Programme / Qualification name: BSc (Hons) Business Administration
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International Marketing Strategy
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Critically evaluate the ‘customer demand conditions’ of the Romanian market-place, as compared to that of the entry by the UK National Bank into Poland?
Romanian market-place is full of tremendous potential with advantage of excellent strategic location. Coupled with a business environment that’s full of opportunities, it’s an excellent market worth exploring. However, associated risks need to be taken into careful consideration and weighed against the profitability before venturing into the Romanian market. The financial risks involved can be minimized by identification of an effective and qualified local partner who would provide valuable insights into the market-place commitment and relay uncompromised information on trustworthiness of local stakeholders.
Despite Romania’s weak economic growth following the years of recession in 2009, there are distinct opportunities for UK National Bank as the businesses strive for recovery in the fields of energy, agricultural equipment, environmental technologies, infrastructure and many more. As the economic conditions improve, businesses will thrive creating more opportunities in future. Several important factors need to be deliberated upon, the most critical being the role played by Romanian government in the functioning of the economy, ownership of assets and influence on prevailing business practices. Public sector business entities rule business environment in Romania and practices such as political influence in decision making, non-transparent decision making policies, non-payment of dues even under contractual agreements, conflicts of interest etc are not so uncommon. Administration by an inefficient bureaucracy where red tape prevails in matters of business decisions has led fraudulent and corrupt practices dominate the market place environment. Romania’s poor infrastructure is another unfavorable factor and poses risk to a thriving business unit. As a practical consideration, UK National Bank would not remain untouched or unhindered by these practices.
In comparison, UK National’s Banks entry in Polish market was seamless due to the advantages bestowed by Poland’s geographical proximity to UK, the prevalent low transportation costs, low transaction costs, absence of tariff barriers and most importantly Poland’s transparent business environment with much lesser chances of fraud or corruption. Absence of political interference in business affairs cuts down on red tape and supports trade and commerce activities.
Considering all ambient factors, should UK National Bank decide to move forward with entering into Romania’s market place, it would be in the best interests of all stakeholders that adequate preparations be made and suitable tie ups be established for the purpose. Suitable positioning of UK National Bank is mandatory for maximum profitability with minimum issues. Sufficient time allowance would be required to envelop red tape and its resultant delays.
How might the infrastructure of Romania impact upon the UK National Bank’s decision to expand into this country?
Infrastructure plays an important role in establishment and smooth operations of a successful business venture. Infrastructure in Romania poses a threat to existing as well as new businesses. It would have a restraining effect on UK National Bank’s expansion and growth plans.
Expenditure of Public funds in Romania is controlled by numerous public sector entities influenced by politics and politicians. Consequently, large size business entities have to rely on the public sector demand for their survival. The business units owned by state provide privileged status to many industries making them either dominant customers or suppliers and in some cases competitors in the local market thereby making the settlement of outside establishments even more difficult. In addition, most important decisions regarding business affairs are controlled by politicians and are thus biased with minimum or no consideration to the interest of the stakeholders. Red tape and fraudulent practices thus prevail in the Romanian market-place and need to be allowed for in case UK National Bank goes forth with an establishment there.
IMF has sanctioned large funds for development of infrastructure and facilities in Romania to support economic development activities. The utilization of these funds has not been appropriately channeled resulting in slower and lesser development than aimed for. Poor physical infrastructure affects business costs adversely thereby affecting overall operations and profitability. The activities that support businesses such as transportation by road, rail and air, water availability and circulation, wastewater disposal systems cause numerous problems in operations. They also adversely affect public health and safety rendering dwellings hazardous, decreased productivity and other related problems. It’s noteworthy that most of the infrastructure is owned by Romanian National government and any endeavors towards improvement in facilities have to go through political approval which is not easy to achieve. These reasons have kept Romania from realizing its complete potential in economic development and from attracting FDI in most cases.
Taking all these factors into consideration, and in the current economic scenario, UK National Bank needs to be accustomed to higher commercial risks and exposure to issues arising out of political influence while tapping lower profitability margins. Terms and conditions of trade need to bear careful consideration. Choice of the right liaison partner might be the deciding factor between success and failure.
As a marketing professional, recommend what other strategic international marketing tools and processes should be accessed and used before any final decision is taken to enter the Romanian marketplace?
The most important aspect in positioning a new business in an existing market is to discover prevalent demand and ascertain adequate supply with better quality than existing products. Launch of new products should be even more critically analyzed in terms of customer demand before entering a new market.
