Essay On International Business Operation.

Running head: ESSAY 0
INTERNATIONAL BUSINESS OPERATION
APRIL 19, 2020
STUDENT DETAILS

ESSAY 1
Contents
Introduction.................................................................................................................... 2
Dunning’s paradigm and critique by identifying key problems inherent in OLI.................................2
Ownership..................................................................................................................... 3
Location........................................................................................................................ 6
Internalization................................................................................................................. 8
Conclusion..................................................................................................................... 9
References................................................................................................................... 10

ESSAY 2
Introduction
There are several theories to address purposes and projections of Foreign Direct Investment. The
economists mostly used OLI framework. As per this framework, there should be advantages to
offset the cost of creating direct investment out of the country. In the following parts, OLI
framework is explained to know the motive behind German Foreign Direct Investment in China.
The case of Volkswagen China is directed to state implementation of OLI in reality, and to
demonstrate why FDI internationally can be the success story in spite of all the problems an
organisation faces in the foreign environment. In this essay, OLI framework is discussed to know
ownership, location, and internalization advantages for Volkswagen.
Dunning’s paradigm and critique by identifying key problems inherent in OLI
A theory founded by Dunning (1977) has become extensively utilised in attempt to get
knowledge about the purposes behind Foreign Direct Investment. This theory is known as OLI
(Ownership, Location along with Internalisation). These three areas are required to be present in
order to get FDI. It can say that it is a theory that states aims or objectives behind the decisions
of MNCs to select FDI in place of licensing utilisation of the product and image to international
manufacturers or traders. The investing organisation is required to purchase assets in foreign
nation to get FDI. Additionally, FDI is considered as foreign direct investment because it is
resulted into the actual or direct regulation over purchased capital. MNCs purchase the rights to
make production out of country and take decision where it desires to sell products.
Moreover, OLI theory provides helpful vision in relation to FDI. It has changed over the time to
follow new ways in which international businesses are operated. Critics of this theory make
arguments that due to the expansion of implementation of OLI to all MNEs, the risks are

ESSAY 3
increasing for them. Narula (2010) offers the return to common OLI structure and utilises
substitute methods to know about composite new development in place of adopting the whole
thing so that it fits OLI (Sharmiladevi, 2017). It is also acknowledged by Narula that there is
great significance of OLI in earlier research on FDI and business out of country (Narula, 2010).
However, it is not suitable to explain everything, which takes place in the business. In actual, it is
going to be awkward to implement this theory to understand international businesses because
later it can become critical. The Critiques say that there is requirement for new structures for
FDI.
(Pitelis and Teece, 2017)
Ownership
In 1977, John H. Dunning founded the OLI framework. According to the eclectic paradigm,
Dunning stated entry-mode decision of MNEs about three strategic areas, like ownership,
location, as well as internationalization. The first strategic area includes ownership advantages,