Objectives of the Report
Structure of the Report
The key issues that the company will face while launching mobile phones in Romania
Strategies to attain business success in Romanian market.
Objective of the Report.
The main objective of this report is to give an overview of the key issues that a mobile manufacturing company will face while launching its products in Romania and to come up with potential strategies to attain business success in the respective market. The starting summary of this report is the overview of Eastern Europe. Furthermore, the study of Eastern Europe helped me to select a country appropriate for this report. This overview provided a highlight commonalities and differences in the different countries of Eastern Europe.
Due to differences in each Eastern Europe country, culturally and language, I decided to make the report on Romania because over the years, Romania has been an international talent exporter and has also been a market flooded with world's most prestigious brands. While some countries had no balanced market to trade in and some countries were already chosen by my peers.
With the chosen country, a market study was carried on. It covered the country's profile, its economy and the major players of mobile industry in the market. Marketing Mix and Pest analysis was also done. This research helped to tackle the key issues that a new mobile company would face while entering the new market and to plan out the strategies to make it success in the respective market.
Structure of the Report.
The report's structure is very simple to understand including the most important key points required.
- Eastern Europe : Overview
- Romania : Country's profile
- Economy in Romania
- Mobile Industries in Romania
- Market Research
- PEST Analysis
- SWOT Analysis
- Marketing Mix
Eastern Europe : Overview
It is a part of Europe lying in the eastern part. It lies between the Central Europe and the Ural Mountains. The following countries fall under the Eastern Europe region:
- Bosnia and Herzegovina
- Czech Republic
- Republic of Macedonia
- Serbia and Montenegro
Some countries are small and others are very large.
The population of this region is 880,000,000
It is described as a multicultural region. Each and every European country has its own unique culture. These cultures are very old and are still observed today. There are many cultures like Balkan, Turkish, Russian, Serbs, Croats, Bulgarians, etc. Almost all countries follow Christianity. Most of them are Protestants and others are Orthodox. All the countries celebrate Christmas.
Eastern Europe countries are trying to stabilize their financial environment so that it would help their economy with a rapid growth in business activities, international trade and FDI. Countries like Czech Republic, Slovakia, Hungary and Poland have stabilized their economies by achieving low rates of inflation and relatively stabilizing exchange rates. Other countries are still struggling for the survival.
This report is totally focussed on Romania and its market.
Romania: Country's Profile
It is the largest of all Balkan countries. It is a rough region with mountains. The border countries of Romania are Slovakia, Hungary, Bulgaria, Serbia, Moldova and the Black Sea.
Many empires were built and vanished from the Romans, to the Ottoman, to the Austro-Hungarian. Romania was one of the European countries which were ruled under the Soviet Union after World War 2. But later a centrist government came to power. In April 2005, Romania signed the EU accession treaty so that it could become a part of the EU Union. In January 2007, it became a member of the EU Union.
The following is the profile of Romania in brief:
Capital : Bucharest
Population :21.3 million
Language : Romanian
Religion : Christianity
Monetary unit : 1 new Leu = 100 Bani
Main exports : Textiles and footwear, metal products, machinery, minerals.
GDP per capita : $ 11,500 (2009 estimated)
Economy in Romania
Romania was a communist nation under the Soviet Union. In 1989, the industrial base no longer produced and stopped working. This led to bankruptcy and large current account imbalances. In 2000 after three years of recession, Romania emerged once again with help the of the EU export markets. A growth in the GDP was noticed in the recent years but the current account was still imbalanced. Romania has seen bad days during the 2007-08 inflation. The inflation resulted in strong consumer demand, rising fuel costs and drought which led to high food prices. In 2009 recession, its economy almost collapsed. The GDP fell 7% in 2009 because of recession and unemployment almost doubled.
GDP - Growth Rate:
-6.9% (2009 estimated)
7.1% (2008 estimated)
6.2% (2007 estimated)
7.6% (2009 estimated)
4.4% (2008 estimated)
Mobile Phone Market in Romania
There are many mobile phone industries in Romania which sell their phones in the market. Nokia, LG Electronics and Samsung Electronics are among the major players in the Romanian market. All the three companies are world class manufacturers of mobile phones and they are competing each other in the world market as well as in the Romanian market. Each of them is trying to achieve the maximum market share in the mobile phone division. To achieve that goal they keep on studying the dynamic market and come up with new ideas and new phones. Each company tries different strategies to compete the others.
