Forside - Det Digitale Projektbibliotek, Aalborg Universitetprojekter.aau.dk/projekter/files/18161111/10th_semester_… · Web viewOverseas subsidiaries are located in Egypt, Zambia,

August 2009

Agnieszka Cieśla

Master’s Dissertation

International Business Economics

Market Opportunities for NIRAS in Poland Within Environmental

Services Field

International Business Economics, 10th Semester

Aalborg University

IBE 10th semester, 2008

The Project Topic:

Market Opportunities for NIRAS in Poland Within Environmental Services Field

The project timeframe:

25.02.2009-25.08.2009

Supervisor:

Arnim Decker

Author:

Agnieszka Cieśla

-----------------------

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Table of Contents

1. Introduction......................................................................................................................5

2. Problem formulation........................................................................................................6

3. Research design...............................................................................................................7

4. Methodology....................................................................................................................9

4.1. Theoretical view on the systems approach.................................................................10

4.2. View on the company reality.....................................................................................14

4.3. Data collection............................................................................................................16

4.4. Limitations of the research.........................................................................................17

5. Presentation of the company..........................................................................................18

5.1. Services......................................................................................................................19

5.2. Plans for growth.........................................................................................................21

6. Internationalization of the firm......................................................................................22

6.1. Current NIRAS’ position...........................................................................................24

6.2. Internal internationalization factors...........................................................................24

6.2.1. Implementation of international business competences.........................................27

6.2.2. Market oriented company.......................................................................................28

6.2.3. Conclusions............................................................................................................31

6.3. External internationalization factors-analysis of the business environment..............31

6.3.1. Cultural Environment.............................................................................................33

6.3.2. Theoretical perspective on culture..........................................................................34

6.3.3. Applying theory into a real business environment.................................................383


6.3.4. Conclusions............................................................................................................43

6.4. Legal forces................................................................................................................44

6.4.1. The sources of the environmental law in Poland....................................................44

6.4.2. Potential partners for NIRAS from the public sector.............................................45

6.4.3. European Union......................................................................................................48

6.4.4. Funds for the implementation of environmental policy.........................................49

6.4.5. Conclusions............................................................................................................50

7. Public Private Partnership (PPP) theory........................................................................50

7.1. Organization of PPP...................................................................................................51

7.2. NIRAS involvement in a PPP project in Poland........................................................53

7.2.1. Public tenders.........................................................................................................54

7.3. Conclusions............................................................................................................54

8. Recommendations..........................................................................................................54

9. Final conclusions...........................................................................................................58

10. References......................................................................................................................60

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1. Introduction

There are numerous incentives behind the internationalization process. One of the most frequent motives is to gain access to new and larger markets in order to achieve growth. Firms expand the market for their products by exporting or creating subsidiaries or joint ventures abroad. Many firms go abroad to have access to new know-how and technology in order to remain competitive. This indicates that various internationalization processes are undertaken by firms to achieve different strategic goals. Globalization of the world brings new opportunities as well as enormous complexity of the business decision makers. In Europe companies operate in environment affected by diverse national cultures and institutional influence of European Union. With the increase of international business ventures numerous researches appeared trying to classify issues faced by international entrepreneurs and state what factors would increase the international success. NIRAS’ objective is to expand its offer in Poland and provide the environmental services there. The company has already a subsidiary established in Poland within construction field and now wants to introduce other offerings there within environmental technologies field. This is a challenging task because in Poland which is a new European Union member and a post-communist country the environmental field was neglected for many years. There is very short tradition of introducing environmental technologies and sometimes there is lack of suitable legislations. On the other hand, such situation can be an interesting and beneficial venture for NIRAS as it can bring its experience, capacity and know-how to the Polish market and take advantage of the arising environmental technologies sector as one of first players from the private sector. In order to undertake this challenge NIRAS has to prepare carefully and search for arising opportunities to offer their service. To identify properly such opportunities the company has to develop certain internal competences and analyze external factors, which

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will allow to enter the Polish market. In the environmental technologies sector it is important to know the legislations concerning the issue as well as public organizations dealing with environmental management and protection. It is also significant to get familiar with the business culture of the target market, which will simplify the business relationships. Furthermore, the company has to improve its market orientation in order to be more competitive and react better for the arising market opportunities. This project will attempt to analyze the opportunities for NIRAS in Poland within environmental services field and its outcome will be a strategy for entering this market. The project will consist of two areas- theoretical and empirical.

Theoretical part will serve as a guidelines towards the empirical part. Deductive way of

generating knowledge will be adapted and the project will follow the assumptions of the

systems approach, where a company is perceived as an open system contingent to the

environment.

2. Problem formulation

Obtaining an access to the foreign market is an objective for numerous companies nowadays.

It is especially evident for firms in Denmark where the home market is relatively small. An

increasing speed of competition and the globalisation of various industries put an enormous

pressure on companies to adopt global strategies1. Obtaining an access to the foreign

countries' markets is an objective for many managers. They have to internationalise in order

to gain adequate level of profits, in some cases, it is the only way to secure their existence on

the market and preserve a long-term profitability. An individual business cannot longer

compete as a separate entity, but rather as a coordinated network of interrelated foreign units.

In the new business economy, companies’ competitive position and level of their performance

depend on their management ability of to manage the international network of business

relationships. A company approaching the foreign market will find itself in a completely new

circumstances and reality. Every country has its specific culture and business environment. To

learn what are the market opportunities in a given country it is necessary to get familiar with

the complex business environment which includes the culture, economy, legislations and 1 Riusala, K., Suutari, V. (2004), p.743

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other important factors. Apart from external issues influencing the internationalization

process, there is a set of internal characteristics that the company has to obtain in order to

succeed in a foreign market.

NIRAS offers a wide array of consultancy services. It has customers in both-public and

private sector. It has already established construction department in Poland which has

successfully operated for several years and now the company plans to enter Poland with

environmental consultancy services. In Denmark the environmental division serves mostly the

public sector. Its services depend considerably on national and international legislations and

regulations. Similar situation is expected in Poland. The first steps of Polish environmental

division will be within the public sector, thus it is necessary to investigate the legal

environment there and get familiar with the natural environment protection and management

organization which is extremely important for NIRAS performance in Poland. In order to

generate the strategic knowledge which will facilitate NIRAS’ trouble-free action in a new

market it is necessary to investigate its conditions and determinants.

Consequently, considering the discussed assumption the project problem formulation will be

as follow:

What are the NIRAS’ market opportunities in Poland within environmental consultancy

services area?

The project will address also the following issues:

What are the conditions of successful internationalization of a firm?

How can NIRAS undertake an environmental project in the Polish public sector?

The research will be directed in a way which enable to investigate the market opportunities, to

get familiar with the natural environment organization and management in Poland and will be

concluded with a set of guidelines for NIRAS helping the company to undertake first steps in

Poland within the environmental consulting service. The project will also tackle the question

of internationalization of a firm in correspondence to NIRAS’ case and address the problem

of internal company’s characteristics necessary .for international success.

3. Research design

In the following section the structure of the project will be presented and explained. The

structure of the project is determined by the deductive way of reasoning. The aim of the

project is to answer the questions stated in the problem formulation and to provide the 7


guidelines for NIRAS concerning its market opportunities in Poland within the environmental

services area. The project will consist of theoretical and empirical part and will be presented

from the systems approach perspective. Theory will serve as an explanation of the observed

regularities and they will guide the collection of empirical evidence and will be sourced from

the available contemporary background literature. The analysis of theory and conducted

empirical study combined intend to generate legitimate knowledge concerning the issue of

research. Nevertheless, the obtained knowledge will be limited by some factors described in

the “Limitation of the research” section. The research will be conducted according the

deductive method. The researcher, on the basis of what is known about the particular domain

and of theoretical considerations in relation to this domain, deduces knowledge which is

subjected to empirical study. Theoretical hypothesis will be translated into operational terms.

The data will be collected in relation to the concepts that make up the theory. Theory and

hypothesis come first and they drive the process of data gathering.2 The theoretical

background will be constituted by some definitions and considerations relevant to the research

scope. First of all, the literature review concerning internationalization of a firm will be

presented as it is important for the research question to present how the scholars perceive the

internationalization process. Then, some more particular aspects of the internationalization

concerning the NIRAS case will be presented. First, it will be discussed what internal

competences a company needs in order to successfully approach foreign markets and how to

improve the company’s market orientation. These issues will be followed with an elaboration

of external business environment, then the two questions will be related to each other. Having

created a theoretical platform for international market opportunities for NIRAS, the theory of

Public-Private-Partnership (PPP) will be depicted in reference to the company entering the

Polish market of environmental consulting service. Then it will be suggested how practically

NIRAS can approach and benefit from the PPP project in Poland. The theoretical platform

will be complemented with the Geert Hofstede theory of cultural dimensions. The theory will

help to understand social environment in a foreign market and provide the knowledge about

cultural differences between Danish and Polish business cultures and their possible

repercussions for business cooperation between these two countries. Even if the Hofstede

theory is relatively old, it has been chosen due to the fact that it is widely recognized and

approved by scholars and gives a valuable picture of cultural differences and characteristics.

All the theoretical considerations will be utilized empirically in favor of the company market

opportunities investigation in Poland. The research will be completed with strategic 2 Bryman A, Bell E. (2007), pp. 11-13

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guidelines concluding the project outcomes and giving suggestions for exploiting the market

opportunities for NIRAS in Poland within the environmental services field.

Figure 1: Research design

Source: Own Creation

4. Methodology

This section will present the systems approach under which the project will be elaborated. The

analytical and actors approach will not be presented in detail as they are irrelevant for the

project contents. The system approach is applied as it provides broader understanding of

NIRAS opportunities in Polish business environment. However, some elements of actors

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approach cannot be eliminated due to the researcher’s subjective point of view on the scope of

research. The choice of the methodological approach has been made upon the fact that the

systems approach plays a dominant role in the study of both, business practice and business

theory and is relevant to the problem addressed in the project.

Searching for the market opportunities for NIRAS in Poland can be viewed as an analysis of a

particular system, its elements and environment. The internationalization process takes place

in an international environment. The company is one of many elements of the system and can

be perceived through a set of elements connected to and influencing each other. The activities

of the company and its internationalization process are embedded in a certain system and can

be observed through this system’s components, relations and links. There are internal and

external factors influencing the company internationalization, both of them are connected to

each other and to the environment as well, creating a unique system. Investigating NIRAS’

market opportunities can be performed as investigating the given system possible synergies.

Internationalization of the company, through a system’s thinking point of view, is a process

which involves coordination from many parts of complex organization and is highly

influenced by external factors such as demand, size of foreign market, global competition, and

the nature and relationships the industry the company is operating in. Once knowledge about

international market is acquired, transformed and transmitted and the resource base is defined,

company internationalizes at a certain speed, committing resources outside domestic markets.

The development of the company on the international markets is influenced by the

relationships between companies including personal networks3. Internationalization of the

company has an impact on its structure, as the company grows. The CEO is no longer

associated to the headquarters, but has to divide attention between all outlets. The local

managers gain new roles and more responsibility in maintaining the local outlets.

