Romania's Business Environment Analysis

This assignment examines the business environment in Romania. It involves conducting a PESTLE analysis to identify political, economic, social, technological, legal, and environmental factors influencing businesses. A SWOT analysis is also required to assess the country's strengths, weaknesses, opportunities, and threats. The analysis delves into specific aspects such as international trade, corporate social responsibility, and the impact of regulatory reforms on economic growth. Additionally, it considers Romania's competitive advantage in a global context.

BUSINESS ORGANIZATION AND
ENVIRONMENT IN A GLOBAL
CONTEXT

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
BACKGROUND OF THE COMPANY....................................................................................3
BUSINESS ENVIRONMENT...................................................................................................4
ANALYTICAL FRAMEWORK (SWOT AND PORTER FIVE FORCES ANALYSIS).......7
CONCLUSION..........................................................................................................................8
REFERENCES...........................................................................................................................9

INTRODUCTION
Business environment are complex in nature as there are many factors which impact
the operations and the activities of the firm. As all the companies are adopting globalization,
so it is essential to identify the business environment in which it is operating its functions.
This report will talk about the Dedeman organization which is a successful hypermarket and
sells different garden as well as furniture equipment to the customers. Besides this, the
interesting fact about the firm is that it is only operating in Romania despite of being one of
the successful brands. Due to this reason, the organization is planning to expand its market in
Netherlands as the European market is best for operating the business. Further, the
background of the organization will be discussed different marketing tools will be adopted to
identify the potential business environment of Netherlands. Swot, Pestle and porter five
forces will help to analyse the current and future condition of Dedeman.
BACKGROUND OF THE COMPANY
In this report, the firm which has been chosen is Dedeman it is a hyper market which
is located only in Romania. In the present time, the organization has around 44 hypermarkets
and in the mean time they are planning to expand their business in Netherlands also. The firm
was established in the year 1992 and from now it has seen a rapid growth as it spread its
business in all over the world (Hill, Cronk and Wickramasekera, 2013). As in the world there
are many organization who are selling these types of products to their customers. But in the
very short span of time, Dedeman has made a positive remark in the country. It is considered
as one of the largest retailer in selling building materials and furniture products. The
functions of this organization are considered similar with the operations of the IKEA
organization.The products which are rendered to the customers consists of wooden building
materials, entry mats, varnish and lacquer products, door accessories etc. till this time, the
firm has opened around 44 stores in the Romania and their target is to open around 50 stores
in the country. The motto of the company is “dedicated to your plans”. This organization was
created by two brothers named Adrin and Dragos Pavalas in the recent time it has beaten
many of the corporates operating in Romania in the same kind of product. Further, it is
making the plan to expand by opening the new store in Oradea and further it also has plan in
carrying out the business in Netherlands. The investment which has been required to develop
the big store is around 14 million (Harrison, 2013). Besides this, by opening the new stores it
is beneficial for the country as well as the people who are residing in. As it will help in
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increasing the GDP of the company and further it has provided around 200 jobs to the
individuals. Further, if the organization expands their business in Netherlands it will earn
good revenue because it is also a brand and further the organization did not have to attract the
customers because of its effective brand image.
With the opening of these stores, the city is being developed which will in future help
the individual in increasing the standard of living. The company has become the leader of
Romania DIY market and it has beated Baumax, Pratiker etc. These are the international
organizations who are selling their products in Romania. The firm target was to open 45
stores by the year 2015 (Tarique and Schuler, 2010). Besides this, the organization is
expecting the growth of around 40 million Euros, as they are witnessing a hike of 8% in their
sales. Further, the firm has their own logistic parks. On the other hand, Dedeman is specialist
is home and the garden equipment. It has maintained its competitive position inthe year 2016
by leading on the number one position.
