International Business

Running head: INTERNATIONAL BUSINESS
International business
Name of the Student
Name of the University
Author Note

INTERNATIONAL BUSINESS
Table of Contents
Assignment 1:.............................................................................................................................3
Answer to question 1:.................................................................................................................3
Answer to question 2:.................................................................................................................3
Answer to question 3:.................................................................................................................3
Answer to question 4:.................................................................................................................3
Answer to question 5:.................................................................................................................3
Answer to question 6:.................................................................................................................3
Assignment 2:.............................................................................................................................3
Answer to question 1:.................................................................................................................3
Answer to question 2:.................................................................................................................3
Answer to question 3:.................................................................................................................3
Answer to question 4:.................................................................................................................3
Answer to question 5:.................................................................................................................3
Answer to question 6:.................................................................................................................3
Answer to question 7:.................................................................................................................4

INTERNATIONAL BUSINESS
Assignment 1:
Answer to question 1:
Description of Foreign direct investment and difference between FDI and FPI:
Foreign direct investment is an investment made by investor from foreign country in a
business in the form of controlling ownership that is the foreign investor would have control
over the company in which they are investing. Foreign portfolio investment is the investment
made by foreign companies via purchase into stock market or bond market of another
country.
Difference between FDI and FPI:
Foreign direct investment (FDI) Foreign portfolio investment (FPI)
FDI is a long term process where investment is
made by foreign country for gaining substantial
interest in the firm of other country.
FPI is a short term process where investors make
investment in the financial assets such as
debenture, bond and stocks of company.
In this type of investment, investor enjoys high
degree of control as their role is negative.
Low degree of control is enjoyed by investors as
their role is passive.
This type of investment results in transferring of
funds, technology and other resources.
This type of investment only results in inflow of
capital.
Japan has made direct investment into economy of Australia as it is the second largest
market of exports and largest source of such investment. The traditional sector of Australia
such as energy, agriculture, resources, information and communication technology, financial
services and renewable has been diversified by the investment made by Japan. The FDI made

INTERNATIONAL BUSINESS
by the stock of Japan in Australia had reached at level of A $ 91 billion in year 2016 that is
an increase by 78% compared to year 2010.
Answer to question 2:
The Heckscher Ohlin theory of international trade says that the difference in
comparative cost arises due to difference in factor proportions required for producing
commodities and difference in two countries factor endowment. Labor and capital are the two
factors of endowment in the Ohlin theory and the gist of the theory is that differences in
factor endowment why two different countries are involved in trade as that differences leads
to differences in commodity prices because of the difference in the relative prices of
commodity. A country having dear labor and cheap capital is considered as capital intensive
country irrespective of ratio of total capital quantity in relation to labor with other country.
The comparative advantage of any country is impacted by the factor endowment by
affecting opportunity cost of specialization in producing any particular goods in relation to
other goods. A country enjoys comparative advantage when the opportunity cost of
specializing is less compared to other nations.
The international trade pattern in China can be explained by identifying whether the
agricultural foreign trade pattern is consistent with the theory of factor endowment. One of
the critical considerations for competitiveness in China is supply of products that meet the
specifications of world with respect to quality, design and technological content. The growing
competitiveness of Chinese industry is represented by this important step. A special
competitive advantage is offered by China over other East Asian region countries and entry
of any country into China is viewed as producers of export so that they are able to sell in
growing domestic market of China. China is regarded as one of the dominant recipient of FDI
in China that has also led to flow of management skills and technology.