Question

American-based Trenton Inc. has decided to establish a wholly owned subsidiary in Argentina. To decide whether to acquire an enterprise in the market or to establish a greenfield venture, the company evaluated the pros and cons of each strategy. In the end, Trenton Inc. opted to establish a greenfield venture. What was likely a major point in favor of greenfield ventures?

Answer 1

The benefits of greenfield ventures are:

• Investors have larger control over the business they are creating fro scratch rather than acquiring an existing local business.
• The investor can avoid intermediary costs.
• The investor also has the possibility of setting their own marketing strategies.

Greenfield ventures means that the subsidiary will be built from scratch, which allows the parent company to fully shape its subsidiary as they want.