Besides this, the turnover as well as the branches, the firm is dedicated in advertising
its products. They spend huge amount in making the people aware about their products and
services. With their motto only they make the advertising campaignwhich has helped them in
maintaining the top position in the market. Dedeman has been planning to now expand its
market in Netherlands. As they have made a huge mark in the minds of the consumers, so
they are focusing on increasing their market share outside Romania. as per the new plans as
well as the strategy, the hypermarket is planning to expand their chains in Moldova as it will
open its first store in Chisinau (Dilling, 2010). Besides this, the organization future strategy
is to sale their products through internet as most of the individuals purchase products by
using internet.
On the other hand, Dedeman provides consulting, logistics as well as transport
facilities. It is now only restricted to the equipment. For security of the employees in the
organization, the security manager has selected Bosch as the best choice in securing the
employees. The main concern of the organization is safety of the workers, as due to this
reason, they have designed a highly-securedsystem according to the needs and demands of
the customers (Cavusgil. and et.al., 2014). It is said that after the execution of the plan and
the security system it will become one of the largest high tech and integrated system in
Romania.
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BUSINESS ENVIRONMENT
Business environment includes all the factors which affect the operations of the
organization. It basically includes the external and the internal aspects due to which the
functions of the firm are carried out. As in this case Dedeman is a hypermarket which
hasbeen operating its activities only in Romania. So for expanding the business, it is required
to analyze the business environment of Netherlands.
Political factors- This aspect has huge impact on the working of the organization. In
Netherlands the interference of the government is minimum in the operations of the
organization. In this country, the government had made several policies to encourage the
internationalization. In case of Dedeman, it will not face huge problems regarding their
functioning because Netherlands has effective taxation system (Boons and Lüdeke-Freund,
2013). On the other hand, due to the emergence of the Dutch Telecommunications, business
has less restrictions o the price control. In short, it can be said that the political environment
of the Netherlands is stable and the organization can effectively carry out the operations in
the country. Further, due to the government liberal policies they also think for further
expansion in this country only.
Figure 1: Netherlands GDP statistics
(Source: Netherlands GDP statistics, 2017)
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Economic factors- From the past it has been witnessed that the economic condition of
Netherlands are good and further, it encourages the foreign trade. The country in the recent
time has seen a huge growth. The Netherlands is considered as one of the most favourable
places for doing the business as it attracts the investors towards the geographic location
(PESTLE Analysis, 2017). By seeing the economic condition of the country, it can be said
that it is very favourable for the organization. Through this, it can be witnessed that there is
huge scope for development (Kramer, 2011). Due to the increasing GDP, the standards of
living of the people are increasing. Because of these reasons, Ddeman has planned to expand
its business in Netherlands. On the other hand, the Netherlands has expanded its
communication and the transportation network and it has the third largest airport. This
economic infrastructure is beneficial for the foreign trade. But in the recent years, the Europe
has seen the downturn due to the Sovereign debt crises. This can affect the profitability of the
organization because of the decrease in revenues (Mahmood and Hanafi, 2013).
Social factors- This factor consist of the culture, background and the values which are
attached to the individuals which are residing in the country. In this country, the standard of
living of the individual is high and it is suitable for the people who come from different
countries. Besides this, in the recent time, many immigrants have also been witnessed in the
country and further, the labour force is of the high quality. This will help the organization in
achieving the success instantly. So, due to this reason, the organization has scope in
developing competitive advantage. The reason of the high quality is that, the quality of
education is good and even the training provided to the individual are also good which help in
performing effectively in the business (Scheer, 2012). Due to the positive business
environment, it encourage in the individual to participate in the activities of the organization.
With the positive environment with the social culture it has made in favourable for the
investors to invest in the country. So according to the social business environment, Ddeman
will not face issue regarding the cultural factor and it will get support from the individual.
Technological factors- With the upgrading technology and hyper active environment,
it has become essential for the organization to adopt new technologies so that they can
compete with the rivalry firm effectively. But in case of Netherland, the situation is totally
different as compare to Romania because in this country it has been witnessed that 43.5%
people do not have the basic computer skills. In this country, computers are not common in
the working place. Further, the internet usage in the country is only 23% which is less is
comparison to other countries (Gharajedaghi, 2011). Hut in case of the Netherlands, it is
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leading in the communication networks and it has best IT technology in the country. This is
disadvantageous factor for Dedeman because the organization uses less technological skills
due to their home country. But to expand the markets Netherland, the organization is
required to adopt all the latest technologies so that they can compete with their rival firms.
