Marketing Strategies of Small and Medium Enterprises

on Foreign Markets

Katarzyna Dziewanowska, PhDFaculty of Management

Warsaw University

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Area: 312,679 km2Population: 38.1 million

Men: 48.3%Women: 51.7%

Data 2004 2005 2006 2007 2008GDP (bn PLN) 925 983 1,060 1,175 1,266GDP change (previous year=100)

105.3 103.6 106.2 106.7 104.8

FDI inflow (mln €) 10,237 8,330 15,741 16,674 10,970Unemployment rate (%) 19.0 17.6 14.8 11.2 9.5Exports (mln €) 65,847 77,562 93,406 105,893 114,566Imports (mln €) 70,399 79,804 98,945 118,262 139,329Inflation rate (previous year=100)

103.5 102.1 101.0 102.5 104.5

Poland in Figures

Employment:

◦ Micro: up to 10 people, Small: up to 50, Medium: up to 250

Net income:

◦ Micro: up to € 2 m, Small: up to € 10 m, Medium: up to € 50m

Assets:

◦ Micro: up to € 2 m, Small: up to € 10 m, Medium: up to € 43m

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Small and Medium Enterprises - Definition

The importance of SME in Poland: They constitute 99% of operators

(95% in other OECD countries) They provide 68,4% of GDP

They employ 64,3% working people

(60-70% in other OECD countries) They generate over 45% of export

(25-35% in other OECD countries)

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Why SME?

Year Total 0-9 10-49 50-249 SME Share (%)

2004 3468,2 3302,4 131,5 28,9 99,84

2005 3581,6 3410,2 138,0 28,3 99,86

2006 3576,8 3402,2 141,5 28,3 99,87

2007 3615,6 3436,8 145,7 28,3 99,87

2008 3636,0 3455,6 147,4 28,4 99,87

Enterprises According to Number of People Employed in Poland (in thousands)

Resources

Strategy development

Organizational structure

Risk-taking

Flexibility

Sources of market information

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Characteristics of SME

Hidden Champion

Cooperation

Anonymous Contractor

Born Global

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Marketing Strategies of SME on Foreign Markets

1. Building a position on local market

2. Careful selection of foreign markets – a few

3. Careful selection of foreign business partner

4. Building a strong brand

5. Careful segmentation process and segment selection

6. Marketing mix adjusted to foreign markets’ needs

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Hidden Champion Strategy

Ambitious!!! Takes advantage of SME’s

strengths Full control Gradual involvement

Costs, costs, costs!

Time-consuming

Risky…

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Pros & Cons

70%

1. Horizontal integration of producers

2. Building a strong brand (common or regional) on local and foreign markets

3. Other decisions relating to foreign markets are made by a joint company

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Cooperation Strategy

Position on markets based on common/ regional brand

Cheaper and less risky Members do not compete

against each other

Common company may take over the control

Less flexible Works only for

homogeneous products

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Pros & Cons

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Mazovia Fruit Fresh Fruit Poland Group

Internationalization Fast and parallel on many markets Pro-active motives for entering FM

Competition Innovative and high quality product Close relationships with clients Building a network with international partners Building a strong brand Market segmentation – focus on a niche Highly standardized marketing mix

Owner

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Born Global Strategy

Ambitious!!! Takes advantage of SME’s

strengths Full control Becomes a part of

marketing network

Costs Profits in long term Risky Requires highly innovative

products

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Pros & Cons

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1. Careful selection of partners (local or foreign)

2. Market selection is of secondary importance

3. Focus on production efficiency and low costs

4. Almost all marketing activities are done by a partner

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Anonymous Contractor Strategy

Easier and cheaper Product matches the

market needs Low risk in short term Beginning of more

adventurous activities

Passive – no experience gained

No relations with final customers

Long term risk Low profit per unit Weak negotiation position

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Pros & Cons

Syntex

Romeo Zbąszyń

Thank you.