Faculty of Business, Economics and StatisticCentre for Business Studies

Department of International Marketing

Wristwatches in Bulgaria

KFK iMAR: International Marketing: Teil 1 (E) –

Context & Analysis (040517)

Winter Term 2011/12

Lecturer: Prof. Dr. Christina Sichtmann

Written by:

Richard Biath Taissia Galperina

Miroslava JergusovaMariya Kravtsova

Irina Mazur

Vienna, January 2012

Table of Contents

1. Bulgaria: General Information.....................................................................................................32. Economic environment................................................................................................................3

2.1 Macroeconomic performance.......................................................................................................32.2 Economic Activity..........................................................................................................................42.3 Financial and economic forecast..................................................................................................4

3. Political environment...................................................................................................................54. Demographic Environment..........................................................................................................65. Socio-Cultural Environment........................................................................................................66. Doing business in Bulgaria..........................................................................................................89. Global marketing research.........................................................................................................10

9.1 Primary data market research......................................................................................................109.2 Secondary data market research.................................................................................................10

10. Wristwatches market in Bulgaria.............................................................................................1110.1 General overview.......................................................................................................................11

10.2 Market segmentation..................................................................................................................1110.3 Recommendations for entering the wristwatches market in Bulgaria..................................13

11. Conclusion...............................................................................................................................14Resources.......................................................................................................................................15Appendix 1....................................................................................................................................18

Economic Data....................................................................................................................................18Bulgaria Exports....................................................................................................................18Bulgaria Imports....................................................................................................................18Bulgaria Balance of Trade.....................................................................................................19Bulgaria Population...............................................................................................................19Bulgaria Unemployment Rate...............................................................................................20Bulgaria Consumer Confidence.............................................................................................20Bulgaria Business Confidence...............................................................................................21Bulgaria GDP Growth Rate...................................................................................................21

Appendix 2....................................................................................................................................22Socio-cultural data..............................................................................................................................22

Appendix 3....................................................................................................................................23Distribution of family income - Gini index.....................................................................................23

Appendix 4....................................................................................................................................23

1. Bulgaria: General InformationBulgaria is located in Southern Europe situated in the eastern Balkans and is surrounded by

Greece, Macedonia, Romania, Serbia, and the Black Sea. Owing to its geographic location,

Bulgaria is a crucial springboard for making sales in markets such as EU countries, Turkey,

Russia and the Middle East. The construction of planned pipelines will increase its importance in

gas transition even further. After the breakdown of communism, Bulgaria has transitioned to a

market economy, with prices of goods and services determined by market forces. However, this

change has not resolved the issue of low standards of living. Bulgaria is a parliamentary

democracy with the Prime Minister as the head of the government and the President as the chief

of state. Due to EU’s concern about corruption and organized crime, Bulgaria was not allowed to

join the Union until January 2007 and is still blocked from joining Schengen passport-free zone.

Furthermore it is a member of BSEC (Black Sea Economic Cooperation) and NATO. (Bulgaria:

Introduction, 2011)

2. Economic environment

2.1 Macroeconomic performance

The economy of Bulgaria continues to recover at a moderate pace. Over the last year the

investment in fixed assets increased by 3.8 per cent, the overall consumption has increased by

0.7 per cent. The companies’ policy, which was aimed at shortening the real production costs,

has led to increased efficiency and had a direct positive influence on external demand recovery.

According to the latest economic review, exports in 2011 rose by 58.9 per cent in comparison to

the same period in 2010; imports also showed the same positive trend – 36.3 per cent. The

government is implementing the consolidated fiscal program that allows decreasing a deficit of

BGN from 3.9 (in 2010) to 3.2 per cent of GDP in a current year. At the end of the first quarter

of 2011, the inflation rate accounted for 4.6 per cent. (Bulgaria: Economic Review, 2011)

2.2 Economic Activity

The impact of crisis on Bulgaria’s economy and its duration can be compared to those in other

countries of EU. The real GDP of Bulgaria lost 7 per cent (in EU generally 5 per cent of real

GDP) in 2010. The GNI per capita; PPP (US dollar) in Bulgaria was reported at 11370.00 in

2010. [1] Household behavior continues to recover but rather at a slow pace. In the first quarter

of 2011, the household consumption experienced a slight rise of 0.1 per cent. The household

expenditure on public catering, communications and other essential commodities (such as

electricity and water) decreased and the expenditure on food products, on the contrary, increased.

