Definition: Greenfield Venture

Greenfield Venture is a form of market entry strategy with establishment of a new wholly
owned subsidiary in a foreign country by constructing its facilities from start.

Through Greenfield Venture, a business enters a new market without the help of another
business which is already present there. Although the process of setting up a Greenfield Venture,
in most cases, is complex and more expensive, yet it provides maximum control to the firm. This
is because the firm develops the project from the beginning thereby building its own culture and
structure.

A firm therefore has full control over the operations of its Greenfield Venture. However the costs
and risks are high because to set up a new business operation in a new country, the firm needs to
acquire knowledge and expertise regarding the local market and build various stakeholder
relationships which adds to the cost as well as exposes the firm to various risks.

For example:

Nissan’s Canton plant in Mississippi, the first auto factory built in Mississippi had to rely
on inexperienced workforce to set up the plant. They had to face great logistical and
cultural difficulties as well high risks.

Hence, this concludes the definition of Greenfield Venture along with its overview.