The purchase of physical assets or a significant amount of ownership (stock) of a company in another country to gain a measure of management control is called ________.
A) foreign direct investment
B) portfolio investment
C) mergers
D) vertical integration

Question

Quizplus · Accepted Answer

Foreign direct investment (FDI) involves the acquisition of a foreign business or a significant ownership in a foreign company to gain control over operations and management. It includes the purchase of physical assets like factories, offices, and warehouses. Portfolio investment, on the other hand, involves the purchase of securities such as stocks and bonds for the purpose of earning a return on investment, without acquiring management control. Mergers refer to the combination of two or more companies to form a new company, while vertical integration refers to the integration of different stages of production or distribution within a single company.

The Purchase of Physical Assets or a Significant Amount of Ownership