Running head: POLAND 1
1. What are some current issues facing Poland? What is the climate for doing business in Poland today?
Polands population is an ageing one with a low birth rate. The rate of unemployment in the country is fairly high but the countrys openness to FDI has helped curb this to some extent by allowing foreign companies to recruit Polish natives. Poland is still one of the less developed European countries and the economy is growing slowly. However, due to stringent labor laws and a bureaucratic system, companies sometimes face problems operating in Poland. The infrastructure is developing and the economy is highly dependent on oil import from Russia.
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The climate for doing business is good. The government supports MNCs and encourages them to set up offices and factories in Poland by offering them subsidies, grants and tax exemptions. The population is highly educated, very hard working and the labor is comparatively much cheaper than in developed countries. 15% of the work force is unemployed making it easier to find labor and staff. In addition, Poland offers good transportation systems, and being located centrally, provides easy access to neighboring countries as well. A number of top-rung companies have set up their R&D offices in Poland which is encouraging for new players wishing to start businesses in Poland. The United States shares a bilateral relationship with Poland and hundreds of the US companies have offices there.
2. Is the Canadian manufacturing firm using an economic, political, or quality imperative approach to strategy?
Companies that employ an economic imperative have a worldwide strategy based on cost leadership, differentiation and segmentation. The products are usually homogeneous and no changes are made to suit specific needs of the country. Most of the product value is added during R&D, manufacturing and distribution. Also, since these are utility products, brands play little importance. Sourcing is global and the company may partner with its suppliers to shorten and economize buying cycle.
A political imperative approach is used when plans are modified to suit the country and the success of the product depends more on marketing, sales and service.
When a company follows a quality imperative it implements total quality management practices, including but not limited to cross-training employees, reducing waste, process re-engineering to improve product and service quality. It also involves communicating these higher quality standards to the employees and customers.
The Canadian manufacturer will use an economic imperative strategy. Since Poland government provides subsidies to foreign direct investment and labor there is cheap, the cost of production will be low. Power tools are a generic product, where brand does not play a huge role and so the Canadian firm, being a first-mover, should be able to capture the market as the requirement arises. The products are standard and no alternation will be required to fit Polands specific needs. In fact, by manufacturing in Poland, the Canadian firm will not only be able to cater to Poland but also to the requirements of the neighboring countries making use of Polands good transportation system.
3. How should the firm carry out the environmental scanning process? Would the process be of any practical value?
Environmental scanning helps firms decide whether the prevailing conditions in a country or area are conducive to the conduction of a particular business and helps forecast the future of the business. It involves collecting and evaluating information about the political, economic, social, technological, regulatory, and market environment. The political environment determines the stability of the government and the support it provides a foreign company. Studying the economic environment will involve getting an in-depth understanding of tax, interest and subsidy rates, exchange rates, inflation, employment rate and the overall health of the economy of the country. Social environment or an understanding of the people in the country, the consumer attitudes, their demographic profiles and customs are also important to understand before setting up a business in a foreign country. Studying the technological environment helps a company understand the current technology being used and the level of modernization prevalent in the host country. Understanding the regulatory or legal environment involves understanding the laws that will govern the business, including ownership, property, employment and tax laws. The market environment includes the competitors, the industrys growth prospects, and the changes in the market.
For an accurate and effective environmental scan, secondary data regarding the country and the industry in particular should be carefully studied. Primary information can be obtained from prospective customers, from government officials, legal experts and technology experts. Information regarding all aspects of environment should be collected and assimilated to identify trends. Based on these trends, planning can be done.
Environmental scanning is very important in determining whether or not a firm can survive and profit in an area. However, since the environment is dynamic, the scanning process should be constant and the company should be able to adapt to changes in the environment. It also helps in better decision making and ensuring that the business practices being followed are legal and suited for the region. Even though there are currently no competitors, it is important for the Canadian firm to scan the other aspects of the environment properly and to keep updating their information.
4. What are two key factors that will be important if this project is to succeed?
While it appears that all is set for the project to do well, government support in form of subsidies, cooperation and tax exemption must be an ongoing factor. The government must help ensure no other manufacturer of small power tools enters the market and gives competition at least until the Canadian firm has established a good hold on the market. The Canadian firm should be granted access to Polands resources like low cost labor and transport within Poland and to neighboring countries for the business to succeed.
The foundation research studies that the demand for small power tools shall indeed increase should also be accurate. Since it is being assumed that the post-communist countries will require small power tools to increase their productivity and that the growth of their economies will be dependent on this increase, it is also important that no other neighboring countries set up similar businesses and be able to supply cheaper, better quality small power tools.