Reference no: EM131789253

Question: Read the "In the International Spotlight: Poland" in your text, Chapter 8. Respond to the questions at the end of the case with complete and thorough responses. Poland is the sixth-largest country in Europe. It is bordered by Germany, the Czech Republic, and Slovakia in the west and south and by the former Soviet Union republics of Ukraine in the south, Belarus in the east, and Lithuania in the northeast. The northwest section of the country is located on the Baltic Sea. Named after the Polane, a Slavic tribe that lived more than a thousand years ago, Poland has beautiful countryside and rapidly growing cities. Rolling hills and rugged mountains rise in southern Poland. In 2012, there were approximately 38 million Poles, and GDP was around $514 billion. A shift to industry and services has made Poland attractive to MNCs. There are many facets that make Poland attractive, one of which is that the central location to other European countries provides MNCs with easy access to competitive markets nearby. A policy of economic liberalization, which Poland has been pursuing since 1990, has converted the country that had not been known for ranking high in business into a success story among transition economies.

Despite continuing problems, the Poles have made some progress in establishing a viable economy. Poland has proven to be very attractive for U.S. investors; in the last 20 years, U.S. companies have poured over US$20 billion in the country. There are approximately 350 U.S. firms that have offices, factories, joint ventures, or subsidiaries on Polish ground. A basis for foreign cooperation is the broad consensus across political lines, which welcomes foreign direct investment. Many incentives to attract new firms that can bring capital, technology, and jobs to Poland are offered by the government. Poland's economy has performed considerably better than its Eastern and Central European neighbors, especially during difficult economic times such as the 2009-2010 global recession and subsequent slowdown in Europe. To take advantage of this economic situation, a mediumsized Canadian manufacturing firm has begun thinking about renovating a plant near Warsaw and building small power tools for the expanding Central and Eastern European market. The company's logic is fairly straightforward. There appears to be no competition in this niche, because there has been little demand for power tools in this area. As the postcommunist countries continue to struggle in their transition to a market economy, they will have to increase their productivity if they hope to compete with Western European nations.

Small power tools are one of the products they will need to accomplish this goal. Other than the relatively open market, why would Poland seem so attractive to U.S. and Canadian companies? The people of Poland have a great deal to offer. The highly educated populace includes a great many individuals who are multilingual and are extremely hard working, second only to Korea in hours worked per year. Furthermore, low labor costs in a country where almost 13 percent of the people are still unemployed are a huge incentive. Poland also has a vast modern transportation system including seaports, major airports, railroad systems, and roadways. The government attempts to bring in new companies by offering grants or tax exemptions. While the Canadian firm considers moving the manufacturing of small power tools to Poland, it might be favorably impressed by the vast and successful R&D projects that are in progress in the country, including institutions such as Siemens, Avio, IBM, Intel, Motorola, GlaxoSmithKline, and more. There likely will be little competition for the Canadian firm for the next couple of years, because small power tools do not carry a very large markup and no other manufacturer is attempting to tap what the Canadian firm views as "an emerging market for the 21st century." However, a final decision on this matter is going to have to wait until the company has made a thorough evaluation of the market and the competitive nature of the industry.

1. What are some current issues facing Poland? What is the climate for doing business in Poland today?

2. Is the Canadian manufacturing firm using an economic, political, or quality imperative approach to strategy?

3. How should the firm carry out the environmental scanning process? Would the process be of any practical value?

4. What are two key factors that will be important if this project is to succeed?