4.1. Theoretical view on the systems approach

One of the theoretical origins of the system approach is the “general systems theory”, which is

based on Bertalanffy’s “holistic theory of life and nature”4. A system is a whole formed from

the continual interaction of its components, which operates toward a common purpose.

Examples of systems include companies, biological organisms, communities and atomic

3 Blomstermo A., Sharma, D. D. (2003), p. 414 Arbnor I., Bjerke B. (1997) p. 30

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structures5. Within any systems, there are few or more interactions or feedbacks between

system’s components. For instance, component X can affect Y, and Y in turn affects X

through multiple cause and effect chains of interaction. In a system the cause and the effect

can be far away in a time and space. The effect might not be visible until days, weeks even

years later. The long-term effects might be either positive or harmful. The ability to connect

cause and effect results in a good decision-making6. Interconnecting parts of the system

function as a whole. Adding additional pieces or taking away pieces can make changes.

Cutting a system in half does not result in the existence of two smaller systems, but causes a

damaged system, which will probably not function. The arrangement of the pieces is crucial

and the behavior of the system is dependent on its structure. Changes in the system structure

cause the changes in behavior7.

According to Arbnor and Bjerke, a system is “a set of components and the relations among

them”8. In the systems approach, the components refer to all the factors within a specific

system and the relations refer to the internal collections within the boundary of the specific

system. As to the relation outside of a system, Arbnor and Bjerke call it “system

environment” and define it as “the factors that are important to the system to consider but are

beyond its control”9. One feature of the systems is that layers of systems create them. In other

words, every component in a system can be a sub-system of its own. Any system can be

distinguished as an open system or a closed system. The former category includes systems

that have connections to their environment while the latter category includes systems that

have no connections to their environment. Business theory is usually focused on open

systems10.

According to Arbnor and Bjerke, there are four different types of systems models, as shown

on figure 2. The first type is “the mechanical systems model”. These types of systems are

closed and static, only internal relations are relevant. The second type is “the biological

systems model”. Systems of this type are open, which stipulates that the environment-system

relations are important. The third type is “the self-organizing systems model”. Systems in this

type are perceived as open and learning systems and have the ability to organize their

structures according to the new environment. The last type is “the value-laden systems

model”. This type of systems can be regarded as the third type. The system has its culture in

5 Senge P. (1990) p. 906 O’Connor J., McDermott I. (1997) p. xvii7 O’Connor J., McDermott I. (1997), p.38 Arbnor I., Bjerke B. (1997), p. 1119 Arbnor I., Bjerke B.,(1997), p. 11210 Arbnor I., Bjerke B. (1997), 112

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addition to this. Here, the culture is regarded as a set of basic values developed in a

company.11 The first two systems models can be viewed from a structural perspective, where

the emphasis is put on static structures and regulations. The last two system models can be

viewed from a procession perspective, where the focus is put on dynamic structures and non-

regulative processes. A key word within this perspective is the learning organization, i.e. the

company.

Figure 2: Four systems models

Source: Arbnor I. & Bjerke B., p. 125

The core part of this project will be a discussion evolving around an open, dynamic system in

a complex reality. The system will be considered together with its culture which is a kind of

filter through which various conceptions and goals are classified. The system will be

presented not only as an open, learning and structurally changing entity but will involve the

ability and the interest of the individuals to participate in learning and in changing of

structures.

11 Arbnor I., Bjerke B. (1997), p. 122-12512


Conception of reality Conception of reality in systems approach, unlike that in analytical

approach, cannot be understood as a “sum up” of the entire components. Instead, it focuses on

the relations within a system, i.e. the synergistic effects brought out by the constitution of the

components. The whole is more than the sum of its parts. In a word, the reality in the systems

approach refers to an objective (or objectively accessible) reality, consisting of wholes, the

outstanding characteristics of which are synergies.12 According to Arbnor and Bjerke’s

conception of reality within the systems approach, the reality can be viewed in two ways, i.e.

the objective point of view and the pragmatic point of view. The objective point of view states

that the reality consists of concrete systems and sub-systems that can be observed objectively.

The pragmatic point of view states that it is not important whether the reality consists of

systems or not, the focus is laid on the explanation capability that systems has when

explaining the reality.

Conception of Science Conception of science is related to the perception of knowledge.

Knowledge in this approach depends on systems13 and it is more likely to be systems-

dependent, which means it may differ from system to system. Therefore, knowledge

developed by the systems approach cannot be understood as general knowledge like it is in

the analytical approach14. According to Arbnor and Bjerke, the conception of sciences within

this approach is inspired from both natural sciences, where the emphasis is put on objective

relations, and the social sciences, where creation of knowledge and the hermeneutic learning

process is highlighted.

Scientific ideal Scientific ideal in systems approach states that the purpose is to provide a

better understanding of systems in business reality15. The level of ambition in this approach is

to diagnose system problem through systems analysis, e.g. positive or negative synergy, on

the basis of describing and explaining systems.

Ethical and aesthetical aspect The ethical and aesthetical aspect is highlighted in creating

knowledge through this approach. This is due to the importance of systems` interdependent

relationships inside and between companies as well as their surroundings.16

Criticisms of the Systems Approach A general criticism of the system approach is that it is

too abstract to view and understand reality properly. The perception of system thinking relies

on business’ relations, but lacks explanation in real life context. This means, that the system

12 Arbnor I., Bjerke B. (1997), p. 7013 Arbnor I., Bjerke B. (1997), p. 5214 Arbnor I., Bjerke B. (1997), p. 7015 Arbnor I., Bjerke B. (1997), p. 14616 Arbnor I., Bjerke B. (1997), p.146

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approach is not suitable for research in all spheres, but can be better utilized in the research

areas where a system is often viewed as an explanation metaphor due to its strong explanation

capability.

Another criticism of the system approach is its lack of focus on the individuals, because it

considers the individuals and their subjectivity to be less valuable. Instead, it focuses on the

relations between the parts, which benefit the whole. In some cases the system approach is

considered to be insufficient because it lacks focus on individuals.

4.2. View on the company reality

NIRAS as an international company can be perceived as a system which should give positive

synergy effect to its participating members and stakeholders. The goal of the system is to

make profit from the local and international business operations in order to maintain and

develop the organization activities on the international markets. The considered system

involves NIRAS positioned in a new environment, among new stakeholders. The system’s

goal is to utilize the opportunities arising within this environment. The goal for the project is

to identify market opportunities for NIRAS on the Polish market and design

internationalization strategy. Thus, the methodological goal according to deductive way of

research is to analyze the relevant theories and then derive from the research guidelines for

NIRAS.

NIRAS can be viewed as a social system which is creative, can provide meaning for their

members and has free will. Such system can determine its behavior and can grow

quantitatively and qualitatively. The picture below presents NIRAS in a perspective of the

systems approach. The company is a part of the system and has relations with other parts of

the system, other systems and with the environment as well. In this project NIRAS will be

approached from the system point o view and analyzed in the light of its connections and the

system possible synergies.

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Figure 3: The system model

Source: Own creation

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INTERNATIONAL MARKET

POLISH MARKET

NIRA

S

Polish reality and

culture

Polish environmental organizations

EU

NIRAS Polska

Global community

Natural environme

nt


EXPLANATION OF PARADIGM

The following master thesis will be analyzed under the functionalistic paradigm since it is

laying out a pragmatic and objectivistic view on the how the reality should be perceived. The

functionalistic paradigm is fundamentally built on realism, determinism and the existence of

common valid laws.17 The system will be analyzed through the pragmatic paradigm. The

pragmatic system approach stipulates that the value of knowledge should be equal to the

knowledge in practical use.18 Pragmatism believes that knowledge should be put into practical

use and that theories work in the real world when implemented in a company and put into

practice. In addition to this, a pragmatic seeks to find possible solutions to the problems. The

functionalistic paradigm attempts to explain the root of the problem through ideals of natural

sciences. The collective actions are explained through their functions within the social context

where they appear. The single parts are explained as a function of the whole system and are

analyzed in the context of their contribution to the whole system. Additionally, the pragmatic

approach is used. The project attempts to objectively investigate the relations between the

single parts within the company and the synergy effect that the whole system contributes to.

4.3. Data collection

The data collected for the project purpose will be of primary and secondary character. The

primary data will include interviews conducted in the company with the two of managers of

the environment division and with a certain number of employees. The data collected in that

way embrace the company concerns for growth, plans for entering Polish market, the

expected opportunities and obstacles there, potential services that the company wants to offer

in that market, the relationships between NIRAS headquarters in Denmark and the

construction department in Poland and the possible cooperation of the two for introduction of

the environmental services in Poland. Also among the primary data are information about the

current position of NIRAS on the international markets, its plan for future internationalization

and development as well as scenarios for achieving the goals appointed. The primary data are

used for assessing the present situation of NIRAS in terms of its internationalization process,

evaluate its market opportunities in Poland and design some guidelines for the Polish market

successful entering. The primary data were collected through unstructured interviews with the

persons mentioned above. The secondary data sources include NIRAS’ business plan for 17 Burrell, G., Morgan, G. (1979), pp. 25-2618 Arbnor, I., Bjerke, B. (1997), p. 118

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years 2009-2013, the company official websites both, international and Polish externally

available, the company brochures. Other secondary data originate in the adequate literature

concerning the topic- books, scientific articles, websites, dictionaries. Among the secondary

sources there are also Polish Public Organizations’ official websites, and the Polish

environmental law code.

However, some limitation of the data collection might occur. This is due to the fact that some

data are confidential and cannot be used in the project as they determine the company market

position to some degree. Limitations of the primary data is also due to the fact that managers

and employees tend to speak in favor of the company, which results in a biased distortion of

the real picture of the system. Managers might be afraid of information leakage, which can

influence the company’s position in a highly competitive environment. Interviews with

employees might provide their subjective opinions and beliefs, which can be at variance with

system’s approach applied in this thesis. The customers comprise the main asset of the

company, some of the information may be confidential, therefore very difficult or even

impossible to obtain. The limitation of the secondary data is that the writer’s professional and

cultural background, understanding, and method of research and interpretations of the data

might have influenced the data. Furthermore, the following project will be limited with a

deductive way of generating knowledge, where theories serve as guidelines towards areas

subjected to the research.

4.4. Limitations of the research

The project will look upon market opportunities for NIRAS in Poland within the

environmental services field and the internationalization of the company from the system

approach perspective. This limits the project with the view of the reality through two other

approaches. The system approach projects each individual, as a part of the system and

therefore the actors should be analyzed as representatives of the system. Applying the

analytical approach enables the separation and the evaluation of individual units, their

activities and experiences with the project issues without placing them in a context of the

whole system. The actor approach, on the other hand, would have made it possible to

investigate the individual actors reasoning and understanding of the problem. The choice of

deductive approach limits the data collection and the generation of new knowledge because

the researcher can be bounded by the chosen theories. Deductive thinking aims to interpret

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individual cases within previously derived theoretical concepts. The inductive and abductive

way of structuring the project was excluded. The underlying theories of internationalization,

international business environment, international business competences, market orientation

and PPP will serve as a guideline to the structure of the project and data collection. Moreover,

the theories identify the fields to investigate and research, which might make the researcher

blind for other angles of the problems, experienced in the reality. The following project will

look into theories related to investigating foreign markets opportunities for NIRAS and its

successful internationalization from cultural and legal perspective. The project will not

analyze the theories of types of internationalization. The project will also exclude technical

and economical view on the international business environment and will focus more on

market opportunities for NIRAS within the public sector.