The first and foremost important task required for UK National Bank’s entry into Romanian market is to identify a trustworthy and efficient local partner. The local business presence can be in the form of a distributor agreement, a subsidiary establishment, joint venture on mutually profitable terms or a radical acquisition. Such tie up would help towards acquiring knowledge of the market, previous business experience, information about successfully implemented strategies in the past as well as failures, access to key contacts in the trade and development of business relationships. The banking customer base and prospects should be thoroughly studied and compared against other ventures to determine risk, accountability, profitability, ROI, government policies, market penetration ease and other important factors. An adaptive approach would need to be maintained in the business model to be able to successfully satisfy all stakeholders. A legal counselor with excellent knowledge of Romanian law is absolutely necessary throughout operating lifecycle. Development of sound political and trade relationships is paramount to succeed in Romanian business environment.
UK National Bank needs to adhere to local regulations and standard business practices while entering Romanian market. Legal contracts and other necessary documentation need to be developed and signed by all stakeholders at the advent of business venture itself to avoid any complications during operations. Use of print and electronic media for advertisement needs to be considered as a strategic initiative. Earning of goodwill and faith through value proposition and fulfillment of promises to customers would create a path of success in the long run. It would also help towards “word of mouth” publicity. If the critical success factors of Romanian market are given due attention and processes and procedures are followed to the letter, UK National Bank’s endeavor could prove to be an example for other international players. Even if a compromise on price can’t be made to meet existing standards of the local market, a clear value proposition should be demonstrated.
Romania experienced economic recession in 2009. However, recent years have seen an increase in income of specific sections of the society and an expansion in consumer credit has also been observed. Unfortunately not all sections of the society have experienced prosperity and the average incomes remain relatively low. A comparison of Romania with other nations on the basis of Gross Domestic Product per capita makes it a preferred choice over neighboring nations. The affluent sections of the society should constitute the priority list of UK National Bank as should the thriving and upcoming business entities.
Timely and relevant intelligence and insights into the market trends gives any business a direction to advance. UK National Bank should establish trustworthy local intelligence unit to feed a strategic business development team with necessary information from time to time. Advancement strategies should be made by Business Analysts of UK origin positioned locally in Romania.
The other important strategic tools such as PEST analysis, SWOT analysis as per positioning in Romania, Value chain analysis keeping in mind the customer base and business procedures in Romanian market etc would help UK National Bank take a successful stride in this direction. Enough emphasis can’t be given on the fact that these analysis should be done by experts in the field. If sufficient precautions and adequate measures are taken at every step of the process, this step may prove right. As has been rightly said – good preparation is half victory. Adequate diligence may very well play the role in differentiating this endeavor from being a successful investment to be a costly mistake.
Critically assess what ‘bases’ for international market segmentation are relevant and that you would advise to the Board of Directors, in accessing the Romanian market-place?
Romanian market-place presents a conglomerate of local and international business entities. It presents excellent opportunities for new ventures given the right positioning and adaptive nature of their leaders. Big brands in major business sectors have set up shop in Romania with no menial success. Granted that post economic recession experienced in 2009, market conditions have deteriorated and progress has receded. However, things are looking up. Business entities have roped in funds with Romania’s impending entry in EU on 1st Jan 2014. Top brand retailers such as Metro, Carrefour and Selgros have set up large stores in Romania local market and have done well financially. Affluent sections of the society have herded to these stores resulting in large sales and profitability. Most of these store chains have expansion plans which speak volumes about the market potential. Foreign supermarkets businesses such as Metro Cash & Carry, Billa, Gima, Auchan, XXL and Artima etc also have share in the local Romanian market. These entities have also been profitable and expansion plans have been executed from time to time. Growth plans of all such businesses were affected during the economic turndown. Businesses have flourished post recession with imminent growth in the foreseeable future.
Media in both forms, print and electronic, is thriving in Romania. With a large variety and good quality of media, Romania presents excellent opportunities for advertisement of new business ventures. Large multinational companies have been spending good amount of funds on advertising endeavors through local media. With most of the population able to afford basic education, media plays an important role in the spreading news regarding new business types and ventures. New developments have been witnessed in the recent past with various media combinations coming up in the form of internet, social networking, digital TV, mobile telephony and FM etc to respond to the needs to different sections of the society. This presents a considerable advantage to UK National Bank’s decision to enter and dominate the Romanian market.
