greenfield investment

greenfield investment

the establishment of a new manufacturing plant, workshop, office, etc. by a firm. Greenfield investment is undertaken by a ‘start-up' (i.e. new) business and by existing firms as a means of expanding their activities (see ORGANIC GROWTH). Establishing a new plant may be preferred to inheriting existing plants through takeovers and mergers (see EXTERNAL GROWTH), because it gives the firm greater flexibility in choosing an appropriate location (see INDUSTRIAL LOCATION). It enables it to build a scale of plant most appropriate to its operations and to install modern manufacturing processes, techniques and work practices, thus avoiding, for example, various problems associated with the rationalization and reorganization of existing plants and the removal of restrictive labour practices. See MARKET ENTRY, BARRIERS TO ENTRY.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

greenfield investment

the establishment of a new manufacturing plant, workshop, office, etc., by a firm. Greenfield investment is undertaken by a ‘start-up’ (i.e. new) business and by existing firms as a means of expanding their activities (see ORGANIC GROWTH). Establishing a new plant may be preferred to inheriting existing plants through takeovers and mergers (see EXTERNAL GROWTH) because it gives the firm greater flexibility in choosing an appropriate location. It enables it to build a scale of plant most appropriate to its operations and to install modern manufacturing processes, techniques and work practices, thus avoiding, for example, various problems associated with the rationalization and reorganization of existing plants and the removal of restrictive labour practices.

See MARKET ENTRY, BARRIERS TO ENTRY, FOREIGN DIRECT INVESTMENT

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005