What Is the Meaning of Greenfield Projects?
A greenfield project refers to an activity in a completely new area of investment, according to Cambridge Dictionaries. The original connotation of a greenfield project revolved around construction and development on land that had never been used before. The term also relates to creating something from the ground up without the need to consider previous work.
Greenfield projects relate to several industries, such as construction, software development and investments. TCii Consultants reveals that greenfield investments start with bare ground and build upward from there. Large companies that specialize in greenfield projects include McDonald's, Coca-Cola and Starbucks in terms of constructing new facilities in new locations rather than renovating old spaces.
Advantages of greenfield projects include greater control of all aspects of the business, commitment to the market in which the business is located, early work with relevant authorities and unique press opportunities. These types of investments cost more, have greater competition from already-established firms and may take years to fully realize the scope of the project.
Greenfield investments can cross international boundaries. Investopedia states that foreign companies often create economic activity in other countries with new construction, more jobs and long-term projects that benefit the area. Foreign nations often lure companies with tax breaks and incentives. The loss of corporate tax revenue is seen as a small sacrifice compared to the long-term job stability of a region.