Preview: Luong Gyöngyi Lan - Corporate marketing strategic problems of a joint venture

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http://www.doksi.hu BUDAPEST BUSINESS SCHOOL FACULTY OF INTERNATIONAL MANAGEMENT AND BUSINESS INTERNATIONAL BUSINESS ECONOMICS FULL-TIME COURSE FACULTY OF INTERNATIONAL MARKETING CORPORATE MARKETING STRATEGIC PROBLEMS OF A JOINT VENTURETHROUGH THE EXAMPLE OF VECTRA-LINE PLUS KFT. Made By: Luong Gyöngyi Lan Budapest, 2009 http://www.doksi.hu Table of contents Executive summary ........................................................................................................ 5 Preface............................................................................................................................ 6 1 Introduction ........................................................................................................................ 7 1.1 2 3 4 5 Schedule ..................................................................................................................... 8 Vectra-Line Plus Kft.- Company

overview...................................................................... 10 2.1 Activities .................................................................................................................. 10 2.2 Distribution............................................................................................................... 11 2.3 Marketing communication ....................................................................................... 11 2.4 Quality...................................................................................................................... 12 2.5 Foreign business partners ......................................................................................... 13 Hungarian paper market ................................................................................................... 15 3.1 Development of the paper market ............................................................................ 15 3.2 Competition and the

biggest market leaders ............................................................ 16 3.3 Environmental issues................................................................................................ 17 Long-term plans ............................................................................................................... 18 4.1 Economic significance of joint ventures .................................................................. 18 4.2 Steps of strategic marketing ..................................................................................... 19 4.3 Setting objectives ..................................................................................................... 21 4.4 Planning and formulating strategy ........................................................................... 22 How partners see the strategic steps of Vectra-Line Plus Kft.- Primary research ........... 24 5.1 Deep

interviews........................................................................................................ 24 5.2 Method of working................................................................................................... 25 5.3 Analysis.................................................................................................................... 26 Reasons for cooperation with Vectra-Line Plus Kft. ................................................... 27 Position in the Hungarian paper market....................................................................... 27 Competitiveness ........................................................................................................... 28 Foreign market penetration strategies .......................................................................... 30 Marketing communications.......................................................................................... 31

Strengths....................................................................................................................... 32 Weaknesses .................................................................................................................. 33 3 http://www.doksi.hu Suggestions................................................................................................................... 33 Reason for joint venture ............................................................................................... 34 Success of a joint venture............................................................................................. 34 Failures of international alliances ................................................................................ 35 Summary of analysis .................................................................................................... 35 6 Implementation phase of the joint

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venture....................................................................... 38 7 Slovakian market.............................................................................................................. 39 8 Desired situation............................................................................................................... 42 8.1 Objectives................................................................................................................. 43 8.2 Entering to international markets ............................................................................. 43 9 Strategies needed to reach desired situation..................................................................... 46 9.1 Marketing strategy definition and concepts ............................................................. 46 9.2 Missions ................................................................................................................... 47 9.3 International

marketing strategies ............................................................................ 48 9.3.1 STEEP analysis ................................................................................................ 49 9.3.2 Marketing mix in international marketing ....................................................... 50 9.4 Competition strategies.............................................................................................. 52 9.4.1 9.5 Benchmarking .......................................................................................................... 56 9.5.1 9.6 10 Porter 5 ............................................................................................................. 53 Types of benchmarking .................................................................................... 57 Growth strategies...................................................................................................... 57

Problems........................................................................................................................... 61 10.1 Barriers to trade........................................................................................................ 61 11 Solutions and suggestions ................................................................................................ 65 12 Conclusion........................................................................................................................ 69 References .................................................................................................................... 70 Appendices ................................................................................................................... 72 Interviews ..................................................................................................................... 74 Interview

1.................................................................................................................... 74 Interview 2.................................................................................................................... 76 Interview 3.................................................................................................................... 78 4 http://www.doksi.hu Executive summary The topic of this assignment is the corporate marketing strategies of Vectra-Line Plus Kft. used in establishing an international alliance, a joint venture. Vectra-Line Plus Kft. is a paper and stationery wholesaler company in Hungary. The company is planning to start a joint venture involving foreign business partners. This assignment is going to show what kinds of marketing strategies Vectra-Line Plus Kft. uses in order to make foreign companies to join this joint venture. Nowadays many companies are trying to start alliances with other foreign companies, but it

has many barriers and threats. It can be useful for other companies to see how an existing company does it and learn from its mistakes and avoid the mistakes they do and learn from the strategies they use efficiently. The main problem is how to improve using of marketing strategies in order to reach a higher efficiency in establishing a joint venture. Some suggestions will be given about how the company can improve in implementing and using marketing strategies in practice and the assignment will include some recommendations to it and tries to find solutions to the problems. The aim of this assignment is to show the practical utility of corporate marketing strategies in a case of an existing company. 5 http://www.doksi.hu Preface I chose this topic as my graduation assignment topic, because I have made my traineeship at Vectra-Line Plus Kft. I was working at the purchasing department of the company as a marketing and purchasing assistant. I chose to write about this company because

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as I worked there I could see its strategies and activities from the inside. Because this is connected to my work there, I chose to write about its foreign market penetration strategies. As I knew that their long-term plan is to establish a joint venture, I found it interesting not just to write about international penetration, but more exactly about establishing a joint venture. I would write my assignment in this topic because one of the long-term objectives of the company is to start a join venture. The objective of my assignment is to show how international alliances work and what strategies Vectra-Line Plus Kft. should use in order to be successful in reaching its long-term plans. Here I would like to thank to all those people, who helped in my work. I would like to say thanks to the owner of Vectra-Line Plus Kft., Péter Szlifka, for making it possible to work there and get the needed experience to write my graduation report and the chief executive of the company, Zsolt

Kárpáti, for giving internal sources of the company, guidance and help for my graduation report. I would like to thank to all my colleagues of Vectra-Line Plus Kft. for their support and help. 6 http://www.doksi.hu 1 Introduction The objective of my dissertation is to show the corporate marketing strategies of Vectra-Line Plus Kft., when establishing a joint venture. The problem of Vectra-Line Plus Kft. is that the company is planning to establish a joint venture in the long run. The problem definition of the company is that new strategies are needed to improve and reach its goals. The assignment question is: How can the company establish a joint venture involving foreign partners, with what marketing strategies? This is the core question of the assignment, but there are many other questions I would like to answer in my assignment: • With what kinds of threats and difficulties does the company have to face? • What kinds of penetration marketing strategies does the

company use? • How effective are they using these techniques? • How and in what can the company improve? In the end of the assignment the aim is to obtain an answer for how the desired situation can be reached. The desired situation is also the aim of the company. They would like to reach the following goals: • To be able to enter to new foreign markets and begin relations with new foreign business partners in order to make them join into an international alliance • To increase the awareness of foreign partners • To be able to use marketing strategies in the most efficient way when entering to foreign markets • To avoid the barriers and threats of an international alliance In this assignment I am going to write about how the company should develop and implement new strategies in order to reach higher efficiency. 7 http://www.doksi.hu 1.1 Schedule The schedule of the assignment is as follows: First the assignment is going to show the activities of the

company, which is a general overview of Vectra-Line Plus Kft. It will show the activities of the company in the domestic paper market, give an overview of the biggest market leaders, the competitors, current market situation and foreign business partners. Some interviews will be made with foreign partners to have a deeper sight into how other companies think about the strategies of Vectra-Line Plus Kft. The company is planning to establish a joint venture involving foreign partners. This is the long-term plan of the company. The main objective of the assignment will be to show the steps of planning, to describe the current and the desired situation and to show which marketing strategies Vectra-Line Plus Kft. uses in order to reach its goals. We will see threats and problems that may occur and will see some solutions to it. Some suggestions will be given about how they can improve and what other strategies and moves can be implemented instead of the used ones. The assignment includes

theoretical background of corporate marketing strategies. It will help to understand the real problem and later to see how theoretical knowledge can be implemented into practice. 8 http://www.doksi.hu 9 http://www.doksi.hu 2 Vectra-Line Plus Kft.- Company overview1 2.1 Activities Vectra-Line Plus Kft. is a Hungarian enterprise. It is one of the largest printed materials, stationery, paper and office supplies wholesalers in Hungary. The company was founded in 1989 and operates in Budapest. Its warehouse and an office facility are also headquartering in Budapest. Vectra-Line Plus Kft. is a dynamically growing company. The company is a wholesaler of paper and stationery products but also has retailer activities. The company can offer all the products that are necessary in an office. The company has a turnover about 2 billion Forints a year. The company has a showroom for stationary products and a showroom for computer tools. In the showrooms the customers can find all groups of

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products, which can be found in the paper and stationery market. The range of products is widening continuously. Vectra-Line Plus Kft. sells nearly 5000 items from paper to computer products. Just to mention some of the items, the company sells for example copy papers, punched pockets, paper rolls, cashier rolls, thermo cashier rolls, fax papers, exercise books, envelopes, registers, pens, pencils, printed materials, stationery tools, office properties, computer devices, and also some kind of foodstuff and décor properties. Furthermore, the company offers special, additional services like production of various stamps and special printed materials or logos on the products. The company has about 3000 partners all over the country, who are regular customers at the company. Vectra-Line Plus Kft. is the supplier of several large end-users, for example banks, schools, ministries, etc. and also of re-sellers. It has many business partners, not only in Budapest but in the whole area of

