Greenfield Venture
Unit 1 Individual Project
Tiffany Nelson
October 7, 2012
FIN630-1204D-02: Global Financial Management
American InterContinental University
International Financial Markets
Introduction
Not to be confused with an acquisition, a Greenfield venture is a strategy in which a parent company enters into a new market without the involvement of another business or partner. This popular strategy entails a company leasing or purchasing land, building a new facility, employing or relocating managers and employees, and then independently launching a new operation where none has existed before. Basically, the operations within a Greenfield venture are done from the ground up. As of today, many organizations have succeeded in entering global markets by way of a Greenfield investment. With that in mind, Acme’s feasibility to establish a Greenfield production facility in Mexico or in France will be evaluated. While France has been a European Union (EU) member since 1952, Mexico has been declared as an independent, self-governing country that is not an EU member. In an effort to compare the pros and cons of starting operations in one of the two aforementioned countries, each country’s trade policies, currencies, and social and cultural differences will be explored and discussed.
Trade Policies According to the US Census Bureau (2012), France has accumulated billions of dollars’ worth of exports and imports, placing them as the ninth largest trading partner with the United States. As a member of the EU, France’s day-to-day operations, decision making as far as trading issues and legislation is delegated to the European Commission (EC). This institution not only upholds and enforces the European Union’s trade treaties but it also is responsible for bargaining, consulting and negotiating (Consolidated version of the treaty on European Union , 2010). Even though France along with the other 26 EU countries is legally obligated to abide
Tiffany Nelson
October 7, 2012
FIN630-1204D-02: Global Financial Management
American InterContinental University
International Financial Markets
Introduction
Not to be confused with an acquisition, a Greenfield venture is a strategy in which a parent company enters into a new market without the involvement of another business or partner. This popular strategy entails a company leasing or purchasing land, building a new facility, employing or relocating managers and employees, and then independently launching a new operation where none has existed before. Basically, the operations within a Greenfield venture are done from the ground up. As of today, many organizations have succeeded in entering global markets by way of a Greenfield investment. With that in mind, Acme’s feasibility to establish a Greenfield production facility in Mexico or in France will be evaluated. While France has been a European Union (EU) member since 1952, Mexico has been declared as an independent, self-governing country that is not an EU member. In an effort to compare the pros and cons of starting operations in one of the two aforementioned countries, each country’s trade policies, currencies, and social and cultural differences will be explored and discussed.
Trade Policies According to the US Census Bureau (2012), France has accumulated billions of dollars’ worth of exports and imports, placing them as the ninth largest trading partner with the United States. As a member of the EU, France’s day-to-day operations, decision making as far as trading issues and legislation is delegated to the European Commission (EC). This institution not only upholds and enforces the European Union’s trade treaties but it also is responsible for bargaining, consulting and negotiating (Consolidated version of the treaty on European Union , 2010). Even though France along with the other 26 EU countries is legally obligated to abide
References: Advameg, Inc. (2009). France - International trade. Retrieved from Encyclopedia of the Nations: http://www.nationsencyclopedia.com/economies/Europe/France INTERNATIONAL-TRADE.html Consolidated version of the treaty on European Union. (2010). Office Journal of the European Union, 115(17), 13-44. Emmott, R. (2002). Superpeso develops a fear of flying. Euromoney, (400), 20. Lowery, M. (1995). American jobs and the Mexican peso. Black Enterprise, 25(8), 28-30. Mexico. (2008). Retrieved from Office of the United States Trade Representative: http://www.ustr.gov/countries-regions/americas/mexico Tested by the mighty Euro. (2004). The Economist, 370(8367), 61-62. US Census Bureau. (2012). Exports, imports and trade balance by country and area. Retrieved from http://www.census.gov/foreign-trade/Press-Release/current_press_release/exh6s.pdf US Department of State. (2012). U.S. Relations With France. Retrieved from http://www.state.gov/r/pa/ei/bgn/3842.htm US Department of State. (2012). U.S. relations with Mexico. Retrieved from http://www.state.gov/r/pa/ei/bgn/35749.htm