FROM POLAND TO INDIA
A TOY COMPANY’S TRANSITION
Prepared For: Professor Ligia Maura Costa
Prepared By: Daniel BarmaschEric SnoddyMarco MichelNatalia BieszczaninSylwia Przeplata April 16, 2012
1. Description of the Company
Structure of the Company
2. Justifying International Expansion
3. Choosing a Country: PESTEL
4. Modes of Entry
5. The Ten year plan
1. Description of the Company
Zabawa Sp. Z o.o. (Limited Liability Company) is a Poland based firm established in 1989 after the transformation from a centrally planned economy to capitalism.
The company’s name, Zabawa, means ‘fun’ in Polish and is strikes as dynamic and robust toy company, largely contrasting other firms of pre-1990. Through the years, Zabawa positioned itself in white spaces of the market by beginning to develop educational toys and in hope to grasp untouched markets.
Indeed soon after the fall of Communism, the Polish market presented particularly high returns in almost any branches of economy, as the consumer industry has not been created yet; since then Zabawa has continuously grown in size, revenues, and reputation.
At its creation, Zabawa was a toy retailer for young children, though the brand quickly conveyed and took on the image of ‘Rubik’s Cubes’ from Hungary, where it was originally invented and produced; indeed, the cube represented 57% of sales’ revenue after the second year of business. However, a short 5-year period allowed Zabawa to grow steadily and establish a strong domestic network, one that can easily be tapped. In 1994, Zabawa re-established company objectives and entered the toy manufacturing business, led by a potential internal breakthrough innovation in the educational toys sector.
In essence, Zabawa kept its retail stores to continue business, and in parallel set up its own factory in Dzierżonów, a special economic zone benefiting from tax exemptions for 5 years. For the following decade, Zabawa developed several educational toys destined to young children, notably its bestseller iCube (please refer to Product Description). On 1 May 2004, Poland joined the European Union and thus became a member of the vast European single market where goods, services, capital and labor move as freely as within one country; Zabawa notably benefited from reduced transportation costs.
In 2004 Zabawa LLC established a distribution center in the special economic area in Lazy, near Warsaw. Back then, the Polish economy was developing much faster than the Euro zone (2.6%) and higher than the average of all EU members (2.8%). In 2005, Zabawa had grasped over 19% of the market, yet remained a purely domestic firm.
Surprisingly, the 2008 financial crisis did not intensely damage the Polish economy, as Poland in fact remained the only country in Europe with positive GDP growth. However, Zabawa has suffered from the decrease in demand and therefore put its expansion plans on hold. The firm likewise realized that the European population is aging, fertility rate is dropping and the shrinking toy market is already saturated. Structure of the Company
The company has one factory that produces all range of Rubik’s Cube products and promotional supplies. The distribution center is located near the main market in Lazy. Both entities are located in the special economic area. Headquarters of Zabawa is located in Warsaw.
The company started in 1989 with one retail store and 5 employees; it now employs over 500 in the factory in Dzierżonów, 200 in the distribution center and 150 at the Warsaw headquarters. Zabawa it is a limited liability company. Its structure is presented below. Product Description
Zabawa produces educational toys for children...
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