5. Presentation of the company

NIRAS was founded In 1956 and Since that time expanded to a large consulting engineering

company employing more than 1200 people. Throughout the growing period the company

was gaining new competences within the usual and specialized engineering fields. Thus,

NIRAS has capacity to handle large projects both in Denmark and internationally. NIRAS

provides consultancy services within building, industry, infrastructure, public utilities,

environment, climate change, energy, water, natural resources, agriculture, forestry, physical

planning, management, socio economics, corporate real estate services, property development

and development aid.19 NIRAS is organised in eight divisions and each division is sub-divided

into a number of business units. Two new divisions were formed in 2008. The Climate

Change and Energy division was a spin off mainly from the existing Environmental division.

The TP Group division was a result of the acquisition of TP Group.20

19 Niras’ business plan20 TP Group is an independent consultancy company offering fully integrated services to real estate owners, investors, operators and occupiers. Source :www.tpgroup.se

18


Figure 4: NIRAS Group’s divisions

Ciwil Works & Engineering

Building & Industry Environment

Planning & Management

Climate Change &

EnergyInternational Consulting

Building & Industry Poland TP Group

Denmark

Sweden

Finland

Poland

Estonia

Ukraine

Russia

Global

Source :NIRAS’ business plan 2009-2013

NIRAS’ divisions are defined by scope of services and/or geography. Divisions defined by

scope of service serve customers within company’s full geography, whereas the two divisions

TP Group and NIRAS Polska primarily serve the local markets in Sweden and Poland within

their respective service areas. Apart from the line management there are Office Managers,

Regional Managers and Country Managers representing NIRAS´ business interests and

different business support systems in the specific geography.21 Today, NIRAS is an

international group of companies with over 1,270 employees. 25% of the employees work

abroad and approximately one third of the turnover originates from markets outside Denmark.

There are subsidiaries of NIRAS in ten countries and the company has completed projects in

over 180 countries.

5.1. Services

NIRAS specializes in engineering consulting which belongs to service area. According to

business literature service is a complex phenomenon. The word has a wide array of meanings

from personal service to a service as a product or offering. Any physical product can be

turned into a service, for example a machine which is used to treat a customer. Usually a

service involves a sort of interaction with the service provider and it is not an object but a

21 Niras’ business plan. pp 1-419


process or an activity intangible in its nature.22 Service can be described as a provider’s

application of competences for the other party’s benefit. It can take various forms- of action,

performance or promise that are exchanged for value. Providers and clients might be

individuals, firms, government agencies, or any organization of people and technologies. The

key is that providers and clients work together to co-create value – the client owns or controls

some state that the provider is responsible for transforming according to some agreement

between provider and client. Jim Spohrer et al. 2007 have discussed also a concept of service

system which can be specified as a value co-production configuration of people, technology,

other internal and external service systems and shared information such as language,

processes, metrics, prices, policies and laws. This system is characterized by internal and

external structures in which value is produced together with other service system directly or

indirectly. Instances of service systems can be families, firms, individuals, nations or

economies. 23

The literature generally proposes five distinct features of services24:

Intangibility- refers to the fact that services do not always consist of physical items

which can be judged by customers at the same way as goods- by sight, taste, smell or

touch. More often they have a form of experiences which cannot be assessed before

consumption.

Inseparability- means that many services are supplied and consumed at the same

time.

Heterogeneity- the production of services is often embodied in the provider’s

personnel, thus there is potentially a variation in the way the service is produced and

in its quality.

Perishability- some services cannot be stored and once they are not utilized they can

never be recovered, i.e. an empty seat on an airline flight.

Ownership- usually the customer does not own the service but obtains an access to it.

Even though these are the features which differentiate services from goods there are just few

services displaying all these characteristics simultaneously. Most of them though has more

than one.

NIRAS services scope

22Gronroos C. (2007), pp. 51-5223 Jim Spohrer et. al. (2007), pp. 71-77.24Buckley J. P. and Ghauri P. N. (1999), pp. 149-150

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Through the company eight divisions consultancy services within building, industry,

infrastructure, public utilities, environment, climate change, energy, water, natural resources,

agriculture, forestry, physical planning, management, socio economics, corporate real estate

services, property development and development aid are provided. Property development and

corporate real estate services was added to the service portfolio with the purchase of TP

Group in 2008. The services are offered at a higher level in the value chain than many of the

traditional service areas and as such it constitutes a strategic move towards a larger proportion

of high value services in the portfolio.25 The environmental division is one of the biggest in

Scandinavia and employs around 250 employees. Main fields of the division activity are:

integrated water resources management, soil and groundwater pollution, assessments of the

environment and ecological systems - economy and biodiversity, natural resources

management, environmental consultancy to industry and waste management.

5.2. Plans for growth

According to NIRAS’ annual report of 2008 the company plans to double its size in five

years. The firm goal is to expand especially in a Baltic region and become the “first choice”

for both –competent employees and visionary customers. Currently the head office is in

Denmark and in Europe there are subsidiaries in Sweden, Finland, Poland, Ukraine, Estonia,

Bulgaria and Russia. Overseas subsidiaries are located in Egypt, Zambia, Tanzania, Sri Lanka

and Malaysia. During 2008 NIRAS has undergone significant international growth both

organically and via acquisitions. Hence acquisitions in Sweden, Poland and Finland have

increased the number of employees in the foreign subsidiaries by 151 adding up to more than

20% of the Group’s employees. The company expects that due to the recent Danish and

international governmental recognition of issues related to climate changes there will be

substantial investments in renewable energy, energy conservation and preventive measures.

As a consequence substantial market growth is expected within the Climate Change & Energy

division. An increasing number of NIRAS’ customers are operating internationally. Growing

internationally with the customers is therefore a key element in the international growth

strategy of NIRAS. Growth will be pursued through a combination of acquisitions and

organic business development, but with an aim that more than half of the growth is organic .

Currently in Denmark NIRAS is number four among independent engineering consultants and

25 Niras’ business plan. pp 4-521


number seventy two in Europe. Companies Ramboll and Cowi are regarded as main

competitors of NIRAS and both companies are also present in Poland. 26

6. Internationalization of the firm

The following sections will present the theoretical background chosen by the researcher to

investigate the problem of the project. The theory aims at helping to organize the particular

aspects of gathered knowledge and according to the deductive way of research serves as basis

for the empirical investigation.

Nowadays in the globalization era the home market is too small for numerous companies.

They look for development opportunities, new markets and new customers. The

internationalization can be defined as: “The process in which firms both increase their

awareness of the direct and indirect influences of international transactions on their future,

and establish and conduct transactions with other countries.”27

One of the most important NIRAS’ business goals is to be a preferred supplier in its field in

the Baltic Sea region and make its core competences available in the global market.

Consequently, growth and internationalization are among the company’s strategic tools used

to achieve its business goals. An increasing number of NIRAS customers is operating

internationally so a logical step for a company is to grow internationally together with its

market scope. For the Polish market the company has a plan to develop activities within

NIRAS Polska Civil Works, Infrastructure and NIRAS International Consultants. A plan for

the further future is to continue internationalization process and introduce the divisions:

Environment, Climate Change & Energy and TP Group in Poland.28 There are various

objectives of companies’ internationalization and they depend on the firm profile and the

industry it operates in. The figure below presents the most important incentives driving the

internationalization process.

26 Niras’ business plan. pp. 11-1227 Beamish P. W. (1990)28 Niras’ business plan

22


Figure 5: Objectives of expansion of a company

Source: Own creation

In order to design a strategy of internationalization of a firm it is important to include both-

internal and external factors into such plan. In a global business environment any firm which

wants to be successful outside its local market has to develop a set of competences allowing

to operate in foreign settings. These competences demand the involvement of managers and

employees aiming at gathering knowledge about target markets, make accurate decisions and

undertake suitable actions. International business competences should be adapted throughout

all the divisions of a company- marketing, human resources, R&D and others and the

divisions should cooperate on a success abroad. The company should also improve and

develop its market orientation in order to be competitive in the contemporary demanding

business environment. The internal firm’s capability to internationalize should result in

23

Objectives of expansion of a company

Fulfill certain needs within the organization

Expand the company product line

Gain access to new customers

Achieve competitive economies of scale

Expand the company geographical reach


external actions undertaken in order to succeed abroad. One of such accomplishments is a

proper assessment of a company’s business environment. The following sections will present

the internal competences essential for a thriving international performance, the importance of

a developed marked orientation and way to achieve it and the manner in which NIRAS should

utilize the international business competences and market orientation. Then, the external

factors influencing NIRAS’ actions to be undertaken in Poland will be discussed.

6.1. Current NIRAS’ position

Currently NIRAS operates both locally in Denmark and in some international markets as well.

The goal of the project is to assess NIRAS’ market opportunities in Poland within the

environmental services field which will be performed also in the light of other NIRAS’s

international activities. The biggest offices of NIRAS outside Denmark are in Sweden and

Poland. And the company aims at constant expanding its international scope. Gaining wider

market in Poland is a part of NIRAS internationalization strategy of becoming a preferred

consultant in the Baltic region and attract both the best customers and employees.29 The

NIRAS’ construction division in Poland is also important from the potential opportunities

within environmental consultancy perspective. The company can utilize the existing network

and experience of the managers and employees from this division in order to create a new

division either by organic growth or by mergers or acquisition.

6.2. Internal internationalization factors

Before a company decides to internationalize it has to follow some conditions to be able to

do that. There are numerous medium-size companies which do not decide to approach foreign

markets or they do but without any success. This is due to the fact that the good condition of

the company on the local market is not sufficient to be successful abroad. There is a set of

intangible features which determine whether the company can internationalize or not. Before

NIRAS will attempt to challenge international markets it should revise or develop its abilities

to operate in a foreign environment. Internationalization process depends on some particular

company’s features. In order to decrease the risk level the company should obtain some

competences, which are vital in a successful internationalization process. Knight and

29 www.niras.com24


Daekwan (2008) describe these competences as intangible, overarching firm resource that

stimulates superior international performance in a company. They identify some core abilities

substantial for a firm which wants to be successful abroad. These competences are:

international orientation, international marketing skills, international innovativeness and

international market orientation. Other scholars also mention cross-cultural competence as an

important factor determining international success or failure. International business

competences are conceptualized as multidimensional concepts reflecting the extend to which

the company adopts a bundle of international competences to perform international business

activities in foreign markets in an effective way. These competences have connotations to the

cultural issues, they include learning about international environment and ability of adapting

the whole organization to new environment through interactions with the foreign markets. The

list of competences was derived after interviewing managers of international companies and

combining the results with the available literature. In the study it was proved that high level of

international business competences results in better international performance of the firm in

terms of international sale growth, international market share, international profitability and

export intensity. Thus, any company willing to operate abroad should introduce the

development of these competences into its program.30

International orientation

As international business is risky the company has to adapt entrepreneurial and aggressive

attitude in order to succeed abroad. A firm with a strong international orientation tends to be

characterized by managerial vision and proactive organizational culture for developing

particular resources aimed at achieving goals in foreign market. International orientation

implies active exploration of new opportunities in foreign markets. It is likely that companies

possessing this feature will increase certain practices, processes and decision-making

activities associated with targeting new markets abroad and thus, will perform more

effectively internationally.

