Greenfield Investment

Question 1

First paragraph

Answer 1

A greenfield investment is when a firm starts with bare ground in a foreign market and builds up from there. Mcdonalds, Coca-Cola and Starbucks are good examples of US firms that invested in greenfield projects worldwide.

Question 2

Advantages

Answer 2

• Press coverage will benefit the business
• Commitment to the market will be solid
• Vendor financing will often be available
• You will achieve economies of scale and a scope in production, marketing, finance, r&d, transportaion and purchasing
• You will have control of all aspects of your business
• You will be able to implement the best-long term strategy
• You will have full power over your brand and staff

Question 3

Disadvantages

Answer 3

• Government regulations may put MNE’s at a disadvantage in the short-term
• It is likely to cost more
• Competition will be difficult to overcome
• The entry process may take years
• The barriers to entry can be costly