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Investment in Slovakia

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Juliette Goulet

on 12 March 2013

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Transcript of Investment in Slovakia

Porter's Diamond Firm strategy , structure and rivalry PESTEL Analysis Economical environment FDI in Slovakia Slovakia : Dunning’s OLI paradigm
Firm Specific Advantages Location
3 categories of home country advantage: economic, social and political.

Economic: 8th lowest debt in the EU27 and among the highest growth rates in Europe

Social: Highly motivated workforce

Political: Low taxes, grants and subsidies How to invest in Slovakia Conclusion Greenfield investment in Bratislava to producing all its range of products

Development of a R&D center dedicated to the innovations of car equipment

Take advantage of - low cost workforce
- location
- thriving of electronics and automotive industry
- R&D projects Became an EU member in 2004

Is recognized as an open market economy

Is focusing on creating a business friendly environment for investors

Skilled and affordable workforce, numerous natural resources (aluminum, cooper…)

Leading car -producer Founded in 1964 by Dr. Amar G. Bose
has 5 manufacturing centers but only one is in Europe (Ireland)

The company creates a range of 6 different products mostly high-performing audio products

Its strategy is to innovate constantly

There are many opportunities in Europe: huge markets (such as Germany)

Slovakia has a combination of all the ingredients BOSE needs to expand its name in Europe Stable GDP growth: 2012: 2,4%

Inflation (yearly average): 3,6%

Budget Balance (%GDP): -4,6%

Public dept: (%GDP): 46,3% Member of E.U since 2004

Member of Shengen area

Strategic localisation

Modern infrastructures

Highest productivity in the CEE (relative to labor force)

Certified ISO and CEN Financial environment Excellent credit ranking:

Standard and poors: A stable
Moody’s: A 2 neg
Fitch : A+ stable

Country investment risk (coface analysis) : A 3

Rank in the World (Bank report on the ease of doing business) 46
before Hungry, Poland, Czech Republic and Bulgaria

Privatized banking sector, foreign ownership: 96
No report of politically
motivated damage to property

No violence directly toward foreign owned company

“Aid-Map” for 2007-2013 prepared by the Ministry of Economy

Actively participates in EU research and development (Lisbon agenda targets ) Political environment Socio-cultural factors
Population approximately of 5.5 million which around 2.2 million are working

Life expectancy of 72 years for men and 80 years for woman.Age between 25-64 represent 58.3% of population

Strong labor productivity growth

A workforce that is well educated and proficient in foreign languages

Leading country of scientific and engineering talent : 1706 R&D scientists and engineers per million inhabitants. Technological factors Ongoing revolution in the area of information and communication technologies => companies need to innovate constantly

Open economy based on R&D and innovation activities

Low production costs. Environmental factors Ecological: pollution taxes similar to European commission

Ecological label of the EU Demand Condition Factors condition Logistically well-positioned : transit country

High-qualified and low cost workforce ,
large supply of scientist and engineers

Electronics, automobile and suppliers industries : most perspective industries sectors for doing R&D projects

Future : high value added project , especially in R&D and innovation activities Related
supporting industries Demand from car manufacturers due to the expansion of the automobile industry (largest per capita car producers :
119 cars produced per 1000 inhabitants)

Demand for its whole range of products from new markets
( Central , Eastern Europe)

Demand for lower cost products due to : - the constant increase of customers' expectations
- the crisis

Cluster : can beneficiate from lower cost components
can work in cooperation possible with car producers and universities for R&D project

JIT II : Bose suppliers are integrated in the company Electronics : most significant and dynamic industry
second driver sector in the economy

Principally foreign corporations :
Greenfiel investment
Purchase of defunct manufacturers‘ assets

Firms need to innovate constantly to secure survival and prosperity in the long run in this industry BOSE business Analysis: Investment in Slovakia Bose : Bose : market leader (25% of market share)

Need to develop a new strategy to compete against similar but low cost products

Technological leardership of the company along with low cost of production available in Slovakia => will enable the firm to compete Ownership

Main operations in the USA

Consider local costs : Cultural, Legal, Governmental and Language

Bring their own advantages, Industry knowledge Internalization

49 years expertise in the industry

Bose are not new to manufacturing in Europe

Chance of loosing industry secrets

Close ties with Audi who already operate in Slovakia GDP EVOLUTION: 2001-2012 Greenfield Investment
BOSE in Slovakia
Why Greenfield Investment? Employment



Bratislava References http://www.weastra.com/cee-countries/slovakia/














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