Global Marketing and Strategy Practice - How to Establish a Business in Poland - Case Study Example

Global Marketing and Strategy Practice . Student’s Name: Grade course Tutor’s Name Date: Introduction This paper presents research on international business mainly on how to establish a business in Poland. The research involves establishing a business in Poland. The research will present the business opportunities in the country. There is also research of the investment environment in the country. The report also involves the analysis of the country’s economy in the past 25 years and the current situation in the country. The paper also involves identifying the most suitable market mode of entry into the international market. The investment environment in the country will be analyzed so as to identify the opportunities that a company can take to prosper in the country. The country analysis will also help a company in identifying the challenges and regulations in the country of the investment. The changes, which arise as, a result of these components will be analyzed in the report. The culture of the people of Poland is also very important in this research because culture is an integral part of investment. It presents a critical analysis on regional investment in the European Union decisions and the impact it creates, once a company ventures into the international business. The report involves the environment that should attract investors venture into the international market specifically Poland. It also involves discussing how social, legal, economic, political and technological factors contribute to countries attractiveness. Political environment Political factors are the changes that arise as a result of government influence. These include policies passed by the government of Poland. There is freedom of movement in the country and therefore, investing in the country will be very important in investment. The reason behind this is that a company should invest in a country where there is freedom of movement (Brouthers and Nakos, et al., 2009). This will enable the company to use their resources freely including human capital to strengthen the new ventures. Freedom of movement and other favorable factors increase competition, which will, help a company, penetrate the market freely without any discrimination from international government (Lee and Carter, 2010). After the country gained its independence it has moved away from communism and has embraced democracy as rule of law in the country. Democracy is very important in the international business because the government does not interfere with the business community. Since gaining independence the country has been having a stable political system that is attractive to the business community. A democratic country attracts a lot of investors and aid from the international community so as to promote development of the key sectors of the economy. The cultural factors These relate to behaviour, lifestyles and tastes of consumers. The company should consider the consumer behavior because, their changes in cultural practices will lead to changes in their fashions and styles (Thomas, 2008). They should also consider the population structure, that is, the age structure. This will help plan effectively on current market situation and to predict the future (Hill and Hill, 2011). McDonald’s should invest where there are a lot of young people because they form a large base of their customers. The company should work towards identifying the social changes that might occur in future (Thomas, 2008). This will help them plan for the future market situation. The legal factors There is need to have the required licenses to operate in the country. The legal factors should also be considered. These are the laid down rules and policies that companies should follow. There is need to identify such policies in their areas of investment. The legal frameworks include consumer protection, environmental legislations, health and safety and employment law (Blithe, 2009). A company should work to understand the policies in time of their investment. The company should take proactive measures to ahead of such changes in case they occur. The company should, therefore, follow the laid down policies to the letter to avoid disturbances in the market. The company should ensure that they follow the set labor policies in the EU region. The economic factors The country practices a mixed economy where there are some elements of capitalism together with those free markets. Economic factors are factors that directly affect investment and the company’s profits. They are to be considered before any international venture. They include interest rates, which is the cost of borrowing money. A company should invest when investment rates are low to avoid making losses when it comes to the time of payment (Hill, 2010). A boom is a time when company or a business is earning high profits. It is not advisable to invest during such a time because; it does not reveal the real image of the market (Ghauri and Cateora, 2010). A slump is a kind of economy fluctuations when most businesses make huge losses and close down. A company should not, therefore, invest in such a time but should wait when the conditions are favorable (Hill, 2010). Levels of demand at this time, is the consumers’ willingness and ability to buy. It should be highly considered during investment. The company should invest in a market where there is a rising demand. This is because; the company will be assured of a ready market which can be exploited. The rate of inflation, which is, a general hike in commodity prices, should be considered during investment. This is because; it could lead to collapse of the market when it causes the prices to rise beyond affordability of consumers (Hollensen, 2010). It will also make it expensive for the companies to do business leading them to losses. Wage rate is the pay that is going to the companies employees. The company should consider a venture where wage is low (Keegan and Green, 2010). The reason behind this is that, low wage rates means cost of production is low, and the company will make large profits while selling at a low price. During the world economic crisis the country was not affected and actually it is the only country in Europe to have registered growth in its economy. This means that the country’s economy is very stable to an extent it cannot be destabilized by shakeup in other dependent economies. Nature of the country’s international trade After the country gained its independence its involvement in the international trade was minimal because there were no structures to govern the nature of this trade. The independent government worked to put down structures that will enable the country to compete in the global arena with the already stable economies. The involvement of the country at this stage was mainly as an importer for most of its goods. This means that the country did not have a lot of goods to export to other countries. The products that the country mainly exported were at their raw form and comprised raw materials. This was a loss to the country because it gained less foreign currency