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The purpose of this paper is to explore the strategic issues associated with foreign direct investment (FDI). The literature review is based on an extensive reading of works categorised as international business research. The review aims to identify the central themes in the international business literature in relation to the establishment of foreign value adding activities. Since this chapter cannot fairly review the whole field of international business it will limit discussion to three fields:1 the link between strategy and structure of international firms; 2 stage models of internationalisation which seek to interpret the choices aspart of a longer term, strategic process; 3 strategic aspects of location and entry mode choices for internationalbusinesses.