According to the national accounts data, a slight recovery was observed in retailing, especially in

shops with diverse range of goods, while in shops with household appliances, furniture and other

household commodities a sales decrease was reported. (Bulgaria: Economic Review, 2011)

2.3 Financial and economic forecast

Taking into consideration the current business climate and performance in Bulgaria, we can

expect that the economy will continue its gradual recovery and will create favorable conditions

that will contribute to the increase of the domestic demand. According to the forecast, the export

and import rates will continue to grow further and the mismatch between both rates will diminish

due to decline in external demand and increase in domestic demand. According to the experts,

slight nominal increases in wages as well as employment rate recovery are expected. (Bulgaria:

Economic Review, 2011)

According to the macroeconomic review, the saving rates are raising which improves the current

account balance. Bulgaria fulfils currently the fiscal criterion of admissible level of budget

deficit that make it possible to enter the euro zone at the end of the year. (Bulgarian Economy

Will Continue to Grow in 2012, 2011)

3. Political environment

Bulgaria is a liberal democracy, NATO member, and EU member state (Bulgaria joined the EU

in 2007). While the country is politically stable, elections typically lead to coalition governments

owing to the country’s system of proportional representation and numerous parties competing for

power. 

The European Commission (EC) instituted a Cooperation and Verification Mechanism for

Romania and Bulgaria for monitoring these two countries, with their progress in fighting with

corruption, against organized crime, poor rule of law, involved to improving human rights. 

Bulgaria's progress is measured against six benchmarks and it lags particularly in two: high-level

corruption and organized crime (according to the Corruption Perceptions Index Bulgaria has

value of 3.6 compared to leading Denmark with value of 9.3). July 2009 the EC decided to

freeze €450 million in structural funds earmarked for Bulgaria and in December they took €220

million back, because of fear that this money would involve in corruption transactions. The

introduction of more severe anti-corruption measures remains a matter for the Board. The EC’s

progress report for Bulgaria noted improvements with in the fight against corruption. Many

organized crime killings have gone unsolved in the past years and judicial corruption is reputedly

widespread. Government procurement and privatization procedures remain susceptible to

corruption. Violent crime against persons is very low although property crime - car theft, pick

pocketing and burglary - remains widespread. (Bulgaria, 2011)

4. Demographic EnvironmentBulgaria’s population is 7.5 million with 84% Bulgarians, 9% Turks, 5% Roma and 2% of other

ethnic groups such as Russians, Armenians, Jews, Tatars and Greeks. The growth rate of the

population is declining with approximately -4.6 people/1000 population. The same applies for

the fertility rate with a stagnating 1.49 children born/woman. The main religion group is

Bulgarian Orthodox with 82.6%, followed by Muslim with 12.2%. (Bulgaria: Statistics, 2011)

Bulgaria’s adult literacy rate is 98.3% with a notable percentage of the workforce with some

form of vocational, technical or secondary education with backgrounds in engineering, medicine

and economics. However, there is a lack of professionals with management skills common in

Western countries. (Doing Business in Bulgaria, 2011) To the high percentage of population

below poverty line averaging 14 % contributes the fact that the legal minimum wage is mere

EUR 75/month and the average wage equals EUR 260. (Coface Country Report Bulgaria, 2009)

5. Socio-Cultural EnvironmentHofstede’s socio-cultural Dimensions give a good overview of national behaviour and culture.

The highest ranking Dimension for Bulgaria is Uncertainty Avoidance (UAI) at 85 (70 for

Austria) (see Appendix 1). Society in Bulgaria is very uncertainty avoiding. UAI indicates to

what extent culture members feel either uncomfortable or comfortable in unstructured situations

or how risk-averse or risk-taking they are. (Itim International, 2009)

The second highest ranking Dimension is Power Distance Index (PDI) at 70 (11 for Austria).

The high PDI shows a high level of inequality of power and wealth within the Bulgarian society.

After the fall of socialism the gap between the rich and the ordinary citizens grew sharply (see

Appendix 2). Conspicuous consumption by the elite has become considerably more visible in the

form of imposing dwellings and imported luxury goods (Countries and their Cultures 2011).

