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Teaching Note: Case 11 – GreenWood Resources:
A Global Sustainable Venture in the Making
Case Objectives
1. To assess the advantages and disadvantages of different international entry modes.
See the table below to determine where to use this case:
NOTE: There are both PRIMARY and Secondary chapters that can be used for this case. The
Teaching Note gives guidance for the PRIMARY use chapter and provides suggestions if the
instructor wants to use the case to illustrate concepts from the optional Secondary chapters.
Chapter Use Key Concepts Additional Readings or
Exercises
PRIMARY
Strategy
International expansion; entry
NOTE: additional reading –
SECONDARY
1: Strategic
Management
Vision, mission, strategic
2: External
External scanning and
5: Business-Level
Competitive strategy; generic
6: Corporate-Level
Corporate strategy;
8: Entrepreneurial
Strategy
Opportunity recognition
Case Synopsis
GreenWood Resources, Inc. was founded in 1998 by Jeff Nuss, a bio-resources engineer. It was a
Portland, Oregon, USA-based investment and asset management company with a worldwide
focus on high-yield and fast-growing tree plantations (i.e., tree farms). In spite of its global
vision, value proposition, and pursuit of environmental stewardship and social responsibility,
Notwithstanding the availability of the capital and its cumulative knowledge of the Chinese
market, the firm’s investment screening and negotiation process in China turned out to be
complex due to the differences in business approaches and culturally embedded mindsets. In
Teaching Plan
The case provides a unique setting for analyzing the market entry rationale and process and for
deliberating the strategic investment decisions for an American entrepreneurial firm in China. In
particular, the case describes the situation in which the company has to evaluate its investment
opportunities with a simultaneous consideration of economic performance, social responsibility,
and environmental sustainability. Instructors can use the case to address the need for a strategic
mindset prior to making any decision on how to proceed with any given strategy, and can adopt
the resource-based view (RBV) to identify and classify GreenWood’s resources and capabilities
as a precursor to any investment decision.
Of special interest to more advanced students is the question of Porter and Kramer’s “shared
value” view. Porter and Kramer (2006) argue that firms should adopt a strategic approach to
fulfill corporate social responsibility in which a firm’s long term competitive advantages and
positive social impact will be mutually reinforcing. This perspective applies well to the analysis
of the pros and cons of the Luxi and Dongji projects – which is the best investment project? This
more extensive analysis needs to be completed before GreenWood and its investor can make an
informed decision, and could benefit from a reading of Hennart’s (2009) recent work which
indicates that contractual (as opposed to equity-based) partnering is desirable at the investment
project level for GreenWood.
For this advanced discussion, instructors may find it helpful to assign the following articles to the
class prior to the use of the case:
Porter, M., & Kramer, M. 2006. “Strategy and Society: The Link between Competitive
Advantages and Corporate Social Responsibility.” Harvard Business Review, December: 78–92.
Hennart, J. F. 2009. “Down with MNE-centric theories! Market entry and expansion as the
bundling of MNE and local assets.” Journal of International Business Studies, 40, 1432 –1454.
Icebreaker
Since most of the students in a typical business class are unfamiliar with the forest/tree plantation
industry, it might be useful to show a few pictures of tree farm operations (see
http://greenwoodresources.com/about/), and refer to the Case Appendix.
Instructors may start the discussion by asking the following questions:
What do you like and dislike about doing business in the tree plantation industry? Why?
What do you think about GreenWood Resources’ business focus & strategy?
Money notwithstanding, how many of you would invest in one or both of the two projects (Luxi
and Dongji) and why?
A brief discussion of ten minutes or so tends to warm up the class.
Additional reading on the issue of the environmental impact of tree farms, especially those in
And information about the impact of certain other industries, i.e., book publication, on the tree
industry can be found at http://www.greenpressinitiative.org/documents/ForestTreeFarms.pdf
GreenWood Resources belongs to the Forest Stewardship Council, whose mission is to promote
environmentally sound, socially beneficial and economically prosperous management of the
According to its website, “GreenWood Resources (GWR) is a global timberland investment and
asset management company specializing in the acquisition, development and management of
forestry assets: GWR creates value through the integrated deployment of improved plant material
Summary of Discussion Questions
Here is a list of the suggested discussion questions. You can decide which questions to assign,
and also which additional readings or exercises to include to augment each discussion. Refer
Discussion Questions:
1. PRIMARY QUESTION: What was GreenWood’s rationale for entering China in 2005?
What entry strategy did GreenWood use to enter China? What were the advantages and
disadvantages of the China entry decision?
