Assessing Albania's Attractiveness for International Business Strategy

This report provides a comprehensive analysis of Albania's international business strategy, assessing its attractiveness for foreign companies. It begins with an introduction to Albania's economic and demographic landscape, highlighting key indicators like GDP growth, unemployment rates, and population demographics. The report then delves into the external factors influencing business in Albania, including geography, climate, religion, political structure, and legal system. It examines the country's economic conditions, social factors, technological advancements, and environmental considerations. The report also explores the labor market development and business start-up processes in Albania. The analysis emphasizes Albania's potential for foreign investment, the benefits it offers, and the government's efforts to improve the business environment. The report concludes by underscoring Albania's growing economic stability and opportunities for international businesses.

Running head: INTERNATIONAL BUSINESS STRATEGY
International Business Strategy
Name of the Student
Name of the University
Author Note

1INTERNATIONAL BUSINESS STRATEGY
Introduction
Albania is situated in Southeast Europe. It has an estimated population of 2.885
million, of which 55% of the people live in the urban areas. The country’s unemployment
rate was 16.1% in the year 2016. The country is a higher middle-income country with per
capita GDP of USD is 5,288. Real GDP grew by 4.2% in the year 2018, which is mainly
driven by exports, constructions, household consumption and direct foreign investments. The
economic growth of the country has slowed down in the year 2019 to 3.6%. Albania gets
trade benefits especially for EU and it has free trade agreement with Turkey. Foreign
investments are very essential for implementing the strategic reforms, managerial methods
and use of advanced technology in order to stimulate the economic growth of the country.
Albania has experienced an increase in the interest of the foreign investors in a variety of
sectors like cement production, mining, energy generation, oil and industrial park, especially
in the telecommunication sector (Gloyer 2018). In order to assess the countries attractiveness
for international companies, it is essential to consider the external components that affect the
business of these companies in Albania.
Geography and climate: The country is mostly covered by mountain ranges, united with a
shoreline and a number of lagoons and river with an area of approximately 28,748 sq are
kilometers. The largest city and the capital of Albania is Tirana, which offers a great place for
the international companies to expand their business to this country (Osmani 2013). The
country has Mediterranean climate with temperature range varying from 7-degree Celsius in
winter to 24-degree Celsius in summer. Albania falls within the time zone of Central Europe
(GMT+1) and between the month of April and October switches to daylight savings time that
is GMT+2.

2INTERNATIONAL BUSINESS STRATEGY
Religion: The Albanian constitution provides liberty of religion and the government respects
this fact. There is no societal abuse or any kind of discrimination based on religions and
beliefs in the country (Pistrick 2017). Thus, it provides a healthy environment for the
international business players to expand their business to Albania.
Political structure: The politics of the Republic of Albania takes place in the framework of
Parliamentary Representative Democratic Republic. The governmental system is based on the
balancing and separation of the legislative, judicial powers and executive (Tochka 2016). The
branches of government are independent to each other. The governing structure enables
foreign companies to invest in Albania.
Legal system: The legal system of Albania has a system of civil law. The main piece of
legislation governing the employment relationship in the country is the Law of Civil Servants
and Labor Code. The employees involved in the employment relationship is governed by the
Labor Code. These employees include the private sector employees, certain section of the
public sector and public sector employees. The public sector employees include the civil
servants who are involved in the employment relationship synchronized with the Law
imposed on the civil servants (Hasani and Beleraj 2013). There is no significant distinction
based on the criteria of public and private sector. The following kinds of contracts for the
employees are regulated under the Labor Code:
 Employment agency contracts
 Part-time and full-time contracts
 Unlimited and limited duration contracts
 Collective and individual employment contracts
 Commercial agent contracts
 Home base employment contracts