Hungary. The company imports products from countries like Slovenia, Finland, France, United Kingdom and the Czech Republic for ten years now. The company has relations with other foreign companies from countries like Slovakia, Romania, Germany, the Netherlands, Italy, 1 Source: www.vectraline.hu, based on internal sources from Vectra-Line Plus Kft. 10 http://www.doksi.hu Poland, Bosnia Herzegovina or Portugal. And it is trying to do business with Chinese and Indonesian companies. The company is continuously planning to widen its imported product range. The company is making more and more relations with foreign countries and partners, but still need to improve in entering into foreign markets and making business and relationships with foreign business partners. The company has many chances to improve and to break into other foreign markets and strengthen its presence in those markets. 2.2 Distribution The biggest advantage of the company is that it sustains a huge warehouse with

a huge volume of stock. This is why the company can serve its customers very fast and deliver goods warehouse to warehouse. The customers can order in various ways, for example via phone, fax, e-mail or through the web warehouse. Vectra-Line Plus Kft. delivers the ordered products door-to-door within 24 hours on the entire area of the country. The company not just serves its customers from stock, but also at wholesaler prices. Directly after the order, the products are ready to be dispatched. Of course, special offers can be made, but it takes one plus week to deliver the goods. The company serves its customers promptly from its warehouse at wholesale prices and with various discounts. New partners can buy at first only by cash, later, after a minimum volume of purchase customers can buy by transferring money. This requires signing a contract with the company. In case of orders the main problem is that the customers need to purchase the products from different places. Vectra-Line Plus

Kft. is trying to solve this problem with its new catalogue. The catalogue of the company is trying to make order easier and it provides that everything can be bought in one place. 2.3 Marketing communication The company has a monthly product magazine, which presents the new and most popular products of the month. This magazine is very popular among customers. The company’s monthly paper is sent to all the partners automatically for free. Vectra-Line Plus Kft. has also a web shop through which customers can accept and fulfill orders. It provides a more comfortable availability of the products for customers; this is why a 11 http://www.doksi.hu lot of them are using it. The company has just renewed its online warehouse to be more comfortable to use and provide more up-to-date information and be easier to give orders and get information from the company’s official web site. The company uses many tools to inform and attract customers. Here are some examples of them. The company

sends newsletters in e-mail more times a week or SMS in case of special offers. The company has seasonal and yearly magazines and catalogues. Vectra-Line Plus Kft. provides a seasonal magazine mainly in school beginning seasons, Christmas seasons etc. to show the seasonal choice of products. The school season is a very important period for the company. In this season the company provides and emphasizes those products that are necessary for beginning the school year. This, and the Christmas season are the most profitable periods of the year. The company has an exclusive calendar and gift catalogue, which can be bought in spring. It includes suggestions and tips for the year. Resellers have their own catalogue because they have plus advance at purchases. The company has a point collector program to encourage customers. At the end of the point collector program, the points are summarized and the customers get gifts according to how many points they have collected. This is some kind of

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loyalty program to encourage customers for purchase. 2.4 Quality Quality is a very important issue for the company. Quality products are purchased by suppliers, who are continuously checked. The suppliers who sell bad quality products are kept out of the business partners’ circle. For Vectra-Line Plus Kft. it is becoming more and more important to be able to find those business partners, who can offer the most competitive prices to remain profitable and competitive in the paper market. The company is trying to act in an environment friendly way and sustain an environment conscious activity. So the company makes moves in order to save the environment, mainly in the field of handling dangerous garbage. The activities of the company are certified according to the ISO 9001 quality assurance system. 12 http://www.doksi.hu 2.5 Foreign business partners Vectra-Line Plus Ktf. has entered to some European foreign markets and they are doing business with them, both exporting and importing

goods. They are doing business with countries like Slovenia, Slovakia, Romania, Finland, Czech Republic, UK, Germany, France, Italy, Portugal, and Poland etc. Vectra-Line Plus Kft. has other foreign partners like the Netherlands or Bosnia Herzegovina. They are still trying to make business with them. There are some markets they are trying to enter into, like China or Indonesia. The Asian market is a rather new market for the company but nowadays it is a very profitable solution to do business with Asian companies. The biggest target market of Vectra-Line Plus Kft. is Slovakia. Last year, in 2008 the highest foreign profit earner for Vectra-Line Plus Kft. was Slovakia, so that is why some market characteristics of the main target market will be shown later. In the followings you can see two tables, which shows the foreign partners of Vectra-Line Plus Kft. and the amount of profit they have generated. The amounts are converted into Hungarian Forints. 1.Table2 The following table shows

the profit gained from export in 2008: PARTNERS FORTUNA OFFICE S.R.O. AC TRADE SLOVAKIA S.R.O. SC ADIVA IMPEX S.R.L. 48.102.042,62 6.934.678 5.383.221,49 INTERPAPIR 4.779.216 BAFOR S.R.O. 4.601.840 SLAVOMIR BINCIK M-REAL FINE 2 AMOUNT IN HUF 3.058.343,40 315.125,60 FADOR TRANS IMPEX S.R.L. 227.647 M-REAL CORPORATION BV 121.243,20 Source: based on internal sources from Vectra-Line Plus Kft. 13 http://www.doksi.hu S.C. FNK-HUN S.R.L. 63.110,75 BAIER&SCHNEIDER GMBH 0 KARTON P+P SPOL S.R.O. -164.268 TOTAL 73.422.200 This table shows the profit gained from export in the first quarter of 2009: PARTNERS 2. Table3 AMOUNT IN HUF FORTUNA OFFICE S.R.O. SC ADIVA IMPEX S.R.L. 5.344.453,58 1.674.554,62 476.789,40 FOKUS TOTAL 7.495.797,60 Both of the tables show that the main target market according to profit gained from export is Slovakia. Slovakian companies buy the most among the foreign partners. Vectra-Line Plus Kft. has many Slovakian partners. One of the

Slovakian partners became the first who joined the joint venture and later can be seen the details of it. First I would introduce the Hungarian market, but later I will show the Slovakian market, too. 3 Source: based on internal source from Vectra-Line Plus Kft. 14 http://www.doksi.hu 3 Hungarian paper market4 This is an introduction to the Hungarian paper and stationery market to be able to understand deeper where Vectra-Line Plus Kft. stands and in what market circumstances and situation it operates. It is a general summary of competitors, the biggest market leaders and the operation of the paper market. Later we will see that how many similarities are between other Eastern-European countries and the Hungarian market situation. 3.1 Development of the paper market It is a hard job to analyze the Hungarian paper market, because it has changed significantly in the past 5-6 years. But first let us see which product lines are involved in the stationary and paper market. Earlier

the suppliers of paper and stationary products sold products- in the classical sense- that were connected to office paper products and every items used in an office and office work. These were for example copy papers, computer papers, lever arch files, pens, glues, staplers and punchers. If we look the market in this product circle, then it means a turnover of 50 billion Forints. The purchasing behavior of the customers began to change from 2000. One of the main reasons is that the marketing strategies of previously government-owned companies became old fashioned. Their strategy was to serve their customers in their territorial shop network in personal purchase by cash. This was a comfortable solution for them, because they just needed to put the items on the shelves and the customers were standing in queue in from of the paper shops if they wanted to buy some items. In those times before the first school day, customers were standing in long queues in front of the paper shops. The

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appearance of multinational companies brought a change of point of view in this market. In this time began to open the shopping centers and hyper- and supermarkets began to appear in the markets. These organizations provided a huge range of products. In the sales of paper and stationary products, the market leaders were PBS Hungária Kft. and Office Depot Hungary Kft. They provided catalogues, payment by transfer and home delivery of goods. These organizations have created a kind of office culture. Standing in queues and payment by 4 Source: based on internal source from Vectra-Line Plus Kft., according to a Meeting on 22 April, 2009. 15 http://www.doksi.hu cash began to cease. They began to spread their product catalogues by regional representatives. So the customers could easily, comfortably order from the catalogues and the goods were delivered in 24 hours. The same situation happened in the product offer. In the beginning they were engaged in paper and stationary products, but

later it has changed. Nowadays the product offer of the company includes items like printing tools, computer products, office furniture, household products and food stuff. The demand of the office workers began to increase continuously, so by today the product offer of the companies includes all the items needed to run an office. The paper and stationary suppliers were in the beginning of the 90s: Ápisz, Budapiért, Ico, Nyomell, Pátria Nyomda and Állami Nyomda. These organizations were government-owned companies, but by today they were privatized. These are still actively working companies in the market. The only one exception is Budapiért, because this company was bought in 2005 by Ápisz Zrt., so a new company was established under the name Ápisz-Budapiért. 3.2 Competition and the biggest market leaders According to competitors the tendency is that more and more multinationals are appearing in the Hungarian paper and stationary market with very favorable prices and they are

trying to lead all the market. This trend makes very hard for the new entrants to enter the market. The same situation is on other Eastern-European countries’ markets. Multinationals appear and try to own the whole market. In the beginning of the 90s many small enterprises were established. From these companies most significant ones with huge turnover are the Hungarian owned Barát Papír Kft., Corwell Kft., IPS, Írókéz Kft., Papír-Ász Kft., and also Vectra-Line Kft.-which has changed its name from 2008 to Vectra-Line Plus Kft. The multinational companies working on the Hungarian market are as follows: Corporate Express, Lyreco, PBS and Office Depot. In the beginning of the 90s the Hungarian owned companies began to develop dynamically because of their ambitions and new sales approach but government-owned companies were not able to adapt to new market conditions and changes. The biggest Hungarian owned company is Corwell Kft. In the 90s it began its activities with sales of