LG Electronics' main motto is to offer products that enhance the consumer's life quality. With this motto, LG Electronics Romania in 2007 achieved a turnover of EUR 140 million. The growth of 51% was observed compared to the previous year. The LCD TV and the mobile phones both contributed to the biggest growth. In 2008, there was a growth in the sales of the mobile phones. At that time, it had a market share of 10% which resulted in the rise of brand awareness on the local market. LG became a partner with the major phone service provider like Orange. The growth in the sales of LG mobile phones in Romania was mainly because of successful sale achieved by LG Shine. They sold around 70,000 units on the market. LG Chocolate with the sale of 50,000 units was also counted for the overall growth of LG mobile phone sales. LG are mainly focussing on GSM mobile phones with new styles and designs along with smart technology which will attract customers in the Romanian market.
In 2009, Nokia started manufacturing mobile phones in their new plant at Cluj-Napoca. They chose Cluj because of cheap engineering graduates who are willing to work. To ensure success, Nokia invested $88 million in the plant and made value supply chain much easy and less time consuming.
These are some of the facts that major players of the mobile phone industries are trying to compete in the world market as well as in the local market to capture some market share.
To be successful in a new market, the company should conduct a market survey so that it could acknowledge itself with the local needs and what the locals expect from the company. There are many ways to do a market study. PEST Analysis, SWOT Analysis, Marketing Mix and Porter's Five Forces are one of the well known market research concepts in the world of economy. This report has concluded Pest Analysis, Swot Analysis and Marketing Mix to come up with strategies to tackle key issues that a new company would face in a local while launching its products in the Romanian market.
Political Factors - Romania is an independent country with judicial, executive and legislative divisions in the government. The Prime Minister serves as the head of the government. Romanian political environment is highly unstable. The government is bureaucratic in nature.
Since the fall of the Soviet Union, Romania has been strengthening its relationship with the other European countries. Romania is a member of many international and regional organisations. Some of which are International Monetary Fund, the World Bank, European Bank, North Atlantic Treaty Organization, World Trade Organisations, United Nations and Southeast Europe Cooperation Initiative. These organisations have provided aide and financial support to Romania which really helped to stabilize its economy and positive growth rate.
The government of Romania is keep on changing the laws for doing business so that it could maintain steady positive economical growth.
Economical Factors - Romania has been showing a strong and a positive growth rate since it became a member of the EU. It has also overcome the situation of 2007-08 inflation and helped in growing GDP rates. The main sectors which contributed to the growing GDP are industry, services and agriculture. The 2007-08 inflation led to the shortage of food and energy supply within the country which paralysed the country's economy and infrastructure. Because of this, the food prices got hiked, therefore resulting in increase in domestic demand.
The Romanian is still suffering from bad debts. It is said that it will take time to get the current account balanced though there has been positive growth in the GDP rates. The interest rate set by Romania's central bank is 10.25% which is the highest interest rate in EU. Lately, Romania has also experienced a steady growth in the inflow of FDI contributed by the export oriented industries.
Romanian labour market is in tight situation. The main reasons for the 6.4% unemployment rate are because of competition and strong economic growth. Compared to other European countries, this figure is low. Romania is one of the low-risk countries in terms of investment. The labours are also cheap earning averaging around EURO 354 a month.
Social Factors - Demographically, Romanians dominate and then the Hungarians which is followed by Roma, German and Ukrainian. Romanian is the official language of Romania. Almost 90% of the population follow Romanian Orthodox and the rest being Protestants, Baptists, Muslims and Jewish. Romania has 69.7% of young adults in its population.
Technological Factors - More than half of the population do not have basic computer skills. Computers are still not used at most of the working places. Romania is the leader in the IT sector in Eastern Europe. The internet usage is very low in Romania compared to its neighbouring countries. The Research and Development system of Romania is recovering back after the end of 2007-08 inflation when it lost about 10,000 researchers. To sustain development, the public investment in RDI will be mainly focussed on RDI fields like information and communication technologies, new and innovative products, food and health safety and infrastructure.
This is the SWOT analysis of the Mobile phone industry entering a new market.
- The service channel of the mobile phone helps the customer to talk with anyone anywhere at any time. Without a mobile phone this would not happen.
- Demand for smart phones with internet access features like Wi-Fi, 3G, etc.