3INTERNATIONAL BUSINESS STRATEGY
 Internship contracts
 Foreign investments
The contracts of the employment are concluded in writing except for in some special cases.
The employer takes care of the protection of the employees, corruption, and the minimum age
of the employees, safety and health at the workplace, protection of the personalities of the
employees, protection of the pregnant women, minimal salary, overtime limits, paid leave,
unpaid leave and applicable facilities (Osmani 2013). The collective contract contains
provisions that are less favorable for the employees.
Economic condition: Albania has remarkably progressed in the economic sector during the
past few decades. Due to such an improvement in the economy of the country, Albania grew
from one of the poorest country of Europe to a middle-income country, with decreasing rate
of poverty. The financial crisis in the global market has exposed the weaknesses of the model
of growth of Albania. This marks the requirement of a shift from consumptions to
investments in various sectors including exports. The new model will require helping people
who has very less access to various opportunities in the economy in order to benefit these
people from the economic growth (Zoto 2013). Albania is structuring and implementing
structural reforms in order to accelerate the growth rate of the economy. This will in turn lead
to increase in productivity and competitiveness in the economy, creating more opportunities
of jobs, improved governance and public sector delivery. This will also enhance regional
connectivity and access to the global and regional markets, allowing more exports and
diversification for promoting the faster growth within and outside of the country. This will in
turn give major opportunities to the telecommunication industry to expand their business to
this country with economic stability. The government of Albania had imposed broad based
reform programs in order to focus on the macroeconomic and fiscal sustainability, stability in
the monetary sector, energy concerns, territorial administration and pensions. Such ongoing

4INTERNATIONAL BUSINESS STRATEGY
reforms create circumstances for recovering business confidence and domestic demand
including the beginning of augmented investment and export led recovery. Such stable and
growing economic conditions of the country offer a great platform for the international
companies to expand their business in Albania (Zoto 2013).
Social conditions of Albania: Albania has progressed on setting up social safety net for
the poor people. Government has taken measures to improve efficiency, equity, transparency
and effectiveness in order to initiate social protection. Ndihma Ekonomike is the major
poverty oriented social programs that gives cash benefit, providing a monthly cash allowance
to approximately 7.3% of the total population. The overall spending in the social assistance is
easily compared to other countries of that region (Muharremi, Madani and Pelari 2013). The
World Bank is supporting the act of social protection through the Social Assistance
Modernization Project, that is supporting the societal loopholes and disability reforms. These
projects are in turn supporting the actions and reforms of the government. Albania spends
approximately about 2.6% of the GDP on the health care sector.
Technological advancement in the country: Technology advancement in Albania has
been poor. The government in Albania has approved and implemented the National Strategy
for Science, Technology and Innovation in the country. It had few strategic goals:
 In order to create five Albanian centers of excellence in science government has
introduced well-equipped and well-designed laboratory equipment and
workspaces that will be utilized for certification, testing and other technology
related works (Sherifi and Senja 2018).
 In order to stimulate innovations in hundreds of countries either through
investments in R & D or through consortia with foreign partners.
 In order to increase the public spending on research and development.

5INTERNATIONAL BUSINESS STRATEGY
 Albania has less penetration in the market of technology with internet compared to
other countries. Production sector is heavily slanted towards traditional low-
technology activities that depend on the cost of labor rather than the production of
high value added services or products (Sherifi and Senja 2018).
Although the improving technology in the country is providing platform for the international
companies to expand their business in Albania.
Environmental condition of the country: The government of the country is developing
and implementing various rules and policies for protecting the environment of Albania. The
impact of the centralized economic system on the environment has become apparent with the
beginning of the transition period in Albania. Albania was although facing major issues; they
take the issues related to the environment very seriously. The Committee for Environmental
Protection was established in the year 1991 and a new legislation of the environment has
been enacted. Several such projects and studies relating to the environment were carried out
meanwhile the National Environmental Action plan has been prepared in order to initiate the
protection of the environment. Recently the environment has become one of the major
priorities of the Albania government. NGOs had starting playing a major role in spreading the
awareness of the environmental issues and it protection among the business communities and
the public. Albania has to tackle many environmental issues. The latest leap of NEAP has
pointed out various issues of the environment, which has been identified as the main issues
related to the environment in Albania. Various industries using obsolete technologies and the
fleet of old vehicles with diesel engines are majorly polluting the environment. The
groundwater resources are polluted by the discharges coming from various industries but the
condition of the water surface is much better than before. Urban and industrial wastes are
polluting the soil surface. Thus, a Ministry has been developed to take care of the
environmental issues of the country. The law on environmental protection has imposed major