computer tools, the product range of the company began to widen all the time and by now they have reached profit of 8 billion Forints. It works with re-sellers and represents many well-known brands. 16 http://www.doksi.hu Another market leader is Papír-Ász Kft., which increased its growth and strengths with mergers with other companies, first with Papír-Ár Kft., and later with Gyár-Ker Kft. It has a profit about 6 billion Forints a year. Barát Papír Kft. is also a big player with its 1,5 billion Forints turnover. In the SouthernEastern area it is the biggest player in the market. It serves end-users and re-sellers, too. The Austrian owned PBS Hungária Kft. began its operations in Western Hungary and in Budapest. In the beginning of 90s the company bought up Készlet Kft. and later, in the middle of 2000, it bought up IPS Kft. It is one of the biggest market leaders with its profit of 6 billion Forints. The other market leader is Office Depot Hungary Kft. They are similar

with PBS Hungary Kft. in that they both find their potential customers through representatives and tenders. Then they sell through their catalogues and their web warehouse. Office Depot sells not just through representatives, but by its shop network in the entire area of Hungary. These shops usually can be found mainly in shopping centers or near to them. Corporate Express Hungária Kft. is an American company and it began its activities in the second half of 2000 and it has a market leader position in the United States. This company could not reach such turnover as PBS or Office Depot, its profit does not even reach 1 billion Forints. Lyreco is a Slovakian company headquartered in Bratislava and it is present in the Hungarian market for 3 years now. It provides goods for Hungary, Czech Republic and Austria. They sell from catalogue and they search for customers personally. 3.3 Environmental issues Environment consciousness became more and more important nowadays. People are becoming

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more aware of environmental issues and it affects the paper market, too. From the original copy paper trends are turning towards recycling papers. 17 http://www.doksi.hu 4 Long-term plans The objective of Vectra-Line Plus Kft. in the long-term is to establish a joint venture in order to purchase the manufactured goods at the lowest possible prices, to save money and to gain additional profit and to gain additional advantages of the joint venture. Previously we could see that where Vectra-Line Plus Kft. stands in the paper and stationery market. We could see that there are much bigger players in the market, mainly multinational companies; the company is just a medium-sized enterprise but still has to compete with the big players and their prices. Because the company is a wholesaler company, a joint venture is one option to lower costs and increase profits. It is very important for the company to purchase high-quality products, but at low prices. To purchase at lower prices, the

company should order in big quantities. Obviously the company can not order more than it can sell. To be able to order in bigger quantities, the company needs to have subsidiary companies in other parts of Hungary or in other foreign countries or it can establish a joint venture. 4.1 Economic significance of joint ventures According to two different definitions of joint venture, “joint venture is the original tool of international economical cooperation in order the parties establish a new company for a well defined common activity. So that every founders can maintain their independence while they unite their resources-separated for this objective-within a company headquartered inland.” 5 “Joint venture is an entity formed between two or more countries to undertake economic activity together. Joint venture can be formed for only one project or for continuous business relationship. Usually the members of the joint venture include both local and foreign companies.”6 5 Source:

Bartha Judit-Fazekas Judit-Harsányi Gyöngyi-Miskolczi Bodnár Péter-Ujváriné Antal Edit: Speciális társaságok, edition 2003, page 231 6 Source: http://en.wikipedia.org/wiki/Joint venture Download date 03. 22. 2009. 18 http://www.doksi.hu According to a literature about special alliances, the reason why many companies choose to invest capital abroad is common advantages. If domestic and foreign capital and knowledge is beginning to connect and unite, it provides advantages to both parties. For Hungarian companies establishing a joint venture is advantageous because the most of them are suffering from lack of capital. The companies need more resources. The international alliances provide Hungarian companies the chance for better sales opportunities, access to better technologies, know-how-s and managerial knowledge. Because the competition is getting stronger and stronger, it became a hard job to compete with Hungarian and foreign businesses. Additional capital and additional

knowledge made it possible to be able to be competitive and to improve. For foreign companies it also provides advantages, like cheap, skilled workers, gaining of market share, lowering costs of transport, increasing of profit or tax advantages. According to the Hungarian market, joint ventures are advantageous, because they encourage domestic suppliers for development. The international alliances have kinds of balancing effect. Economic activities of foreign organizations affect positively the budget of the Hungarian market. Hungary has recognized that establishing of joint venture can affect positively economic processes, so somehow the government is supporting these initiatives.7 4.2 Steps of strategic marketing To reach the desired situation, the company should improve in its marketing strategies. There are three main steps of making an efficient marketing strategy. The steps of developing a marketing strategy are as followings according to a literature:8 1. Planning a. Setting

long-term objectives and missions b. Defining external environment and market opportunities c. Evaluating of resources, abilities, strengths and weaknesses d. Evaluating the internal environment e. Formulating strategy f. Timing 7 Source: Bartha Judit-Fazekas Judit-Harsányi Gyöngyi-Miskolczi Bodnár Péter-Ujváriné Antal Edit: Speciális társaságok, edition 2003, chapter 10, pages mainly 223-238 8 Source: Dr. Józsa László: Marketing, edition 2000, page 58-61 19 http://www.doksi.hu 2. Implementation and organization 3. Controlling a. Evaluating of results b. Measurement of results c. Corrective steps Planning includes setting objectives, which is very important in further steps, because the implementation is based on the objective of the company. The mission and objective of the company involves the definition of what businesses the organization is in and where it wants to be headed. The implementation of the plans has to meet the objectives that have been set by the

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company. In this phase the company should formulate the strategy and make an overall environmental analysis, because without it, an efficient strategy can not be formulated. Formulating strategies conclude a decision making process where the mission and the objective of the company is considered in the light of the environmental analysis. Environmental analysis should include the organization’s environment both internal and external. Internal analysis is very important because the company should always keep in mind that its resources are scarce so it has to take it into consideration. Before deciding to make business with a foreign company, environmental analysis and market research is needed to be made. The company should know as much as possible about the competitors and about the foreign market situation. Though in Europe there is free trade among countries, trade can have many barriers so that is why market research is highly recommended. In the implementation phase the company

should decide on the target groups and the target market. In this phase the main decisions has to be made. Successful implementation requires that the strategies should be compatible with factors such as the structure of the company, the attitudes and skills of the employees, its system and its corporate culture. Vectra-Line Plus Kft. is still in the implementation phase. This strategic plan is the long-term plan of the company, so there are many things to do to finish implementation of the desired situation. The company has found its first business partner, which is a Slovakian company, but the implementation takes long time. When a complete marketing strategy has been made and implemented, the company has to make continuously corrective steps to control whether the plan is appropriate for the company 20 http://www.doksi.hu and whether it has been fulfilled. Performance should be continuously compared with the target objectives and corrective actions should be taken where

necessary. Previous steps should be reviewed and revised in the light of changing circumstances and environment. The company should evaluate and measure the results so that the company can decide whether to continue the strategy or make corrective steps. Because Vectra-Line Plus Kft. is still in the implementation phase, corrective steps will come later. The company is still looking for the most appropriate companies and markets. During the implementation the company needs to take continuous corrective steps to check whether the company is going towards reaching its goals. 4.3 Setting objectives To establish a joint venture the company should take into consideration the advantages and the threats and difficulties. Here are some reasons why Vectra-Line Plus Kft. chose to start a joint venture: Internal goals • Sharing costs, risks and difficulties • Improving access to financial resources • Economies of scale • Access to new customers and markets • Access to extra

advantages • Increasing and gaining additional profit • Opportunity to gain new capacity and expertise • Access to greater resources Competitive goals • Competing with multinational companies • Response to market conditions and requirements • Creation of stronger competitiveness • Becoming more competitive • Be able to compete with market leaders in the Hungarian market 21 http://www.doksi.hu Strategic goals • Synergy • Transfer of knowledge and resources • Sharing of knowledge and resources Because Vectra-Line Plus Kft. is still in the implementation phase there can occur many difficulties, risks and threats of establishing a joint venture. Later I am going to talk about it in details. At the early stages Vectra-Line Plus Kft. should be very careful in using and implementing marketing strategies in order to be successful. 4.4 Planning and formulating strategy The core of the plan of the company is that Vectra-Line Plus Kft. wants to make

cooperation with similar or same-sized companies as Vectra-Line Plus Kft. is and wants to establish a joint venture. The first step on which the company is still working on is that the company is continuously looking for manufacturing companies who can offer good-quality, low price products with good transport and payment conditions. It is important because it would make easier the cooperation in a joint venture if all members would buy the same types of products from the same manufacturers. Now the aim of the company is to find the manufacturers and the similar-sized enterprises that has the same objectives and are able and willing to join a joint venture with Vectra-Line Plus Kft. In this case the advantage of a joint venture would be that the companies would be able to purchase the manufactured goods easier and at much lower prices. The same-sized companies have the same objectives, because they have the same problems and difficulties. The similar sized companies are also not able