On the other hand, the country is efficient in trading through internet. Besides this, it is
considered amount the wired country in the world. Further, with the efficient telecom
market, the country is trying to adopt the new technologies. So for the Dedeman it has
become important to adopt the technology to compete with the rival firms.
Legal factors- The legal rules and regulations are strict in Netherlands. The country is
known for its business laws and the laws are made with the help of the legal principle
theories. As in case of security, the organizations are advised to maintain a minimum
standard of security in the area. This is basically made for safeguarding the interest of the
employees (Haidar, 2012). The legal norms ae made by the government for the crimes to
maintain the peace in the country. Dedeman hypermarket would not suffer a lot because it has
the safe working environment but the major concern is that the organization cannot violate
the law. But overall it can be said that through effective legal proceedings it is easy for the
organization to work in Netherlands.
Environmental factors- Due to the increasing global warming, all firms are concerned
with the environment. In most of the countries, government has become vigilant about the
practices of the firm. Besides this, the government are making the public about the
environmental facts (Bageac, Furrer and Reynaud, 2011). In the Netherlands, KPN system
has been adopted to reduce the energy consumption so that they can safeguard the
environment. In case of Dedeman, the organization has to carry out the environmental
friendly activities which can help in safeguarding environment. The environmental laws
made in Netherlands are very strict as they have stopped the exploring of the mineral
resources to help the environment. Further, in the same case, the organization is forced to
carry out the CSR activities which help to protect the surroundings. These systems are
adopted by the country to improve the environmental performance and due to this aspect the
rigorous policy of environment has to be followed.
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ANALYTICAL FRAMEWORK (SWOT AND PORTER FIVE FORCES
ANALYSIS)
Swot analysis will help in analysing the strength, weakness of the organization. This
will be useful for the firm in taking the long-term decision. On the other hand, with the help
of five forces model, the competitive situation of the organization will be discussed which
will analytically aids in evaluating the intensity of the rivalry prevailing in Netherlands.
Strength- By analysing the Netherland market and the position of the firm, the main
advantage of the organization is its brand image in the minds of their customers because of its
products and the services, this will help in making effective mark on the customers (Gavrea,
Ilies, and Stegerean, 2011). Strength is its market share as it has captured almost Romania
and due to this reason, it is able to earn huge revenue. Besides this, as Dedeman is focusing
on Netherlands so it is able to make the products and services according to the taste and
preferences of the individual.
Weakness- The main weakness of the Dedeman is that it has not expanded its market
in the new areas outside Romania. It is considered as the weakness because with this quality
of product and the services it would have captured the huge market segment. Besides this,
another weakness of this organization is that it is still spending more on increasing the store
in their country only (Albu. and et.al., 2011). This will not be beneficial in the long run.
Opportunity-There are huge opportunities for Dedeman in the market. As it is
operating only in Romania so it can expand in other countries as now it is planning so it will
be beneficial for it. Besides this, as it has developed a positive brand image in the market so
they can diversify the business in other sectors which will help the firm in capturing new
target market (Kramer, 2011).
Threats- The threat prevailing in Netherland is the high technology in the
environment. This is not good for the growth of the organization in the initial stage because it
is coming from those countries in which there is lack of technology. Another threat is the
competition in the hyper market. As in the world, there are many other organization who are
selling the same product (What Is a SWOT Analysis? 2017). For Dedeman it is required to
analyse the competition. Competition is a major threat because they have huge target market
as compare to Dedeman.
Porter five forces
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Figure 2: porter five forces model
(Sources: Porter five forces model, 2017)
Bargaining power of suppliers- The bargaining power of suppliers is low in case of
Netherlands. This is because the suppliers of these types of equipment are many because it
encourages trade so there are many suppliers due to this reason. There are various
organization which is rendering the same products (Tarique and Schuler, 2010).