The IT market in Romania is huge in terms of revenue generation and profitability. It suffered a downfall during the recent economic recession. Nonetheless, it has revived and has been generating large revenue. With improvement in the economic conditions of the private consumers and companies, the IT budgets have witnessed a boom and so has the business. Romanian government had also pulled back on public IT spending during recession but with its entry in EU, there are possibilities of attracting EU structural funds which has helped the IT business revive. The improvement in IT infrastructure is good news for UK National Banks move to set up shop in the Romanian local market. Technology plays a vital role in internal as well as external administration of a large business unit. It’s also mandatory for development and execution of strategic business modules suited to the locale and native consumers needs.
It’s also noteworthy that the country is known for its strong computing and language skills. The labor force is comparatively cheaper with high skill sets making Romania a haven for foreign investors who want to set up shot in the local market. Networking in the business sector is prevalent. Most IT companies in Romanian local market are owned by foreign entities. These companies supported the large scale investment companies in the automotive and energy sectors and made available a broad spectrum of customized IT services suited to requirements. The past and current such scenarios clearly indicate large scale banking and investment opportunities for the UK National Bank in local Romanian market. Notable IT brands such as HP, Siemens and IBM have set up support and development centers in the local market-place. These are responsible to provide services to the entire central and eastern European region or in most cases global operations. Google and Intel are to follow suit in the recent future and set up shop to serve Romanian consumers and local business needs.
An analysis of the funds pumped into the market shows that most of it was generated through corporate market spending. Financed investments by public administrative authorities and national enterprises also contributed a large section of the market funds. Consumerism is on the rise post economic recession as well. Local public has re-developed faith in the economic situation and money flow has resumed. Corporate spending has seen an upward trend post economic recession. All these factors constitute the positive pathway for UK National bank’s entry into the Romanian market. However, serious consideration should be given to the lack of infrastructure and basic utilities which hinder the prospects of growth and advancement in Romania. Endemic corruption is bound to affect the modus operandi and pollute the system and if UK National bank decides to enter Romanian market, it should put strict systems and policies in place to fight corruption from the start with constant supervision as to its effectiveness.
Having conducted your own research into the Romanian marketplace, critically evaluate the most suitable marketing communications ‘tools’ and the most effective media that might be used to launch the UK National Bank into Romania?
Successful entry of UK National Bank into the Romanian market and effective operations thereafter with regards to profitability and large customer base would require high-level marketing efforts during the inception stage. Brand recognition by prospective customers is absolutely essential for any business to succeed. Ongoing communication is equally important once the brand is recognized and trusted upon. Therefore the initial marketing efforts would need to be backed up by constant review and renovation for continued market performance.
Integrated marketing communication would be ideal for the Romanian market-place. A mix of various forms of promotional activities and large scale communication techniques would reach out a wider audience and help in building a strong customer base. Advertising, public relations, sales campaigns, online marketing and personal selling techniques all should be combined to achieve best results.
Some of the marketing communication tools that can be effectively implemented for UK National Bank in the Romanian market are listed below –
- Advertising – The main feature of advertising is to create brand awareness by outlining the advantages of the specific product and brand. It reaches out to a large audience thereby reducing effort. The objective of advertisement should be clearly outlined with a target audience in mind and parameters to measure effectiveness. Television and Print media are the best choices for advertising in Romania. Outdoor advertising is another important measure that should be considered. For example – Billboards, bathroom stalls, banner ads etc.
- Online Marketing – Online marketing comprises of various features and is vast in its usage. From use of company’s website to use of social media websites and emails, the main purpose of online marketing is to generate leads. A clear message with subsequent action plan on the part of consumer should be clearly outlined in such form of marketing. The most important consideration in this marketing technique is to target the right audience, convey a clear message, have parameters to measure the effectiveness of the campaign, have a sales force to convert potential lead generation into actual consumer base and to constantly upgrade the campaign with promotional offers.
- Loyalty Programs – Reward programs for loyal customers.
Other marketing communication tools can be explored and weighed for effectiveness as well before being implemented in the Romanian market.
References
- Doing Business in ROMANIA: 2012 Country (http://export.gov/romania/static/2012%20CCG%20ROmania_Latest_eg_ro_031139.pdf)
- The Romanian Economic Journal (http://www.rejournal.eu/Portals/0/Arhiva/JE%2036/JE%2036%20-%20Postelnicu%20-%20Ban.pdf)
- Quality of investment environment. Evidence from Romania (http://www-sre.wu.ac.at/ersa/ersaconfs/ersa12/e120821aFinal00907.pdf)
- Marketing Communications, Chris Fill (http://www.ebsglobal.net/documents/course-tasters/english/pdf/h17mm-bk-taster.pdf)
