Question

In: Finance

If you were the CEO of a U.S. MNC (multinational) and you wanted to expand into...

If you were the CEO of a U.S. MNC (multinational) and you wanted to expand into China, would you seek to
acquire a firm or to engage in a greenfield investment? Discuss the rationale for your decision. If you can - refer
to any article to support your decision.

Solutions

Expert Solution

As a CEO of a U.S. based mnc i have to understand the various factors and circumstances to decide the Green field investment or acquire a firm . for considering the green field and brownfiled investment first i have to understand the local industry and competitiveness among the local firms . before deciding for any type of investment i have to take into account various factors as to start a new business in foriegn country is depend on no of conditions and factors like- Growth of the related industry

Growth of the market

Potential for the product or services provided by the company

Level of risk

competitiveness within the firms in  the industry  

Growth of the Economy of the Country .

for above given case i would like to invest in Brown field investment (acquire a company) . china is a technologically advanced country . they are leader in technological innovation companies are well equiped and technically strong . workforce of the china is also skilled and they are familier with technical innovativeness .

i would like to invest through acquring of the company  because it has lower fixed cost against greenfield inestment .

i would like to invest through acquring of the company  because it has pre approved licenses and government clearings

i would like to invest through acquring of the company  because it already has infrastructure, and network.

thank you , please ask if you have any query.

jeff jeffy answered 2 years ago
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