The Finnish leather goods brand "Happy Feet" plans to open a new production site in Romania to expand into southeastern European markets. It will establish a wholly owned subsidiary to take advantage of Romania's lower costs and establish a local presence. The company analyzed Romania's economy, culture, competition and regulatory environment and believes lower production and transportation costs along with an experienced workforce will help it succeed despite barriers like cultural differences and rival brands. It will implement strategies to gain loyalty from customers, employees and local suppliers through ethical practices and support of the Romanian leather industry.
8. Business Advantages
• 15 years work experience in
the Romanian leather goods
industry
• Knowledge of local culture
• Connections with local
companies & suppliers
17. Power Distance: Finland
• Romania: strong culture of power
hierarchy
• Finland: accessibility and transparency of
hierarchical structure
• => implementation of Finnish culture
18. Individualism: Romania
• Romanian culture based on:
– Interaction and communication
– Sharing
– Companionship
• => Implementing the Romanian
culture will benefit productivity
19. Masculinity: Romania
• Romania: competitive stimulation
• => Encourage healthy competition
• => Acknowledge high quality work and
professionalism
• => Promote knowledge sharing
20. Uncertainty Avoidance: Romania
• Romania: higher uncertainty
avoidance
• Positive effects: people are less likely
to initiate job changes
• => Higher stability for the company
• => Less investment in training new
employees
21. Pragmatism: Romania
• Higher level of pragmatism in Romania
• => Better ability of accepting societal
change and innovation
22. Indulgence: Finland & Romania
• High level => instability
• Low level => rigidity
• Right balance of indulgence leads to:
– Empowering people through freedom of
self expression
– Clear managerial direction through strong
and healthy leadership
23. PESTEL Analysis
• PESTEL analysis is used to create an overview
of the external environment of the market we
want to enter
24. PESTEL Analysis - Polytics
• Stable political environment
• Growing support of new enterprises and local
producers
25. PESTEL Analysis - Economy
• Stable economical environment
• Cheaper raw materials than in the rest of
Europe
• Supporting local suppliers
• Prices set in Euros
26. PESTEL Analysis – Socio-Cultural
• Centuries old tradition in the leather industry
• Skilled employees
27. PESTEL Analysis - Technology
• Stable technology and techniques, compared
with other industries
28. PESTEL Analysis - Environment
• Adopt a socially responsible business strategy
business model
• Become involved in the community by
supporting the local animal breeders and
supply chain
• => ”Customer loyalty, employee commitment
and business performance”
29. PESTEL Analysis - Legal
• Quality working conditions
• Attractive salary scheme based on
professionalism
• Higher salary than the competition, still
creates savings for the company compared
with salaries in Finland
30. Porter’s 5 Forces Model
• Analysis of the
competitive power in
the industry through:
– Supplier Power
– Buyer Power
– Threat of Substitution
– Threat of New Entry
31. The 5 Fs – Supplier Power
• Raw supply materials: leather, lining, thread,
glue, dyes, zippers, accessories...
• Local suppliers
• Strategy: developing long-term relationships
with suppliers based on mutual trust and gain
32. The 5 Fs – Employee / Buyer Power
• Business values promoted and valued in the
Romanian market:
– Environment protection
– Ethical behaviour
– Supporting local companies and suppliers
• Strategy: creating an employee / customer
loyalty programme to minimize the buyer /
employee power
33. The 5 Fs – Threat of New Entries and
Substitution of Products
• Strategies to gain an advantage over the
potential competition and new products:
– Creating a brand recognised for social awareness
and support of local suppliers
– Customer loyalty strategy
– Lower prices than the competition
– Quality products
34. Market Entry Mode
• Direct Investment entry mode =
• Wholly Owned Subsidiary (WOS) =
• Private Limited (PL)
• => A sole venture with full ownership by the parent
Finnish company
36. Marketing Mix
Product / Price
• Lower production costs due to:
– Cheaper labor
– Cheaper raw materials
– Cheaper equipment maintenance
– Shorter distance to the client
37. Marketing Mix
Place / Promotion
• Good working conditions:
– Clean and safe work environment
– Quality equipment
– Better salaries
– Job flexibility: training and job rotation
– Financial reward schemes