Вы находитесь на странице: 1из 3

Theories of International Business

The commonly held theories as to why firms become motivated to expand their business internationally are: 1) The theory of comparative advantage; 2) The imperfect market theory; and 3) The product cycle theory.

International Business Methods


Firms use several methods to conduct international business. The most common methods are these: 1) International trade 2) Licensing; 3) Franchising; 4) Joint ventures; 5) Acquisitions of existing operations; 6) Establishing new foreign subsidiaries.

Domestic Model: The value of the firm should be present value of expected cash flows. i.e. Valuing international cash flows: E(CFst) = [E(CFj.t.) X E(Erj.t. )] Where: E(CFst)= The amount of cash flow denominated in domestic currency; E(CFj.t.) = The amount of cash flow denominated in foreign currency; E(Erj.t. )= The expected currency conversion rate

Valuation Model for an MNC

Вам также может понравиться