In many disciplines a greenfield is a project that lacks any constraints imposed by prior work. The analogy is to that of construction on greenfield land where there is no need to remodel or demolish an existing structure.
A Greenfield Investment is the investment in a manufacturing, office, or other physical company-related structure or group of structures in an area where no previous facilities exist.
Greenfield Investing is usually offered as an alternative to another form of investment, such as mergers and acquisitions, joint ventures, or licensing agreements. Greenfield Investing is often mentioned in the context of Foreign Direct Investment
A related term to Greenfield Investment which is becoming popular is Brownfield Investment, where a site previously used for business purposes, such as a steel mill or an oil refinery, is expanded/upgraded to achieve superior return.
A form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. In addition to building new facilities, most parent companies also create new long-term jobs in the foreign country by hiring new employees.
Developing countries often offer prospective companies tax-breaks, subsidies and other types of incentives to set up green field investments. Governments often see that losing corporate tax revenue is a small price to pay if jobs are created and knowledge and technology is gained to boost the country's human capital.
Examples of greenfield projects are new factories, power plants, airports which are built from scratch on greenfield land. Those facilities which are modified/upgraded are called Brownfield land projects (often the pre-existing site/facilities are contaminated/polluted.)
In transportation industries (e.g. automotive, aircraft, engines) the equivalent concept is called "clean sheet design".
Greenfield also has meaning in sales. A greenfield opportunity refers to a marketplace that is completely untapped and free for the taking.
Proyecto Greenfield | |
El concepto Greenfield (tierra verde, terreno virgen) se refiere a realizar un proyecto desde cero o cambiar completamente uno existente. La imagen es aquella construcción de la tierra de greenfield, donde no es necesario remodelar o demoler una estructura existente.
The eclectic paradigm is a theory in economics and is also known as the OLI-Model or OLI-Framework. It is a further development of the theory of internalization and published by John H. Dunning in 1980.
The theory of internalization itself is based on the transaction cost theory.This theory says that transactions are made within an institution if the transaction costs on the free market are higher than the internal costs. This process is called internalization.
For Dunning, not only the structure of organization is important. He added 3 additional factors to the theory: * Ownership advantages (trademark, production technique, entrepreneurial skills, returns to scale) Ownership specific advantages refer to the competitive advantages of the enterprises seeking to engage in Foreign direct investment (FDI). The greater the competitive advantages of the investing firms, the more they are likely to engage in their foreign production. * Location advantages (existence of raw materials, low wages, special taxes or tariffs) Locational attractions refer to the alternative countries or regions, for undertaking the value adding activities of MNEs.The more the immobile, natural or created resources, which firms need to use jointly with their own competitive advantages, favor a presence in a foreign location, the more firms will choose to augment or exploit their O specific advantages by engaging in FDI. * Internalization advantages (advantages by own production rather than producing through a partnership arrangement