Business Risk Analysis

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  • Topic: Croatia, Socialist Federal Republic of Yugoslavia, European Union
  • Pages : 12 (3588 words )
  • Download(s) : 249
  • Published : April 11, 2006
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Honda Motor Co. Ltd has always sought to provide genuine satisfaction to people around the world. We are striving to deliver the products and services that customers in each locality want most. To ensure that we meet local needs, we go beyond establishing local sales networks; we have structured our operations so that many of our products are not only manufactured, but also developed in the regions where they will be used. The result is over 124 manufacturing facilities in 28 countries outside of Japan, producing the motorcycles, automobiles, and power products that bring us into contact with over 17 million customers each year. This paper focuses on the business risk analysis for building, owning, and operating a manufacturing plant in Croatia. This plant will produce Hybrid vehicles and introduce the Hybrid technology to this region.

Considerable research was conducted on the Republic of Croatia and the region and a SWOTT Analysis was prepared to determine the benefits and risks of conducting business in this country. Political, economic, and market risks have been researched and a detailed description of the risk and how to manage the risk is included.

SWOTT Analysis
SWOTT for Croatia ¡V Opening a Honda Hybrid plant in this country

Strength
„ÏStrategically located in the Adriatic Sea (distribution) „ÏOpen to FDI
„ÏMember of the WTO
„ÏScheduled to become a member of the EU in 2010
„ÏScheduled to become a member of NATO in first decade of 2000 „ÏProactive mindset for protecting the environment
„ÏCompetitive advantage in the production of steel and rubber „ÏAggressive tax incentives to corporations (Honda)
„ÏLow tax rate
„ÏEnglish well spoken in Croatia

Weaknesses
„ÏHigh unemployment rate may affect car sales
„ÏManaging a multicultural population comprised of enemies ethnic groups „ÏJudiciary system challenges ¡V ineffective court system „ÏPotential political instability due to new government party HDZ, which depends on support of the HSS party for continued ruling „ÏLimited motorway network/capacity

„ÏInadequate Railway system
„ÏPost-communist era economy, judicial and political system plagued with corruption

Opportunity
„ÏUnderdeveloped country
„ÏHonda expects to provide employment opportunities in Croatia „ÏIncreased road network investments
„ÏIncreased access to EU transit network
„ÏRailway investments started in 2005
„ÏOpportunity to create a positive impact on Croatia through charitable donation

Threats
„ÏEU overturns of existing FDI tax incentives
„ÏReticent relations between Croatia and International Criminal Tribunal for the former Yugoslavia (ICTY) „ÏInternal organized crime
„ÏDouble taxation

Trends
„ÏIncreasingly high cost of fuel
„ÏInstability of the Middle East, larger producer of oil
„ÏEU increased demand for fuel efficient automobiles
„ÏWorldly initiatives to preserve the environment

Political/Legal/Regulatory Risks
Croatia is a very young political country. The current government has only been in power since 2003. Variations of the current government have run the country in the years previous to 2003, but the current government represents a position more significantly on the center than predecessors. Trends are showing a deep alienation of Croatian public from Croatian political establishment. Evidence is seen through record low turnouts and support for candidates and options that represent alternatives to Croatian political mainstream. Because of this Croatia is perceived as having minor instability problems. This poses a risk for businesses looking to move into the region. Although small, instability is a legitimate issue.

Relieving the concern about the instability in the government and possibly mitigating the problem all together is the fact the Croatia is positioned to join the European Union. Over the past several years Croatia has been making an admiral bid to become a part of the EU. Being a part of the EU...
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