Opening a new production site of the Finnish leather goods brand "Happy Feet" in Romania

The Company

• ”Happy Feet”• Finnish leather goods manufacturer

Goal

• Growth of the market share in south & south-eastern Europe

• Focal point: Romania

Market Analysis

• Competition from established brands: Rieker, Vagabond, Gabor...

• Lower income level than Northern Europe

Market Entry Strategy

Strategy Implementation

• Opening of a production factory in south-eastern Europe -> Romania

Financial Advantages

• Low production costs• Low transportation costs• Market presence

Business Advantages

• 15 years work experience in the Romanian leather goods industry

• Knowledge of local culture• Connections with local

companies & suppliers

Key Economic Indicators - GDP

• Economical growth from 2009

Key Economic Indicators - Inflation

• Economic stability from 2007

Key Economic Indicators - Unemployment

• Decreasing levels

Key Economic Indicators - Exports

• Growing trend

Key Economic Indicators - Imports

• Decreasing trend

Costs of Starting a Business

• Starting costs in Romania = ½ starting costs in Finland

Barriers To Entry

• Rival companies could have factories which may compete with us

• Cultural differences

• Bureaucracy

Cultural Environment

• Geert Hofstede’s theory of comparing six dimensions of the two countries

Power Distance: Finland

• Romania: strong culture of power hierarchy

• Finland: accessibility and transparency of hierarchical structure

• => implementation of Finnish culture

Individualism: Romania

• Romanian culture based on:– Interaction and communication– Sharing– Companionship

• => Implementing the Romanian culture will benefit productivity

Masculinity: Romania

• Romania: competitive stimulation

• => Encourage healthy competition• => Acknowledge high quality work and

professionalism• => Promote knowledge sharing

Uncertainty Avoidance: Romania

• Romania: higher uncertainty avoidance

• Positive effects: people are less likely to initiate job changes

• => Higher stability for the company• => Less investment in training new

employees

Pragmatism: Romania

• Higher level of pragmatism in Romania

• => Better ability of accepting societal change and innovation

Indulgence: Finland & Romania

• High level => instability• Low level => rigidity

• Right balance of indulgence leads to:– Empowering people through freedom of

self expression– Clear managerial direction through strong

and healthy leadership

PESTEL Analysis

• PESTEL analysis is used to create an overview of the external environment of the market we want to enter

PESTEL Analysis - Polytics

• Stable political environment

• Growing support of new enterprises and local producers

PESTEL Analysis - Economy

• Stable economical environment• Cheaper raw materials than in the rest of

Europe• Supporting local suppliers• Prices set in Euros

PESTEL Analysis – Socio-Cultural

• Centuries old tradition in the leather industry

• Skilled employees

PESTEL Analysis - Technology

• Stable technology and techniques, compared with other industries

PESTEL Analysis - Environment

• Adopt a socially responsible business strategy business model

• Become involved in the community by supporting the local animal breeders and supply chain

• => ”Customer loyalty, employee commitment and business performance”

PESTEL Analysis - Legal

• Quality working conditions

• Attractive salary scheme based on professionalism

• Higher salary than the competition, still creates savings for the company compared with salaries in Finland

Porter’s 5 Forces Model

• Analysis of the competitive power in the industry through:– Supplier Power– Buyer Power– Threat of Substitution– Threat of New Entry

The 5 Fs – Supplier Power

• Raw supply materials: leather, lining, thread, glue, dyes, zippers, accessories...

• Local suppliers

• Strategy: developing long-term relationships with suppliers based on mutual trust and gain

The 5 Fs – Employee / Buyer Power

• Business values promoted and valued in the Romanian market:– Environment protection– Ethical behaviour– Supporting local companies and suppliers

• Strategy: creating an employee / customer loyalty programme to minimize the buyer / employee power

The 5 Fs – Threat of New Entries and Substitution of Products

• Strategies to gain an advantage over the potential competition and new products:

– Creating a brand recognised for social awareness and support of local suppliers

– Customer loyalty strategy– Lower prices than the competition– Quality products

Market Entry Mode• Direct Investment entry mode =• Wholly Owned Subsidiary (WOS) = • Private Limited (PL)

• => A sole venture with full ownership by the parent Finnish company

Marketing Mix

Marketing MixProduct / Price

• Lower production costs due to:

– Cheaper labor– Cheaper raw materials– Cheaper equipment maintenance– Shorter distance to the client

Marketing MixPlace / Promotion

• Good working conditions:

– Clean and safe work environment– Quality equipment– Better salaries– Job flexibility: training and job rotation– Financial reward schemes

Thank You!