The Masculinity index (MAS) is 40 (79 for Austria). Masculine societies are associated with

value ambition, competitiveness and high earnings in contrast to the feminine society that are

influenced by modesty and nurturing. (Itim International 2009) The society in Bulgaria is rather

feminine. Despite this fact, Bulgaria has a particularly long working week (the employees work

almost 10 h longer than those in the Netherlands). (Essential Do’s and Taboos, 2007).

The ranking of Individualism (IDV) for Bulgaria is 30 (55 for Austria). That mean Bulgaria has

very collectivistic culture, in which loyalty is essential, and over-rides most other societal rules

and regulations. Family is an integral part of Bulgarian culture which strongly influences

people’s behaviour (Bulgaria – Language, Culture and Etiquette 2011). In Bulgaria respect and

honour is given to people with age and position. Though Bulgaria strives to create a more

modern society, Bulgarians place a high importance on tradition and their cultural heritage.

(Doing Business in Bulgaria.Bulgarian Social and Business Culture, 2009)

When considering marketing strategy and communication activities in Bulgaria market it has to

be mentioned that according to the research made by Gaston-Breton and Martin Martin (2011)

Bulgaria relates to the third cluster which means that Bulgarians are likely to put emphasis on

survival values, e.g., hard work, religion, determination, perseverance, economizing and

avoiding waste. (Gaston-Breton & Martin, 2011)

6. Doing business in BulgariaThe country of Bulgaria represents an attractive location for foreign investment. The inflow of

FDI peaked in 2007 with over EUR 6.5 billion. This in many cases positive state of events is a

result of Bulgaria joining the EU and the country’s successful attempt to stabilize the political

and economic situation. Particularly the government’s introduction of a flat 10% tax for both

personal and corporate income, the lowest in the region, contributed to strong inflows of capital

and forecasts of slight economic growth in 2011. Moreover, foreign investors are attracted by the

country’s mostly well-educated workforce and generally low cost of labor, the lowest in the EU.

Investors planning to entry Bulgaria’s markets are allowed to establish businesses of any form

permitted by law and own as much as 100% of domestic companies. The most common type of

organization established by foreign investors is a limited liability company. Last but not least,

Bulgaria’s favorable geographic location needs to be taken into consideration.

It must be said, that Bulgaria has a very stable currency regime. Its currency board has fixed the

rate of Bulgarian currency (Lev) to the common EU currency (Euro) and this rate has remained

unchanged for the past 10 years. As a result, European investors find it convenient to import

capital into Bulgaria.  

Although Bulgaria’s business environment offers many opportunities, there are also many

challenges and barriers to the trade. One of the major difficulties is the inefficient bureaucracy

and unwieldy administration at the local level, which hinders and slows down business

operations. Other challenges include a slow moving court system, organized crime and

corruption. As a result, Bulgaria is still excluded from the Schengen passport-free zone. It must

be said, however, that there has been improvements and progress in this area. One notable

problem is companies facing the violation of intellectual property rights and a very common non

transparent tendering process, which is in many cases pre-determined. The investment climate is

even less favorable due to complex legal regulations which are subjected to rapid change and a

low level of transparency in the regulatory environment. (Doing Business in Bulgaria, 2011)

One of Bulgaria’s most significant problems hindering the trade is the country’s lack of a proper

infrastructure. According to its Prime Minister Boyko Borisov Bulgaria has probably the worst

infrastructure in the whole European Union. Bulgaria has only about 400 km of motorway and

its border-to-border transport corridors are still under construction. Additionally upgrading the

railway system has become a national priority of Bulgaria. This is due to the importance of

Bulgaria’s crucial links to Asia and Europe, but also to the fact that this would enable the

integration with the European railway system. The solution may lay in Bulgaria’s EU

membership as the World Bank agreed to help Bulgaria developing projects liable to obtain

European Union funds, provided that the Bulgarian government procedures prove to be

transparent and efficient. (World Bank to help Bulgaria develop infrastructure, 2010)

According to COFACE (Compagnie Française d'Assurance pour le Commerce Extérieur)

Bulgaria has a country rating of B. (see Appendix 4)

The strengths of the market can be summarized in brief as followed (Doing business in Bulgaria,

2010): member of the EU, BSEC, WTO and NATO, stable and predictable currency rate towards

Euro, strategic geographic location, attractive infrastructure projects in planning, tax incentives,

35 double taxation treaties, low production and labor costs, manufacturing industries with spare

capacity, strong potential for economic growth, high priority given to attraction of FDI.

