DPD Group Expansion: Business Environment Analysis for Poland

This report provides a comprehensive analysis of DPD Group's potential business expansion into the Polish market. It begins with background information on DPD Group, including its history, global presence, and competitive advantages. The report then delves into the business environment of Poland, utilizing a PESTLE analysis to evaluate the political, economic, social, technological, legal, and environmental factors that could impact DPD Group's operations. The analysis includes discussions on political stability, economic indicators, social demographics, technological infrastructure, legal frameworks, and environmental regulations. The report further examines the business scenario in Poland, focusing on the logistics infrastructure, transportation systems, and a competitive analysis using Porter’s Five Forces to assess the threats and opportunities in the market. The report concludes with a summary of the key findings and recommendations for DPD Group's expansion strategy in Poland.

Expansion of DPD Group’s
current operations

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Background information on DPD Group.........................................................................................3
Business environment of Poland.....................................................................................................4
Analysis of business scenario..........................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business expansion refers to the strategies for the growth of a business by increasing the
number of physical store or establishment of online presence of a company’s products and
services in other areas, regions and countries in order to increase the market share, gain new
customers and increase revenue of the company. The company chosen for expansion is DPD
Group which is a courier service company, in order to plan its expansion in Poland by
conducting market research. The project report will aim to evaluate major issues that the
company can face while expanding its operation in Poland. The report highlights a detailed
description of DPD Group in terms of legal form, size and international expansion. The business
environment of Poland is analysed through a PESTLE analysis. The business scenario in context
of transportation was discussed in brief along with a competitive analysis using Porter’s five
forces.
Background information on DPD Group
DPD group is from the courier industry which is delivering parcels which are delivering
more than 5.3 million parcels weighting under 30kgs every day. The organization was founded in
1999 which is 22 years back and the organization is serving worldwide which is having its
headquarters in Issy Les Moulineaux which is situated in France. There are 42,000 employees
working in the organization as of 2019 and the revenue generation of the organization is
€7.8billion. The organization is serving worldwide which is why the company has been able to
get a higher stable economic factor so that there would be able to have a good functioning. The
company is having a lot of competitors in the market which is why the organization will have to
invest in the technological aspect so that the customers can have a higher satisfaction level.
There is tracking which is provided to the customers which are using this group for couriers.
There are a lot of policies which DPD group has to follow because all countries have
different laws and regulations for products which are coming from outside. There are a lot of
security measures which have to be provided to the countries from which the products are being
carried out and carried to. The customers have to be given full details about the products which
are being delivered from one place to another and that are a very essential factor. DPD group has
become Europe’s 2nd largest courier express parcel agency which is a great success for the
company since they have been able to establish themselves effectively. The ownership of DPD
3

group is in Germany. The organization has followed all the rules and regulations effectively
which is why the company has been able to establish themselves effectively in the market.
There are international operations which the company has to select a strong structure and
planning for themselves and by expanding internationally which has made the company gain a
lot of knowledge and skill. The competition in the market is increasing which is why it is very
essential for the organization to be able to get in the right skills and productivity in the
organization to satisfy the customers. There are a lot of courier agencies which have established
themselves in the market therefore there have to be innovation and better services and trust
which the company will have to gain for them in the market (Sheng and et.al., 2017). Operating
globally is a huge factor for the company since they have to have the right knowledge and from
that the planning has to be done effectively. There are bounders which the organization has also
created for the customers so that there is no illegal work which is being done by the organization
which can impact on the reputation of the organization. The company has been able to
successfully been able to gain a competitive advantage, brand image and reputation in a very
short time because of the trust they created for themselves in the customers and that has to be
well maintained for a long run.
Business environment of Poland
The business environment of Poland consists of the internal and external factors that have
direct and indirect impact on the expansion of DPD Group’s business. These are political
climate, suppliers, customer needs and preferences, supply and demand, competitors, innovation
in technology, market trends, social trends, economic changes, legalities of the country in
context of courier business, investors and environmental concerns of the country. The analysis of
the business environment of the country selected for expansion, i.e. Poland is done using a
PESTLE analysis to give insights for broad fact finding so that DTD Group in devising
appropriate strategies, plans for expansion and decision-making (Perera, 2017). It helps in
understanding the valuable opportunities, potential threats, cost effectiveness and deeper
understanding of the market of operation.
Political Factors: In the context of political landscape, Poland has turned into a major
democracy in its functions, laws and operations, gained stability after the fall of communist
4