International marketing skills

This is the ability of creating value for foreign customers through effective market

segmentation and targeting and through integrated international marketing activities, by

planning, controlling and evaluating how the marketing tools are organized to differentiate

offerings from those of competitors. Firms with good marketing skills attempt to offer

products whose value is perceived by customers as better than the value of alternative

30 Knight G. A., Daekwan K. (2008) pp 255-27325


products. Without strong international marketing skills the firms are less likely to succeed

internationally, even if they offer superior products or services. As a result of globalization

buyers are better organized nowadays, have more information and higher demand. In such

competitive environment international marketing skills are essential and assist firms to

operate more effectively. Such skills provide foundations for a company to interact in

different foreign markets and enable managers to create effective strategies aimed at

overcoming international challenges and to adapt them to local business environment. As a

conclusion it can be stated that international marketing skills help companies reach and serve

international customers more effectively.

International innovativeness

It can be described as a capacity to develop and introduce new processes, products, services or

ideas to international markets. The company should be open to innovations as this openness

determines the degree to which members of a given organization are willing to consider

adoption to innovation or whether they are resistant to it. It is kind of ability to recognize the

need for new ideas and take the actions to meet this need. There are two main sources of

innovations- R&D that draws on firm’s accumulated knowledge and market intelligence

including the innovations of other firms. The latter factors seems to be crucial if it comes to

international markets. Organizations without the capacity to innovate may invest time and

resources in studying markets but are less capable to translate this knowledge into practice

and act upon it. International innovativeness is crucial when a company internationalizes.

Technological leadership improves competitiveness of a firm and together with strong

international innovations it constitutes a source of processes, products and services that fit

international market better.

International market orientation

Market orientation is a critical concept in marketing and management concerning both-

domestic and international business. There are various definitions of this concept, generally it

can be defined as an extend to which the firm’s international business activities are oriented

towards customer and competitors and the extend to which these activities are coordinated

across functional areas in the firm. Kohli and Jaworski (1990) have synthesized the existing

definitions in their research and attempted to create a new term. According to previous

researches market orientation is a phenomenon consisted by three pillars: customer focus,

26


coordinated marketing and profitability and a market-oriented organization is the one n which

the three elements are operationally manifest. Kohli and Jaworski derived a broader definition

based on a literature and field study and stated that 31market orientation is an organization-

wide generation of market intelligence pertaining to current and future customer needs,

dissemination of the intelligence across departments and organization-wide responsiveness to

it. In their definition the scholars approach the market orientation rather as a degree of a

certain continuum than a phenomenon present or not in the organization. Especially the

degree of market orientation can be specified as a degree to which the business unit obtains

and utilizes information form customers, develops a strategy meeting customers needs and

finally, implements this strategy by being responsive to the customer needs and wants.32

Among the internal factors of a company internationalization, market orientation is the

broader one which to some degree includes other competences. Thus, it will be elaborated

further as it is important for NIRAS’ success in a new market. The companies with strong

international market orientation tend to achieve superior international performance. It is

crucially important for a firm to understand customers, competitors and other market forces

and to disseminate learning about these entities within the organization. All the international

business competences put together will create a ground for a strong market orientation of an

organization and ensure that the company will achieve a better business performance.

Cross-cultural competences

Such competence is an ability to develop and interpret criteria for personal and business

performance that are universal and independent from assumption of a single country culture

or context and to implement these criteria into various cultures, countries and contexts. Such

ability emerges from the appropriateness and effectiveness of a person behavior in a foreign

cultural environment.33

6.2.1. Implementation of international business competences

NIRAS operates already on international markets and is interested in a constant growth and

development. Within five years period the company wants to double its size in terms of

employee number therefore, it is necessary to pay more attention on their strategy concerning

international presence. Expanding the international market is the medium-term goal for

31 Kohli A. K., Jaworski B. J. (1990), pp.1-18.32 Ruekert R. W. (1992), pp. 225-24533 Muzychenko O. (2008), pp. 366-377.

27


NIRAS. In order to achieve that it is necessary to develop international organization and

management skills. For NIRAS the Baltic Sea region is a target market for the future, starting

from Poland the company can expand to the neighboring countries- Czech Republic, Slovakia

and Lithuania. The company should revise its international skills, design and implement some

strategy for international growth. International orientation is an important competence for

international growth. The company should constantly explore arising opportunities,

proactively develop resources and be focused on pursuing the set goals. International market

intelligence should be actively developed and thorough due-diligence should be performed.

Furthermore, it is important to follow the international marketing rules. NIRAS should

segment its target market and treat each segment separately with integrated international

marketing activities. Especially for environmental consulting the segmentation will be

specific as the nature of such service is different than this of typical goods. Moreover, the

company should permanently asses the organization of its marketing tools and compare it

with the competitors’ ones as it has been proved that the products of organizations of superior

marketing skills are valued higher by the customers. It is especially important in the

international environment where the customers are well informed and very demanding. High

competition level also imposes need for international innovativeness. In order to be perceived

as better than the competition the company has to constantly develop and introduce new or

improved services. In the engineering consulting business new technologies and services

appear everyday, thus NIRAS has to involve innovativeness into its strategy. The company

should value both sources of it- its own R&D and the market intelligence and use them for

implementing novelties into its service portfolio. Technological leadership will ensure NIRAS

international competitiveness. Another important factor for international success is market

orientation. The company has to make sure that its activities are oriented towards customers

and competitors and that they are coordinated across the functional areas of the firm. NIRAS

has to scrutinize all the market forces and use the knowledge of them for the organization

benefit. The result of introducing the international business competences will be improved

market orientation of NIRAS and, as a consequence, superior business performance.

6.2.2. Market oriented company

To enhance an international success NIRAS needs to improve its market orientation. Only

after that the company will be able to read the psychological and social factors determining

the customers actions. As a result the firm will know how to provide the offerings that the 28


customers want. In return, the market oriented company will meet its primary purpose-

making profit. Kohli and Jaworski (1990) suggest that market orientation plays significant

role in the company business performance and is worth to devote some resources in order to

climb a higher business level. They have investigated when it is worth to develop market

oriented activities and what can be the exact benefits. It is argued that market orientation

depends on both internal and external antecedents and can be influenced by the business

culture. Numerous scholars enumerate three main elements of market orientation-341)

organization-wide generation of market intelligence relevant to customer needs 2)

dissemination of the intelligence across departments 3) organization-wide responsiveness to

it. The response is a two-steps activity-it involves design of the response and its

implementation. These three elements can lead to significant consequences for a company

such as cohesive product focus, clear leadership or better coordination of sales activities and

they can be completed when the company improve its international business competences. In

general it can be stated that a market oriented company has an unified focus for the efforts and

projects of individuals and departments within the organization, which provides to its superior

performance. The managers asked for the positive consequences of implemented market

orientation enlisted factors like increased profits, sales volume market share and sales growth.

Generally, which is important for NIRAS, market orientation increases business performance

in various perspectives. For example, market orientation has a positive influence on the

employees. The feeling of belonging to an organization in which all the individuals and

departments work toward a common goal of satisfying customers brings a sense of pride to

the employees and makes them more efficient and more committed to the organization. The

conclusion is that once NIRAS wants to improve its business performance, satisfy employees

and gain new markets- the degree of its market orientation may be one of the determinants of

success. The best way to raise the market orientation according to Kohli and Jaworski (1993)

is to place a lot of emphasis to the issue by the top managers through consistent and continual

reminders to the employees that it is critical to them to be sensitive and responsive to market

developments. It is also necessary to take some risk and accept some occasional failures of

new services or products as a natural part of business conduct. The authors of the research

also have noted that the process of raising the market orientation in a company has two

sources. First, it is top management and second, there should be attention put to the nature of

interdepartmental dynamics in an organization. The conflict between a company divisions

tends to limit the level of its market orientation when the connectedness facilitates it. Thus, 34 Kohli A. K., Jaworski B. J. (1990), pp.1-18.

29


NIRAS should analyze the dynamics existing within its structure as a factor influencing its

market orientation. Especially in Poland where at the beginning different divisions of the

company are supposed to cooperate, the manner in which they will interact will be a very

important determinant of market orientation. The authors suggest some ways to manage the

two interdivisional dynamics, conflict and connectedness. These can be common lunches and

sport activities as well as exchange of the employees across departments or cross-department

training programs. Thanks to such efforts employees can understand personalities of

managers from other departments, their culture and specific perspective. Another set of

factors influencing market orientation is the organization-wide systems. Issues like

centralization and formalization tend to influence the market intelligence generation and

dissemination and in consequence improve market orientation. The more centralized the

organization is the less market oriented it seems to be, therefore allowing employees to

participate in decision making process can have positive influence. According to Hofstede

research such attitude is a common practice in Danish firms so NIRAS should transfer it to its

international practices. Also rewording system can be important criterion of market

orientation, it helps to improve it when it depends on factors like customer satisfaction or

intelligence obtained more than on sales and profits amount. R. W. Reukert (1992) provides

more determinants of market orientation. In his research he suggests that also recruiting and

selection of personnel systems will influence the degree of a company’s market orientation as

it is important to find proper people who have commitment to serve customers, and train them

in such a way that they will perform the firm’s strategy properly.35

Finally to utilize and combine all the abovementioned competences on the international

market NIRAS needs to poses the cross-cultural skills. To accomplish a successful

internationalization strategy the company has to involve cultural factors which will

complement the internationalization tools. In order to utilize the internal internationalization

competences the company needs to asses the environment in which it is going to operate.

Such knowledge is essential in order to plan what tools and in what way to use on the

international market and to make the company more market oriented.

35 Ruekert R. W. (1992), pp. 225-245

30


6.2.3. Conclusions

Knight and Daekwan (2008) concluded that the companies that have possessed a high level of

the abovementioned competences were more successful performing internationally. Having a

strong international orientation can shape organizational culture and international market

orientation helps to collect and disseminate market intelligence on foreign customers and

competitors and to coordinate functional areas internally for international business activities.