Bargaining power of buyers- The bargaining power of buyers are high because of the
high switching cost. In the recent time, many organizations have been established in
Netherlands and due to this the buyers have the choice to choose the product.
Threat of new entrants- The threat of new entrant is also high in Netherlands because
as the entry barrier is low so the firm can easily enter the market with the product. On the
other hand, the reason for high entry barrier is because of the easy laws and proper taxation
rules.
Threat of substitutes- The threats of substitute in case of Dedeman is high as there are
substitutes and the standard of living is high so they have many options to replace it. But still
the firm is required to focus on substitutes so that they can make the strategy accordingly to
capture the market of Netherlands (Cavusgil. and et.al., 2014).
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Industry rivalry - Rivalry of the competition is quite high in this industry. As there are
many organizations which are selling the homogenous products and services to the
customers. So, it is essential for the Dedeman to adopt the strategy which can create
competitive advantage in Netherlands (Mahmood and Hanafi, 2013).
CONCLUSION
From this report, it can be concluded that Dedeman is successful organization of
Romania. it has been providing excellent services in to country by selling home furnishing
equipment. From the analysis, it can be witnessed that the economic and political condition of
Netherland market is also and it is beneficial for the organization to establish its stores in the
country. But by evaluating the porter five forces it is advised that there are some of the
competition factors which has to be kept in mind in Netherland. The reason is that it is
favourable for the trade so there are fewer barriers to restrict the international trade. This
makes the country highly competitive.
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REFERENCES
Books and journals
Albu. and et.al., 2011. The implications of corporate social responsibility on the accounting
profession: The case of Romania.
Bageac, D., Furrer, O. and Reynaud, E., 2011. Management students’ attitudes toward
business ethics: A comparison between France and Romania. Journal of Business
Ethics.98(3). pp.391-406.
Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation: state-of-
the-art and steps towards a research agenda. Journal of Cleaner Production, 45, pp.9-
19.
Cavusgil. and et.al., 2014. International business. Pearson Australia.
Dilling, P.F., 2010. Sustainability reporting in a global context: What are the characteristics
of corporations that provide high quality sustainability reports-an empirical analysis.
The International Business & Economics Research Journal.9(1). p.19.
Gavrea, C., Ilies, L. and Stegerean, R., 2011. Determinants of organizational performance:
The case of Romania. Management & Marketing.6(2). p.285.
Gharajedaghi, J., 2011. Systems thinking: Managing chaos and complexity: A platform for
designing business architecture. Elsevier.
Haidar, J.I., 2012. The impact of business regulatory reforms on economic growth. Journal of
the Japanese and international economies.26(3). pp.285-307.
Harrison, A., 2013. Business environment in a global context. Oxford University Press.
Hill, C.W., Cronk, T. and Wickramasekera, R., 2013. Global business today. McGraw-Hill
Education (Australia).
Kramer, M.R., 2011. Creating shared value. Harvard business review.89(1/2). pp.62-77.
Mahmood, R. and Hanafi, N., 2013. Entrepreneurial orientation and business performance of
women-owned small and medium enterprises in malaysia: competitive advantage as a
mediator. International Journal of Business and Social Science, 4(1).
Scheer, A.W., 2012. Business process engineering: reference models for industrial
enterprises. Springer Science & Business Media.
Tarique, I. and Schuler, R.S., 2010. Global talent management: Literature review, integrative
framework, and suggestions for further research. Journal of world business.45(2).
pp.122-133.
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Online
PESTLE Analysis. 2017.[online].<http://study.com/academy/lesson/what-is-pestle-analysis-
definition-examples.html//.> [Accessed on 26th March, 2017].
What Is a SWOT Analysis? 2017.[online].<http://articles.bplans.com/how-to-perform-swot-
analysis//.> [Accessed on 26th March, 2017].
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