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Country Analysis; Poland.docx

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BUSI 2701
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Themiya Ellepola 100823117 FUNDEMANTALS OF INTERNATIONAL BUSINESS (BUSI 2701, SECTIOND) PROFESSOR: DR. Wade Rose POLAND 1 Executive Summary: A Canadian company is interested in expanding its foreign operations into Poland. The most important fact that comes to mind is the geographical location of Poland. This is a big plus for trade and other possible relations with the markets around. The first part of the report focuses and analyzes the macro environment the company will be operating in. Poland will be analysed based on infrastructure (in transportation, communication and energy), level of development, legislations that affects inward foreign investments, political stability and corruption level. Then the report will focus on factor endowments and its impact on the decision of investing in Poland. At the end, however despite the few risks and costs, benefits weigh more is recommended to invest in Poland Countries Macro Environment: The Republic of Poland is a central European country with a population of 38 million, and is known as one of the strongest consumer Markets in Europe. Warsaw been the capital and the largest city of the Country, it is considered to be a global city th and is ranked at 29 in the top 150 city destinations. Furthermore Poland is unitary state and is the most populous post-communist country. Favourable centralized location in Europe, where main communication routes intersects allows exporting off goods possible to all European countries and as a result reach over 500 million consumers. Poland is rich in mineral resources. The main natural resources in Poland consist of coal, sulfur, copper, natural gas, silver, lead, salt, amber and arable land. All of these resources contribute to the basic factors of production in the country. The main types of Industries are machine building, iron and steel, coal mining, chemicals, shipbuilding, food processing, glass, beverages and textiles. Furniture, cars, ships, apparel and coal are main exporting products. While the imports include; crude oil, passenger cars, pharmaceuticals, car parts and computers. 2 Since the 1990s Poland has been privatizing many public companies and encourages the development of small and medium business. Hence they have adopted a very active foreign policy since post-communism, and are now a part of many international Originations. EU, NATO, WTO, and OECD are some Organizations Poland is a part of. While becoming involved strongly with EU, they also participate in activities with other international organizations. Canada is currently having ongoing discussion with Poland for a Foreign Investment Promotion and Protection Agreement as well. Communication and transportation infrastructure, combined with Information technology of a country play’s an important role in production and development. Poland is in the verge of investing aid gained through EU in improving their transportation sector. Since joining EU Poland has been developing there transportation as a result Portland is ranked 15 in Roads and Railways. Also according to BBC, Poland's communication Infrastructure is the largest in Eastern and Central Europe and has attracted foreign investment. Also 59% of populations use internet, which suggest that IT in the country is in good standings. With a GDP of 476 billion and a real GDP growth of 3.8% in 2010 Poland’s economy is steadily growing. Poland was the only eastern European country to avoid recession and is the largest economy European Union’s eastern states. Weaker Polish zloty, currency of Poland, keeps exports growing and increasing GDP. Poland GDP has increased by a great deal in the last three years and hopes that it will increase by more than 3% this year. Legislation that affects inward foreign investment complies by international standards, most of the time. However, Poland has not signed any of the following agreements: double taxation, customs union and free trade agreements (FTA), bilateral agreements for the promotion and 3 protection of investments with Canada. As mentioned previously there are ongoing discussion for a Foreign Investment Promotion and Protection Agreement (FIPA). FIPA aims to provide a stable investment environment and by having provisions on investor-state arbitration, and thus help to successfully settle disputes that might occur between investors and Poland. Until the FIPA is been signed there may be tariffs, quotas, and preferences on some goods and services traded may cause problems for Canadian companies. Hence it may decrease revenue of Canadian companies operating in Poland. Even though there are no trade or Investment agreements between Canada and Poland, well known Canadian corporations are doing business with Polish. Bombardier, RIM, Nortel and Shoppers drug mart (known as super pharm in Poland) are some of them. The cumulative Canadian Investments totals an amount of $440 Million. Some Canadian firms have been active in Poland for more than 30 years. Trade and Investment opening are there for Canadian firms in the agri-food, environment, ICT, infrastructure, aerospace, energy (particularly shale gas), building products and construction sectors. Moreover according to the Market Potential Index for th emerging markets ranked Poland 6 . Poland’s culture is greatly influenced by Christianity, and it’s ethnically Homogenous. However, doing business in Poland is no difference to doing business in any other European country. Hence this should not be an issue when thinking of investing in Poland. The norm in a polish meeting is considered to be small talks, and is advised not to rush proceedings as this part of the relationship building process. Business decision is taken by hierarchy of the business, and it may not be fast as in North America or many developed countries to get a reply. 4 Poland has been doing great economically since they joined EU in 2004, and they are also drawing the most foreign direct investment in the eastern/central Europe. However, behind this success, spectre of corruption arises. Some argue that corruption is already diluting the growth rate Poland. The actual growth rate of 10% is reduced down to 5.2% due to corruption. A causal visitor in Warsaw will get know about corruption immediately by media and would likely judge Poland as corrupt country. However, polish people don’t see it that way and believes that this will change with new leadership. Poland’s political situation and stability is about change with its newly appoin
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