Within the framework of the course International Trade and Business Challenges, our professor Miss Chau asked us to analyze and to develop a strategy to enter a specific sector of one of the BRIC countries and the 8+2 new EU members. In this context, we decided to tackle the beer sector in the Czech Republic. Since 2004, the Czech Republic is part of the European Union. This adhesion conducts them to adapt their commercial and juridical framework. Today, doing business with the Czech Republic is more reachable and favorable for international actors. This has been possible thanks to the abolition of the tariff and non-tariff barriers and the setting up of investment incentives by governmental plans to promote the country abroad. All these efforts have been rewarded. The Czech Republic is one of the most prosperous and stable post-Communist state. On the one hand, the GDP is constantly increasing, what is making them nowadays the fastest growing economy in the European Union. On the other hand, several Czech sectors, including food and beverage industry, are really full of promises. All these statements have attracted and pushed us to focus on the Czech Republic for the elaboration of this paper. More specifically, we have chosen the beer sector because beer is really anchored in the Czech culture and its daily life. The consumption of beer is a tradition and Czech breweries are well-known for their particular skills and their special beers.
[...] Useful recommendations Collect of information To do business with the Czech Republic, we first recommend to make researches on the AWEX web site or even to contact them. An organization such as the AWEX will provide you useful information and will also help you to meet a contact person in the Czech Republic. Indeed, you can get in touch with representatives abroad (trade commissioners, commercial attachés, export promotion officers ) and in this way, getting informed about the need of your products to comply with the local regulations. [...]
[...] The favourable economic development in EU states impacted on the economy of the Czech Republic, which is very open and depends strongly on exports to EU25 countries, the crucial markets for it. The dominant foreign trade partner of the Czech Republic among the EU25 countries is Germany. The German economy accelerated its growth to in 2006 and its recovery was reflected in an increase in Czech exports to Germany. Whereas in 2005 Czech exports to Germany rose by year on year, in 2006 the increase amounted to compared to 2005. [...]
[...] Firstly, thanks to this case study, we have now a better understanding of the Czech market, not only focused on the beer sector, but in general. We have seen that some countries that are not well-known by most of us, could be economically efficient and could promise good results in a near future. In a second step, we have learned a lot on the theoretical approach about the concrete steps that currently exist when we want to invest in a company abroad. [...]
[...] The adhesion to the Euro Zone will increase the facility of Czech Republic to make business with EU members. At present, the Euro area is a partner for about to of Czech exports and it is obvious that these figures will increase. Another advantage will be the elimination of transaction costs in the exchange of the Czech currency for euros, and the fluctuations of the mutual exchange rate. However, this new money could represent a risks and a potential loss of the country's own monetary policy. [...]
[...] The right strategy to enter the market Recommendations In this part of our work, we will try to establish an efficient strategy to penetrate the Czech market and be able to compete with the reputable local companies in the beer sector. It is essential not to forget that some aspects must be taken into account when penetrating a new market; some of these factors are cultural differences, language difference, but also consumption habits and traditional aspect of a country. We have noticed thanks to the previous part of our work that the Czech Republic is not homogeneous: the country is divided in two different social classes: on the one hand, there is the capital population, which has higher standards of living and which is very influenced by the western European countries habits. [...]
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