Establishing a Green Field Production Facility
Published: 2020-10-18 14:05:31

Acme, which is a United States’ MNE (multinational enterprise), is present in the planning stages of launching a Greenfield which is an investment, establishing a service or production facility beginning from the ground up abroad. The discussion in this paper will offer a comparative analysis on establishing a Greenfield production facility in either Turkey, which is a non-member of the European Union (EU) or in Italy which is a member of the EU. The proposal will consider each country’s culture, currencies and trade policies, legal and political components in evaluating the verdict for the nonpareil choice.
The Advantages and Disadvantages of the Currency used in Turkey and Italy
Turkey is not an EU member and uses the Turkish Lira as the primary form of currency. This currency is convertible and previously in Ottoman Turkey, it was referred to as the Turkish pound. Despite the fact that Turkish Lira is convertible, the country has many tax treaties and bilateral investments with the US, thus there are some benefits such as elimination of double taxation and a guarantee send back of capital in currencies that are convertible.
On the other hand, Italy is a member of the EU and it uses the Euro as its currency. The Euro as a currency used in trade presents both advantages and disadvantages. The only thing is that the advantages outweigh the disadvantages as outlined below. The major advantage of using the Euro in trade is that it is the form of currency that is used between the member nations. This is an enormous advantage given that there is no need for swapping over currencies between EMU (the economic and monetary) members. It has been estimated that the EMU members save on average $30 billion every year by avoiding switching to the Euro.
Trade Policies in Turkey and Italy
It has been recorded that Europe is considered the largest trading bloc which accounts for 1/5 of the global trade. There is a single policy of trade, which is set up for all the members of the European Union, Italy included and they share a single market and border. As a result, the European Commission is empowered when it negotiates trade with the EU’s partners. The commission is the negotiator for all trade agreements between the member states; hence, the trade rules apply to all member states. The commissioner also presents all the member states in the World Trade Organization (WTO) hence promotes unity in creating a Global Trading System that is open. As a result, there are fair rules and the commissioner ensures that the rules are followed. The system ensures that all the members receive equal and fair voice while negotiating and making trade rules as well as making new trade agreements of WTO.
Turkey similarly has its own foreign trade policies which are unique because they are formulated in a way which strengthens the country’s political and social platforms, as well as its democratic system. During the world financial crisis, unlike other countries, Turkey did not intervene in its banking sector and its credit score went up in two consecutive years. In addition, Turkey is considered to be among the countries, which is growing at a very fast rate. Following economic reforms, the country enjoys a strong political and economic stability.
Turkey has free trade agreements with among others, Israel and the European Free Trade Association. Their nominal GDP is $ 797.6 billion. It has flexible or a liberal exchange rate regime and it exports mostly to the US, Italy, Germany and France which are members of the EU. A flexible exchange rate allows fiscal authorities to leeway to monetary and s to trail internal goals such as price stability, full employment, stable growth and exchange adjustment. However, it has some limitations such as instability and uncertainty in trade, speculation, inflation, and lack of investors from within and from abroad.
Cultures of Turkey and Italy
In Italy, the highest percentage of its population speaks only Italian. However, those who work in international and large companies speak English. When doing business with Italians, it is important to know that they have their business culture. Firstly, the Italians prefer negotiating with the top managements in a firm. They also prefer doing business with people they can trust; hence, it is important to have a close relationship with them. It is imperative to note that for Italians August is not a month of business as most of them have a vacation. These people are also very mindful about what the presenters show as this is valued above the content.
The language used by the people of Turkey is diverse, but Turkish is the official language. Other languages such as Kurdish, Arabic, Circassian, Armenian, Judezmo, and Greek are spoken by a small percentage of the population. Just like the Italians, the people of Turkey like working with people whom they trust; hence, it is important to build personal relationships while doing business with them. They are also keen on how people present themselves; hence, the presenters need to be keen on this. The Turkish do not prioritize the financial gains, but the things which are valued are respect, power, influence and other benefits that are non-monetary. In addition, it is important to be patient while dealing business with them since they are never in a hurry to make decisions.
The Italian and Turkish Politics and Economies
In Italy, there is a government agency ICE (Istituto nazionale per il Commercio Estero), which is responsible for trade promotion, business opportunities, as well as industrial cooperation between foreign countries and Italy. The Italian firms are supported by the ICE for consolidation and internalization of foreign markets. The funding of ICE comes from both public and private companies that benefit from ICE inform of assistance, advice and information. The ministry of international trade, which constitutes directives, and has supervisory roles, also funds ICE. Italy has been ranked 6th richest country globally and its GDP (gross domestic product) is $ 1.273 trillion.
Turkey is equally booming economically and as of 2002, it had $15.7 billion in foreign direct investment. Foreign investment is restricted in some sectors, and there are also frequent changes in the legal and regulatory domains. Nevertheless, the financial system has greater competitiveness as well as transparency as a result of steady financial system transformation.
After analyzing Turkey and Italy’s currency, culture, economy, trade policies and politics, choice has to be made as to where the green field production should be established. From the analysis, Italy would provide the most successful and beneficial outcomes for Acme. This is because it is a member of the EU and has, therefore, many economic benefits which include large trading block, market and a currency (Euro) which is stronger than the Turkish Lira.
About author
 Monica is the author at https://essaysleader.com/how-to-write-a-movie-critique/. She always dreamed of working in this position, working with texts and new information. After all, her credo in life is to develop daily in different fields and be an interesting person. She is fluent in three languages and holds a Masters Degree in Philology and Translator, and is also trying to master new fields in order to be knowledgeable in everything.