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r of technology and expertise. Through this the hosting country and the investing organizations both get benefitted through mutual share of resources.

The FDI create a relationship in between two countries or in between the investor and the investee. This relationship of mutual interest usually remains for the long period of time. Thus both the parties are mutually benefitted through the venture of entrepreneur.

Product Life-Cycle Theory
According to Ray Vernon the Product Life-Cycle theory is the concept when the products moves to lower income countries automatically through he process is called the Product Life Cycle Theory. Further he re-asserted the notion that in similar manners the FDI flows to the developed countries for the advancement and the innovation process when the developing countries proceed through the right time. In this way the mass production process begins and the innovation and the technological transfers take place. Through this way the hosting country and the investor both achieve benefits.

The Eclectic Paradigm
Distinguishes between:

Structural market failure :

The Structural market Failure is the situation when the external condition gives rise to the system of the monopolistic market system.

Transactional market failure :

The traditional market failure suggests the lowering of prices than the prices than the cost than the standards set in the internalization.

The Dynamic Capability Perspective
The firm intend to produce the competitive resources that can achieve the competitive advantage.

The lack of resources or the expertise or the knowledge can be the cause of the barrier of the organisation. this may hinder the organisational level of the production or expansion.

the multinational environment requires organisation to improve and use the capacity and the expertise to produce the desired level of quantity and the quality of the goods and services to achieve the competitive advantage.

The investing firm intend to provide the units that provide the excellent services or the production units that can produce the best quality. However this process ultimately benefits the organization in the large extent. However the firm develop the excellence to achieve the core competencies to the host environment.

Monopolistic Advantage Theory
Entrepreneurs can produce in the lower cost than the host country's producers this tends to provide the monopolistic advantage to the organisation. However this may hinder the host country's infant industry.

Monopolistic Advantage comes from:

Superior knowledge - production technologies, managerial skills, industrial organization, knowledge of product.

Economies of scale - through horizontal or vertical FDI

Internationalization Theory
Internalisation process take place when the host countries capability of managing markets, supplies, production facilities and efficiency fails then the FDI are given more power to create the process the business process.

Advantages
Less or no negotiating costs

The costs on moral hazard are avoided.

Possible cost on litigation process is avoided.

No Government intervention with in the business process.

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