ideology and political parties from the country (Simon, 2019). This has led to more free market
operations, capitalistic economy, notable progress in terms of protection of minorities, restoring
diversity and safeguarding the human rights. The political transformation in the country has led it
to adopt a new constitution and establishment of a political system similar to France, that is a
mixed parliamentary-presidential system (Sovacool and Yazdi, 2019). There are many 14 special
economic zones which offer relaxation in terms of financial operations and taxation and
encouraging foreign direct investment. With few restrictions on FDI, the overall framework of
regulations in Poland in quite complex and the tax system of the country keeps being outdated.
On an average, it takes around 685 days to enforced any contract in Poland due to numerous
bureaucratic hurdles and red tapism. Apart from that, Brexit has impacted Poland’s economic
partnership with UK which caused major disruption in the logistics infrastructure and supply
chain, therefore it can be challenging for DPD Group to expand in Poland (Borońska-
Hryniewiecka, 2019). The political stability improved the GDP of the country over the last
decade. The political stability of Poland is illustrated by a graph as follows:
Figure 1: Political Stability of Poland (1996 -2018)
Source: The World Bank
5

Economic factors: The economy of Poland is dominated by the tertiary or service sector that
contributes to more than 60% in the GDP of the country. The primary contributors of tertiary
sector are professional, technical services, trade repairs of motor vehicle etc. The growth of the
gross domestic product of the country was disrupted by the global financial crisis of 2009 and the
service sector declined by a huge percentage. Although, it is one of the only countries that
showed growth after the period of recession in the European Union. Poland’s supportive
government policies, regulation, strategic location and market position strengthens the industrial
activities. The global economic landscape is dynamically transforming, which is a major
challenge for establishing courier operations. Major international agreements are taken in the
interest of foreign investors which are protected by policies and the fact that foreign businesses
don’t need to pay taxes on business profits in each country. Poland has a good rank on the
Financial Development index and by a report of World Economic Forum it was noted that
Poland performs productively in context on banking systems and exchange rates. Economic
fluctuations can affect the logistics infrastructure, supply-chain and freight and air carrier
charges of DPD Group. The growth in real GDP determined that country has been positive for
import export outcomes along with high market value of its total goods and services (Brzezinski,
Myck and Najsztub, 2019).
Social factors: According to Central Intelligence Agency, more than 60% of the total population
of Poland resides in the Urban areas which is low as compared to France, Belgium and UK. The
low rate of urbanisation in Poland denotes that it lacks demands in terms of communication
infrastructure, IT and depends upon an efficient distribution and transportation channel which
could be a huge market for courier services (Rechsteiner and et.al., 2020.). Religion plays a
major role as a cultural factor in the country as 89.8% of the population is identifies as Roman
Catholic. Therefore, DPD Group has to consider this fact while devising their marketing and
promotional tactics and even give proper holidays to employees during certain religious occasion
and festivals. The uncertainty avoidance of the country is high which means that residents can
reject innovation or unorthodox ideas which polish people are unfamiliar with. The country is
feministic in nature meaning along with profits it gives importance to culture, environment and
citizens. The corruption level of the country is quite low and the bribery should not be practiced
by the company in form (Ramet and Borowik, 2017).
6