9. Global marketing research

9.1 Primary data market research

In Bulgaria primary data can be obtained by different types of surveys: personal (face-to-face)

interviews; personal distribution and collection of the questionnaires; self administered

questionnaires completed by respondents in groups; telephone interviews; and mailed

questionnaires. In the last couple of years the internet usage has grown considerably (Internet

World Stats 2010). The spread of the Internet gives a possibility of conducting online surveys.

9.2 Secondary data market research

The main sources of information are: customs statistics; annual book-keeping reports of

enterprises; banking statistics; information from sample surveys conducted for other purposes

but containing useful information. Some of this data is collected by the National Statistical

Institute (NSI) and some by the National Bank which is formally responsible for compiling the

balance of payments. The NSI (2011) is responsible for Structural Business Statistics in terms of

preparing methodological and technical bases, carrying out the surveys and compiling,

publishing and disseminating the data. The Bulgarian National Bank produces credit institutions

statistics on structural, profit and loss account and balance sheet variables and provides them to

the National Statistical Institute.

In some case, alternative data sources exist for the same item. For example, the NSI has

estimates on imports and exports based on customs statistics and the National Bank has estimates

based on request for foreign currency. Until now, a considerable discrepancy has existed

between these two sources but steps are now in hand to ensure a closer working relationship

between the two institutions and to agree a single set of estimates. (National Accounts for

Bulgaria 1996)

According to article 20 (6) of the Law of Statistics the Bodies of Statistics have the right under

written request to obtain free of charge from other State bodies and register keepers, data

collected by them, which are required in the statistical surveys, included in the National

Programme for Statistical Surveys. The provision of the administrative data is organised by

formal agreements between the NSI and each of the bodies such as Ministry of Finance,

Bulgarian National Bank and others. (Structural Business Statistics Methodology s.a.)

10. Wristwatches market in Bulgaria

10.1 General overview

Wrist watches market in Bulgaria forms an integral part of jewellery market. The jewellery

market in Bulgaria was estimated at US$74.97 million in 2008 and is considered to be the

smallest market in EU following Slovakia. The average growth rate between 2004 and 2009

equalled 6.1%. It is evaluated that on average consumers in Bulgaria spent only US$9.7 per

capita on jewellery compared to nearly US$69.38 in EU in 2008. Joining the EU resulted in

increase in consumer spending on jewellery. However, the financial crisis resulted in fall-back

and stagnation of these values. (The Jewellery Market in Bulgaria, 2009)

10.2 Market segmentation

We can identify two possible market segmentations of wrist watches market in Bulgaria on the

basis of price and different value attributes. According to the segmentation based on prices we

can distinguish the following four major market segments:

Mass Market Watches with a value under $50:

-Fun Fashion Watches

-Sports Watches

-Character and Sports Logo Watches

Middle Market Watches with a value up to $299

Upper Middle Market Watches with a price tag of $300-$999

Luxury and High Luxury Market with price ranging from $1000-$5000+

(Market For Watches, 1995)

As far as the Bulgarian wrist watches market is concerned the two most relevant segments are

the mass and the luxury market. This is due to the fact that Bulgaria’s distribution of income is

unequal with a not very well presented middle class. One important issue is the fact that the

wealthy Bulgarians tend to buy luxury watches abroad.

When taking into consideration the luxury brands, they are oversized presented on the Bulgarian

wrist watches market. However, according to the experts’ estimations, luxury market in Bulgaria

is rather small. As reported by the previous research study in 2009, Bulgaria has approximately

5.000 luxury consumers and this number seemed not to change drastically. There are three major

players on the luxury market in Bulgaria: Cartier, La Tiara and Royal House. It is clear that the

luxury market in Bulgaria has suffered because of the crisis what has caused the decreasing

power of buyers and the increasing prices of high street rentals. On the contrast, the mass market

is dominated by many small manufacturers. (Jewelry/Watches, 2010)

The second type of segmentation is based on different value attributed to watches:

1. Consumers who want to pay the lowest price for a reasonably working watch, replacing

it after it fails.

