Which term describes the process of starting a new venture in a foreign country by constructing new facilities from the ground up?

Which term describes the process of starting a new venture in a foreign country by constructing new facilities from the ground up?

• A. Subsidiary
• B. Green Field Investment
• C. Franchising
• D. Joint venture

Answer: (B)

Starting a new venture in a foreign country by constructing new facilities from the ground up is a greenfield investment. This term captures the idea of building the plant, offices, and infrastructure from scratch to operate overseas, giving the investing company full control over location, design, and operations to fit its strategy. It’s different from other foreign direct investment options that involve using existing facilities or sharing ownership. A subsidiary is simply a locally incorporated entity that the parent controls, and it can be created in various ways, not necessarily by building new facilities from scratch. Franchising involves licensing a proven brand and business model to others to operate, rather than the parent creating and owning the new facilities. A joint venture is a partnership to create a new entity with another company, which involves shared ownership and resources rather than the parent building everything on its own.

Starting a new venture in a foreign country by constructing new facilities from the ground up is a greenfield investment. This term captures the idea of building the plant, offices, and infrastructure from scratch to operate overseas, giving the investing company full control over location, design, and operations to fit its strategy. It’s different from other foreign direct investment options that involve using existing facilities or sharing ownership. A subsidiary is simply a locally incorporated entity that the parent controls, and it can be created in various ways, not necessarily by building new facilities from scratch. Franchising involves licensing a proven brand and business model to others to operate, rather than the parent creating and owning the new facilities. A joint venture is a partnership to create a new entity with another company, which involves shared ownership and resources rather than the parent building everything on its own.