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to buy at prices like the biggest players, who have many subsidiary companies. To be able to compete with companies who are able to order in huge quantities because of operating subsidiary companies, the best solution is to start international alliances. In this case the joining of companies would make them capable to compete with those big market leaders, mainly multinational companies, who have many subsidiary companies. If it would be possible, then the members of the joint venture could gain profit on it, because they can give their order together in order to get a high quantity discount. Then the items 22 http://www.doksi.hu would be distributed among the members. Everyone receives the items they have ordered but at much lower prices. Somehow it works in the same way in the case of a parent company and its subsidy. But in this case there is no parent company; the members are joining together into one big company to undertake economic advantages. Now the members will be able to

receive advantages that only very big companies can gain. It is advantageous for all members to join. This is the point when the same objectives of the companies come into picture. The companies can gain advantage only if they have the same aims. That is why Vectra-Line Plus Kft. is looking for companies with a similar size, similar market share, similar customer base, similar product base and similar aims. To be able to be successful the members should stand to the same way. If there are huge differences between the members, the balance can be thrown off and the objectives will not be reached. The company is beginning to find four or five partners at first to begin to establish the joint venture. Later the number of partners can increase, but this number is the aim at first. The target markets are the markets in which the company already operates. These target countries are mainly Slovakia and Eastern-European countries. This would be advantageous for VectraLine Plus Kft. because the

market situation of these countries are similar to the Hungarian market. And Asian markets are becoming more and more important and becoming the targets of Vectra-Line Plus Kft. The company is interested in cooperation with Asian companies from countries like China, Thailand or Indonesia. But in case of an international alliance it would be at the early stages a very hard and big job to cooperate with so different cultural countries. This is the aim of Vectra-Line Plus Kft. and they are still on their way to reach it. They have found the first partner, which is a Slovakian company, Fortuna Office S.R.O. I am going to go into details in later and show the Slovakian market and how Vectra-Line Plus Kft. could enter the market and find the most appropriate partner. To be able to reach its goals, there is a very important step. The company is planning to establish a detached company whose task would be to organize purchase from the chosen manufacturing companies. They would agree on prices

and organize transportation. So the members of joint venture will no need to take care of it, this separated company will take the responsibilities. This company will get a commission which would be enough for its maintenance. This whole planning is forecasted to take about five years. 23 http://www.doksi.hu And if the strategy is successful, then the company is planning that the members of the joint venture can launch an own range of products under the same brand name. This would be another milestone for the company. This would widen the customer base of the company and it would give further opportunities. It is also the part of the long-term plans of Vectra-Line Plus Kft. 5 How partners see the strategic steps of Vectra-Line Plus Kft.- Primary research 5.1 Deep interviews As a primary research I have made three deep interviews with foreign partners of Vectra-Line Plus Kft. These partners are the three partners who generate the highest profit on exporting to Vectra-Line Plus

Kft., Fortuna Office S.R.O., AC Trade Slovakia S.R.O. and SC Adiva Impex S.R.L. Deep interviews are a special type of market research interviews. This is a qualitative method. The objective of the deep interview is to find out motivations and reasons. 9 Deep interviews are useful when we do not need quantitative data. Deep interviews are usually used in the following cases: • When the examined topic is not very well known and we would like to know more about it • If we would like to understand motives, personal values, reasons of acts or psychological development processes • If we need unbiased information (unbiased from other people) • When more personal contact is needed to understand the problem than for example a questionnaire In this case I chose deep interviews because I wanted to know motives and reasons and I wanted to get opinions about a topic unbiased by others. To see how others see the position and strategic acts of Vectra-Line Plus Kft., I needed unbiased

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persons and circumstances. And 9 Sources: Dr. Józsa László: Marketing, edition 2000, page 123-127 24 http://www.doksi.hu it was easier to understand motives and reasons in this way than in a questionnaire, where people can not describe deeply their opinions and feelings. A lot of companies are using deep interviews when they would like to launch a new product to understand complex customer behavior and to know customer needs. The deep interview helped me to focus on the partners and to get the information directly from them. During the deep interview the answering party can tell his feelings and thoughts in his own words, he does not need to choose from given answers. Not only can the told words be interesting but also the gestures and non-verbal communication. Sometimes they can tell more than words, and it can be seen only at face to face communication. So, observation is an important part of the deep interviews. Disadvantages of deep interviews are that it is very

time-conscious and costly and to obtain worthwhile qualitative information, a lot of deep interviews should be made. To get an accurate data about 10-20 interviews are needed, but it is not as exact as quantitative methods are. Qualitative data are not representative; we can not make statistics from the data, because deep interviews are searching for the answers for questions “how” and “why”. Qualitative data help in setting objectives and developing marketing and market strategies. 5.2 Method of working Though I have made only three interviews, the data can be still useful because the asked partners had a background in the topic, experiences with cooperation with Vectra-Line Plus Kft. for a long time, usually for years. That is why in this case the three deep interviews can give a picture of how foreign partners see the acts and position of Vectra-Line Plus Kft. The interviews took about an hour one by one. I have prepared a guide line before the interviews. The interviews

were made in calm circumstances and in a loose atmosphere. Unfortunately with the Romanian company I could make the deep interviews only by phone, because the representative of the company was in Romania. The three companies are foreign partners of Vectra-Line Plus Kft. Two of them are Slovakian partners and one is a Romanian partner. One of the Slovakian partners, Fortuna Office S.R.O. is the one who became the first partner of Vectra-Line Plus Kft. in its joint venture. That is why I asked a few extra questions from Fortuna Office according to the joint venture to see how they think about this cooperation and what they expect from it. 25 http://www.doksi.hu The aim of the deep interviews was to understand how different partners see the strategic acts, competitiveness, position and marketing communication of Vectra-Line Plus Kft. from an unbiased point of view. The objective of the extra questions asked from Fortuna Office was to understand the motives and reasons why the company

chose to join to Vectra-Line Plus Kft. in its joint venture and to see from another point of view the working of it. The interviews can be found in the appendices. 5.3 Analysis10 Some short descriptions of the three companies are as followings according to the interviews: “Fortuna Office is a paper and stationary wholesaler on the Slovakian market. The company was established three years ago. The company headquarters in Bratislava. It is not a big company but it is becoming more and more known. I can say that from 30 wholesalers about 25 knows our name in Slovakia. Not long ago Fortuna Office became the partner of VectraLine Plus Kft. in its joint venture and we are strategic partners of Vectra-Line Plus Kft.” (Fortuna Office) “The Company was established in 2004. We distribute hygienic papers and typographic papers. I buy the goods from Krpa and I sell them in Hungary. Vectra-Line Plus Kft. is my biggest partner. AC Trade is an enterprise with about 27000 EUR profit per

year.” (AC Trade) “This is a Romanian company. This is not a very big company, smaller than Vectra-Line Plus Kft. We are a wholesaler of paper and stationary products.” (SC Adiva) The objective of the interviews was to know as much as possible about what foreign business partners thoughts about Vectra-Line Plus Kft. This information will show how others think about the marketing strategic steps of the company, what they think their weaknesses and strengths are and what they suggest the company should change. 10 The interviews can be found in the appendices. 26 http://www.doksi.hu Reasons for cooperation with Vectra-Line Plus Kft. The most of the interviewees said the same things as a reason for cooperation with VectraLine Plus Kft. “Because it has all the products I need and it can serve me from stock, so it is much faster this way.…in price advantages it is good for Fortuna Office to cooperate with Vectra-Line Plus Kft.” (Fortuna Office) “At Vectra-Line Plus Kft.

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they showed us their show room, they showed us their products, they showed the warehouse and how many items they have on stock. This attracted us and the product range was also interesting for us.” (SC Adiva) “Maybe because of its favorable prices and its services.” (AC Trade) It is very advantageous for foreign companies that the goods are on stock and they do not have to wait too much for the delivery. The range of products and the prices also attract partners to buy from Vectra-Line Plus Kft. Position in the Hungarian paper market “I think the position of Vectra-Line Plus Kft. is stable. The company is present in the market for 10 years now and I would reckon it among the biggest ones. Maybe the reason why the company is so stable is its aggressive business politics.” (Fortuna Office) “…strong and stable. I can sell Vectra’s goods on the Slovakian market, so their offer is appropriate for me.” (AC Trade) The asked companies agree on that the company has a strong

and stable presence in the Hungarian market. Vectra-Line Plus Kft. is present in the Hungarian market for ten years now and its foreign business partners think them stable in the market. 27 http://www.doksi.hu Competitiveness All the questioned companies agreed on that Vectra-Line Plus Kft. is competitive in the Hungarian market. There are many reasons they have mentioned why they think that. The first one is that they can satisfy their customer’s needs with their huge range of products and their advantageous prices and they serve them from stock. The interviewed companies think this makes Vectra-Line Plus Kft. competitive in the Hungarian market. They find advantageous the transportation conditions of the company. And they also find competitive that the company owns an own warehouse, office and showroom because it lowers its cost, can save money, because it does not need to rent them. “I think the company can satisfy customer needs and it is able to compete with the

requirements of the Hungarian paper market. They have every goods on stock and it is an advantage for them and helps them to be able to be competitive in the market. And, they offer a huge range of products. In the Hungarian market it has enough capital to stay stable and it makes it competitive.” (Fortuna Office) “Other things that makes Vectra-Line Plus Kft. competitive in the market are for example that the company has an own warehouse, they do not rent a building, they have their own machines and trucks and everything is in their own, they do not rent anything. Since they are in the market for ten years now, they are known in the paper and stationary market and it provides many advantages for the company.” (Fortuna Office) “They have continuously goods on stock. Circa 80% of the products are on stock. And they offer for us free delivery above 70 EUR purchase.” (AC Trade) The online marketing solutions of the company also make it competitive according to the

interviewee’s opinions. “Through their web warehouse I can comfortably see the latest prices, does not require personal contact, I can see the items, which and how many of them are on stock, so I can calculate with it.” (AC Trade) 28 http://www.doksi.hu “The Company communicates with customers very well; it is developing all the time to keep up with the changing trends and requirements. It has renewed its web warehouse recently; they are finding new ways to satisfy customer needs.” (Fortuna Office) According to prices the interviewed partners think differently. The Slovakian partners agree on that the company offers competitive prices, but the Romanian company thinks that they offer competitive prices only for some of the items but there are some in case prices are not competitive in the Romanian market. “The prices are very competitive in the Hungarian market.” (Fortuna Office) “They have the advantage which comes from the exchange of Forint and Euro. If I buy in

