ESTABLISHING AND GROWING BUSINESS IN KOSOVO FROM THE INTERNATIONAL BUSINESSES PERSPECTIVE:

THE CASE OF FACTOR LEASING

Mentor: Prof. Ph.D. Marko Jaklič

Candidate: Driton Nikaj

Introduction

• The purpose of this thesis is to present facts that support foreign investors with a background regarding business culture, business environment, consumption capacity, bargaining of entries and others factors which support the decision for investment and business development.

• In this research I have been mostly focused in the SME-s and a special emphasis is paid also to the financial market. Financial market is among the most developed segments in Kosovo and best organized in relation to all other segments. Also, it is the segment where the case study of this thesis has been conducted.

Methodology

• My research has been focused in describing the economic parameters with existing data and their reflection to an existing business

• I have also conduct interviews with businesses which are foreign and domestic investors.

• The numbers of interviews that I have realized are eight (8) interviews with foreign and domestic investors and five interviews with Factor Leasing’s clients which are randomly selected for better understanding of factors that made this company acceptable in the Kosovo market.

PEST analysis of Kosovo market

• Political analysis - In political aspect, Kosovo is organized as a democratic and multi-party system.

• The countries’ legislation, in majority of cases is in accordance with the international legislation. In some cases it may not be detailed as in international countries, but in general it tends to adopt the practices of developed western countries.

PEST analysis of Kosovo market…continues

• Economic analysis - GDP per capita has reached 2,721 in 2012, equal to 11% of the EU-27 average.

• The annual average rate of inflation was 2.5% in 2012. • Unemployment is very high at 35.1%• Trade imbalance remained significant, with a trade deficit of

35.1% of GDP.• Kosovo's state budget is based mostly on collecting taxes on

imported mass consumption goods, since Kosovo is very little developed in the manufacturing sector.

• The main segment of the Kosovo economy is trade, services and finally we have production as a market size.

PEST analysis of Kosovo market…continues

• Social analysis - Kosovo is a small country but with a lot of natural recourses, ore and minerals, the population density is (people per km2): 177.4.

• Kosovo has a high rate of increase in population, which regardless of the trend in recent years shows a declining, in 2012, natural increase was 20,426.

• Based on trends, the natality will continue to fall in the general level but not drastically decrease. The decrease of natality is expected since the awareness and the living concept has changed.

PEST analysis of Kosovo market…continues

• Technological analysis - In Kosovo enterprises, there are sophisticated software and information technological equipment that are being used in most of the developed European Union countries and the United States of America.

• One of the factors that shows the usage level of information technology is the rate of internet usage in national level and the level of possession of personal computers at homes. Over 72.1% of the population is using the internet at home, including the urban and rural parts of the country.

• Vehicle registration centers, tax declarations, credit registry, civil registry (birth certificate, marriage certificate, etc.) has been developed and is functioning online throughout Kosovo.

Main sectors of Kosovo economy

• Energy and mining – The state of Kosovo has underground valuable assets, with 14.700 million tons; it ranks fifth in the world for lignite reserves from which it also produces the highest amount of electricity.

• Agriculture and livestock – According to officials in Pristina, Kosovo has 53 percent of the total area as arable land.

• Vineyards – This culture of cultivation and wine production is an old tradition in Kosovo and especially in Rahovec.

Main sectors of Kosovo economy…continues

• Construction – This industry has become one of the most important sectors in the Kosovo economy because of the high increase in demand after year 1999, This sector continues to be a great economic potential in Kosovo, taking into account the need for construction of new settlements and road infrastructure.

• Textile industry - Textile sector has been the second largest industry in Kosovo, In this sector there is plenty of room for investors so that Kosovo once again produces finished products.

• Tourism - Kosovo's tourism has potential for winter tourism. Mountains in the south of Kosovo, resorts such as Brezovica and Sharr Mountains are good and interesting opportunities for investors.

Conclusions

Kosovo can be seen as the basis of investment for South

Eastern European market because of the geographical position.

- Following are some general suggestion for foreign investors

who plan to enter the Kosovo market:• Kosovo marked is a calculated risk; you have to be

persistent, define clearly who is your market or customer, must possess the ability to communicate repeatedly with all parties involved in your business.

• As foreign investors, initially contact the embassy of your country in Kosovo and receive information about the market and meet leading businesses in Kosovo to get familiar with the environment.

Conclusions…continues

• The easiest way to market entry and success is in cooperation with local partner.

• Establish clear rules of partnership and written rules. • Strategic business plan should be developed by the

investors and adapted together with local management, at least for 3 to 5 business years until the business is stabilized and the management is specialized in that segment.

• Choose management that has experience in the field that you want to invest and much younger in age.

• Study the market in various aspects and collect statistical data from the relevant authorities.

Conclusions…continues

• The flexibility in doing business in Kosovo is necessary because, most of the companies are not well structured and the culture of reaching agreements is more informal.

• Positioning in the market as foreign companies is an additional advantage, it is assessed by local and regional clients that foreign companies are serious companies, which keep the promise, own the quality product and respect the terms of the contract, all these translates into trust to your brand and your product.

• In Kosovo market, it is very important to keep the business promise whether verbal or written in contract, this is crucial for market positioning and business growth.

Conclusions…continues

• In regards to the research topic, foreign investors in Kosovo have been successful until now because of their competitive advantages in comparison with local investors.

Foreign investors have more experience, financial potential and support as foreign investors that local investors.

• I will finish my presentation with one suggestion, investment in Kosovo, is a good opportunity and provides good return on investments.

Thank You