The acquisition strategy for market entry is advantageous when a quick acquisition is required of valuable assets. However is not beneficial in cases where the possibility of the acquired assets to be of little or no value exists in the acquisition. The Greenfield investment strategy is advantages as it does not result in the acquisition of any unwanted assets, however on the other hand it is not very efficient or quick and requires extensive assets building in a new market with a different environment.
“One key difference between entry through Greenfield and entry through acquisition is that the complementary inputs needed for entry are purchased in different markets, in the market for inputs (land, machinery) for Greenfield entry, in that for companies in the case of acquisitions. Hence the choice between these two entry modes hinges on the relative cost of buying complementary inputs in these two markets. Acquisitions will be preferred if “bargains” can be obtained in the market for firms, and any factor that depresses the price of stocks should make acquisitions more attractive relative to Greenfield entry.” (Hennart & Park, 1993)
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