Greenfiled Investment

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Establishing a Greenfield

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Establishing a Greenfield


Acme, the U.S multinational enterprise is planning to establish a Greenfield production facility overseas. The comparative analysis of Italy and Russia as potential market to develop business operations will be covered in this paper. The countries selected for analysis are Italy and Russia.

The analysis will discuss aspects of currencies of both countries, their trade policies and last but not the least, their cultural variables. The elements will be presenting their advantages and disadvantages both to enable Acme in decision making process.

Recommendations and supporting rationale for decision making will also be included in at the end of the analysis.

Greenfield Investment

Greenfield investment is a kind of Foreign Direct investment. To understand the comprehensive definition of Greenfield we shall discuss the concept of foreign direct investment and its importance. Foreign direct investments are distant investments made by companies in need of expansion and growth in their business as a strategy of globalization. Companies reap profits from the positional markets across borders and maintain the value of the name of the company.

Greenfield Investments means the expansion of existing facilities or a direct investment in new facilities (in an area where no previous facilities exist). The name comes from the idea of building a facility verbatim on a "green" field, such as farmland or a forest. Over time the term has become more metaphoric (Investments & Income, 2011). Greenfield investment is the kind of foreign investment a company wishes to make establishments in the potential markets where no current facility of the same kind exists. The primary objective of the host nation is to welcome the investors with a motive to promote efforts that support economic factors like labor and capital. Multinationals can enjoy better opportunities and achieve economies of scale due to advance technology, availability of nominal workforce and ...