6INTERNATIONAL BUSINESS STRATEGY
responsibilities on the Ministry. Their responsibility is to corporate and coordinate with the
local and central government institutions, public and non-profit organizations in order to
increase the enforcement level of environmental legislation. Their major responsibility is to
figure out the needs of the country and check the activities of the personnel who are dealing
with the protection of the environment. Thus, Albania’s environment although has many
issues are being taken care by the government and improved over the years for the citizens to
survive healthily in the country. Albania can thus provide a very good platform to the
international companies to expand their business to Albania.
Demographic background: The demography of Albania has been characterized by three
major phenomena namely the declining rate of fertility, declining rate of mortality and large
external and internal migratory waves. The population of the country is majorly young with
an average age of 28.3. The population who are below 15 years is now decreasing and
migration from various other parts of the world has become very dominant in the country’s
socioeconomic landscape. The migratory flow in the country has been internal, international,
temporary and permanent. Thus, Albania is open to the expansions of business of the
international companies to their country.
Labor market development: The transition process that is going on in the entire social
and the economics spheres has majorly influenced developments in the labor market of
Albania. The share of agriculture is growing hand in hand along with the growing industries.
The informal labor market is less affected by the external factors and just employment rate in
the country is increasing every year (Dollani, Lerario and Maiellaro 2016). Thus, the labor
market development of the country also offers a good platform for the international
businesses to expand their business to Albania.

7INTERNATIONAL BUSINESS STRATEGY
Any international company will have no control on the external corporate environment. Thus,
the achievement of any international business depends on its capability to adapt to the general
atmosphere of the company with the new working environment. Business start-up processes
have become less expensive and there is no capital investment required for starting a business
in the country. Demand of the labor in the formal economy has encouraged and initiated high
level of self-employment, which in turn has been influenced by the public sector. The
government is imposing rules and regulations for controlling the issues related to electricity,
transportation, water and other issues related to the improvement of the country. The
government is also introducing and making strategies for improving the import export of the
country and creating a platform for the foreign countries to successfully and effectively
expand their business to Albania.
Country Attractiveness Model
Benefits: The foreign investments have helped to increase the economic growth of Albania
with a decreasing rate of poverty. There has been an imposition of reforms by the government
of Albania in order to raise the stability in the monetary sector, in territorial administrations
as well as in pensions. These stable growing economic conditions of Albania, have provided
a great platform for the international companies to expand their business with Albania.
Albania also gets trade benefits especially for EU and it has a free trade agreement with
Turkey.
Costs: The cost factor of the country’s attractiveness involves few factors such as corruption,
lack of infrastructure, legal costs. The government of Albania is trying to solve the problem
of the lack of infrastructure in Albania by introducing well-equipped and well-designed
laboratory and other infrastructures. The legal costs and the corruption of the country are

