Greenfield Investment Case Study
Abstract
Bulgaria a country that is part of the European Union and Uganda a emerging market are the two options Acme an MNE (Multinational Enterprise) is considering to build a manufacturing unit. We will need explore the political and economic situations of the Bulgaria as well as Uganda. Uganda is a resource rich nation but still in need of improvement in many sectors like transportation, energy etc. Where as Bulgarian an European nation has a well-developed infrastructure, which is attracting investors. The investors need to see profit being generated hence after researching; the best option would be Bulgaria.
Green- Field Investment
A Greenfield is an area of land, which has never been developed or built up. Some Greenfield sites have been used for agricultural purpose but most of them are vacant lots. Green field Investment is a form where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. They not only build up new facilities but also create long-term jobs in the foreign country by hiring employees.
Now Acme and US based company is planning out a new venture where it will be constructing a new operational facilities from the ground up.
Bulgaria offers a highly diverse landscape; vast lowlands of the Danube and the South by the highlands and elevated plains dominate the north. It close proximity to the Black Sea, on the east side of Bulgaria can facilitate trade with the Asia as well.
Potential investors can freely choose their mode of entry into the market; it could be Greenfield investment, acquisition of an existing company or a joint venture. The advantages of investing in a Greenfield in Bulgaria are that Bulgaria has been a member EU, there is government approved investment and financing options from banks and favorable tax rates and free trade environment with other European union countries. They have the lowest taxes in EU, incentives for industrial zones and high-tech parks.
The strategic geographic location, linking Europe to Asia, Middle East and Africa is an added advantage. The transportation companies are privatized and there are concessions for airports as well as the ports at the Danube River and the Black Sea. The state owned railway transportation and railway are being stabilized and modernized. Bulgaria is currently considered the world’s best property hotspots.
The country is politically stable with a strong banking system and qualified labor force, along with its low taxes and office rents, provide great benefits for investors and MNS’s.
Bulgaria has been a peace-loving nation where there is tolerance for different religions and nationalities. The country has also made significant progress in initiating regulations, which are favorable for foreign investment.
In 1997 Bulgaria established