Hungary, I can buy for Euros favorably. My purchasing opportunities increase with about 510%.” (AC Trade) “(The prices)…are more or less good. Our company is looking for very cheap products from Europe and Asia, and in case of paper and stationary products Vectra-Line Plus Kft. can offer very good prices. Cheap prices that are competitive in the Romanian market.” (SC Adiva) “I do not know in the Hungarian market, but in the Romanian market they are more or less good. In case of some goods they are not that competitive.” (SC Adiva) The reason why some of the items are not competitive in the Romanian market, but competitive in the Slovakian market can be the differences in market conditions. When entering to a market, conditions should be examined consciously. It makes sense that VectraLine Plus Kft. focused more on prices of the product than on customer needs. Price and product orientation is not always the best solution, sometimes market orientation is much better.

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According to an online definition, “a market orientated company is one that organizes its activities, products and services around the needs and requirements of its customers. In 29 http://www.doksi.hu contrast, a product orientated company produces exciting and interesting products and seeks to demand-supply-for-goods-services-interest the market in these products.”11 The following table shows the marketing tools of each orientation: 3. Table12 This also proves that Vectra-Line Plus Kft. is using much more product oriented strategies, while they are making usually product and price research. They also do some market research, but it is very poor and they do not really focus on customers, much more on prices and products. When analyzing competition they also do research on products and price comparison, but they miss to examine the market conditions and customer behavior. Foreign market penetration strategies This is one of the most important questions to understand what

foreign partners think about the foreign market penetration strategies of Vectra-Line Plus Kft. The interviewees agree on that foreign market penetration is not the strongest point of Vectra-Line Plus Kft. They can improve in penetration strategies and in the field of importing and exporting goods. They think that the lack of capital can be a reason why Vectra-Line Plus Kft. is not that competitive in the market and the lack of awareness of foreign partners. 11 Source: http://www.thetimes100.co.uk/theory/theory--market-product-orientation--211.php download date 05. 05. 2009 12 Source: http://www.thetimes100.co.uk/theory/theory--market-product-orientation--211.php download date 05. 05. 2009 30 http://www.doksi.hu To become more efficient in foreign market penetration strategies the company should increase customer awareness in foreign markets where they would like to enter to. “Entering to foreign paper and stationary markets is a very hard job these days. The market is rather

saturated. To be able to keep up, a lot of money is needed. A huge amount of capital is becoming a requirement. Vectra-Line Plus Kft. has got not enough capital to be able to successful in foreign markets… Otherwise I think importing and exporting are not the strengths of the company. And, neither foreign penetration.” (Fortuna Office) “They are strong in the Hungarian market, but I think that in other foreign markets they are not considerable. I mean in Slovakia they are not very well-known, the customers are not that aware of their products.” (AC Trade) Vectra-Line Plus Kft. should utilize market penetration strategies by cutting prices, increasing advertising, obtaining better store positions for the products or innovative distribution solutions. Marketing communications According to marketing communication all the asked companies said that Vectra-Line Plus Kft. has a good and appropriate marketing communication. They keep up with the trends and try to reach the customers

and partners and inform them in the most efficient way. All the three companies are satisfied with its marketing communication techniques. “It’s marketing communication works very well.” (Fortuna Office) “The Company communicates with customers very well; it is developing all the time to keep up with the changing trends and requirements. It has renewed its web warehouse recently; they are finding new ways to satisfy customer needs. I think their marketing communication works very well.” (Fortuna Office) “I regularly receive news letters from Vectra. These are very good. I receive catalogues, monthly magazine about discounts. I always find products which are appropriate for me.” (AC Trade) 31 http://www.doksi.hu “It is very good. I am informed all the time by e-mails and they send news letters regularly. They answer to e-mail as fast as they can. Marketing communication works very well.” (SC Adiva) Marketing communication has six types: advertising, public

relations, personal selling, sales promotion, direct marketing and publicity.13 Vectra-Line Plus Kft. does not really use advertising tools. It is too expensive for the company and the company does not require it. They prefer much more for example sales promotion tools, like the point collector program they have. This builds customer loyalty. They also use personal selling. The company invites retailers and they show them their products, the features of them and try to convince them. This gives opportunity for VectraLine Plus Kft. to answer to the arising questions according to the products. Vectra-Line Plus Kft. also prefers to use direct marketing tools, like sending messages and news letters to the customers. I think they use marketing communication in an appropriate way. Strengths According to the strengths of Vectra-Line Plus Kft. the interviewed companies mentioned that the strengths of the company are that they serve their customers from stock, they offer a huge range of

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products, they have enough capital to stay competitive in the Hungarian market, they have their own warehouse, showroom and office facility, they have a 10-year-old experience in the Hungarian market, their online marketing strategies, marketing communication strategies, transportation strategies are favorable and they work with low number of partners at the early stages of entering to a foreign market. “I think the company can satisfy customer needs and it is able to compete with the requirements of the Hungarian paper market. They have every goods on stock and it is an advantage for them and helps them to be able to be competitive in the market. And, they offer a huge range of products. In the Hungarian market it has enough capital to stay stable and it makes it competitive. Other things that makes Vectra-Line Plus Kft. competitive in the market are for example that the company has an own warehouse, they do not rent a building, they 13 Source: Dr. Józsa László: Marketing,

edition 2000, page 225, 231-262 32 http://www.doksi.hu have their own machines and trucks and everything is in their own, they do not rent anything. Since they are in the market for ten years now, they are known in the paper and stationary market and it provides many advantages for the company.” (Fortuna Office) “They do not transport directly to small and middle sized companies in the Slovakian market. I think this a good strategy. They work with only a few partners here and I think that it is also an advantage for them.” (AC Trade) “They have continuously goods on stock. Circa 80% of the products are on stock. And they offer for us free delivery above 70 EUR purchase. Through their web warehouse I can comfortably see the latest prices, does not require personal contact, I can see the items, which and how many of them are on stock, so I can calculate with it.” (AC Trade) Weaknesses The following things should be improved according to the interviewees, because these are

the weaknesses of the company: the company allocates its tasks incorrectly and they answer slower to foreign partners. In foreign penetration and in exporting and importing they should improve a lot. “….the main problem is that the exercises are not allocated in the appropriate way and this can be a barrier to development. Sometimes I see that the tasks of the employees are blurred…. Otherwise I think importing and exporting are not the strengths of the company. And, neither foreign penetration. “ (Fortuna Office) “Sometimes things with foreign partners are a bit slower than with Hungarian partners at Vectra-Line Plus Kft.” (SC Adiva) Suggestions The main suggestions towards Vectra-Line Plus Kft. from foreign business partners would be that they should trust a bit more in other companies and focus more resources and attention on foreign markets if they would like to go international or establish a joint venture. Both 33 http://www.doksi.hu internationalization and

starting a joint venture requires trust in the other parties, otherwise it can not work efficiently. “I would emphasize concentrating more on foreign markets and control the allocations of tasks so they can avoid confusion.” (Fortuna Office) “I think that Vectra is a bit too careful with other partners, mainly with new ones. A lot of time is needed for them to strengthen relationships with partners, I mean years. It is hard for them to open towards foreign countries. I know it is important to be careful but I suggest that they should trust a bit more in their partners.” (AC Trade) Reason for joint venture For Fortuna Office S.R.O. who became the first member of the joint venture, price advantages and further development and faster serving of customers are the reasons why they have joined to this alliance. According to questions about the joint venture I have only one answer, because the only one party is the one who can answer to this question. “This joint venture is a good

chance for the company in further development and of course it provides price advantages. Cooperating with Vectra-Line Plus Kft. provides advantages. This cooperation also helps in faster serving of customers.” (Fortuna Office) Success of a joint venture Fortuna Office S.R.O. thinks that the key of success can be that the market situations should be similar, if they are not, the market conditions should be examined as much as possible. To understand the other members and their management styles and their way of thinking in order to cooperate successfully, the members should know as much as possible about each other. “Also the Slovakian paper market and the Hungarian paper market are very similar to each other. The market requirements and needs are I think about at 80% the same, so the 34 http://www.doksi.hu objectives in serving customers are almost the same. The market situation is also similar so the two companies can understand each other very well.” (Fortuna Office)

