Scenario: Global Manufacturing, Inc. (GMI)
GMI is a fast-growing U.S. company that wants a production system that makes each of its product's two components in the location where the cost of production is lowest. The components will then be taken to maquiladoras for final assembly. GMI purchased an existing company in Brazil to produce component A and built a subsidiary in Thailand to produce component B.
-GMI's purchase of the Brazilian company can be best classified as a(n) ________.
A) greenfield investment
B) acquisition
C) portfolio investment
D) merger

Question

Quizplus · Accepted Answer

GMI purchased an existing company in Brazil, which falls under the category of an acquisition. A greenfield investment would involve starting a new production facility from scratch, whereas a portfolio investment refers to investing in a range of different assets, such as stocks and bonds. A merger involves two companies combining to form a new entity.