess the strength of multinational competitors, and clarify their appropriate positioning in the industry.

Understand the different pressures faced by different industries

Assess the company's own advantageous resources