8INTERNATIONAL BUSINESS STRATEGY
taken care of by the employees, which involves the overtime limits, paid leave cases and also
the case of minimal salary.
Risks: the overall attractiveness of the country depends on few risks, which includes
Political risks, economic as well as legal risks. The politics of the Republic of Albania
involves the framework of the Parliamentary Representative Democratic Republic. However
the political risks may involve the risk of the foreign investments and returns due to the
political instability of Albania. Due to the change in the government, in foreign policies and
the legislative bodies, there could be a possible risk to the country. Also economic risks like
Albania’s financial condition which might be decreasing, might put the domestic economy of
the nation at a risk. The country also needs to keep its debts clear and the ratio of the debt and
GDP of the nation must be low, so that the country may be able to raise money. The legal
risks of a country involves all of the risks of economy, politics, as well as business risks.
Conclusion:
Thus from the above discussion, it can be concluded that Albania is a developing
economic nation with a decreasing unemployment rate. The nation experiences an increase in
the foreign investment and also a variety of sectors like the telecommunication sector, the
energy generation and others are undergoing a number of technological advancements. The
legal system and the economic sector of Albania is structuring and implementing structural
reforms that would help in the acceleration of the economy of the nation. The government has
also taken measures which would help in the improvement of the safety and the, transparency
and the efficiency of the social protection. The World Bank as well as programs like Ndihma
Ekonomike provides social assistance and protection to the nation. Also the government of
the nation is looking up to the environmental issues and also the labour market development.

9INTERNATIONAL BUSINESS STRATEGY
The import and the export of the country and the foreign investments are also taken care of
by the government of Albania.

10INTERNATIONAL BUSINESS STRATEGY
Vodafone and its business activities:
Vodafone Company is one of the top most companies to operate in the market of
Albania. Vodafone has tried various mechanisms in Albanian market in order to upsurge the
number of subscribers and revenue generation. The Vodafone Company in Albania operates
in the telecommunication industry and is the most important international investments in
Albania. Vodafone was founded in the year 2000 after winning the coveted second license
and breaking the intensive monopoly of the telecommunication company in the nation.
Vodafone has 1.5 million subscribers and is currently in the second place in the market (My
World - Vodafone, 2019). The company has increased its customer base with prepaid
subscribers and these customers have increased the company’s revenue by 35%. The
company has many products and service to offer to the market of Albania such as voice and
data. Introduction of the other network operators in the Albanian market has substantially
reduced the tariffs and thus, Vodafone has introduced new strategies to provide services and
products in order to attract new customers and retain the old customers (Kresak, Corvington
and Williamson 2016). Customers with consistent behavior drives the revenue generation of
the company in order to add capacity of the company to meet the demands of the customers.
The telecommunication market of Albania has two more operators with lower price schemes
and variety of new products and services. Thus, Vodafone had to readjust, with its pricing
strategies and product design in order to respond to the new market. Vodafone had offered
new services and products based on price, place, promotion and product (My World -
Vodafone, 2019).
Product analysis: Successful introduction of a service or a product from Vodafone resulted
in the rapid consumption of the product by the new customers and in turn increasing the
customer base of the company and has become the fastest growing company in Albania.

11INTERNATIONAL BUSINESS STRATEGY
Vodafone has improved the promotional strategies of their new launch and their method of
distribution. Their new product has been launched with various new parameters in order to
meet the requirement of the customers (Chen and Riordan 2013). Competitors in the market
had started playing major role in pulling down the profits of Vodafone with their outstanding
low price strategy and variety of new products. Vodafone decide to introduce the product that
affected the entire call network system of Vodafone and for calls outside the network towards
international calls or other network operators. The company in order to cut down its cost and
attract more of postpaid clients executed this. In order to realize the launch, the company has
made considerable investments in the network and other factors like billing and IT. These
investments were made to set a high-standard product in the marketplace. These investments
on new products have made Vodafone launch high quality product, which had differentiated
this from the rest of the products available in the market of Albania and thereby making the
brand differentiation. This launch of the new products gives a sense of security to the
customers on the durability and quality of the product. Vodafone has designed new product
for differentiating it with the various other products already available in the market of
Albania. Vodafone has made distinct market segmentation in order to target a particular
group of customers and consumers to whom these products will be offered. This
segmentation in the market has inevitably made the company more viable in the market. The
new product was related with a number of new sub-products like lower cost for international
calls and mails within or outside the network of the company. This has been done to create a
packaged schemed product to cater the customers with something entirely new in the market,
considering all the competitors. Vodafone found out new opportunities to present and provide
its new products and services to the customers. They have made efforts and strategies to get
the 3G license which had enabled the company to penetrate the market with products and