2. SECONDARY QUESTIONS: What forces in the external environment might affect
GreenWood’s choice of strategy?
3. What business-level and corporate-level strategy did GreenWood pursue? And how did
GreenWood adopt entrepreneurial strategies in its quest for growth?
4. OPTIONAL QUESTION: Which is the best investment partner: Luxi or Dongii?
Discussion Questions and Responses
1. What was GreenWood’s rationale for entering China in 2005? What entry strategy did
GreenWood use to enter China? What were the advantages and disadvantages of the
China entry decision?
Strategy is all about the ideas, decisions, and actions that enable a firm to succeed. See Chapter
1, Exhibit 1.1: Strategic management consists of the analyses, decisions, and actions an
organization undertakes in order to create and sustain competitive advantages:
●strategy directs the organization toward overall goals and objectives;
●includes multiple stakeholders in decision making;
Leaders face a large number of complex challenges. Leaders must be proactive, anticipate
change and continually refine changes to their strategies. This requires a certain level of
“ambidextrous behavior,” where leaders are alert to opportunities beyond the confines of their
See Chapter 1, Exhibit 06: The primary role of the organizational leader is to articulate vision,
mission and strategic objectives. Leaders must communicate their initial vision of the
organization’s purpose: what was the original goal, one that evokes a powerful and compelling
The organizational mission also needs to be considered: a mission encompasses both the purpose
of the company, as well as the basis for competition and competitive advantages. In writing a
GreenWood Resources had a global vision to build “a resource that lasts forever,” and had a plan
to specialize in the development and management of high-yield, fast-growing tree plantations
and then to help institutional investors (pension funds, endowments, insurance companies, etc)
and wealthy individuals invest in these professionally managed assets. The company’s website
has stated its vision/mission as follows:
●Build a resource that lasts forever
●Meet the needs of investors, communities and the environment with the earth’s most
To do this, the company stated its values as people – helping people pursue their interests and
passions for a greater good; excellence – striving to be the best in the field of acquisition and
Regarding his commitment to these values, Jeff Nuss stressed the importance of understanding
Organizations must respond to multiple constituencies if they are to survive and prosper, and the
mission provides a means of communicating to diverse organizational stakeholders. Although
GreenWood Resources had several stakeholder groups that might exert conflicting claims on the
company, depending on the performance expectations each group had. The investors, both
institutional and wealthy individuals, would want to see financial results; the employees would
want job security and opportunities for growth, therefore expecting that the company would
Although CEO Jess Nuss had an obligation to provide economic returns to his investment
customers, he also realized his vision/mission supported his decision to operate GreenWood’s
farms in accordance with Forest Stewardship Council (FSC) regulations – conserving biological
Anticipating that things might change, an organization’s leadership must then establish strategic
objectives to operationalize the mission statement. That is, objectives help to operationalize the
These vision and mission statements and the resulting strategic objectives have implications for
how to analyze opportunities, manage innovation, and provide leadership to encourage growth. It
The basic question strategic management tries to answer is: How can we create a sustainable
competitive advantage in the marketplace that is not only unique and valuable but also difficult
for competitors to copy or substitute?