- Growing mobile phone demands
- Need of the mobile phones by marketers, retailers and customers to do business
- As said mentioned above, the internet usage is very low in Romania. So most of them have less experience with the use of Internet
- Low purchasing interest. Since the country is facing bad debts and high inflation, people would have to think a hundred times before spending money for purchasing anything.
- Partnerships with the major service providers like Orange, Vodafone, Cosmote.
- 70% of the population are the young adults interested in gadgets with styles and designs along with new technological features.
- Competition from the existing companies Nokia and LG Electronics in the Romanian market.
- Interference of government in the business in order to extract profits.
It is commonly known as the Four P's. The elements of marketing mix are price, place, product and promotion.
Price : The price range will be based on the monthly average wage which is around EURO 350. So, the price ranges from EURO 100 to 150.
Place: Major cities like Bucharest, Ploiesti, Timisoara, Constanta, Cluj-Napoca, Iasi are densely populated compared to other cities and towns in Romania. All the markets are located in these major cities.
Product : As per the price, the mobile phones will be installed with certain advanced features like Wi-Fi, 3G, Bluetooth, External memory and Touch-screen giving it a classic look.
Promotion : Mass media, Banners, Press Release.
Key Issues that the mobile phone industry will face while launching its products in Romania.
The key issues are as follows:
Language: Romania is one of the multicultural countries in Eastern Europe. The official language spoken is Romanian. It is widely spoken in Romania. It is written using the Cyrillic alphabet. So, here communication is one of the key issues as very few people know to speak English and understand it.
Entry Mode and setting up: It is the main key issue of all. The company cant enter the market by acquisition or joint venture because as per my research I could not find any mobile manufacturing company except Nokia and LG Electronics but my company would not merge with them since it wants to do business independently. So as to enter the new market, the company has to deal with government by paying lump sum amount of money and also by following the rules and regulations. It can also try to enter the market by selling its product through a local agent. But acquisition or joint venture is more preferable because the local companies have already set up their base in the market. So setting up a base is also a key issue.
Competition: After entering a new market, the company will expect few existing competitors who have been there since a long time. It will be difficult to capture a market share initially. To achieve a position in the market, the company should come up with strategies to compete the others in the market.
Customer's loyalty: A customer would never trust a new product until its popular or very unique. The company should satisfy the customer by fulfilling their demands.
Marketing: The economy of Romania is currently out of shape but still recovering. Marketing in Romania can be done only through mass media, newspaper or press release. Marketing through internet is still a doubt because use of computer in Romania is very less as more than half the population has no basic computer skills.
Supply Chain Management: The company should be quick in providing services to the customers by fulfilling their needs and orders. The company must focus on moving data and products as quick as possible with the help of supply chain and distribution. To achieve this, the company must maintain relationships with the suppliers and distributors. This is difficult to achieve initially while entering a new market.
Strategies to attain business success in the Romanian market.
The company should plan out the key strategies before entering a new market which are as follows:
Market study: The Company has to study the market before entering it, starting from the country's profile, the existing competitors, government, economy, customers and suppliers. It is very difficult to predict any next move without knowing anything about the concerned market. In order to succeed, the company should have full information about the things happening in the market and the customers' needs. A market research would provide us about the various trends in the new market. With the market research, the company would come to know about competitors' moves, demand for their products in market, scope for new products and drawbacks for the failure of the product. It is important for the company to make market research as an integral part of their work.
Supply chain management: The Company should have transparent supply chain management as it makes supply and customer order processes quicker. It improves performance in delivering on time and lowers inventory levels. The company should maintain good relations with suppliers and distributors because they act like middlemen or agents between the company and the market.
Marketing management: The company can promote their products through advertising agents provided along with the creative concept. Marketing can also be done via mass media which includes TV, Radio, Press, etc. The company can also advertise through WEB (mobile internet, mobile portal), Broadcast (radio), others like visual radio and ring back tones. They can also promote their products by entertainment, competitions, text quizzes, vouchers, etc. By taking such steps, the company would be successful in the sale of their mobile phones.
CRM: The customers are the key to the success of the company. Therefore, the company should render quick services and supply their order so as to fulfil their needs. To become successful in the market, they should win the customers' heart.
Mobile technologies: The product should be laden with advanced technology such as Wi-Fi, Bluetooth/Infrared, External memory, Touch-screen and features that would provide access to the internet such as 3G. A series of mobile phones should be launched with different features as per the customers' needs and they should be of reasonable price. This will be helpful for the company to become successful in the Romanian market.
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