The avenues to market entry are numerous, and the choice of an effective and efficient path depends on an organization’s strategic goals. Effectiveness relates to the applicable set goal, while efficiency considers the best resource options for achieving that goal within a strategic intent.

“companies must choose between building from scratch (Greenfield) or acquiring an existing player (Brownfield).”

 

When examining Ansoff’s Matrix, market penetration is a growth strategy used to increase the market share of an existing product or service in its existing market. It is a vertical deepening into the market that leverages existing knowledge of the current market and an understanding of competitive threats. However, to execute this, companies must choose between building from scratch (Greenfield) or acquiring an existing player (Brownfield).

Brownfield acquisition involves acquiring the controlling shares of all assets—tangible and intangible—infrastructures, production capacities, debts, and contingencies of an existing corporate entity. It skips the heavy investments required in a Greenfield acquisition, such as incorporating a new company and building a fresh customer base.

A prime example in the Nigerian construction industry is Huaxin Cement’s acquisition of Holcim’s 83.1% total shares in Lafarge for about ₦1.55 trillion ($1 billion). Nigeria’s construction industry presents a huge market for cement manufacturers, driven by projects like the Badagry Sea Port and the Renewed Hope Housing Scheme. Through this Brownfield acquisition, Huaxin took over Lafarge’s 10.5MTa (Million Tonnes per annum) operations, assets, and market in one sweep, bypassing the hurdles of a Greenfield start.

For C-Suite leaders aiming for rapid market entry, Brownfield acquisition is a low-risk, fast-expansion strategy, as it takes over the relay baton at the same speed and position as the acquired company.