According to the GreenWood Resources website, since its founding the company has
“specialized in creating value through the integrated deployment of improved plant material and
intensive silvicultural management strategies to maximize the sustainable production of fiber for
According to this, GreenWood Resources had been able to carve out a unique and valuable niche
Corporate strategy focuses discussion on the questions of what businesses a corporation should
compete in, and how the businesses should be managed so they can create “synergy” – creating
Diversification is the process of firms expanding their operations by entering new businesses. In
related diversification, a firm enters a different business in which it can benefit from leveraging
core competencies, sharing activities, or building market power. Some possibilities include:
●Mergers and acquisitions
●Strategic alliances
Whatever the choice, it should create value for all stakeholders – employees, suppliers,
GreenWood Resources had started with a poplar plantation in the northwestern U.S. While
managing that tree farm, Dr. Brian Stanton, a renowned expert in poplar hybridization and
genetic improvement, had joined the team to research the development of poplar varieties
characterized by high growth rate, strong pest resistance, high wood density, and broad site
As a result of acquiring these skills, and demonstrating the ability to share activities, GreenWood
was able to build market power, allowing it to use its growing reputation to get financial support
Referencing Chapter 7: International Strategy: Creating Value in Global Markets
International expansion is a viable diversification strategy, however before pursuing this, a firm
There are several reasons to expand internationally. A firm’s motivation for international
expansion could involve the following:
▪To increase the size of potential markets
▪To attain economies of scale
When choosing a country to expand into, firms must assess certain factors: the degree of
consumer demand, the degree to which resources such as skilled labor and other supplier or
supporting infrastructure are developed and available, the speed with which such resources can
GreenWood was motivated to seize both market opportunities and gain access to forest resources
in foreign countries. The case states: “The poplar plantation industry in the United States was of
GreenWood developed some ownership or firm-specific advantages (i.e., unique resources and
capabilities), which could be potentially exploited overseas. The advantages included:
●Ownership of elite poplar plant materials;
●Substantial experience in the development and management of high-yield, fast-growing
At this point, the main ownership disadvantages appear to be lack of operating scale and lack of
financial and human resources. Nevertheless, Jeff feels that these rather common entrepreneurial
To further support the decision to expand internationally, students can be asked to identify the
The logic of RBV argues that unique bundles of resources and capabilities or core competencies
can (and should) be leveraged in an ever-broader scope through internationalization. Students
The concept of the resource-based view of the firm includes the three key types of resources:
tangible resources, intangible resources, and organizational capabilities. A firm’s strengths and
capabilities – no matter how unique or impressive – do NOT necessarily lead to a competitive
Appendix Exhibit IM-1 should be helpful for the instructors to summarize the class discussion
on GreenWood’s resources and capabilities before the company implemented its international
expansion strategy in 2005.
As shown in Exhibit IM-1, GreenWood was initially constrained by a lack of physical and
financial resources. The company also had inadequate human resources. As a matter of fact, Jeff
had to convince Brian Liu, a Chinese American with years of experience working for the Oregon
Location or country-specific advantages play an important role in motivating GreenWood to
enter China. Location advantages in the tree plantation industry in China include:
1) Substantial market size
●China’s timber market is expanding rapidly. In Luxi, and in the remaining mills in Linyi
●Timber has good investment returns (15 percent or so).
●The potential for high-yield, fast growing plantations in general, and poplar tree farming
2) Available natural resources
●A large forest base (2 million hectares or so) is available for developing high-yield poplar
●For example, over 6,000 hectares (92,073 mu) are available in Luxi; more than 13,500
3) Low labor costs
●The labor force for crop care is available.
●The labor costs in China, in particular in the tree plantation areas, are low due to
4) Pro-industry government policies
●Nationwide, China set a goal of raising its afforestation (i.e., establishing forestland by
planting seeds or trees in open land) rate to 26 percent of its land area by 2050, which
●The No. 9 state council decree is promulgated to encourage Chinese people to go out and
5) Lack of competitive intensity
●The tree plantation industry is fragmented and lacks serious
Students should also examine the following location disadvantages:
1) The legal enforcement of intellectual property protection is relatively weak.
2) The variety of government agencies at different levels forms a complex set of ownership
3) There is a need to build comprehensive connections in China (guanxi), which is a long
4) Due to an inadequate technological infrastructure, the Chinese approach to silviculture
●There has been a lack of systematic knowledge in tree farm investment, plant material
●This has been exacerbated by a clash of mindsets between viewing the projects through
5) The negotiating process for land and for tree assessment and pricing is difficult and slow.
Despite some location disadvantages, the Chinese tree plantation industry is attractive to firms
that make a commitment, and get their foot in the door. GreenWood has many valuable
ownership advantages for China. As Jeff said, “China has two main hybrid varietals of poplar
Entry modes available for international expansion differ based on the extent of investment and
risk, and the degree of ownership and control. See Chapter 7, Exhibit 7.9. In order from low to
high, they include:
●Exporting
●Licensing
As mentioned in the case, GreenWood decided to establish a wholly owned subsidiary based on
greenfield investment in China in 2005. It is useful to discuss foreign entry modes briefly in light
of internalization (or transaction cost) theory. GreenWood already possesses a substantial amount
The internalization advantages for a wholly owned greenfield subsidiary are significant for at
least two major reasons. The first is that GreenWood’s core ownership advantages (i.e., research
The second is that the organizational structure of GreenWood (Exhibit 4 and Exhibit 6 in the
case) may be too complex to involve either a joint venture partner or an acquired partner
Have these decisions been adequately anticipated by GreenWood’s overall strategy? Are these
decisions consistent with the company’s vision, mission and values?
