The Finnish leather goods brand "Happy Feet" plans to open a new production site in Romania to expand into southeastern European markets. It will establish a wholly owned subsidiary to take advantage of Romania's lower costs and establish a local presence. The company analyzed Romania's economy, culture, competition and regulatory environment and believes lower production and transportation costs along with an experienced workforce will help it succeed despite barriers like cultural differences and rival brands. It will implement strategies to gain loyalty from customers, employees and local suppliers through ethical practices and support of the Romanian leather industry.

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

2. The Company
• ”Happy Feet”
• Finnish leather goods manufacturer

3. Goal
• Growth of the
market share in
south & south-
eastern Europe
• Focal point:
Romania

4. Market Analysis
• Competition from
established brands:
Rieker, Vagabond,
Gabor...
• Lower income level
than Northern Europe

5. Market Entry Strategy

6. Strategy Implementation
• Opening of a
production factory in
south-eastern Europe ->
Romania

7. Financial Advantages
• Low production costs
• Low transportation costs
• Market presence

8. Business Advantages
• 15 years work experience in
the Romanian leather goods
industry
• Knowledge of local culture
• Connections with local
companies & suppliers

9. Key Economic Indicators - GDP
• Economical growth from 2009

10. Key Economic Indicators - Inflation
• Economic stability from 2007

11. Key Economic Indicators -
Unemployment
• Decreasing levels

12. Key Economic Indicators - Exports
• Growing trend

13. Key Economic Indicators - Imports
• Decreasing trend

14. Costs of Starting a Business
• Starting costs in Romania = ½ starting costs in
Finland

15. Barriers To Entry
• Rival companies could
have factories which may
compete with us
• Cultural differences
• Bureaucracy

16. Cultural Environment
• Geert Hofstede’s theory of comparing six
dimensions of the two countries

17. Power Distance: Finland
• Romania: strong culture of power
hierarchy
• Finland: accessibility and transparency of
hierarchical structure
• => implementation of Finnish culture

18. Individualism: Romania
• Romanian culture based on:
– Interaction and communication
– Sharing
– Companionship
• => Implementing the Romanian
culture will benefit productivity

19. Masculinity: Romania
• Romania: competitive stimulation
• => Encourage healthy competition
• => Acknowledge high quality work and
professionalism
• => Promote knowledge sharing

20. 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

21. Pragmatism: Romania
• Higher level of pragmatism in Romania
• => Better ability of accepting societal
change and innovation

22. 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

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

24. PESTEL Analysis - Polytics
• Stable political environment
• Growing support of new enterprises and local
producers

25. PESTEL Analysis - Economy
• Stable economical environment
• Cheaper raw materials than in the rest of
Europe
• Supporting local suppliers
• Prices set in Euros

26. PESTEL Analysis – Socio-Cultural
• Centuries old tradition in the leather industry
• Skilled employees

27. PESTEL Analysis - Technology
• Stable technology and techniques, compared
with other industries

28. 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”

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. Marketing Mix

36. Marketing Mix
Product / Price
• Lower production costs due to:
– Cheaper labor
– Cheaper raw materials
– Cheaper equipment maintenance
– Shorter distance to the client

37. Marketing Mix
Place / Promotion
• Good working conditions:
– Clean and safe work environment
– Quality equipment
– Better salaries
– Job flexibility: training and job rotation
– Financial reward schemes