Greenfield Venture

Posted in Marketing and Strategy Terms, Total Reads: 7693
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Definition: Greenfield Venture

Greenfield Venture is a form of market entry strategy with establishment of a new wholly owned subsidiary in a foreign country by constructing its facilities from start.


Through Greenfield Venture, a business enters a new market without the help of another business which is already present there. Although the process of setting up a Greenfield Venture, in most cases, is complex and more expensive, yet it provides maximum control to the firm. This is because the firm develops the project from the beginning thereby building its own culture and structure.


A firm therefore has full control over the operations of its Greenfield Venture. However the costs and risks are high because to set up a new business operation in a new country, the firm needs to acquire knowledge and expertise regarding the local market and build various stakeholder relationships which adds to the cost as well as exposes the firm to various risks.


For example:

Nissan’s Canton plant in Mississippi, the first auto factory built in Mississippi had to rely on inexperienced workforce to set up the plant. They had to face great logistical and cultural difficulties as well high risks.

 

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