Chapter IC, Problem 8.2CDQ

Summary Introduction

Case summary:

The retailers of Country I are dominated and fragmented by small enterprises. $500 billion sales were done by retailers and rest are by small enterprises.

Advocates for large retailers like Company W, Company C, Company T believes that they can make Country I more efficient in distribution system. Foreign retailers invests major portion in distribution infrastructure such as warehouses and storage facilities. But now in Country I there are lack of cold storage facilities as 25% to 30% of fruits and vegetables are getting spoiled and the same way in warehouse facility.

Farmers become advocates for many reforms. The entry of foreign retailers will lead to many job losses and many small retailers will be vanished. Much legislation was passed for the entry of foreign retailers. Later Company W and Company B of Country I as a joint venture. Later in 2011 the legislation was shelved for time being.

Characters in the case:

• Country I
• Country U
• Company W
• Company C
• Company T

To discuss: The potential benefits to Country I by foreign retail establishment.

Introduction:

Foreign direct investment refers to the investment of a firm in one country and operating a business in another country.