Technological factors: When it comes to technological infrastructure, Poland scores low on
Logistics performance index than other European countries. The quality of Poland’s transport
infrastructure and communication are a particular concern for the DPD Group as it is the
foundation of its business and can lead to increased inefficiency at the same time these factors
increase the demand of transportation services like courier. The fixed broadband coverage of
Poland is also a major concern, but majority of its population is increasingly becoming tech
savvy which could be beneficial for social media marketing and launching DPD’s mobile
application for tracking shipments (Wojewnik-Filipkowska, Szczepaniak and Zamojska, 2019).
Legal factors: In general, the legal structure of Poland provides freedom of economic activities
for foreign business persons since its major political transformation from a communist society to
a capitalistic and democratic country. The laws regarding minimum capital, management bodies,
founders, incorporation, audit, liability for joint stock companies and limited liability companies
are nor very complex. There are extensive laws regarding payment of taxes, employee benefits
and safety, labour unions, protection of workers etc (Maślanka, 2020).
Environmental factors: Enforcement and implementation of environment laws is done
extensively and rigidly in Poland as it is an environment friendly country who believes in
sustainable business approaches and growth. Major laws address to the sectors of improper
disposal of electronic waste and batteries, packaging waste, servicing of vehicles and electronic
equipment which have to be adhered to by DPD Group (Jendrośka, 2017).
Analysis of business scenario
Business scenario for the DPD Group in Poland can be evaluated on the basis of current
logistics infrastructure and transportation system of Poland along with a competitive analysis.
The major business opportunities for the DPD Group is the efficient and cheap transportation
facilities available in Poland as the transportation sector of Poland is seventh largest in Europe
making it a huge market. International companies have major opportunities on carrying cargos
across transport nodes. Road and trucking transport claim a huge share of freight traffic while
rail freights offer cheaper rates. Moreover, European Union’s Fourth Railway Package has a
7

proposition that member states need to open railways for union members, which implies that
more shipments can travel across Polish tracks (Wołek and Hebel, 2019). The market also has
major threats like intense competition for the company. The competitive analysis is done using
Porter’s Five forces:
 Threat of new entrants: The possibilities of entering of new courier companies in Poland
is moderate, as the business environment is pretty favourable but the nature of the
business doesn’t let multiple players enter. Small companies do try to expand in Poland
and few successful ones are Qurier parcel service, Kamil Malinowski, inPost, world
courier Poland, GS services and many more who successfully established businesses but
operate on a low level and don’t encompass a huge market. Even online market stores
like Amazon delivery can harm the business.
 Bargaining power of suppliers: Factors like differentiation of inputs, existence of
substitute inputs, concentration of suppliers, switching costs for suppliers, forward
integration can be a threat for the courier service as acquiring high end technology for
network can leave courier companies in debt. The suppliers of DPD include raw material
contractors, owners of trailers, transportation services, packaging materials and vehicles,
airplanes companies who may raise prices etc. who might have an edge or advantage at
some point due to higher competition within the country. This level of threat can be
termed moderate. If this threat becomes high, it could be a major disadvantage for the
company. But if the company has loyal ties with established suppliers, this threat would
not affect the business expansion. The company has to aim at stabilising its suppliers both
locally and globally (Fabbri and Klapper, 2016).
 Bargaining power of buyers: The buyers refer to the consumers who use the company
for delivering their parcels and shipments. If there are trustworthy companies of courier
services in existence who operate for a median cost, it could be tough for DPD to
compete the market. Consumers tend to shift from one company to another on the basis
of price, quality, loyalty and efficiency. If all these factors are being challenged by
existing or new companies of the same sector, the level of threat could become high from
moderate.
 Substitutional threat: There are various substitutional channels and ways in which
courier services can be tackled. Most importantly, a government established national post
8

