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

1. EMBA Team 3Z
Alexandra Brooks
Ruben Pedroza
Sharon Singleton
Polaris Industries, Inc.
Poland Investment Proposal

2. Polaris Products
Manufacturer of Off-Road
Vehicles (ORV’s)
Motorcycles, ATV’s
Snow mobiles
Images from Polaris Investor Presentation May 7, 2013

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 are
leading product line
65 distributors in
approximately 130
countries outside of North
America
Images from Polaris Investor Presentation May 7, 2013

4. Investment – Typical Projects
 Two typical projects:
 Development of new manufacturing facilities
 Acquire firm’s that build adjacent products

5. Poland Proposal

6. Poland Proposal Summary
International Investment
Where: Poland
What: State-of-the-Art Manufacturing Facility
Estimated Cost: $30m
Product Focus: Off-Road Vehicles

7. What’s Happening in Poland

8. Poland- Geographic Location
Major Automotive
Manufacturing Centers
Wroclaw
Krakow

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. 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. Why Poland?
Create operational efficiency to support existing
customer 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. Polaris Strategic Objectives

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. Poland’s Alignment- Global Market Leadership
 Geographic Location
 Located in Heart of Europe- Between Russia and
Europe
 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. Poland’s Alignment- Operations Competitive
Advantage
 Infrastructure for heavy manufacturing
 Sea and cargo shipping ports
 Rail and Highways running
East/West and North/South
 Highly skilled labor force
 Pre-communist education focused
on training for Heavy Industry
 Labor Costs have been flat-
 High unemployment

16. Poland’s Alignment- Strong Financial
Performance
 Regional subsidies offset building costs and labor costs
National subsides to procure tax exemption:
Up to 50% of two years gross labor costs of newly
created 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. Risk Factors

18. Risk Factors
Employment contracts are required in Poland. Poland has
a strong labor union presence
Polaris is non-union
Tax benefits will expire in 2020
Exchange rate benefit will expire once Poland fully joins the
EU and adopts euro
Laws are not quite up to US and EU standards, but they are
improving

19. Conclusion

20. Conclusion
Poland aligns well with Polaris’ strategic pillars
New factory will support future growth in EMEA
countries
Business Culture aligns with US
Benefits of Investing in Poland:
Financial arbitrage
Tax and local subsidies
Knowledgeable and inexpensive workforce
Geographically connects European countries