Assignment task 3
Tutor: Mahfuzur Rahman
Doing Business in Poland
Terms of reference
This is a formal report. Global Ventures PLC is regarding the set-up new business. The company would like to operate its furniture factory in the Poland and majority (70%) of its production will be exported to the EU countries.
I suggested to my employer, Global Ventures PLC that we should establish a presence in the furniture industry. EU market size is enormous. The wealth of EU citizens and single market without trade restrictions between the European Union countries makes great opportunity to start-up business (Webster, 2009). “In the year 2004, the EU total consumption of furniture was €68 billion or €162 per capita” as stated by an EU furniture market study (2006) yet European Union countries imported around € 10 billion value of furniture from outside EU countries in year 2006. Recent financial crisis which caused economic recession in Western hemisphere is concern for the furniture industry which is observing lower general sales within EU markets just 80 – 85% of sales that were before economic downturn (Furniture Retailing, 2010). The furniture product cycle can span over 10 years and customers are aware and sensible of any furniture price fluctuations upwards. For that reason the furniture market is highly elastic. If the company can cuts its production and transport costs then it makes good profit margin that will allow the company to invest into R&D and offers big market opportunity vs. others competitors. After we made research, where to locate furniture facility, the company chose Poland which is located in the Central Europe and is well connected to rail, road and seaport infrastructures within rest of EU to deliver good to any part of EU within a single day. Another recommendations made to company was sustainable pricing e.g.: good furniture for good value, and last but not last better implantations of marketing strategies witch at the end of the day will increase customer loyalty. Because the furniture market in the EU is highly elastic the creation of new channels to sell furniture products such as online market is chance to exploit and seize this new opportunity and to make handsome profit. Therefore Our Company introduces products which are aimed at a mass market with good value for offered price. Global Ventures PLC product portfolio offers attractive design and hi-quality fabricated moulted carbon-plastic & chipboard PC tables and ergonomic chairs for the office home furniture use. Almost 4 out of 5 households are having PC and it’s predicted that 4 out of 10 businesses will soon work from the home (Home office, 2009). Our plan is to start this project with one design centre and set up furniture production and assemble facilities in the Poland due to its proximity to others countries of EU. Around 70% of our home furniture production will be actually specified for an export from Poland production facility to others EU- mainly western EU countries. Therefore our production strategy is accompanied by a lower price structure than existing competitors (see appendix 1).
Globalisation is process of moving freely and quickly products, people, money and companies around the world without any limitation (Morrison, 2002) (see appendix 6).
Poland is attractive location for investors due to its competitive labour costs, the size of the market, industrial diversity and possibilities for the development of new economic entities. As a NATO, OECD, WTO and EU member to name a few has a stable and predictable political background. Poland is part of the EU, which is an economic and political union of 27 member states and an interesting fact is that 80% of the new legislation is coming from the EU parliament. Poland is from year 2007 within Schengen trade area that enhances further EU policies e.g.: enacts legislation in justice and home affairs for...