All the competences affect a company’s international performance positively and constitute

an intangible source of competitive advantage. On the top of that there are the cultural factors

which constitute kind of glue for all the international competences. Having possessed the

international business competences and improved market orientation the company can expect

progress in many fields such as financial performance, employees’ satisfaction and

commitment to the organization and general business performance which all are areas that

NIRAS desire to improve.36

6.3. External internationalization factors-analysis of the business

environment

Before NIRAS will apply its international competences in the Polish market it has to get

familiar with the new market surroundings. In order to assess NIRAS’ opportunities in Polish

market it is essential to analyze the business environment there. Thanks to such analysis the

company will be able to act quickly, take advantage of the opportunities before the

competitors do and respond to arising threats on time. NIRAS is a Danish company and it is

influenced by the environment in which it operates. When the company operates in another

country also the environment changes. Any business has to understand the surrounding

conditions and circumstances in which it operates in order to be successful. The forces in a

foreign environment are the same as those in domestic one but their values are usually

different. Furthermore, the foreign market forces are often difficult to assess. The

international environment consists of the interactions between domestic environmental forces

and foreign environmental forces when a business is done between them. Making decisions in

36 NIRAS’ business plan31


international context is more complex than in domestic environment. Such decisions are

influenced not only by local forces but by international environments as well.37

International environment is created by several factors which can be divided into groups. To

characterize a foreign country business environment it is important to mention the following

aspects:

The economic environment-consisted of factors like economic growth, unemployment

rate, currency exchange rate, financial and political health of the partners, etc;

The technological environment- like infrastructure, services and products of

competitors, etc;

The political-legal environment- political stability and risk, restrictions on

international financial flows, environmental policy and others;

The socio-cultural environment-society structure, different values and attitudes,

traditions, etc.

In order to operate successfully in a given environment businesses must be able to respond

effectively to the factors in their environments that affect them. The environment can

constitute an opportunity or a threat for a company. A successful firm will be able to deal with

both- to overcome threats and take advantage of opportunities at least as well as its

competitors. Whether new international markets will provide opportunity for a firm will

depend on factors such as culture, infrastructure, politics of the destination country. In order

to understand and make benefit of the new surrounding, conditions and circumstances

environmental analysis is needed. The environment is not static and it is necessary to know

how it will change in order to respond in a way that will allow the company to achieve its

goals.38 For the purpose of the thesis only cultural and legal environment will be analyzed. It

was comprehended that for the particular situation these two aspects of the NIRAS business

environment in Poland are the most important for assessing the company market opportunities

in this country. The reason is that NIRAS’ activities depend significantly on legal regulations,

both-national and issued by EU. As for cultural environment, it was proved by numerous

scholars that this factor is vital for international business and when neglected can cause failure

of the venture.

37 Ball et al. (2008), pp. 23-26.38 Wetherly P., Otter D. (2008), pp. 17-19

32


6.3.1. Cultural Environment

Culture is understood as the shared assumptions, beliefs and values that the people of a

geographical [bounded] area acquire over generations39. These are historically derived and

created social institutions, cultural symbols, rituals and myths. But though some of the

assumptions, beliefs and values are relatively stable over time, culture is adaptive and

changeable. As the environment varies, people tend to adapt new symbols, myths, rituals and

to behave differently. Meanwhile, the fundamental assumptions, values and beliefs are altered

very slowly as they are rooted deeply in people’s minds.40 Business environment is changing

in many ways, so is the business culture which can be the most challenging element of the

international marketplace. According to Czinkota (2007), cultural factors have an important

impact on the flow of business. Each society has its own elements of culture. These elements

of culture are manifested through:

Language

o verbal

o nonverbal

Religion

Values and attitudes

Manners and customs

Material elements

Aesthetics

Education

Social institutions

One of the most important issue for a foreign company is cultural analysis, which includes

information that helps the company´ staff to take planning decisions. This information from

the cultural analysis must be more than collecting the facts; they must also be interpreted in

the proper way.41 Every society is composed of people and their culture and it is impossible to

speak about one without referring to the other. When people work in societies and cultures

different than their own, the problems they encounter dealing with a single set of cultures are

multiplied by the number of cultural sets they find in each of their foreign markets. E. T. Hall,

a famous anthropologists claims that there are only two ways to adapt to foreign culture. First,

39 Sinha, Jai B. P. et al. (2004), p. 89.40 Sinha, Jai B. P. et al. (2004). p. 4041 Czinkota, M.R., Samli, A.C. (2007), pp. 316-331

33

http://www.scopus.com.zorac.aub.aau.dk/search/submit/author.url?author=Samli%2C+A.C.&origin=resultslist&authorId=6602219982&src=s

http://www.scopus.com.zorac.aub.aau.dk/search/submit/author.url?author=Czinkota%2C+M.R.&origin=resultslist&authorId=6603587883&src=s


is to spend a lifetime in a country and the other is to undergo an extensive, highly

sophisticated training program that covers the main characteristics of a culture, including the

language. The program should be a profound study of what culture is and what it does,

imparting some knowledge of the various ways in which human behavior has been

institutionalized in a given country.42 Kotler (2005) mentions a term cultural environment. It

is made up by institutions and other forces that affect a society’s basic values, perceptions,

preferences and behaviors. People grow up in a particular society that shapes their basic

beliefs and values. They absorb a worldview that defines their relationships with others.43 A

company doing business internationally must be prepared to face such environment.

6.3.2. Theoretical perspective on culture

In the situation of a company internationalization the norms of behavior accepted by the

members of a given social group become increasingly important as. It should be noticed that

the behavior of individual person is influenced by different layers of culture- the national

culture determines the values that influence the business culture, which then determines the

culture of the individual. This structure can be presented in a form of a nest-where the

different culture levels are nested into each other.

Figure 6: The levels of culture

42 Hall E. T. (1977), pp. 5443 Kotler P. and Armstrong G. (2005), pp. 89-92

34


Source: Hollensen 2003

National culture- gives the overall framework of cultural concepts and

legislations of business activities.

Business/industry culture- every business is conducted within a certain

competitive framework and within a specific industry (or service sector). This

level has its own cultural roots and history. Industry culture is very much

related to a branch of industry, and this culture of business behavior and ethics

is similar across borders.

Company/organizational culture- the total organization often contains

subcultures of various functions. Functional culture is expressed through

shared values, beliefs, meanings and behaviors of the members of a function

within an organization.

Individual behavior- the individual is affected by the other cultural levels. In

the interaction environment the individual becomes the core person who

interacts with the other actors in industrial marketing settings. The individual is

seen as important because there are individual differences in perceiving the

world. 44

44 Hollensen S. (2003), pp. 195-19735


In international business it is crucial to perceive the culture in the context of the country. It is

better to regard the culture as different from, rather than better or worse than the home

country culture. In this way the differences and similarities can be explored and can be used

as an advantage instead of causing obstacle for a firm.

Geert Hofstede Cultural Dimensions

In order to get a better understanding of culture, G. Hofstede created four key cultural

dimensions45 and studied the attitudes towards them among various nations. He enumerated

the following dimensions:

Power distance

Uncertainty avoidance

Masculinity vs. femininity

Individualism vs. collectivism

Later, in 1988, he added the fifth dimension, called “Long term versus short term

orientation”46, which helped to explain further differences between cultures and which was

neglected in former studies. Each of the dimensions measures a certain characteristic of a

particular culture. The countries were given a score depending on how high was the level of

measured trait in a society.

Power distance- it can be described as an extend to which the members of a certain group or

organization will accept the inequality of power distribution. It suggests that inequality is

accepted by both the followers and leaders. Power an lack of equality are typical

characteristics of any society. It can be stated that every society is unequal to a certain degree.

In societies of large power distance degree there is considerable hierarchy and inequality of

roles. Subordinates expect to be told what to do. In the opposite subordinates expect to be

consulted and the hierarchy is small.

Uncertainty avoidance- measures the tolerance of the society for uncertainty and ambiguity.

It indicates how comfortable or uncomfortable the members of the society are when facing

unstructured situation. Such situations can be new, surprising, unexpected or different from

45 Hofstede, G. (1983), p. 4646 Hofstede, G., Bond, H. M. (1988), p. 6.

36


usual circumstances. The cultures of high uncertainty avoidance level try to minimize the

possibility of unexpected situations occurrence by introducing rules, lows, security and safety

measures, and on the religious ground by believe in one absolute truth. The opposite type, are

more tolerant for untypical situations, they establish small amount of rules and are flexible.

On religious or philosophical level they are relativists.

Masculinity vs. femininity- it describes how the roles are distributed between genders. The

studies revealed that women's values differ less among societies than men's values. Moreover,

men's values from one country to another contain a dimension from very assertive and

competitive and maximally different from women's values on the one side, to modest and

caring and similar to women's values on the other. The assertive pole has been called

'masculine' and the modest, caring pole 'feminine'. The women in feminine countries have the

same modest, caring values as the men. In the masculine countries they are assertive and

competitive to a certain degree, but not as much as the men, so that these countries show a

gap between men's values and women's values.

Individualism vs. collectivism- measures the degree to which the societies are integrated into

groups. In individual societies there are weak ties between their members and everybody is

expected to be responsible for himself. In opposite, members of collective societies are

integrated into strong groups and protected by them in exchange for their loyalty.

Long term orientation vs. short term orientation- Values associated with Long Term

Orientation are thrift and perseverance, when values associated with Short Term Orientation

are respect for tradition, fulfilling social obligations, and protecting one's 'face'. Both the

positively and the negatively rated values of this dimension are found in the teachings of

Confucius, the most influential Chinese philosopher who lived around 500 B.C.; however, the

dimension also applies to countries without a Confucian heritage.47

The strengths and weaknesses of Hofstede’s model

Even though the Hofstede’s study is quite old, it was conducted 30 years ago, there is no other

study based on such a large sample (116000 respondents). Furthermore, the information

population is controlled across countries so comparison can be made. The connotations of

each dimension are highly relevant for international managers. Additionally, no other study

compares so many other national cultures in so much detail.48 It is not the unique theory 47 www.geert-hofstede.com48 Hollensen S. (2003), p. 207

37


available for cultural differences explanations, but it is the most generally accepted and

despite being relatively old it is used in lots of research papers.

On the other hand it assumes that the national territory and the limits of culture correspond to

each other. But cultural homogeneity cannot be taken for granted in countries with a range of

cultural groups like US, Belgium or Spain. What is more, the respondents of the survey

worked in a single industry and a single multinational. In any country the values of IBM

employees are typical only for a small group, which is the only one social group represented

in the study. Some of the dimensions overlap each others, for instance the level of power

distance and the masculine/ feminine level. Still, in spite of some disadvantages the theory is

widely accepted and used by scholars in the international study.

6.3.3. Applying theory into a real business environment

Poland in Geert Hofstede’s cultural dimension

In the light of Geert Hofstede’s cultural dimensions Poland is a country of a very high

uncertainty avoidance level. This indicates that the society has low tolerance for uncertainty

and ambiguity and its members feel uncomfortable in unstructured situations. Such societies

create strict laws and rules in order to avoid vague situations. People from such culture are

also more emotional and motivated by inner nervous energy. Also masculinity level is

relatively high in Poland which means that men’s value dominate in the society.

Individualism is quite high which suggests that everybody in the society is expected to look

after himself. Power distance is quite significant which means that there is hierarchy in the

society. Long term orientation is at the medium level in Poland but it cannot be compared to

Denmark as there is no such measurement for Denmark.

Figure 7: Poland in Geert Hofstede’s cultural dimensions

Source: www.geert-hofstede.com

38


In case of Denmark it is striking that the individualism is at a very high level. That indicates

that everybody in the society is supposed to look after himself. The last three dimensions in

Denmark are at very low levels. The conclusions can be that there is lack of hierarchy there

because of lack of power distance, it is a feminine country as the masculinity level is

extremely low and Danish people are tolerant towards uncertainty and ambiguity due to low

level of uncertainty avoidance.