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Failures of international alliances A reason why the joint venture can fail according to foreign partners’ opinions is if the partners are distrustful towards each other. Companies do not like to be the first ones to join an alliance because they do not like to start into uncertain businesses. Lack of capital can also be a barrier to international alliances. Communicational and organizational problems may occur if the partners do not know each other efficiently. In case of Vectra-Line Plus Kft. it can be a hard job to find the most appropriate manufacturers. “It is very hard to find the appropriate partners for this. I think the companies are very distrustful with each other nowadays. Companies from different countries do not trust in the others. In the beginning it is very hard, because all the companies would like to see whether the join venture works well. They say that they would join as fifth if four other have already joined. They do not like to be the first ones to join

because then they can not know what to expect. They want to be sure in that it will worth it to join. And joining requires capital and sharing of other techniques. This does not attract very much company, because they usually do not like to share with others. This can also be a problem. To find a good manufacturer is not a hard job, there are many good manufacturers. Anyway, the barrier to a successful joint venture can be communicational and organizational problems.” (Fortuna Office) “Well, I would consider it, but in the present situation I have no background and networks that would make it possible.” (AC Trade) Summary of analysis From the interviews I summarize some reasons why foreign companies chose to cooperate with Vectra-Line Plus Kft.: • Because Vectra-Line Plus Kft. serves its customers from stock • Has an interesting range of products 35 http://www.doksi.hu • Offers good servicing All the interviewees told that they think that Vectra-Line Plus Kft. has

a stable and strong position in the Hungarian market. According to the opinions, it can be because it’s aggressive business politics, its good offers or its 10-year-long presence and experience in the Hungarian market. According to strategic steps in the Hungarian and foreign markets, the interviewees all mentioned weaknesses and strengths. The weaknesses, where Vectra-Line Plus Kft. should improve are: • Lack of capital to order in huge quantities • Tasks are not allocated in the appropriate way • Importing and exporting is weakly organized • Bit slower communication with foreign partners The strengths that should be kept and maintained are: • In the Hungarian market it has a good competition strategy • They work with only a few partners at the early stages in the foreign markets According to the competitiveness in the Hungarian and in foreign markets all the interviewees thought that the company is competitive in the Hungarian market and rather competitive

in the Slovakian and Romanian markets. They also agreed on that the prices of the company are also rather competitive. The reasons why the interviewees think that Vectra-Line Plus Kft. is competitive in the market are the followings: • The company can satisfy customer needs • Serve customers from stock • Huge range of products • Good marketing communication • Keeps up with changing trends • Developing all the time • Web warehouse 36 http://www.doksi.hu • Own warehouse; does not need to rent • They are in the market for 10 years now • Free delivery above a certain amount of order The cooperation with Vectra-Line Plus Kft. has many strategic reasons. Here are some reasons why foreign companies think advantageous the cooperation with Vectra-Line Plus Kft. For Fortuna Office the reason was its further development and price advantages. AC Trade had the same reasons, which are favorable prices and advantageous services. For SC Adiva the biggest

advantage is that Vectra-Line Plus Kft. serves them from stock. Here are some suggestions in what the interviewees think Vectra-Line Plus Kft. should improve: • Emphasize more on foreign markets • Control the allocations of tasks • More trust towards new partners The interviewed all agreed on that Vectra-Line Plus Kft. uses good marketing communication. They send regularly news letters, they operate a web warehouse and they refresh the data and news all the time, so that customers and partners can obtain up-to-date data. According to the joint venture I could talk about it only with Fortuna Office, because this is the company who has joined the joint venture already. The reasons why other companies think that a joint venture can be advantageous is mainly price advantages which come from quantity advantages. According to the interviews the biggest threat of a joint venture is distrustfulness of the parties, though it is a base of establishing a joint venture. Also it is a

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hard task to find the most appropriate manufacturers and parties who would like to join to the venture. The barriers can be to the joining to this international alliance are the lack of capital and investment requirements. That is why Vectra-Line Plus Kft. should find those companies who not just willing to but is able to join, who has the appropriate capital requirements. Companies like the idea of a joint venture, they are just afraid to loose money on it; they are not enough brave to start into something uncertain. It also depends on the market situation of the company whether it can be convinced or not. 37 http://www.doksi.hu 6 Implementation phase of the joint venture Vectra-Line Plus Kft. is at this moment in the implementation phase. They are still working on reaching their objective. They are still looking for partners who are appropriate, able and willing to join to the company’s joint venture. The company is still seeking the manufacturers who can provide the top ten

products at the best possible prices. Vectra-Line Plus Kft. has many relationships with foreign manufacturers, but still looking for the most appropriate ones. The company is opening towards Asian manufacturers, like Indonesian, Thai or Chinese manufacturing companies,too. As mentioned before Vectra-Line Plus Kft. has found its first member. It is a Slovakian company. The name of the company is Fortuna Office S.R.O. Their cooperation is working very well. Vectra-Line Plus Kft. is still looking for companies who would like to join to this venture, looks for manufacturers and also runs the already established alliance with the Slovakian company, Fortuna Office S.R.O. The already established alliance works very well, there are no difficulties between the two countries. Maybe the reason is that the Slovakian and the Hungarian markets are rather similar, and it makes cooperation much easier. In the long run this cooperation would be very advantageous for both parties though now they need to

share money and subsidize each other. Market similarities make it easier to cooperate with each other and it also helps to avoid the problems of cultural differences. That is why the target markets of Vectra-Line Plus Kft. are mainly Eastern-European markets. 38 http://www.doksi.hu 7 Slovakian market The Slovakian market is the main target market of Vectra-Line Plus Kft. It is advantageous for them because the company already has knowledge about the market and has already relationships there. The company has business partners from Slovakia and this country makes the biggest profit from export. “Central and Eastern Europe…is a land of opportunity and a land in transition, with technology and energy overcoming many of the barriers that the recent past imposed. The region is going through a renaissance, a literal period of re-birth after 50 to 90 years of containment within the USSR…Over time, many from the West find that their CEE counterparts are well-trained and effective

technicians who accomplish significant amounts of productive work despite the frequent reality of obsolete equipment, facilities, and social constraints…While wages are low across the region, a profitable compromise is possible between pay and productivity. As wages rise, however, cultural adaptations need to be developed to accommodate profit…In fact, HR is not a well-developed profession in the region…In CEE,…having a job is important and job mobility is unusual…The significance of the job, of the security it represents, and the belief among non-executives that they do not 39 http://www.doksi.hu have choice in part of the culture of the region…Choices, though, especially for managers in CEE, are being impacted by technology.” 14 In the paper and stationary market usually Slovakia and the Czech Republic is handled regionally together. Usually one company is representing and serving the Slovakian and the Czechs market. Maybe it is because of the historical background

of the two countries. For Vectra-Line Plus Kft. the Slovakian market is advantageous because the market is similar to the Hungarian market. The requirements and needs and the competition is also similar; there is almost no difference between the two countries. And the biggest advantage is that the country is near to Hungary so it cuts transportation costs. About 10-15 years ago the Slovakian paper and stationary market was divided among the biggest players. New entrants could enter the market and less capital was required to begin an enterprise and to be able to run it successfully. The competition was not that strong and everyone had its place in the market. About in the last two years another tendency began. The paper market began to become saturated. A lot of new entrants began to enter the market and they flooded the paper and stationary market. The multinational companies began to enter, too, and they wanted to reach everything. This tendency began not just in Slovakia but in all

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the area of Eastern Europe. For new entrants it is very hard now to enter the market because it is still saturated. Without connections, relationships or huge amount of capital they can not enter the market. It is almost the same situation as in Hungary. To be worth it to enter the market the company should order in camion amounts and it requires a huge amount of capital for a new entrant. Some companies can not sell some sorts of products just because they can not order in big quantities and in small quantities it is just not worth it to buy. The multinationals are continuing their aggressive business politics and they are trying to crowd out other companies from the market. They want to target everyone and they want to reach everything. They “attack” final customers. The biggest multinationals in the Slovakian market are: Office-Depot, Lyreco, Activa, Krpa, Lamitec and Officeone. And the most of them has just entered into the Slovakian market in the last two years, like

Office-Depot, Lyreco or Officeone. They are entering the market and owning it. The biggest competitors are Lyreco, Activa and Office-Depot. These organizations contact with companies directly and they distribute their products to them. They offer usually very good services at favorable prices, so it is very hard to compete with them. 14 Source: Woodrow H. Sears-Audrone Tamulionyte-Lentz: Succeeding in business and Eastern Europe: A guide to cultures, markets, and practices, edition 2001, pages 1-2, 40-42, 49-51 40 http://www.doksi.hu Lyreco headquarters in Bratislava. It distributes its products to Hungary, Czech Republic and Austria. Office-Depot headquarters in Bratislava, too. It distributes its products from Bratislava to Hungary. It has a centralized purchasing department. It has ceased in 2008 its catalogue sending services. They offer their products at very advantageous prices, their purchasing prices have improved. Prices are almost the same as in Slovakia, just with a big

difference. The prices fall in a very rapid way. Because of the economic downturn products are sold 20% cheaper than before. It is a big disadvantage for the companies. This hard situation made companies desperate and they want to sell their products at whatever it costs. Another problem comes from the exchange rates. Since Slovakia uses Euro instead of corona, products became more expensive. Customer tourism boomed since prices in other countries like Hungary are 20% more advantageous. Gasoline is a good example for that. While in Hungary 1 liter gasoline costs only about 250 Forints, in Slovakia it costs about 315 Forints. It is because when Slovakians exchange Euro, they get more Forints then corona. So it is a good business to play with exchange rates, but it is definitely a disadvantage in the Slovakian market. According to the economic downturn a big problem is that customers do not pay in time. It is important for the company to get the money in time but it is hard to make

customers to be more punctual. Vectra-Line Plus Kft. chose to cooperate with Slovakia because it provides advantages because it is near to Hungary and transportation is very economic for the company. Vectra-Line Plus Kft. chose to cooperate with a Slovakian company, Fortuna Office S.R.O. The reason why the company began to cooperate with this Slovakian organization is that this company strengthens Vectra-Line Plus Kft. in its purchasing side. It can purchase in bigger quantities and it provides quantity discounts. It is an advantage for both companies. For Vectra-Line Plus Kft. this joint venture does not mean any extra costs, it can just gain from it.15 15 Source: Internal source of Vectra-Line Plus Kft., and Fortuna Office S.R.O. 41 http://www.doksi.hu 8 Desired situation The desired situation would be to reach similar cooperation with other companies as with the Slovakian company. The desired situation is to start cooperation with transnational companies in order to

establish a joint venture. “Cooperation is an explicit, long-term agreement between two or more companies, which are independent from each other according to their ownership.”-Högberg (1977) “Cooperation is a common effort with a company to implement continuous, agreement-based transactions and tools.”-Ring&Van de Ven (1992) Joint venture means establishing a common company. It is an agreement-based business activity, which is established by two or more organizations in order to reach strategic objectives and which becomes an independent business unit. It determines ownership shares among the partners, responsibilities and financial risks and gains, while they can keep their independency.16 The reasons why it is worth it for Vectra-Line Plus Kft. to establish a joint venture are for example to share risks in capital investments, to be able to be more competitive or to reduce costs. Nowadays companies need to present the items quicker in the market, because the market is

