Group 3z Poland Project Presentation Polaris


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Market Entry Analysis and Proposal for the Polish Market Polaris Industries, Inc.

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Group 3z Poland Project Presentation Polaris

  1. 1. EMBA Team 3ZAlexandra BrooksRuben PedrozaSharon SingletonPolaris Industries, Inc.Poland Investment Proposal
  2. 2. Polaris ProductsManufacturer of Off-RoadVehicles (ORV’s)Motorcycles, ATV’sSnow mobilesImages from Polaris Investor Presentation May 7, 2013
  3. 3. Polaris’ International MarketInternational unit sales upEuropean (EU) Sales70% of international14% of total company1100 Dealers in EUOff-Road Vehicles areleading product line65 distributors inapproximately 130countries outside of NorthAmericaImages from Polaris Investor Presentation May 7, 2013
  4. 4. Investment – Typical Projects Two typical projects: Development of new manufacturing facilities Acquire firm’s that build adjacent products
  5. 5. Poland Proposal
  6. 6. Poland Proposal SummaryInternational InvestmentWhere: PolandWhat: State-of-the-Art Manufacturing FacilityEstimated Cost: $30mProduct Focus: Off-Road Vehicles
  7. 7. What’s Happening in Poland
  8. 8. Poland- Geographic LocationMajor AutomotiveManufacturing CentersWroclawKrakow
  9. 9. Poland- Country StatisticsCapital: WarsawOfficial Language: Polish25% English SpeakingPopulation: 38.5mGDP per Capita: $21,000Currency: Polish Zloty (PLN)Government: Parliamentary RepublicReligion: 90% Roman CatholicUnemployment Rate: 13%
  10. 10. Poland- Business CultureFormal to informal social etiquetteCommon GreetingsFirm hand shake and eye contactBusiness cards are exchangedUse Surnames and Refer to Honorary TitlesMove to first name basis when invited toHigh trust society where relationships are keyCommon Relationship Building ActivitiesSmall talk at start of meetingsBusiness lunches and dinnersHierarchical decision making
  11. 11. Why Poland?Create operational efficiency to support existingcustomer base in EUAlignment with strategic ObjectivesLocal market-ORV sales to farms is growing marketMinimal competition with key competitorsFirst to market in PolandEstablishing brand of choice
  12. 12. Polaris Strategic Objectives
  13. 13. Strategic ObjectivesPillar 1: Global Market LeadershipGreater than 33% of company revenuePillar 2: Operations as a Competitive AdvantagePillar 3: Strong Financial Net Income Margin10% or greater
  14. 14. Poland’s Alignment- Global Market Leadership Geographic Location Located in Heart of Europe- Between Russia andEurope Existing Distribution Channels for Automotive Industry Strongest Emerging Economy in Europe GDP is 514.5 Bn USD in 2011 GDP growth is 4.3%
  15. 15. Poland’s Alignment- Operations CompetitiveAdvantage Infrastructure for heavy manufacturing Sea and cargo shipping ports Rail and Highways runningEast/West and North/South Highly skilled labor force Pre-communist education focusedon training for Heavy Industry Labor Costs have been flat- High unemployment
  16. 16. Poland’s Alignment- Strong FinancialPerformance Regional subsidies offset building costs and labor costsNational subsides to procure tax exemption:Up to 50% of two years gross labor costs of newlycreated jobsNational tax benefits in special economic zones:No corporate income taxFinancial Arbitrage using Exchange RatesLabor: $1.0 = 3.3 PLNSales: $1.3 = 1 €
  17. 17. Risk Factors
  18. 18. Risk FactorsEmployment contracts are required in Poland. Poland hasa strong labor union presencePolaris is non-unionTax benefits will expire in 2020Exchange rate benefit will expire once Poland fully joins theEU and adopts euroLaws are not quite up to US and EU standards, but they areimproving
  19. 19. Conclusion
  20. 20. ConclusionPoland aligns well with Polaris’ strategic pillarsNew factory will support future growth in EMEAcountriesBusiness Culture aligns with USBenefits of Investing in Poland:Financial arbitrageTax and local subsidiesKnowledgeable and inexpensive workforceGeographically connects European countries