The document outlines a vision for increasing competitiveness in Eastern Europe by focusing on renewable energy production, organic agriculture, tourism promotion, and information technology outsourcing. It identifies strengths such as low costs, skilled labor, and natural resources but also weaknesses including perceptions issues and a lack of branding. The vision proposes investing in these sectors and improving infrastructure to capitalize on Eastern Europe's economic potential.

1. The Vision
SELECTED EE COUNTRY: CROATIA
TEAM LEADER: MATEJ NIKOLIC
TEAM MEMBER: ANDREJ HANZIR
MEMBERS COUNTRY: CROATIA
SCHOOL: UNIVERSITY OF ZAGREB, FACULTY OF ECONOMICS&BUSINESS

2. The competitiveness of EE
Prejudices – because of problematic High corruption in comparison to WE
history, filled with wars and political (Corruption perceptions index - 2012.
tensions many people and investors from data1 – EE selected countries rank:
different regions have prejudices which Slovenia -37, Croatia – 62, Serbia –
adversely affect tourism and investments 80, Russia – 133, Ukraine – 144; WE selected
Slow adapting to the ‘’open market mind’’ countries rank: Switzerland – 6, Germany –
due to the long period of socialism 13, France – 22, Spain – 30)
Low mobility
Weaknesses
Bad entrepreneurial climate (Ease of
Low developed country brand of the EE
doing business index3 – EE selected
countries (example2 – 2012/13 Top 25
countries rank: Slovenia - 35, Croatia -
Country Brands: Switzerland – 1, Germany
84, Serbia - 86, Russia - 112, Ukraine – 137)
– 7, France – 13, Spain – 19)
Lack of management knowledge &
Undefined market penetration strategy
capabilities in the middle & senior level
1 http://www.transparency.org/cpi2012/results
2 http://www.futurebrand.com/foresight/cbi/cbi-2012
3 http://www.doingbusiness.org/rankings

3. Close to the market of WE
Availability of skilled labor force
Good level of English language
knowledge (In Croatia English language is Emerging customer base
mandatory subject in elementary and
high school)
Exceptional capabilities & productivity
Growing education system
Strenghts
Big renewable energy potential 30% lower manufacturing costs compared
to WE
Low political risk compared to Asia region
Big agricultural production potential
Low intelectual property risk compared to
Asia region
Big tourism potential

4. “But the biggest problem Eastern European outsourcers face is the strong
perception, especially in the US, that outsourcing is an "Indian business”
Boris Kontsevoi, CEO of Intetics
“If I was to make a very broad generalisation, I would say India is good at
processing in a factory model, doing things quickly and being cost-efficient, and
Eastern Europe is a better destination for more experimental tasks.”
Daniel Marowitz, head of global transaction banking at Deutsche Bank
“Eastern europe has huge land reserves which are partially unused and big
agricultural production potential. Organic agriculture and biomass production is
must take opportunity.”
Professor, Faculty of Economics and Business Zagreb
“In many cases business executives simply don't take Eastern Europe into
consideration at all. I believe that various Eastern European industry and business
associations must play a greater role in promotion of the region as outsourcing
destination.”
Boris Kontsevoi, CEO of Intetics

5. Potential move of production to EE
 Furniture
 Tires
 Steel products
 Automobile parts
 Large appliances
 Games & toys
 2-10 % more cost effective in producing this type of products than
China manufacturers
 Larger middle class customer base in EE region – 25 million households
with an disposable annual income of 7500$
 4x larger GDP/capita in comparison to China

6. Future industries, sectors and
companies
 Focus industries and sectors:
 1) Energy industry
 2) Agriculture
 3) Tourism
 4) IT

7. Energy industry
 Demand for Electric energy will rise in the future in whole EU
 Renewable energy
 EE has potential in wind, solar, biomass, hydro and geothermal energy1
 Although Croatia has big potential in renewable energy import of electric energy in
Croatia in 20112 was 5.779 GWh (31%)
 Stable energy sector as a key factor for stable and growing economy
 Big factories from socialism age which are decaying
 Noncompetitive shipyards in Croatia are big weight for Croatian economy
 Solution ->
 Start of production in factories, reconstruction and conversion shipyards to manufacturing
facilities for producing wind turbines and solar panels
 Stronger use of renewable energy potentials powered by strong production of wind turbines and
solar panels in combination with hydroelectric power plants, geothermal power stations and
biomass-based energy plants
 Export of electric energy & wind turbines & solar panels
 Big companies with focus on R&D and finance
1 http://www.irena.org/potential_studies/index.aspx?q=g
2 http://www.hep.hr/opskrba/en/esource.aspx

8. Agriculture
 EE has big arable land reserves (Areas in Eastern Europe and EU27 (1000
ha), arable land data1 – Russia – 121781, ex-Yugoslavia+Albania – 6759, Total
EE – 203981, EU27 – 110594)
 Predictions says that will be big demand for organic food in the future
 Clean water reserves are also big potential for export especially in Croatia
 In EE are dominant small farms owned by families
 Future
 Linking small family farms into big enterprises that compete in the market
together
 Branding strategy, together market penetration strategy,
 Farms driven by technology
 Orientation to R&D and IT
 Important logistics and infrastructure
 Use of geographic position between East and West – fast delivery of products
to consumers
1 http://www.bis.gov.uk/assets/foresight/docs/food-and-farming/regional/

9. Tourism
 EE is territory with rich history and culture and delightful monuments
 Tourism must be better used due to big potential, especially in Croatia
 Insufficient utilization due to fair marketing activities, low country branding
activities and prejudices
 Improvement of marketing activities -> digital marketing
 47% tourist accommodation units in Croatia are private accommodation
units
 Future:
 Better infrastructure
 Use of digital marketing
 Breaking prejudices about EE
 Conecting private accommodation advertisers
 Better education and human resources importance

10. IT
 5 reasons for IT outsourcing in EE region
 High skilled labor - The former Soviet Union had a strong educational
emphasis on engineering and the sciences. Today EE have a highly skilled
workforce in areas such as computer science, but at much lower labor costs
than the UK.
 Cultural similarities - employees tend to take a more collaborative and less
process-driven approach to projects.
 Time zones - most of the countries are just a few hours away from the UK in
terms of time difference, making it easier to communicate within working
hours.
 Data protection – EU Data Protection Act
 Growing labor market – In 2009, Romania was found to be the country with
the highest growth of IT specialists, increasing by about 12% compared with
2008. Ukraine followed with over 9% growth.