2. Consumers valuing watches for their quality (long life, good workmanship, material and

design) and willing to pay for it.

3. Consumers who look for usefulness and meaningful emotional qualities, considering that the watch should suite to an important occasion (well-known brand names).

(Watch Segmentation, 2011)

Within this segmentation the first type of consumers is considered to be the most notable on the

wrist watches market. This can be explained by the fact that most of the Bulgarians are very

price sensitive.

Firms entering the wrist watch market should not underestimate the size of the black market.

This can be explained by the geographical location, the access to the Black Sea. The general

value of the black market in Bulgaria is estimated as high as $4.741 billion. This is particularly

true for the luxury watch brands which hinder successful entering of the market. (Bulgaria Black

Market, 2011)

10.3 Recommendations for entering the wristwatches market in Bulgaria

Thus, in conclusion, in order to be successful when entering the Bulgaria wrist watches market

firms should take into account the following recommendations:

It is recommended to seek assistance before entering the market due to high commercial

and market risks, e.g. making contact with Chamber of Commerce in Bulgaria

The use of established networks of partners can facilitate the market entry and help

overcome various obstacles

Firms should target low and focus on mass and middle market watches

The competitive advantage could be achieved by sensitive pricing and/or reasonable

quality;

When developing the marketing strategies and communication activities the main focus

should lie on “survival” values such as religion, hard work etc.;

For some firms it can be reasonable to establish the production facilities in Bulgaria

because of cost advantages and geographical advantage at EU level

The lowest level of internet access in the EU has been registered in Bulgaria with a 45%

share of households with such access>thus offering products via e-commerce is not

recommended.

11. ConclusionConsidering the analysis of market environment concluded in previous chapters it is adequate to

evaluate the wristwatches market in Bulgaria as rather risky, especially in comparison to other

EU member countries. For smaller firms it is highly recommended to follow the model of

Uppsala and enter the market in small incremental steps to gain experience and increase

commitment in the market. For larger firms with more resources a more direct approach might

be desirable, when taking the geographic and cost advantages into account. FDI as for example

establishing a sales branch or even a manufacturing facility might prove viable and is

considerably promoted by the government. However, both small and large firms have to keep in

mind, that the middle market for wristwatches hardly exists and that the luxury brands are

bought largely abroad. Thus, only the mass market representing the low-end can be evaluated as

viable. Nevertheless, there is a keen competition in this segment and thus firms are especially

advised to make use of possible network partners and other institutions to facilitate the entry and

overcome possible obstacles.

Resources1. Axtell, R.E. Essential Do’s and Taboos. The Complete Guide to International Business and

Leisure Travel. John Wiley &Sons, Inc. (2007)

2. Bulgaria – Language, Culture and Etiquette (2011). Downloaded on on November 6 th 2011

from http://www.kwintessential.co.uk/resources/global-etiquette/bulgaria.html

3. Bulgaria, July 2011, Economics. Downloaded on November 10th 2011

from http://www.edc.ca/english/docs/gbulgaria_e.pdf

4. Bulgaria - Why to enter this market (2011), PMR Consulting. Downloaded on November 

15th from http://www.pmrconsulting.com/Countries/Bulgaria.html

5. Bulgaria: Introduction (2011). Downloaded on November 1st 2011 from

http://globaledge.msu.edu/Countries/Bulgaria

6. Bulgaria: Risk Assessment (2011). Downloaded on November 2st 2011 from

http://globaledge.msu.edu/Countries/Bulgaria/risk

7. Bulgarian National Bank: Economic Review (2011). Downloaded on November 1st 2011

from

http://www.bnb.bg/bnbweb/groups/public/documents/bnb_publication/pub_ec_r_2011_01_e

n.pdf

8. Bulgaria Black Market (2011). Downloaded on November 7th 2011 from

http://www.havocscope.com/regions-main/europe/bulgaria/

9. Central Intelligence Agency (2011). Downloaded on November 6 th 2011 from

https://www.cia.gov/library/publications/the-world-factbook/fields/2172.html

10. Coface Country Report Bulgaria (2009). Downloaded on October 25th 2011 from

http://www.coface.ee/CofacePortal/ShowBinary/BEA%20Repository/EE/ee_EE/ratings/BG