always exists in all countries which is generally cheaper. Other substitutions are customer
themselves travel to reach out for giving products, which is merely a weak threat.
Another major substitute for courier companies are Amazon delivery systems where the
consumer just has to purchase the product online and order for delivery on the sender’s
address (Siemiątkowski, 2016). This disrupts the whole concept of couriers in case of
gifting or sending specific items. Other online gifting companies can be counted as
substitutes.
 Overall degree of competitive rivalry: The overall degree for competitive rivalry is
moderate, as DPD is a major company with huge network and distribution channels
across Europe, India and Brazil etc. So, the degree of threat for new and small companies
is low. However, the threat of pre existing companies with huge logistics infrastructure
such as FedEx Poland, UPS Polska, DHL, TNT, Jetpack, Express service, Wings
Express, X press couriers etc. Factors like product and service differences, growth rate of
industry, Brand identity, exit barriers and switching costs can influence the degree of
rivalry among the major players in the industry (Chodakowska and Nazarko, 2016).
CONCLUSION
The major issues highlighted in the report are the external factors that could affect the
expansion of DPD Group in Poland as well as the competitive and situational analysis which
could affects its business operations in the country. The major political threat is of Brexit as the
headquarters of the company is in UK and supply chain and decision-making could be affected
by this. The economy of the country is pretty goods but the social factors of the country seem
high on uncertainty avoidance on prevalence of religion. The transformational facilities of the
country are favourable in terms of delivery systems and logistics. The major threat for the
company is the degree of rivalry which is high due to the presence of established courier
companies. The ways in which company can lead expansion and counter these threats are
adapting the marketing and operational strategies according to the culture of Poland, such as
giving holidays during religious occasions, establish a no bribery culture in the organisation,
partnering up with local suppliers, providing benefits to consumers in terms of quality and
appropriate pricing strategy, focus on expansion of its reach to both sub-urban and rural regions
and maintain its brand equity through increased operational efficiency.
9

REFERENCES
Books and Journals
Borońska-Hryniewiecka, K., 2019. The Polish Parliament and the Scrutiny of Brexit in Poland.
In Brexit and Democracy (pp. 155-178). Palgrave Macmillan, Cham.
Brzezinski, M., Myck, M. and Najsztub, M., 2019. Reevaluating distributional consequences of
the transition to market economy in Poland: new results from combined household survey
and tax return data. Available at SSRN 3497394.
Chodakowska, E. and Nazarko, J., 2016. The models evaluating courier and messenger
companies in Poland. Engineering Management in Production and Services. 8(4). pp.50-
58.
Fabbri, D. and Klapper, L.F., 2016. Bargaining power and trade credit. Journal of corporate
finance. 41. pp.66-80.
Jendrośka, J., 2017. Environmental law in Poland, 1989–1996: An assessment of past reforms
and future prospects. In Environmental Protection in Transition (pp. 81-115). Routledge.
Maślanka, J., 2020. Restoration of Boundary Markers and the Determination of Boundary
Points–Proposed Amendments to the Laws of Poland. Geomatics and Environmental
Engineering.14(1).
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Ramet, S. and Borowik, I., 2017. Religion, politics, and values in Poland. Continuity and change
since 1989.
Rechsteiner, K., and et.al., 2020. Metaphors For Trauma: A Cross‐Cultural Qualitative
Comparison in Brazil, India, Poland, and Switzerland. Journal of Traumatic Stress.
Sheng, D and et.al., 2017. Modeling the effects of unilateral and uniform emission regulations
under shipping company and port competition. Transportation Research Part E: Logistics
and Transportation Review. 101. pp.99-114.
Siemiątkowski, A., 2016. THE INFLUENCE OF TRANSNATIONAL CORPORATIONS ON
SOCIETY’S SAFETY BASED ON ACTIVITY OF AMAZON. COM IN POLAND
AND GREAT BRITAIN. Toruńskie Studia Międzynarodowe.1(9). pp.131-140.
Simon, M.D. ed., 2019. Background to crisis: policy and politics in Gierek's Poland. Routledge.
Sovacool, B.K. and Yazdi, A.H., 2019. Technological frames and the politics of automated
electric Light Rail Rapid Transit in Poland and the United Kingdom. Technology in
Society.59. p.101190.
Wojewnik-Filipkowska, A., Szczepaniak, K. and Zamojska, A., 2019. INNOVATION
SYSTEM: A STRUCTURAL STUDY FOR POLAND. Research Papers of the Wroclaw
University of Economics/Prace Naukowe Uniwersytetu Ekonomicznego we Wroclawiu,
(545).
Wołek, M. and Hebel, K., 2019, September. Strategic planning of the development of trolleybus
transportation within the cities of Poland. In Scientific And Technical Conference
Transport Systems Theory And Practice (pp. 141-152). Springer, Cham.
Online
Political Stability of Poland, The world Bank, 2018, Available Through:
<https://www.theglobaleconomy.com/Poland/wb_political_stability/>
10