Greenfield (India V. Germany)
Introduction
As a part of its international expansion program, Acme, a U.S. multinational enterprise (MNE), is currently in the planning stages of establishing a Greenfield which is an investment that establishes a production or service facility starting from the ground up overseas (Eitman, Stonehill, Moffett, 2004). In this paper, we will present a proposal to the steering committee comparing the advantages and disadvantages of starting operations in one of two selected foreign countries overseas. However, the steering committee has determined that one alternative must be a member of the European Union EU while the other cannot be a member of the EU or the country of China. In this paper, we will provide the reason behind selecting Greenfield as the form of foreign investment, the Difference between Domestic and International Market. After that, we will provide a comparative analysis between India and Germany. The analysis will focus on each countries trade polices, workforce, tax rate, right to private ownership and establishment, countries ' currencies, corruption and political risk. This will help provide us with a picture of where a Greenfield investment is most appropriate.
Why Greenfield?
Greenfield compared to other entry methods (Joint venture, Acquisition, etc.) is characterized as being a long-term method, and requires much more planning. It may take a year and a half to two years according to Jan Scheers, a partner with Price Waterhouse, Brussels, Belgium (Heft, 1998). He also mentions, "The advantages are you can set up exactly where you want-you have optimal location. You can benefit from the [government] incentives offered. It also allows you to fully implement the corporate culture from the beginning" Anytime a company enters a new country or continent, there will be cultural and national differences to deal with. That shines as an advantage for Greenfield sites because the corporate culture can be brought in fresh, rather than
As a part of its international expansion program, Acme, a U.S. multinational enterprise (MNE), is currently in the planning stages of establishing a Greenfield which is an investment that establishes a production or service facility starting from the ground up overseas (Eitman, Stonehill, Moffett, 2004). In this paper, we will present a proposal to the steering committee comparing the advantages and disadvantages of starting operations in one of two selected foreign countries overseas. However, the steering committee has determined that one alternative must be a member of the European Union EU while the other cannot be a member of the EU or the country of China. In this paper, we will provide the reason behind selecting Greenfield as the form of foreign investment, the Difference between Domestic and International Market. After that, we will provide a comparative analysis between India and Germany. The analysis will focus on each countries trade polices, workforce, tax rate, right to private ownership and establishment, countries ' currencies, corruption and political risk. This will help provide us with a picture of where a Greenfield investment is most appropriate.
Why Greenfield?
Greenfield compared to other entry methods (Joint venture, Acquisition, etc.) is characterized as being a long-term method, and requires much more planning. It may take a year and a half to two years according to Jan Scheers, a partner with Price Waterhouse, Brussels, Belgium (Heft, 1998). He also mentions, "The advantages are you can set up exactly where you want-you have optimal location. You can benefit from the [government] incentives offered. It also allows you to fully implement the corporate culture from the beginning" Anytime a company enters a new country or continent, there will be cultural and national differences to deal with. That shines as an advantage for Greenfield sites because the corporate culture can be brought in fresh, rather than
References: Eiteman, D. Stonehill, A., Moffett, M. (2004) Multinational Business Finance. Pearson Education, Inc. Boston, Massachusetts.