Turnkey Project | Turnkey projects meaning | Turnkey Projects Examples | Advantages of Turnkey Project | Disadvantages Turnkey Project
Turnkey projects meaning
Turnkey Project is one of the strategies (mode) of entering into the foreign market by the firm. In a Turnkey Project, the firm agrees to design, construct, train personnel and startup turnkey plants for the foreign client. After the project is completed by the firm, it is handed to the foreign client .With the use of Turnkey Strategy, the firm transfers’ process technology to the foreign countries.
Turnkey Projects Examples
The following are the examples of the industries that are mainly involved in the turnkey projects.
• Chemical Industries
• Pharmaceutical Industries
• Petroleum Industries
• Metal Refining Industries
Advantages of Turnkey Project
• Very useful strategy of earning high economic return from the asset.
• This strategy is also useful in the countries where there are restrictions imposed for Foreign Direct Investment (FDI) by the host government.
• Turnkey Projects are less risky (risks of nationalization or risk of economic collapse) than conventional Foreign Direct Investment (FDI).
Disadvantages Turnkey Project
• The firm entering into the turnkey deal will have no long term interest in the foreign country.
• The firm that enters into the turnkey project with the foreign enterprise may inadvertently create a competitor.
• The firm who sell their process technology (that is a source of competitive advantage to them) means selling competitive advantage to the competitors.