Question

describe the differences between acquisition and greenfield foreign direct investment

Answer 1

1. In green field investment, a parent company creates a new operation in a foreign countryfrom ground up. Whereas in acquisition companies acquire existing companies for various reasons (It can be economies of scale, cost reductions greater market share etc.)

2. A greenfield investment provides the sponsoring company with greatest degree of control. Whereas in acquisition is when one company purchases most of its shares to gain control of that company.

3. A green field investment poses greater risks & a greater commitment of time & capital than other types of Foreign direct investment. Wheras in acquisition, companies look for growth strategy, new niche offerings, away to enter foreign market, to reduce excess capacity and decrease competition.