11. Countries and their Cultures (2011). Downloaded on on November 6 th 2011 from

http://www.everyculture.com/Bo-Co/Bulgaria.html

12. Doing business in Bulgaria (2010). Downloaded on November 2st 2011 from

http://www.ukti.gov.uk/export/countries/europe/easterneurope/bulgaria/doingbusiness.html

13. Doing Business in Bulgaria (2011). 2011 Country Commercial Guide for U.S. Companies.

Downloaded on October 25th 2011 from http://www.buyusainfo.net/docs/x_2758095.pdf

14. Doing Business in Bulgaria. Bulgarian Social and Business Culture (2009). Downloaded on

on November 6 th 2011 from

http://www.communicaid.com/access/pdf/library/culture/doing-business-in/Doing

%20Business%20in%20Bulgaria.pdf

15. Gaston-Breton, C. & Martin, O.M. (2011). International Market Selection and Segmentation:

A Two-Stage Model. International Marketing Review, 28(3), 267-290.

16. Internet World Stats (2010). Downloaded on on November 6 th 2011 from

http://www.internetworldstats.com/eu/bg.htm

17. Itim International (2009). Downloaded on November 6 th 2011 from http://www.geert-

hofstede.com/

18. Jewelry/Watches (2010). CCP Luxury Industry Market Review 2010 Bulgaria. Downloaded

on 7th 2011 from http://www.capital.bg/getatt.php?filename=o_875931.doc

19. Market For Watches (1995). Downloaded on November 7th 2011 from http://fon.gs/watches/

20. National Accounts for Bulgaria: Sources, Methods and Estimates. Centre for Co-operation

with the Economies in Transition and Bulgarian National Statistical Institute. OECD 1996:

86

21. National Statistical Institute (2011). Downloaded on on November 6 th 2011 from

http://www.nsi.bg/index_en.htm

22. Raiffeisenbank: Bulgarian Economy Will Continue to Grow in 2012 (2011). Downloaded on

November 1st 2011 from

http://news.rbb.bg/en-US/news/.000001_2009/7988_11_26_16_02_02_0164/48-

Raiffeisenbank-mesechen-makroikonomicheski-analiz-septemvri-2011

23. Structural Business Statistics Methodology ( s.a.). Downloaded on November 6th 2011 from

http://ec.europa.eu/eurostat/ramon/nat_methods/SBS/SBS_Meth_BG.pdf

24. The Jewellery Market in Bulgaria (2009). Worldwide Jewelry Market Demand and

Opportunities. Downloaded on November 6 th 2011 from http://hrm.iimb.ernet.in/lib-

services/ISI%20Reports/Worldwide%20Jewelry%20market%20Demand%20and

%20Opportunities.pdf

25. Watch Segmentation (2011). Downloaded on November 7th 2011 from

http://www.oppapers.com/essays/Watch-Segmentation/609968

26. Worl development report: Conflict, security and Development, IBRD/WB. Downloaded on

November 21st 2011

27. World Bank to help Bulgaria develop infrastructure (2010). Downloaded on November 1st

2011 from http://www.eubusiness.com/news-eu/bulgaria-worldbank.5u0

Appendix 1

Economic Data

Bulgaria Exports

Bulgaria exports were worth 3270 Million BGL in August of 2011. Bulgaria exports mostly fuels, manufactured goods (clothing, footwear), machinery and transport equipment and chemicals. Bulgaria's main exports partners are Germany, Turkey, Italy, Greece and Romania. This page includes a chart with historical data for Bulgaria's exports.

http://www.tradingeconomics.com/bulgaria/exports

Bulgaria Imports

Bulgaria imports were worth 3233 Million BGL in August of 2011. Bulgaria imports mainly fuels, machinery and transport equipment, metals, raw materials. Bulgaria's main imports partners are Russia, Germany, Italy, Romania and Italy.

16

Bulgaria Balance of Trade

Bulgaria reported a trade surplus equivalent to 37 Million BGL in August of 2011. Bulgaria exports mostly fuels, manufactured goods (clothing, footwear), machinery and transport equipment and chemicals. Bulgaria's main exports partners are Germany, Turkey, Italy, Greece and Romania. Bulgaria imports fuels, machinery and transport equipment, metals, raw materials. Bulgaria's main imports partners are Russia, Germany, Romania and Italy. 

http://www.tradingeconomics.com/bulgaria/balance-of-trade

Bulgaria Population

The total population in Bulgaria was last reported at 7.6 million people in 2010 from 7.9 million in 1960, changing -4 percent during the last 50 years. Bulgaria has 0.11 percent of the world´s total population which means that one person in every 909 people on the planet is a resident of Bulgaria.