Figure 8: Denmark in Geert Hofstede’s cultural dimensions


Figure 9: Comparison of the two countries in terms of Geert Hofstede’s cultural

dimensions.

39



Culture is a very important factor in case of international business activities. When the two

involved countries differ considerably there can be problems expected in communication and

cooperation between them. In case of Poland and Denmark there are some divergence in

terms of Hofstede Cultural Dimensions. First of all, the uncertanity avoidance level is much

lower in Denmark. This indicates that when in Denmark emploeeys are very self-dependent

and like to take initiative, in Poland they prefer to have strict rules and indications from the

manager. The two nations will react in a completely opposite way to an unstructured situation.

Danish employees will experience less anxiety, stress or desire to work extensively. Typically

such societies are unemotional, cosmopolitan and unconcerned with life-security. They accept

risk and change jobs often. Managers tend to make risky decisions, get involved id

unstructured activities and do not pay much attention to written rules. In Poland the situation

will be opposite. Also avoidance of responsibility is one of typical characteristics of societies

of high uncertanity avoidance. This can be an effect of long period of beraucratic system in

Poland which was organized by rigid rules and red-tape and when most of citizens were

deprived of free decision making rights. A good managerial practice in such situation would

be close supervision and centralized decision making process.

The next important thing is power distance disparity between the countries. Managers from

flat organizational structure in Denmark will face huge hierarchy in Poland. In result, there

40


will be a high degree of centralization and unequal distribution of power. The subordinates

will accept colse supervisoin and the superiors will make effort to look powerful. Managers

often deny the need to consult subordinates during decision making process and the

employees can be afraid to disagree with the employer.

Also the level of masculinity varies, which indicates that different values dominate in the two

societies. In Poland, where it is higher, it can be expected that economic growth will be

considered as more important than conserving the natural environment-which is an important

information for NIRAS. Career success will be very desirable but also jeaulosy about

someone else’s success can be expected.

As for individualism level, it is slightly lower in Poland. Low individualism can indicate

shared responsibility which was common during the communist times. Low level of

individualism does not mean that such society will be good at group work, however such

skills are achievable.

Considering the abovementioned variations, it should be comprehended by Danish managers

that in order to be successful in business in Poland they should put some attention to the

cultural issues. Poland is a country with real business opportunities for foreign companies but

can be also acultural challenge. Every organization, including NIRAS developed its own

corporate culture which is sometimes in opposite to the culture of the target market. Thus,

there is a need for cultural analysis in order to start successful business in a given country.

The Hofstede model gives some insight into Polish culture and its distinction from Danish

culture.

The result of the study can assist potential investors like NIRAS with valuable knowledge

about business arrangements in Poland.

41


Points to consider when doing business in Poland:

After analysys of the available literature and from the researcher’s own experience some

indicies can be derived concerning conducting business in Poland. From the study of the

Geert Hofstede cultural dimensions there are a few conclusions emerging for the foreign

managers planning business in Poland. Due to the high individualism level, group work can

be problematic to organize. As everybody has its own strong view it can be hard to find

consensus within a group and reach a common way of work. Furthermore, there are some

issues worth to consider before any business trip to Poland:

Management Style49

In Poland there is a hierarchical business culture and managers tend to be authoritative. It

should be expected that the manager will issue direct instructions to the employees and due to

high uncertainty avoidance level the instructions will be detailed. Lack of clear instructions

can be regarded as poor management. The formal character of doing business in Poland

demands careful planning of any business trip in advance. Especially government and state

organizations are exceptionally formally organized. Such situation is a complete opposite of

the democratic management style in Denmark where employees are involved in the decision-

making process and feel motivated when can make their own decisions.

Meetings

It is common that people arrive to meeting prepared, and they expect the same from their

partners, lack of preparations can be regarded as lack of professionalism. An agenda is

prepared in advance and it is followed with little deviation. Meetings usually start and end on

time. A lot of importance is placed on titles and educational backgrounds, this information

should be printed on the business cards. Meetings are usually formal, though they can start

with a degree of small talk- a part of relation-building process.

Communication styles

English knowledge level is quite high nowadays in Poland, so usually there is no need for

translator during business meeting. Opinions are expressed directly, and the truth is not

hidden behind diplomacy. There is not much of body language displayed. During talks

academic titles are often used before surnames and they are always used in formal writings.

49 http://www.worldbusinessculture.com/Business-in-Poland.html42


The formal character of doing business in Poland demands careful planning of any business

trip in advance. Especially government and state organizations are exceptionally formally

organized. Additionally, it should be comprehended that there is a lot of bureaucracy in

Poland and starting business there or even taking part in a public tender demands a lot of

documentation and formal activities.

Tradition

It should be also remembered that in Poland such values as traditions, history and religion are

very important. People are very proud of their cultural heritage and the ability to survive as a

nation for centuries of wars and occupations. Therefore, people in Poland are very happy

when foreigners make attempts to know some of their language and history. In Poland

business values are often judged from the personal traits of the partner. Because of that Poles

need long time to get into business deals as they want to know more than the values of

balance sheets.

6.3.4. Conclusions

Doing business in Poland NIRAS should make some effort to get familiar with Polish culture-

national, organizational and individual as well. For this purpose the Hofstede’s model of

cultural dimensions can be used as it gives insight into the country cultural profile and allows

to compare it with the company home culture. It can be exploited as a tool for finding a

cultural understanding and helping to improve communication between the two parties. This

generates some basis for designing a strategy to operate on the Polish market. The ability of

individuals within firms to fully grasp cultural differences and make adequate behavioural

adjustments is seen as one the key success factors in international operations.50 It can bring

considerable benefits to devote some time and effort in order to be acquainted with the

cultural environment in the target market country. The results of the conducted study can be

utilized by NIRAS during training or induction programs of managerial solutions or job

organizations before entering the Polish market. For successful transfer of NIRAS’ services to

Poland a great emphasis should be placed on effective communication skills and enhanced

cultural sensitivity, which can reduce its negative impact on the internationalization process.

Managers must analyze and become familiar with the hidden language of foreign culture to

make the firm international smoothly. It should be also remembered that Polish economy is 50 Johnson, J. P., Lenartowicz, T. and Apud, S. (2006), pp. 525–543.

43


still in transition stage and it is not an easy task to make up for the years of socialism and

convert from centrally-planned economy to the market oriented.

6.4. Legal forces

There are more and more interrelations in the world nowadays and also law reflects this trend.

When NIRAS will start offering its services in Poland it will be important to follow the local

law. Also numerous services provided by the company are strictly regulated by the law and

whether a given regulation is introduced in a country or not will determine the demand for

NIRAS’ services. Apart from national legislation also international law is important for

NIRAS-especially the one concerning environmental issues passed by the EU. NIRAS as a

company aiming at serving also public sector in Poland has to get familiar with the acts

concerning environmental protection there and with the local organizations in charge of the

environmental issues-as the company potential partners. Environmental consulting, which

NIRAS wants to introduce in Poland, depends considerably on the political prioritization of

environmental investments. And there are some organizations in charge of such investments

which can be potential business partners for NIRAS within the public sector.

6.4.1. The sources of the environmental law in Poland

Environmental law in Poland is regulated with the act from 27 th of April, 2001 with later

corrections. It sets general rules of environmental protection in Poland and specifies particular

areas like protection of the environmental resources, pollutions’ prevention, acting in case of

damage, financing of the environmental protection, responsibility for environmental damages,

administration and institutions of environment protection and adjusting programs. Other fields

like water, energy, waste management, agriculture, noise, environmental investments,

environmental information or hazardous substances are regulated by separate acts. There are

numerous adjustments and changes in the law taking place now as it has to be in accordance

with EU demands and regulations.51 Apart from Polish regulations there are also these

resulting from adjusting Polish legislation to European Union requirements. Especially the

Water and Sewage Directives (91/271/EWG, 2000/60/WE) caused many changes in Polish

law concerning waterworks and sewage treatment. The Minister of Environment, who is

responsible for implementing obligations ensuing from the Treaty of Accession, takes care for 51 www.prawo.ekologia.pl

44


the coordination of activities and programs of water-sewage management in Poland and also

ensures the compatibility of Polish legislation with the European Union requirements. It is

predicted that before 2015 Poland will achieve the demanded condition of water and sewage

systems, and there are proper legislation to accomplish this goal.

6.4.2. Potential partners for NIRAS from the public sector

Potential partners for NIRAS within the Polish public sectors will be these organizations

which are responsible for water management, environmental protection and other associated

fields. Such organizations are in charge of environmental projects in Poland, they control

other institutions, take care for the drinking water supply, control the water resources and are

responsible for the water works and waste management in particular regions of Poland. These

institutions will be from various organizational levels and having various degree of influence

on the environmental protection organization and infrastructure. First of all, such institution

will be The Ministry of Environmental Protection. It manages the environmental resources

and cooperates in this field with various institutions Polish and foreign in terms of its rational

development and usage. The Minister passes different acts and regulations, creates the

government environmental policy and implements it. It is also responsible for creating and

implementing a plan for water management and rational use. Also geology, forestry, and

control of environmental law obeying is among competences of the Minister. It can be a

potential business partner for NIRAS as in many cases it needs some professional advice and

support within environmental technologies development field and it controls other important

organizations.52

KZGW-The National Board for Water Management

The organization is responsible for water management and use and develops the country water

program. Another task is preparation plans for rivers’ basins management. The boards issues

information systems for the water management in particular areas including divisions of

rivers’ basins districts. It controls regional boards for water management, approves their plans

and represents the Treasury in relation to water management. KZGW also plans and

supervises implementation of the activities associated with the maintenance of water facilities

and investments in water infrastructure. It agrees the list of priority projects for the National

Fund for Environmental Protection and Water Management. The president of KZGW has

52 www.mos.gov.pl45


ownership rights to public waters belonging to the State Treasury and controls water

management in terms of flood protection, water usage, compliance with the terms of the

existing conservation areas established under the Law. It is also a coordinating organization

for implementing the Water Directive requirements and for implementation of some part of

the Infrastructure and Environment Program.53

RZGW- Regional Water Management Board

Regional Water Management Board is a state budget unit set up for implementation of the

management of the waters governed by the President of the Executive Board of the National

Water Management. There are seven regional water management boards in Poland. RZGW

main role is to pursue its activities in the area of the main objectives of today's water policy,

based on the management of water resources. This includes formation and protection of

surface water and groundwater in order to achieve and maintain a good condition of these

waters and aquatic ecosystems in accordance with the requirements of the Water Framework

Directive, creation of conditions to meet the legitimate water needs of the population and the

economy (industry, agriculture, shipping, energy and water recreation) with respect of the

principles of sustainable development of water use and protection of people and property

against threats that may occur as a result of extreme events (floods, drought).54

Picture 1: Regional water management boards in Poland.

53 www.kzgw.gov.pl54 www.krakow.rzgw.gov.pl

46


Source :www.rzgw-poznan.pl.

National Environmental Protection Inspectorate (Główny Inspektorat Ochrony

Środowiska)

The inspectorate is responsible for controlling the obedience of environmental protection

rules. Investigating the condition of the environment according to rules of National

Environment Monitoring program through:

monitoring of compliance with environmental protection and rational use of natural

resources

studies of the environment, observation and assessment of its condition and the

changes taking place

development and application of analytical research, control and measurement

organizing and coordinating the National Environmental Monitoring.