and it spent a lot of foreign currency to buy products that were made from these raw materials. This led to deficit in its balance of payment because it had to use money from the other sources of the government. This drained the country’s resources and made it dependent on the international market for its essential products while it was gaining less foreign currency. This has since changed because after the country changed into democracy a lot of countries from Europe and the USA started investing in the country and offering aid to construct infrastructure that would help growth of the economy. This helped the country to earn a lot of foreign exchange that was reinvested in the economy. This increase in earnings and the stability of the country made Poland a haven for investment for international companies. This was also attributed to country’s high population which was ready market for the produced goods. The country’s economy was market driven because the companies produced for a ready market. This led to stability in the economy because these companies employed the local people and this meant that the government was gaining a lot of revenue from taxes. The country had a very strong cooperation with other countries and this created a market for its processed goods which it had a competitive advantage on. In the current years the country has joined other countries in international cooperation which have made the country very attractive and marketable in the international market. This has also helped the country to attract of investors as well as foreign aid from the developed countries. Government attitude The government has a reduced interference with business operations in the country. This has been as a result of EU legislations which reduces government interference from the business community. This has been possible because the country has undergone economic reformation which has allowed the government to concentrate on development of the other sectors as it reduces its intervention on the private sector. The country having a high population that is market driven has high demand which cannot be sustained by the local producers. This makes it necessary for the country to engage in trade with other countries so as to cater for its growing population. This shows that the company supports international trade outside the country. The country also supports investment in the country by offering tax incentives to investors so as to attract them in the country and to encourage local investors to engage in production for trade. The companies with high costs of investment highly benefit from government incentives and support. The government also supports the companies with high level of job creation to the local population. These companies enjoy lower taxes in the country. The government also offers public aid to the companies so as to ensure they enter into the market. The government also offers grants and loans to investors and these loans attract low interest rates. The government also exempt investors from taxes especially investors in the key sectors of the economy. Investors in the key sectors of the economy also enjoy sectoral loans to develop their products. The government has highly worked to reform the key sectors in trade such as the finance sector, competition law, accounting and intellectual property rights have increased competition in the market which has led to production of high quality products. This has made it possible for companies to operate in the private sector without oppression or high risk. Economic cooperation The country economic cooperation with other countries is very high and this is evident where the country joined European Union (EU) in 2004. The country embraced EU legislation so as to be able to meet the required guidelines in operating international trade according to the world standards. The country also joined NATO in 1999 and this has helped improve security in the country which has helped attract more investors in the country. This has led to increased activities in the international arena because there has been increased production and consumption due to the growing economy. The country has good relations with other European countries which have enabled the country to operate competitively in the international trade. Being one of the most promising economies in Europe the country has received a lot of funding from the European Union which has been directed to developing infrastructure which is key to development of a country. The funded infrastructures have acted as a luring tool to investors to engage in trade within the country. The country also has bilateral agreements with the United States which have made the country gain a lot from this relationship. The USA has supported and funded the country in development of the key sectors and in setting up structures that are important to international trade. This bilateral agreement has seen Poland benefit by large investment from the United States which means there is creation of employment. This is very important because there are a lot of US companies which have started their operations in the country and because they have international standards it is easier for them to export products into other countries. These have helped in marketing Poland to the international community as well as earn foreign currency which is very important for a country’s international trade. The country has allowed companies to enjoy free trade in the country without much intervention. This has allowed economic growth in the country which has led to economic stability. In regards to Foreign Direct Investment the country has been the leading country in Europe that has attracted the highest amount of FDI which amounts to about 14 billion dollars. This shows that a lot of investors have trust of the economic stability of the country as well as new ventures for business. The country is very open on FDI and works to work with the international community so as gain from this relationship. Nature of advantage Competitive advantage The competitive advantage mainly lied on production and exportation of traditional products to other countries. The traditional products are goods in their raw form which means they have not been processed. Most of these commodities no value has been added into them. The company can also enjoy a competitive advantage in manufacturing sector with the production of office equipment and computers. This has been possible because the country uses fewer resources because it is a growing economy as compared to other countries. This has mainly been attributed to low cost of production of the products which makes the country products out compete other from the market. In the service sector the country has a competitive advantage in business management and consultancy because the workforce in the country is highly trained so as to handle the swift changes in the market. This sectors have been very attractive to investors which has increased competition among the companies and this has seen production cost go down as well as the prices. Absolute advantage The country does not have a clear absolute advantage on any product and this is