17

http://www.tradingeconomics.com/bulgaria/population

Bulgaria Unemployment Rate

The unemployment rate in Bulgaria was last reported at 10.2 percent in the third quarter of 2011. This page includes a chart with historical data for Bulgaria's Unemployment Rate.

http://www.tradingeconomics.com/bulgaria/unemployment-rate

Bulgaria Consumer Confidence

In Bulgaria, consumer confidence improved to -41.7 in April of 2011 from -38.6 in January of 2011. In Bulgaria, the consumer survey is carried out 4 times a year on a rotational principle and covers around 1200 people from urban and rural areas. The questionnaire includes 15 questions relating to the financial situation of household, general economic situation in the country, consumer prices, unemployment, major purchases, household savings, financial situation of household, buying a car, buying or building a home and purchases for home improvements. All assessments of present situation or present tendency and all expectations refer to a 12-month-period of variable change.

18

http://www.tradingeconomics.com/bulgaria/consumer-confidence

Bulgaria Business Confidence

In Bulgaria, business confidence improved to 20.5 in July of 2011 from 18.9 in June of 2011. In Bulgaria, the business survey in industry measures the level of optimism that people who run companies have about the performance of the economy and how they feel about their organizations’ prospects over the next 6 months. Business confidence surveys can provide useful signs about the current condition of the economy, because companies often have information about consumer demand sooner than government statisticians do.

http://www.tradingeconomics.com/bulgaria/business-confidence

Bulgaria GDP Growth Rate

The Gross Domestic Product (GDP) in Bulgaria stagnated in the third quarter of 2011 over the previous quarter. Historically, from 1997 until 2011, Bulgaria's average quarterly GDP Growth was 1.13 percent reaching an historical high of 13.40 percent in December of 1997 and a record low of -7.70 percent in March of 1998. Bulgaria is one of the lowest income member states of the European Union to which it belongs since 2007. In recent years the country has experienced a fast economic growth. Yet, corruption and a weak judicial system stand on the way of future

19

expansion. The main sectors of Bulgarian economy are industry and agriculture. Bulgaria produces a significant amount of manufactures and raw materials (iron, copper, gold, bismuth, and coal), electronics, refined petroleum fuels, vehicle components, weapons and construction materials.

http://www.tradingeconomics.com/bulgaria/gdp-growth

Appendix 2

Socio-cultural data

Figure 1. Hofstede’s 5 Cultural Dimensions

Source: Itim International (2009)

20

Appendix 3

Distribution of family income - Gini index

This index measures the degree of inequality in the distribution of family income in a country. The index is calculated from the Lorenz curve, in which cumulative family income is plotted against the number of families arranged from the poorest to the richest. The index is the ratio of (a) the area between a country's Lorenz curve and the 45 degree helping line to (b) the entire triangular area under the 45 degree line. The more nearly equal a country's income distribution, the closer its Lorenz curve to the 45 degree line and the lower its Gini index, e.g., a Scandinavian country with an index of 25. The more unequal a country's income distribution, the farther its Lorenz curve from the 45 degree line and the higher its Gini index, e.g., a Sub-Saharan country with an index of 50. If income were distributed with perfect equality, the Lorenz curve would coincide with the 45 degree line and the index would be zero; if income were distributed with perfect inequality, the Lorenz curve would coincide with the horizontal axis and the right vertical axis and the index would be 100. Index for Bulgaria - 45.3 (2007), 26 (2001). Bulgaria is 38. on the list of most unequal countries. (Central Intelligence Agency 2011)

Appendix 4According to COFACE (Compagnie Française d'Assurance pour le Commerce Extérieur), the world leader in trade-credit information and protection, Bulgaria has a country rating of B, thus caution is advised as the political and economic situation is rather unstable. Occasionally unfavorable corporate payment behavior can occur and the probability of corporate default is appreciable. (Bulgaria: Risk Assessment, 2011) It is advisable to secure payments against default by using financial instruments such as securities or bank guarantees.

21