Topic 2 : Cross Border Interdependence : Growth of Strategic ship Technology Partnership

What is Strategic Partner? A Strategic Partner is another business with whom u enter into an agreement that aims to help both of you achieve more success. Several types of strategic partners might be consider for shipping business: Strategic Marketing Partners Strategic Financial Partners Strategic Suppliers Strategic Technology Partners Building Strategic Partners

STRATEGIC PARTNERSHIP A strategic partnership is a formal alliance between two commercial enterprises, usually formalized by one or more business contracts but falls short of forming a legal partnership or, agency, or corporate affiliate relationship. Strategic partnership is a long-term, win-win commitment between two organizations. Their sole purpose is achieving specific business objectives by maximizing the effectiveness of each participants resources. For strategic partnership to work, they should be trust between the parties involves.

STRATEGIC PARTNERSHIP One common strategic partnership involves one company providing engineering, manufacturing or product development services, partnering with a smaller, entrepreneurial fi rm or inventor to create a specialized new product. The other common strategic partnership involves a supplier / manufacturer partnering with a distributor or wholesale consumer. Also involves in advertising, marketing, branding, product development and other business functions. the larger firm supplies capital, and the necessary product development, marketing, manufacturing, and distribution capabilities. the smaller firm supplies specialized technical or creative expertise.

Benefits / Advantages can utilize other company's strengths to make both firms stronger in the long run. allows businesses and individuals to expand their existing client bases without the time, expense and risk of launching a new line of services by themselves. also help with introductions to entirely new markets, including overseas markets. partners share financial contributions toward joint ventures, the risk of each partner may decreases by half.

Foreign Direct Investment (FDI) trend in Shipping Foreign Direct Investment (FDI) is a driving force of globalization and an important engine of economic growth. Developing as well as developed countries seek to attract FDI due to its many advantages for economic development. FDI can not only bring capital to an economy, but also transfer knowledge, technology and skills, as well as generate employment and trade.

What is Foreign Direct Investment (FDI)? Foreign direct investment (FDI) occurs when a firm invests directly in new facilities to produce and/or market in a foreign country Once a firm undertakes FDI it becomes a multinational enterprise There are two forms of FDI A greenfield investment - the establishment of a wholly new operation in a foreign country Acquisition or merging with an existing firm in the foreign country

Acquisitions are attractive because Most cross-border investment involves mergers and acquisitions rather than greenfield investments Acquisitions are attractive because they are quicker than greenfield investments it is easier and less risky for a firm to acquire desired assets than build them from the ground up firms believe they can increase the efficiency of an acquired unit by transferring capital, technology, or management skills

Increasing globalization International mergers Reasons for FDI Growth Increasing globalization International mergers and acquisitions Entrepreneurship and small firms

Form of FDI : Greenfield VS Acquisitions Green field operation: Mostly in developing nations Mergers and acquisitions: Quicker to execute. Foreign firms have valuable strategic assets Believe they can increase the efficiency of the acquired firm More prevalent in developed nations

There are two ways to look at FDI The flow of FDI - the amount of FDI undertaken over a given time period The stock of FDI - the total accumulated value of foreign-owned assets at a given time Outflows of FDI are the flows of FDI out of a country Inflows of FDI are the flows of FDI into a country Both the flow and stock of FDI in the world economy have increased over the last 20 years

The main benefits of inward FDI for a host country are the resource transfer effect the employment effect the balance of payments effect effects on competition and economic growth

The benefits of FDI to the home country include the effect on the capital account of the home country’s balance of payments from the inward flow of foreign earnings the employment effects that arise from outward FDI the gains from learning valuable skills from foreign markets that can subsequently be transferred back to the home country

Assessments 1. A company that establishes a new operation in a foreign country has made An acquisition A merger A greenfield investment A joint venture

2. Which of the following statements is true? Over the years, there has been a marked decrease in the stock and flow of FDI Over the years, there has been a marked increase in the stock and flow of FDI Over the years, there has been a marked decrease in the stock and an increase in the flow of FDI Over the years, there has been a marked increase in the stock and an decrease in the flow of FDI

3. Benefits of FDI include all of the following except The resource transfer effect The employment effect The balance of payments effect National sovereignty and autonomy