promising in future. This can change with time because the country’s economy is stable and it was not affected by the global economic crisis. Product life cycle The country has benefited from this theory in the international trade because products which were introduced and produced in other countries and imported in the country are now being produced in the country. The country has seen established of computer companies and office equipment companies being established in the country. Through the product life cycle the country has seen the countries of origin of this products shift to other products and engages in importing these products from Poland. A good example is country’s export of computers to the US because of the low cost of production in the country while producing them at the US will be very expensive. This occurs in the standardization stage where the country prefers to move production to a developing economy so as to benefit from low cost of production. Recommendations Technological improvement Technological factors are the changes that arise from advances in communication (Egan, 2007). The country should be aware that technology is very important to investors. This will enable the country attract a lot of investors to be in competition with rival companies in the market and industry. They should invest in technology which will make the country outstanding and favorable to investors. They should also use modern forms of technology to do marketing for the country. The country can take social networks and other types of media as a way of marketing the country. The modern technology enables country to share information with other countries. The country should also invest in technology to cut down costs and improve in service delivery (Baines, Fill and Page, 2010). The country should highly invest in research and expansion in order not to remain behind its competitors. The country should go global after having considered all the above factors. The information will enable the country to realize the best time to invest in an international market (Hill, 2010). The country should also analyze the social, legal, economic, political and technological factors that might affect investment in the country. The country should take proactive measures to ensure they are not negatively affected by any changes in the market (Hollensen, 2010). The country will be able to penetrate the international market if all the factors and recommendations are put in place. The country need to increase investment in the infrastructure such as the airport because this is a very important sector in the international trade. Research and development The company should invest highly in research so as to evaluate the current market of the fast food industry (Fraser, Merriles and Wright, 2007). This will enable the country to run ahead of its competitors even in the new markets. Research and development will allow the country identify new areas to venture into. Porters Diamond of National Competitiveness Threat of new entrants in the market An industry that allows free entrant of new players in the market experiences pressure because a new company in the market have an aim of gaining market share and therefore, they introduce lower prices and find ways of reducing costs and this increases competition because they start taking away the customers of the existing players. In the country there is entry of new players in the market and this has led to increase competition for both the market and resources. Power of suppliers The suppliers determine the profits the company gets in an industry through the supply of the raw materials to the companies. The suppliers increase the prices of supplies when the demand is high due to entrants of new players in the market. This raises the prices of the company products in the market. Power of buyers In an industry where the customers are powerful in a way that they can determine the prices that they buy products at makes it very difficult for the companies to operate independently. In the country buyers have power because the products are not differentiated because the only difference is the brand names. Threat of substitutes The substitutes operate the same way as the main product and this reduces the profits on the main product. This is very severe where the substitution cost is low that going for the main product. It is also severe where the substitute attracts a lower price that the main product. The rivalry among existing competitors In this industry competition is very high and there is a lot of rivalry among the players in the industry. Rivalry makes companies introduce ways such as price wars so as to out compete each other in the market. The rivalry intensifies in the country because there are numerous players in the industry (Bowie, 1999). Global business to business marketing and supply chains considerations This part of the report presents issues both affecting the company’s organisation and customer’s organisation. It also explains the meaning of global sourcing, logistics and supply chains issues. The part involves identifying the most suitable organisational structure to help control the company mechanism and help the company become successful in international marketing (Bui, et al., 2009). The company’s organisation will be affected by government influence and other factors. The company will have to adjust to make room for foreign government requirements. These requirements include paying taxes to the government which will reduce the company’s profits. Venture into the international market will strain the company’s resources both capital and human because they will have to cater for the new venture (Bradley, 2004). The customer organisation will change due the new entrant in the market. This will increase his or her variety of products. Global sourcing This is an act out acquiring resources or goods from other countries, which share the, same political ideologies. The method aims at exploiting the advantages that come with such organisations and political blocks (Brouthers and Nakos, et al., 2009). These advantages enable a company to deliver a product or service by incurring lower costs. This result from low cost labour, low cost of raw material and other favourable economic factors such as tax holidays and low trade tariffs. The company should also aim at creating supply chains, which are short. This will ensure the products reach the customer within the shortest time possible. This will increase the company’s productivity due to high production (Doole and Lowe, 2008). References. Baines, P., Fill, C., and Page, K., 2010. Marketing. 2nd ed. New York: Oxford University Press. Blithe, J., 2009. Principles and practice of marketing. 2nd ed. London: Thomson Learning. Bradley, F., 2004. International Marketing. 5th ed. Essex: Pearson Education ltd. Brassington, F. and Pettitt, S., 2006. Principles of marketing. 4th ed. Essex: Pearson Education Ltd. Brouthers, L. E., Nakos, G., Hadjimarcou, J. and Brouthers, K. D., 2009. Key Factors for Successful Export Performance for Small Firms. Journal of International Marketing, 17(3), pp.1-20. 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