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Report on a Greenfield Investment in Poland Essay Sample

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Introduction:
Poland is a country located in Eastern Europe, (Heritage,2012), it is bordered by Germany, Belarus, Russia and Ukraine. It is the 9th largest country in Europe and has a population of 38.1 Million. Once a member of the Soviet Union, Poland is now a democratic Parliamentary Republic and has a president as head of state. It has been part of the EU since 2004 (CIA, 2012)

Economy:
Poland is an exceptional example of a country going from a communist, state controlled economy, to a free capitalist market. It is considered to be a high-income economy with $12’480 per capita (World Bank, 2011), and has had a steady growth rate since 1990. Poland is the only country to have avoided falling into recession during the last economic crisis, although it has contracted slightly since 2008. The large domestic market has attracted a high amount of foreign direct investment (FDI) and according to a report by Ernst and Young is ranked 7th in the world on an investment attractiveness survey (Global Edge 2012). It has made many advances towards liberalising the growth of a free market. Ever since the fall of Communism in 1989, the economy has gone through a transformation to become more like the states in the rest of European community. When the government stopped regulating prices, eliminating consumer and producer subsidies and privatising Small-Medium Enterprises, it caused an economic shock therapy (Sachs, 1994). The Heritage foundation has ranked Poland 64th on the economic freedom scale, above the world average (Heritage, 2012), and key factors to this is a well-timed fiscal stimulus and effective use of EU transfer funds (Global Edge, 2012).

Political:
The past 20 years have seen the Polish government work under a democratic umbrella, and the transition from being a communist country to a Parliamentary Republic has given the country more stability. It is composed of 16 administrative divisions (CIA, 2012), with a federal government composed of a cabinet led by a prime minister, and a president acting as head of state. Transparency International ranks Poland at 41 on corruption perception, and political interference in the judicial system is still a cause for concern (Transparency, 2011). After joining the EU in 2004, the receiving of additional funds encouraged much foreign investment in both private and public sectors. FDI is estimated to be at around €8.4 Billion in 2009, most of which being from Poland’s main trading partner, Germany (Ernst and Young, 2012).

The footwear market:
The footwear industry is a growing market in Poland, and since 2004 there has been an annual increase of 3.1%, well above the EU average of 0.3% (CBI, 2010). Although these figures are for the footwear market in general, the use of sports shoes as a leisure shoe is becoming popular in many Eastern countries. Older people tend to have more conservative tastes, but the younger generations (18-25) have a higher demand for branded products and sport shoes are becoming trendy (eMarketservices, 2005). New shopping centres and a growing middle class have consumers more interested in fashion (CBI, 2010). The market consists mainly of domestic producers, but well-known international brands are becoming more frequent. In conclusion, with its low consumption per capita, it suggests that there is still some growth potential left. Its political reform and reputation for having a hard working labour force, as well as its economic stability, exhibits great potential to start a Greenfield investment.

Bibliography:

Global Edge. (2012) Global Insights-Poland. Available:
http://globaledge.msu.edu/Countries/Poland. Last accessed 24th November 2012

CIA. (2012) The CIA Factbook-Europe::Poland Available: https://www.cia.gov/library/publications/the-world-factbook/geos/pl.html. Last accessed 24th November 2012.

World Bank (2011) Gross National Income per capita, Atlas Method and PPP.
Available: http://databank.worldbank.org/databank/download/GNIPC.pdf. Last accessed 22th November 2012

Heritage (2012) Economic Freedom-Country Rankings Poland. Available: http://www.heritage.org/index/country/poland. Last accessed 23rd November 2012

Bloomberg (2012) Poland may cut 2013 GDP growth Target to 1.5%-2%. Available http://www.bloomberg.com/news/2012-08-07/poland-may-cut-2013-gdp-growth-target-to-1-5-2-.html. Last accessed 24th November 2012.

Transparency International (2011) Corruption Perceptions Index. Available: http://cpi.transparency.org/cpi2011/results/. Last accessed 24th November 2012.

Confederation of British Industry (2010) The footwear Market in Poland. Available: http://www.cbi.eu/marketinfo/cbi/docs/the_footwear_market_in_poland. Last accessed 24th November 2012

Confederation of British Industry (2010) The EU market for Sports footwear. Available: http://www.cbi.eu/marketinfo/cbi/docs/the_eu_market_for_sports_footwear. Last accessed 24th of November 2012.

Ernest and Young (2012) Doing Business in Poland. Available: http://www.ey.com/PL/pl/Issues/Business-environment/Doing-business-in-Poland-EN Last accessed 20th November 2012.

eMarket Services (2005) The sports market in the new EU member States. Available: http://www.emarketservices.com/clubs/ems/prod/The%20Sport%20Shoes%20Market.pdf. Last accessed 20th November 2012.

Jeffrey, Sachs. Poland’s Jump to the Market Economy. 1st. 1995. 5-6, 57.

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