Apart from the national inspectorate, there is a network of regional environmental

protection inspectorates (WIOŚ). Their activities may be divided into three groups-

inspection department, monitoring department and laboratory.

Waterworks and Sewage System Management in Poland

47


There is a network of public and private organizations dealing with waterworks and sewage

systems in Poland. Some of them could also be business partners for NIRAS. It depends from

region how they are managed and organized.55

6.4.3. European Union

European Union is an important player on the market of environmental technologies. Its

directives determine the organization of water management in the member countries. In

Poland which is a relatively new member the progress of the Water Framework Directive

2000/60/WE is slower than in Denmark. It gives an opportunity to NIRAS to use its

experience and benefit from numerous projects concerning Water Directive running in

Poland. The goal resulting from the Water Directive in Poland is to achieve a good condition

of water resources. This involves a lot of work and NIRAS could bring experience,

technology and capacity which is very often missing in case of Polish companies offering

environmental technologies. Another point is a special support program from European

Union called Infrastructure and Environment Program 2007-2013. Within this program

there are numerous projects running and planned which comply with NIRAS profile. And it

can be stated that there is not enough experienced organizations to perform these projects,

therefore there is a niche for environmental technologies providers. The aim of the program is

the improvement of attractiveness of Poland as a place for investors through development of

technological infrastructure and improvement of the condition of environment. The program

is partially financed by the EU. EU priority goals constitute 66,23% of the expenditures from

the EU funds of the program. 37,6 billions Euro will be spent on the program (27,9 from EU

funds). The main issues of the program are:

Water and wastewater - 3 275.2 million euro

Waste management and protection of the Earth's surface - 1,430.3 million euro

Resource management and counteracting environmental risks - 655.0 million euro

Nature conservation and development of environmental attitudes - 105.6 million euro

Environment-friendly energy infrastructure and energy efficiency - 1 403.0 million

euro

There are numerous public tenders announced every day and covered from the sources of the

program. Within the next few years the number of environmental projects running in Poland

55 www.gios.gov.pl 48


will be increasing so there are major premises to expect that the potential market for NIRAS

in Poland will increase considerably in the nearest future.56

6.4.4. Funds for the implementation of environmental policy

It is estimated that the necessary funds for the implementation of the environmental policy

program for years 2009-2012 will amount 66,2 billion PLN (15,21 billion EUR) according to

prices from 2007, and 63,5 billion PLN for a period 2013-2016 (14,59 billion EUR). These

costs result mainly from obligations connected with the European Union Accession Treaty. It

is estimated that more than 80% of the abovementioned funds will be spend for complying

with the European Union environmental standards. The division of the funds according to

direction of investments in the period of 2009-2012 will be as follow:

Air protection- 19,3 billion PLN (4,44 billion EUR)

Water protection and management- 36,1 billion PLN (8,3 billion EUR)

Waste management- 6,7 billion PLN (1,54 billion EUR)

Other goals- 4,1 billion PLN (0,94 billion EUR)

As far as the structure of the funds for years 2009-2012 is concerned, 43% will come from

private funds and 57 from public. Among the public funds 11% will be from local

governments, 21% from the National Fund for Environmental Protection, 5% from the state

budget and 20% from external funds like European Union Funds and others. The most

important goals in Polish Environmental Policy in 2009-2016 will be water protection and

management, air protection and waste management. The increase of spending on research and

development in environmental protection and the implementation of eco-innovation is

planned in the nearest future. Till 2016 environmental projects will be supported significantly

with the national system of environmental funds and funds from abroad. Private companies

have to follow certain rules and limits of acceptable public support specified by the European

Union regulations. It should be also mentioned that the system of financing the environmental

protection is based on the program of the National Fund for Environmental Protection and

Water Management and the Regional Funds for Environmental Protection and it is supported

by some EcoFunds and Bank of Protection of the Environment (BOŚ).57

6.4.5. Conclusions

56 www.pois.gov.pl57 Polityka Ekologiczna Państwa (The National Environmental Policy)

49


In order to be successful facing the Polish market NIRAS needs to be aware of the legal

regulations concerning environmental issues. Especially entering the public sector as it

performs on the basis of the particular legislations. The company also should know which

public organizations can be potential partners for them. The knowledge of the country legal

organization will allow NIRAS to prepare the suitable way of acting. It will be much more

effortless to approach the Polish market of environmental services after analyzing the actors

present there and with awareness of the rules determining it. The situation presented above

gives good conditions for NIRAS for operating in Poland. As a company with core

competences of water management, soil and ground water pollution, waste management and

others connected to natural environment NIRAS will find a huge market for its services in

Poland and can help to create traditions and capacity for environmental protection

management in this country.

7. Public Private Partnership (PPP) theory

In modern, developed societies the public sector is a major economic player nowadays.

Successful public projects can be seen as a significant opportunity for private business,

especially in such fields as building, infrastructure, consulting services or transport. There are

numerous differences between the public and private sectors, for instance in management

approaches and in environments surrounding both sectors, but it is unavoidable that they

merge with each other. The operation of the market always depends on certain forms of law

and public policy like private property rights, law of contract or the regulation of money as

means of exchange. Business decisions, on the other hand, influence society and public

sectors in terms such as the environmental impact of production, types of jobs needed in the

economy or the level, type and locations of employment. There has to be some balance or

combination of the state and the market in order to achieve the public interest or a common

good of the society.58 Business has an important stake in various areas of government activity

because often it is a direct or indirect beneficiary or supplier of goods and services to the

public sector. For companies like NIRAS public sector will be a very important customer as it

provides the physical infrastructure and offers consulting for public sector. It can be stated

that a business never operates in a truly free market, but always in a political environment in

58 Wetherly P, Otter D. (2008), pp. 276-28050


which government decisions influence the threats and opportunities that a company confronts,

both in a national and international context. 59 Apart from national governments also

supranational governments should be mentioned. An example can be European Union, which

is especially important for NIRAS as through its directives it creates and influences

environmental policies in the member countries and these policies influence the market on

which NIRAS operates. European Union law in many cases takes precedence over national

regulations. For the company approaching public sector projects it is necessary to investigate

the legal environment of the target country in order to get familiar with the local rules and

policies.

7.1. Organization of PPP

Public and private sectors often perform joint projects nowadays and the cooperation takes

form of public-private partnership. Public-private partnership (PPP) can be defined as

“People and organizations from some combination of public, business and civil

constituencies, who engage in voluntary, mutually beneficial, innovative relationships to

address common societal aims through combining their resources and competencies”.60 Often

private organizations are asked to tender for public contracts through the “public

procurement”. This system has strict rules on how contracts are awarded and they are tied to

agreed and expressed needs of central or local governments. PPP brings together the

relationships between the private and public sectors so that particularly the private sector is

taking responsibility for providing public services. The public sector gains by new

management techniques brought from private sector, the private sector apart form financial

incomes benefits from control of its involvement in service provision. 61 As the private sector

is not funded by the government, the actual motive for involvement in a PPP usually is the

expected profits. One of the benefits that a private company would gain from a PPP is the

promotion of their public image, which is becoming more and more important nowadays.62

Additionally, PPP can provide more-efficient, lower-cost reliable services, helps to keep the

public sector administration costs down and can reduce the project life-cycle costs and

delivery time. It also helps to improve quality and efficiency of the services and facilities

innovations in infrastructure development. It transfers risk related to construction, finance and

59 Wetherly P, Otter D. (2008), pp. 98-9960 Nelson J, Zadek S. (2000), p 1461 Wetherly P., Otter D. (2008), pp.285-28662 J.LaFrance, M.Lehmann (2005), pp. 216-229

51


operation of project from public to private sector and helps to promote local economic growth

and employment opportunities.63 Ghobadian et al. (2004) mention two additional reasons for

more extensive use of PPP projects. First, the private sector will get to know the needs of the

public sector client over time. Secondly, the private sector has more to offer than the public

sector in terms of skills, technology and knowledge therefore providing better quality

facilities.64

There must be some conditions fulfilled in order to enhance the PPP success probability.

There are some areas which determine proper functioning of public-private cooperation. Most

scholars agree that one of these factors is a good coordination across projects, functions and

organizations. To set a proper coordination it is important to have decision makers established

from the beginning of the project, the progress of the given venture should be consistently

monitored, the project should be goal-directed and measured by the results, there should be

clear and adequate working methods and agreements and finally, the private sector should be

free to fulfill its entrepreneurial role and there should be mutual confidence. Apart from

coordination it is important to allocate risk properly and perform thorough and realistic cost-

benefit assessment.65 There are always other issues as well, which are specific for a given

project and cannot be generally specified. The literature also enumerates the most important

obstacles appearing on the way of public-private partners. They can be of social, political or

legal nature, they can concern many issues like unfavorable economic or commercial

conditions, inefficient public procurement framework, lack of mature financing techniques

and they can lie on both- the public or the private sector side. Also the natural differences

between the partners can be a source of obstacles. There are many factors to consider but

generally it can be stated that the success of PPP depends on the competence of a government,

the selection of appropriate concessionaire, an appropriate risk allocation between the two

parties and a proper financial system.66 Despite the possible difficulties, when correctly held

PPP can be a key strategy for delivering public service and infrastructure. Therefore, it is very

important to understand and enhance knowledge of PPP nature.67

7.2. NIRAS involvement in a PPP project in Poland

63 Young Hoon Kwak et al. (2009), p.4564 Ghobadian, A.et al. (2004), pp. 271-30265 D. Tranfied et al. (2005), pp. 165-17566 X.Q. Zhang, (2005), pp. 71-80.67 Young Hoon Kwak et al. (2009), p. 19

52


To get involved in a PPP project can be an excellent way for NIRAS to enter Polish market.

They can expand into a new market and through a public sector gain promotion of the

company image. There is a huge tradition worldwide for PPP ventures in fields like water

delivery, sewage treatment or environmental technologies and they tend to be advantageous

for both parties. From the legal point of view, there are a good conditions in Poland for

public-private initiative as there was a new act passed recently, aiming at simplifying the

procedure for PPP and encouraging the private sector to get involved in the public ventures. It

is addressed mainly to companies specialized in infrastructure, construction and

environmental technologies hence also NIRAS can benefit from it.68

NIRAS has a long experience in participating in PPP projects in Denmark and abroad and it is

expected that the public market share will grow during the next years.69 As an experience,

credible participant of PPP in Denmark it can transfer its know-how to Poland and benefit

there from it. Poland as a country of centrally planned economy till 1989 did not have a lot of

time to develop a tradition of PPP ventures so the country can also take advantage of NIRAS’

knowledge in this field. Especially that currently there are numerous projects running or being

planned aiming at adjusting Polish environmental management to European Union standards

involving both public and private sectors. PPP in Poland is regulated by the Act on Public-

Private Partnership from 2008.70 NIRAS can take advantage of the fact that PPP does not have

a long tradition in that country and there is a demand for organizations experienced in this

area. Thus, the company should involve the rules of PPP into its strategy for operating in

Poland. Moreover, there is a lot of support from the EU for the water supply, sewage

treatment and other similar projects in Poland and this can be also a benefit for NIRAS,

especially as it has some experience in applying for EU funds. To initiate the PPP in Poland

NIRAS should look for some favorable projects and partners. In order to do that the analysis

of the new market environment will be performed to state where and how the company could

act. After successful PPP project attempt, NIRAS would become a credible player on a Polish

market and a favorable opinion would allow the company to win new customers within both

public and private sectors. As NIRAS has already opened its construction department in

Poland it could be exploited in order to get access to Polish market and enhance the likelihood

for introducing the environmental services there. Also the area where the construction

department is situated would be the most favorable for the start up, as the company brand is

68Young Hoon Kwak et al. (2009), p. 2269 NIRAS’ business plan70 www.partnerstwopublicznoprawne.info.pl

53


already recognizable there and it would be easier to win customers through the Polish

subsidiary.

