Green Field

Investment
Present by:
Atikur Rahman
What is Green Field Investment?

 A greenfield investment is a type of foreign

direct investment (FDI) where a parent
company builds its operations in a foreign
country from the ground up. In addition to
the construction of new production facilities,
these projects can also include the building
of new distribution hubs, offices and living
quarters.
Objectives:

 To build a wholly owned subsidiary in the target market.

A form of foreign direct investment and is referred to as
Greenfield investment.
 Involvesbuilding everything the company needs from the
ground (or green field) up.
 Investing in a foreign market indirectly by purchasing
shares, stocks and bonds in a foreign company or
government.
 Indirect investment & no influence.
The Positive aspects of Green
Field Investment:
 The company following the Greenfield approach can
completely control the design of its facilities,
establishing its own rules and policies without a
transition process, control all production processes
and train its personnel up to the company’s
standards. This offers much more control and
customization than a brownfield.
After extensive research and study, this is
always a solid long-term strategy with
commitment to the market.
The necessary relationships with the market
and authorities can be established under the
sponsor company’s influence and image since
the beginning. A fresh facility attracts
customers and employees alike.
The difficult aspects of Green Field Invstment:

Naturally, the cost of the project is the main

difficulty for a greenfield investment
strategy, as it covers building, transporting
and buying everything the company needs to
operate under foreign laws and regulations,
and often takes years. The startup process is
slower than that of a brownfield in this case.
 Any sudden changes in political environment or
relationship with the government in the foreign
country could pose an immediate threat to the
company.
 Difficulties with gaining the necessary permits and
accessing resources could slow down the growth
process.
Situation for using the strategy:

There are several reasons why a company

opts to build its own new facility rather
than purchase or lease an existing one.
 The primary reason is that a new facility
offers the maximum design flexibility and
efficiency to meet the project's needs.
Business for using the strategy:

 Green field opportunities can mean more research

and investigative work, resources & time than sales
representatives are willing to invest. 
 Green field opportunities often involves a longer
sales cycle than is comfortable for the sales
representative or the selling organization. 
 Green field opportunities often involve greater
corporate resources from the selling organization. 
Evaluate the strategy:

 Greenfield investment could be a significant

source for performance improvements of a
company because aside capital, they bring
knowledge, skills, technologies, as well as
contacts and customers which they had in the
home country. Foreign investors are motivated
by realization of longterm increasing profits
through a company in which they invest.
Conclusion:

The summary shows that, Green field

investment is totally new invention for a
country that has no existence before.
But green field investment has a greater
impact on economy of a country to
expanse the business globally.