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Advantages and Disadvantages of Business Operations in Foreign Countries

As part of its international expansion program, Acme, a U.S. multinational enterprise (MNE), is currently in the planning stages of establishing a Greenfield (see text glossary for definition) production facility overseas. You have been asked to present a proposal to the steering committee comparing the advantages and disadvantages of starting operations in one of two selected foreign countries.

The steering committee has determined that one alternative must be a member of the European Union (EU) while the other cannot be a member of the EU. Subject to these conditions, you may choose any two foreign countries, except China, India, Czech Republic, and Romania for comparison.

There are many factors to consider in your comparative analysis. Please be sure to include, among other topics, a discussion of the different countries' currencies, trade policies and cultural variables that may affect operations and profitability in each country. Your report should conclude with a recommendation and supporting rationale as to which country should be selected for the new facility.

Solution Preview

In this competitive business environment, organizations are tended to determine proper expansion planning as it helps them to determine potential risk and Return on Investment (ROI) of their project (Wang, 2009). In this guideline the planning process to establish a production facility in foreign countries through Greenfield strategy will be discussed. This establishment will be determined in concern of two foreign countries namely UK and Japan. In this guideline, advantage and disadvantage in concern of both countries will be discussed for providing a base to the steering committee for its international expansion decision. Countries will be compared in this guideline on the basis of such factors that may influence its expansion success namely trade policies, cultural factor and currency (Paul, 2011).In addition, logical recommendation will be also included to provide the basis for country selection decision.
Greenfield Strategy
Greenfield strategy can be defined as a way in which organizations seeks entry in foreign market without the help of any other existing organization. This strategy is quite opposite to other entry strategies namely joint venture, partnership and acquisition as they include existing organization in different forms. This strategy has been selected by ACME for making entry in international market (Paul, 2011). Risks and opportunities with this strategy are quite high as in this; company does not have any local help, which is essential to understand the operational environment. Company will face unfamiliar business environment that may create several issues for this new venture. In order to make this entry ...

Solution Summary

The advantages and disadvantages of business operations in foreign countries are determined. The factors to consider comparative analysis are given.