Sample Essay

“In an IGI, the parent company has full control of its investment and therefore does not need to worry about goal conflict and hidden agendas, both of which tend to create problems for EIJV parent companies. Companies such as McDonalds, that have developed a specific company image, often prefer IGIs when other types of contractual arrangements cannot guarantee that their products will live up to their specifications. On the other hand, IGIs also avoid the problems of acquiring an existing entity with an established organizational culture.” (Newburry & Ziera, 1997)

The Greenfield investments are a form of direct market entry strategy available for the businesses who are seeking to expand their operations in the international market. There are many advantages that are available to the companies by employing this strategy for market entry. These pertain to the fact that the company which enters into the market through a Greenfield investment has complete control over the product and services which are provided. This includes control over the quality, the timing as well as the quantity of the product and or service. Price escalation can be avoided while the product can be adapted to the requirements of the local markets. The control is also extended to the pricing of the offerings. Aside from this the presence of the company in the market with complete ownership of the business allows it to extend warranties and discount to its customers. The company can also make efficient use of marketing and promotional strategies while gaining in depth knowledge about the industry and the market firsthand. The specific consumer behaviors can be observed by the company. In addition to this the business also has the opportunity to establish relations and alliances with prominent other businesses in the market. Moreover the cost of the intermediaries is avoided as well through Greenfield investments.

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Essay: Advantages of Greenfield Investments in Foreign Markets
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