IBUS 330: Drop-In Tacos Goes to Japan: Understanding Direct Investment

What do you see as an advantage of a wholly owned operation?

A big advantage of a wholly owned operation is that we'd maintain complete control over the Drop-In Tacos concept and its profits.

Which of these countries is the biggest recipient of FDI?

China

given that you're a new intern at Drop-In Tacos, let's step out of the meeting for a minute and review a few of the things you might hear being discussed at the meeting. Which would you like to start with?

Terminology related to foreign direct investment

Thinking about what you know from your international business class, which country do you think is the largest source country for FDI?

The United States

What is a greenfield investment?

The establishment of a new operation in a foreign country.

What do we call the total accumulated value of foreign-owned assets at a given time?

The stock of FDI

Let's look at the trade-offs between a wholly owned subsidiary and franchising our concept. Which would you like to consider frst?

Wholly owned operation

do you see any drawbacks to franchising the Drop-In Tacos concept?

Yes! Franchising wouldn't give us the control over the Drop-In Tacos concept that we're accustomed to.

do you see any advantage to franchising the Drop-In Tacos concept?

I do! A franchise arrangement would reduce our cost and risk in Japan

Do you see any disadvantages to going it alone?

I do! Going it alone means that we take on all of the risk and cost of the venture.

do you see any benefits to Japan from an investment by Drop-In Tacos?

I do, Julian! We'd be bringing direct and indirect jobs to the local community.

what is Japan's attitude toward foreign investment?

Japan has been moving toward the free-market end of the spectrum on FDI.