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saturated and the competition is getting stronger. Strategic alliances are spreading because of the new strategic challenges nowadays. Globalization and regionalism is becoming more intense, competition is getting stronger and stronger, the capital concentration of the competitors is rising all the time, the technology is developing in a very fast way and becoming more and more difficult and the market is changing all the time in a very fast way. These all cause that companies turn to strategic alliances, so does Vectra-Line Plus Kft. Strategic alliances: (definition by Tari Ernő)17 16 17 • Keep the organizational, legal and strategic independence of the business partners • Are for the long-run and for reaching strategic objectives • Requires a common agreement, which is advantageous for all parts Source: Presentation of Klegárth Adriána-Reicher Mária: Transznacionális vállalatok közötti kooperáció Source: Presentation of Klegárth Adriána-Reicher Mária:

Transznacionális vállalatok közötti kooperáció 42 http://www.doksi.hu • Work by resources given into the alliance by the partners • Are integration of activities of the business partners The joint venture is advantageous for Vectra-Line Plus Kft., because the advantages of the companies added together and are able to gain common objectives. A joint venture would provide the sharing of risks and costs, lowering financial problems, improving in efficiency of purchasing, lowering dependence on suppliers, entering to new foreign markets, finding new distribution channels, sharing new technologies, sharing management and organizational knowledge, improving the competition position of the company, synergy, sustaining of strategic flexibility and sharing of economic knowledge. 8.1 Objectives The main objectives of Vectra-Line Plus Kft. is to spare money in the long-term and to reach competitive advantages. Entering to new markets is also in its long-term plans. 8.2

Entering to international markets Before entering to international markets, the main characteristics of the international market should be examined. The main characteristics of international markets are as followings according to a source:18 • The powers of the parties are unequal • Market entry and exit is limited • New entrants have to comply with different laws, legal systems and cultures • Different currencies and currency systems • Different price rates • Different tax systems • Tariff barriers • Bigger transportation distances than inland 18 Source: http://www.penzugysziget.hu/kozgazdasag/vallalatok-a-nemzetkozi-piacon.html Download on 16. 04. 2009. 43 http://www.doksi.hu These are some information that should be known before entering to a foreign market. In trade between different companies from different countries it is very important to know the partnering country and the partnering company as much as possible. Entering to a foreign market

has many forms, like:19 • Direct export20 • Indirect export • International manufacturing, marketing and enterprises • Sharing of license and know-how • Establishing a joint venture • Mergers and takeovers • Direct foreign investments The order of the above forms also shows the strengths of the international appearance. 4. Table21 19 Source: Dr. Józsa László: Marketing, edition 2000, page 267-270 Indirect export means that the company distributes and sells the goods by its own in the foreign markets. This is riskier but more profitable than direct export, where an intermediary contacts with the importing country. Indirect export has the advantage that by this the company can know the importing country and its market much better. 21 Source: Dr. Józsa László: Marketing, edition 2000, page 270 20 44 http://www.doksi.hu Vectra-Line Plus Kft. is at the stage of planning to use one of the forms of internationalization, which would be a joint venture.

To be able to compete in international markets, the company should have cost advantages. This is one of the main aims of Vectra-Line Plus Kft. Those companies who have lower costs have advantage in the long run. Economies of scale are an important concept when analyzing costs. Usually the more a company manufacturers, the less costs it will have. It is true in wholesaling, too. The more Vectra-Line Plus Kft. can order, the less its costs will be. This is what Vectra-Line Plus Kft. wants to reach. The following chart shows the relations between cost and the size of output (P=Production; Q=Quantity; AC=Average Cost): 1. Graph22 The chart shows that the more you produce the lower costs you will have. Price is also a very important issue that should be considered in foreign market penetration. Though price is the most obvious characteristic of the product, price competition is one of the 22 Source: http://www.economicshelp.org/blog/wp-content/uploads/2008/01/economies of scale.PNG

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Download 05.05.2009 45 http://www.doksi.hu most difficult forms of international competition. So, defining what pricing strategy the company uses is very important. 9 9.1 Strategies needed to reach desired situation Marketing strategy definition and concepts “Marketing is a management process through which goods and services move from the seller to the customer. It is based on satisfying customer needs and to reach their satisfaction.”23 “Marketing strategy is about defining on which market, to whom, what kinds and at what prices the company would like to distribute its products, which ways the company uses to allocate the goods to the customers and which marketing communication tools can the company finance and support, simpler, how the company advertises.”24 “Strategy itself means the direction and scope of an organization over the long-term, which achieves advantages for the organization through its configuration of resources within the ever changing environment

to satisfy the needs of markets and to fulfill stakeholder expectations.”25 “A strategy involves the knowledge where we are now, postulating where we would like to be in the future, the developing of policies and plans of action and the taking and monitoring of actions to ensure the desired result achieved. Under corporate strategy we mean that the world implies an emphasis on the whole organization rather than segments or divisions.”26 The 5. Table shows the meaning in differences between corporate marketing, strategic marketing and marketing management. You can find it in the appendices. 23 Source: Dr. Józsa László: Marketing, edition 2000, page 11,12 Source: http://www.market-iq.hu/marketing strategia.html Download 15.03.2009. 25 Source: Presentation of Miklós Soós: Consulting and strategy 26 Source: Presentation of Miklós Soós: Consulting and strategy 24 46 http://www.doksi.hu The company should always keep in mind that its resources are scarce and it has to use

them up in a way to reach sustainable competitive advantage. The company should always remember that the main objective is to reach customer satisfaction. The company should be making sure that the products and services meet customer needs. In order to achieve this goal, a flexible strategy should be created, that can response to changes in customer demand and perceptions. Marketing strategy is a long-term plan. It is made at least for 2-3 years. Usually marketing strategic planning requires many charts and tables, but its function is the easier understanding. The marketing strategic plan should contain the objectives of the company, the definition of the target market and the target group, the positioning of the products or services, the positioning of the price, the definition of distribution strategies and last but not least, marketing communication. 9.2 Missions Four plans should be developed:27 • The mission of the company • Definition of the strategic line of business

• Assigning the resources to these • Preparing of new lines of business Five factors define the mission of the company: • History • The current preferences of the management team and the leadership • Market situation • Resources • Special competence The good mission: 27 Source: Presentation of Dr. Réthy István: Marketingstratégia 47 http://www.doksi.hu • Sets only a few objectives • Emphasizes the main directions • Defines the competition area (branches, products, market segments, regions) Strategic lines of businesses: • Product orientation (short sighted point of view according to Theodore Levitt) • Market orientation (customer base, customer needs, technology) 9.3 International marketing strategies28 Before doing anything, the first step is setting objectives. It is very important to define the objectives because this is the base of the strategic marketing plan. Every act of the company needs to be in conformity with its

objectives. Vectra-Line Plus Kft. has many objectives. One of those is to satisfy customer needs with as many sorts of products as possible, to sell highquality products and serve customers from stock. Serving customers from stock makes possible to sell them at lower prices and to save time. The objective is to buy from manufacturers the lowest price possible and gain as high profit as possible. The aim is to reach a sustainable development within the company. Concerning to foreign market penetration the goal of the company is to establish a joint venture with similar size companies as Vectra-Line Plus Kft. is in order to be able to buy the manufactured products at the lowest possible prices. This long-term plan will be described in the assignment in details. When entering to a foreign market, the first step that must be taken is the decision of the internationalization form. In case of Vectra-Line Plus Kft., the company has decided that it would establish a joint venture to increase