7.2.1. Public tenders

The most obvious way for undertaking a PPP project in Poland for NIRAS is to make an offer

in a public tender. Therefore, NIRAS should know the general rules of organization of the

public tenders in Poland. They are regulated by an act from 29th of January, 2004-The Law of

Public Tenders”. Usually they are announced by a certain governmental organization in a

form of contest. There are some basic rules that have to be met by the body responsible for the

organization of such tender. The participants have to be treated equally, there have to be

impartiality and fair play, they have to be available to the public and there has to be a proper

documentation drawn up. Additionally, there is a certain set of regulations for every single

public tender depending on its nature.71

7.3. Conclusions

To challenge the Polish market NIRAS needs to design a proper strategy. For the initial stage

of the company presence on a new market it could be beneficial to undertake a project in a

public sector. There are numerous investments in Poland nowadays within the area of NIRAS

activities and there is also more and more PPP initiatives taking place there. Thorough

preparations and a good plan would allow NIRAS to benefit from investments and gain a

good position on the market.

8. Recommendations

This section will present strategic recommendations for NIRAS concerning its market

opportunities in Poland within the environmental services market. The aim of strategic

guidelines is to identify some steps for the company to follow in order to undertake successful

venture within environmental services sector in Poland. The recommendations will be based

on the research conducted in order to investigate NIRAS’ market opportunities in the

discussed market.

71 www.ted.europa.eu54


In order to enter the new international market NIRAS needs to create precise time

framework indicating when the particular steps will be accomplished. It is very

important to complete the task one step after another. Some procedures- like taking

part in a public tender may be long-lasting and involving many stages, preparations of

documentations, translations, etc. Thus the company has to keep its activities in order

and be consistent, the competences should be divided clearly. Especially, that

according to the cultural research conducted, it is essential to be well prepared when

dealing with Polish managers and to be professional and to have a plan. Acting in such

way NIRAS will be able to assess the completed parts of its plan and to forecast the

best way for the future accomplishments.

Once the company has the goal established it has to define the way to achieve it.

NIRAS’ goal is to enter Polish market with environmental services. Throughout the

previous sections some aspects of this problem have been discussed. From the

research conducted there are some remarks emerging. First of all, the company has to

develop some abilities in order to penetrate foreign markets successfully. Even though,

NIRAS has already possessed some international business competences it has to

permanently keep them updated. In a dynamic and shifting environment everything is

changing very fast. Thus, the company has to make sure that its strategy is based on

the newest international business competences and the target market is well

recognized. Having high level of the international business skills the company can

assess and evaluate its international business environment. then can utilize the

information obtained and turn it into actual business actions. The managers of NIRAS

should strive to improve the market orientation of their business to attain higher

business performance and competitive advantage over their competitors. The proved

consequences of market orientation introduction, like better general business

performance and employees satisfaction should be convincing enough to include this

concept into the strategy of challenging new markets. Managers in NIRAS has to

collect, interpret and use information from the external environment serving as

foundation for selecting goals and developing strategy for fulfilling them. On that

basis they can allocate resources for various programs within the company.

In the project there was an assessment of two dimensions of the NIRAS’ foreign

market environment performed as it was comprehended that for the project problem

the two environments-legal and cultural are the most important. After the analysis of 55


the legal aspect of the environmental services providing NIRAS can be aware who are

the actors within the private sector on its target market, how they are organized and

who holds the key responsibilities. Thanks to that information the company can

identify its potential partners and customers and get prepared for the new market

circumstances. The analyzed situation can also generate some obstacles for NIRAS.

There is very short tradition in Poland of cooperation between the public and the

private sectors. It is due to the fact that the country is still in stage of transformation

from centrally planned economy to the market one. Thus NIRAS can expect that

serving public sector by private companies in Poland is not well organized yet.

Additionally, the environmental protection and management in Poland is far behind

that of the western countries like Denmark. This is due to the fact that during

communist times these issues were totally neglected and there is lack of experience

among the actors involved in this field. On the other hand, that can be an advantage

for NIRAS as it can gain the market by bringing its experience and capacity.

Especially, as it was established before there is a huge potential in Poland within

environmental services. The regulations concerning the environmental protection,

pollutions and natural resources are created or improved very intensively in Poland

nowadays as it is an urgent issue to protect the environment and to catch up with the

other countries of the European Union in this field. Therefore there is a niche within

this field and demand for new environmental technologies and services which NIRAS

can deliver. Additionally, there is a huge campaign conducted aiming at bringing the

public attention to environmental issues, to teach people how to live in an

environmentally friendly way and respect their natural environment. This finally will

result in emergence of a private market of environmental services and technologies.

There are already legislations making people to take responsibility for environmental

losses but there is need for public awareness in this field to fulfill the legislations and

to create demand for environmental services in the private sector. This will happen

very soon and NIRAS can also become an experienced player on this new market. All

these actions are supported by the European Union funds, which ensures a stable

financial side of the ventures in this field. To benefit from such situation NIRAS has

to launch its market intelligence into the new market and to keep up with the most

topical data.

56


All the actions on the Polish market should be conducted with attention to the socio-

cultural angel. As the research has shown there are numerous differences between

Danish and Polish business cultures. Even though the two countries are situated in a

geographical vicinity they have completely opposite history and economy which

results in differences in all the levels of cultural profile. Numerous scholars and

practical examples have proved that cultural differences can lead to international

business fiasco. In order to avoid that, NIRAS has to use tools like the Hofstede

cultural model to design the best way to deal with the foreign business partners,

customers, suppliers, governments, etc. For the best effects there could be a cultural

training conducted for employees involved in the new market operations and it would

be a good idea to employ some persons acting as middlemen- who are aware of both,

Danish and Polish cultures, and who can help to organize the company functioning in

Poland.

After obtaining the knowledge about the foreign business environment and cultural

preparations NIRAS can undertake a PPP project in Poland and in consequence make

its way to the Polish market. To enter such project a company should search for

suitable public tender. Such public tenders are always announced to public through the

websites of particular organizations. There is a big chance for NIRAS to win the

tender in the field of water works, sewage systems or similar as there is very few

companies experienced and big enough to deal with such projects in Poland. For this

purpose NIRAS has to get acquainted with certain legal acts concerning public tenders

organization and PPP rules in Poland. The company should also choose a good area of

Poland to start introducing its services as there are considerable differences in

development and organization of the regions in Poland. As there is already a

construction division of NIRAS existing in Cracow it would be easier to open another

division in this region as well. In such way the company can utilize the knowledge of

NIRAS brand there and the network already created by the division. One successful

project undertaken within the environmental services area will help the company to

develop further and introduce other services of NIRAS in Poland.

9. Final conclusions

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The aim of the project was to assess the market opportunities for a Danish company-NIRAS

in Poland within environmental services field. The factors of a successful internationalization

of a company were formulated and referred to the NIRAS case. The research was supported

with suitable theoretical and methodological background. It was stated that the local markets

are getting not sufficient for numerous companies nowadays and they are looking for

international market. This phenomenon is especially evident in Denmark, where the local

market is relatively small and companies have to go abroad in order to stay competitive.

NIRAS has already gained some international markets and now it wants to offer its

environmental services in Poland, expand the company, gain new customers and the

competitive advantage. By the growth and presence on the new markets the company wants to

become the first choice within its field for both –the best customers and employees as well.

For the purpose of the project it was investigated what factors are crucial for a company in

case of challenging a new market and it was concluded that both- internal and external aspects

will influence the process. The company has to improve its international business

competences, become more and more market oriented and sensitive to the customers needs. It

is necessary to devote some resources to achieve superior international market orientation,

marketing skills, innovativeness and cultural competences. When the company will approach

a new market it has to be aware that it is embedded in a set of unique environmental factors

which influence the business performance. For NIRAS which aims at serving the public

sector it is crucial to know the legal environment and the proper institutions which can

become both- its customers or business partners. A good way of approaching the public sector

would be to get involved in a PPP project or initiate such project in cooperation with Polish

central or local government. Before approaching the Polish market NIRAS has to devote

some attention to the cultural factor. Numerous scholars and practical evidences have proved

that culture can be determining factor of international business and a company has to make

some cultural preparations before going to the particular country. As a tool for such

preparation can be used scientific research of cultural differences conducted by Hofstede, Hall

or other authors. Managers of a company should utilize it in order to gain valuable knowledge

about business culture of the target country. Finally, NIRAS should be aware of a set of

obstacles and opportunities connected to the Polish market of environmental services

identified in the course of the research and presented in the recommendation section. There

were numerous companies approaching international markets without any success. The

failures were due to many reasons like lack of proper preparations, lack of cultural

58


understanding and others. Nevertheless, it is highly probable that NIRAS can be successful in

Poland if it will devote some resources first and plan a careful strategy.

59


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Reports

Niras’ business plan 2009-2013

Prawo ochrony środowiska (The Polish code of environmental protection)

Strategia ochrony środowiska do 2016 (The Polish national environmental strategy till 2016)

Websites

Geert Hofstede’s Cultural Dimensions, www.geert-hofstede.com, Accessem on 17.04.2009

NIRAS’ international website, www.niras.com, accessed on 17.04.2009

Polish Inspectorate of Environmental Protection, www.gios.gov.pl, accessed on 24.07.2009

Polish website of ecology, www.prawoekologia.pl „General rules of environmental

protection”, accessed on 24.07.2009

62

http://www.gios.gov.pl/

http://www.niras.com/

http://www.geert-hofstede.com/


Polish Website of PPP, www.partnerstwopublicznoprawne.info.pl, accessed on 22.05.2009

Tenders Electronic Daily, www.ted.europa.eu, accessed on 13.04.2009

The Website of Polish Ministry of Environment, www.mos.gov.pl, accessed on 12.07.2009

The Website of Polish National Board of Water Management, www.kzgw.gov.pl, accessed on

23.06.2009

The Website of the Water Management Board of the Cracow region,

www.krakow.rzgw.gov.pl, accessed on 29.07.2009

World Business Culture, www.worldbusinessculture.com, accessed on 29.07.2009

63

http://www.worldbusinessculture.com/

http://www.krakow.rzgw.gov.pl/

http://www.kzgw.gov.pl/

http://www.mos.gov.pl/

http://www.ted.europa.eu/

http://www.partnerstwopublicznoprawne.info.pl/

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