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its growth. The following questions should be considered when going international: 28 • Should we go international? • Which market? • How should we enter? Source: Dr. Józsa László: Marketing, edition 2000, page 265-276 48 http://www.doksi.hu • What should the marketing program look like? • How should marketing organization look like? Answering these questions will help in further decisions and setting objectives. To be able to define the target market and the target group, the potential customers and also the market and the market conditions are needed to be known as much as possible. The objective of the company should not be like: “Our product is for everyone in the market”. It is never successful to target every groups of the market. The target group and the target market should be clear and exactly defined. The appropriate definition of the target group should contain demographic data and information about the attitudes of the customers. The target

group of Vectra-Line Plus Kft. is the same or similar sized enterprises who has the same objectives as Vectra-Line Plus Kft. has. The aimed target markets are mainly within Europe and emphasizing Eastern European countries. In case of finding exporting and importing countries, Europe is the main target and mainly the Slovakian market, because as we could have seen before, the main foreign target market of Vectra-Line Plus Kft. is Slovakia. It is very important that the elements of the strategic plan should be in conformity. Only in this case can be the plan a useful one. The most important issues that should be taken into consideration are international market conditions. This is STEEP analysis. Vectra-Line Plus Kft. should make an overall market research before entering to a foreign market. The analysis of international marketing factors would help to avoid risks and threats. 9.3.1 STEEP analysis29 The followings are very important to consider about the partnering country when going

international: • 29 Social environment: cultural differences, religion, ethics, values, morals and traditions Source: Dr. Józsa László: Marketing, edition 2000, page 270, Gerald Albaum-Jesper Strandskov-Edwin Duerr-Laurence Dowd: International marketing and export management, edition 1994, page 55 49 http://www.doksi.hu • Technological environment: level of manufacturing, quality control, technological development • Economic environment: development of the country, its size, transportation conditions, its currency, market needs, its solvency, cash flow, GNP, its raw material resources and its economic politics • Ecological environment: environmental issues • Political-legal environment: certainty of politics, foreign trade barriers of the government, tariffs, taxes, property rights, permissions and authorities Knowing about these environments is a criterion before entering to a foreign market. Sometimes companies ask experts to prepare an overall market

research of the partnering company. This is what Vectra-Line Plus Kft. partly does. With a market research all these conditions can be defined. Trade between companies from different countries can also provide comparative advantage to Vectra-Line Plus Kft. Comparative advantage can come from for example currency changes or exchange rates. In the long-term the company can gain comparative advantages from cooperation with a foreign company. In the appendices can be found the 6. Table , which shows the policies of STEEP analysis. 9.3.2 Marketing mix in international marketing30 International marketing-mix has four main elements: 1. Product policy 2. Pricing policy 3. Sales policy 4. Marketing communication Product policy Vectra-Line Plus Kft. is planning to use expanding strategy. This means that the company is planning to sell the same range of products in the foreign markets as in the Hungarian market. 30 Source: Dr. Józsa László: Marketing, edition 2000, page 265-276 50

http://www.doksi.hu Later, when the joint venture would be established, the company is planning to introduce a new range of products under a new brand name. Pricing policy In pricing policy Vectra-Line Plus Kft. is planning to set different prices for different countries according to market conditions and customer needs. Vectra-Line Plus Kft. makes a strong emphasis on comparing and examining prices in order to reach the best possible purchasing price and the most favorable offered prices. Sales policy Sales policy includes also distribution channels and transportation conditions. Distribution channel means the ways through which goods and services are allocated to buyers. The more difficult the distribution channel is, the more expensive the product becomes. If the company needs to pay for more and more intermediaries, it pushes prices up. So, the aim is to use as easy distribution channel as possible, though it is not easy, because the developed a country is, the more difficult

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distribution channel is needed. In case of Vectra-Line Plus Kft., the company is planning to work an own company which would deal with all the transportation, and this would be the official distributor of the members of the joint venture. Marketing communication Marketing communication is also a very important part of the marketing strategic planning. Marketing communication means communication with final consumers through the media, through advertisements (TV, radio, internet etc.), sales promotion (free samples, gifts, free programs etc.), PR (public relations), personal selling or direct marketing (database marketing, direct mailing, telemarketing, etc.). The marketing communication tools can differ in different countries. Or they can be the same, or partially the same. Vectra-Line Plus Kft. is planning to use the same marketing communication tools in foreign countries as it uses in Hungary. International strategies require three main steps: 1. The choice of the most appropriate

market 2. Establishing the most efficient, international level marketing organization 3. Creation of a marketing-mix program, which satisfies market needs 51 http://www.doksi.hu 9.4 Competition strategies In a so competitive world, the companies have to make a competition strategy to survive. Nowadays, to be successful, the company needs to pursue the right competitive strategy. The company should avoid strengths of competitors and look for weaknesses in their positions and launch marketing attacks against their weak points. Sometimes to be competitive, innovation with a differentiation strategy can be more successful than price competition. To make an efficient competition strategy competition must be analyzed. There are many fields that should be analyzed. Some companies’ mistake is that they put too much emphasis on large competitors or competitors with high market share, etc. but small companies should be never ignored. Small businesses should not be underestimated. One kind

of analysis can be monitoring the changes in market shares of competitors. Another useful step would be to check the history of the market and the competitors. The company should check how real the threat of the new entrants in the market is. The merger and takeover activities of competitors can also be examined. The following characteristics of competitors are necessary to be examined: • Financial position • Market position • Product position • Pricing • Production processes • Trade relations processes • Advertising processes • Sales force processes To receive an overall picture of the competitors, the behavior of the competitors should be analyzed. The company has to understand the objectives of the competitors, and not just the present aims, but the company should examine the objectives and acts and behaviors of competitors in the past. 52 http://www.doksi.hu To be successful in the market the company should know about the competitors as much as

possible. Competitors should never be underestimated, because the aims of the competitors are similar to the company’s. Vectra-Line Plus Kft. uses competition analysis before entering to a foreign market but not an entire one. They mainly examine prices and products but they do not examine financial position, sales and marketing strategies of other competitors. They examine somehow its market position and its customer base, but they do more emphasis on price and product comparison. Maybe this poor analysis of the competitors leads to its poor importing and exporting and foreign penetration strategies. They could be more efficient if they would use a much more overall research of the competitors. And also they would get an overall picture of the market and the market situation and the level of competition in the examined market. According to competition strategies, Vectra-Line Plus Kft. should analyze its competition before going international. Porter 5 analysis and benchmarking

strategies are very good ways to analyze competition. When analyzing the competition the following questions should be asked: • Who are the main competitors? • What are their strategies? • What are their objectives? • What are their weaknesses and strengths? • How do they react on the outside impacts? 9.4.1 Porter 531 To be competitive in the market, the company should make a competition research. To do this the model of Porter can be a very useful and efficient tool. Porter’s 5 say that the degree of competition depends on the following factors: 31 Source: Dr. Józsa László: Marketing, edition 2000, page 42-49, 66-68 53 http://www.doksi.hu 1. Bargaining power of suppliers 2. Bargaining power of buyers 3. Threat of substitute goods 4. Existing competition 5. Threat of new market entrants Sometimes a 6th factor is added, which is: 6. Barriers to entry These factors can determine the status of market competition in the market. The following table gives a

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summary of the Model Porter 5: 7. Table32 © alan chapman 2005, based on Michael Porters Five Forces of Competitive Position Model 32 Source of the picture: http://www.docstoc.com/docs/288688/Porters-Five-Forces-of-Competitive-Position Download on 22. 03. 2009. 54 http://www.doksi.hu According to the above table I am going to define with the help of Porter 5 model the competition of Vectra-Line Plus Kft. Bargaining power of suppliers It shows how strong the position of the sellers is. The bargaining power of suppliers depends on the concentration of suppliers, the profitability of the suppliers, the branding and switching costs. In case of the Hungarian market there are many suppliers and more and more are trying to enter to the market. Bargaining power of buyers It shows how strong the position of buyers is. The bargaining power of buyers depends on the concentration of the buyers, the differentiation of products, profitability of buyers, role of quality and service and the

switching costs. There are many buyers who buy stationary and paper products. In the Hungarian market buyers require lower prices but differentiated products. Threat of substitute goods The threat of substitutes depends on the quality of the substitute good, the willingness of buyers to substitute, the relative price and performance of substitutes and the costs of switching to substitutes. The threat of substitutes is low in the Hungarian paper market. Existing competition It shows whether strong competition among existing players exists. In case of existing competition the threat of competitors depends on the structure of the competition, the degree of product differentiation, strategic objectives and exit barriers. More and more multinationals are entering to the Hungarian market, so competition is getting stronger and stronger. The degree of product differentiation is high. Threat of new market entrants It shows how easy or difficult is for new entrants to enter into the market. The

threat of new entrants depends on the economies of scale, the investment and capital requirements, the customer switching costs, the access to technology and distribution channels, brand loyalty and government regulations. It is very hard to enter to the Hungarian paper and stationary 55 http://www.doksi.hu market because the market is very saturated. Very big investment or huge amount of capital is needed to be able to enter to the market, so only multinational companies mean really threat to Vectra-Line Plus Kft. It is because they provide very favorable prices and they have the capital requirements to reach as much as customers as they can. Barriers to entry Barriers to entry mean governmental restrictions, tariff- and non-tariff barriers, quotas or embargo, etc. There are no government barriers in Hungary at this moment that would prohibit the exit and entry to the paper and stationary market, but, anyway, any unexpected government decision or restriction can come into force.

9.5 Benchmarking33 “Benchmarking means the process of a continuous comparison with other organizations in order to obtain information which can help to increase the efficiency of our organization.” (American Productivity and Quality Center)34 Benchmarking is a rather new approach which is based on an old wisdom: “Learn from the best.” Benchmarking is a special analyzing and appraising process, which is based on a comparison with companies manufacturing the same products or targeting the same group of consumers. In the center of the measurements stand time, cost and quality. Benchmarking itself does not result a better business process, but it highlights those areas that must be developed. The phrase “benchmarking” was first connected to TQM (Total Quality Management), where it meant the “best performance in its own business area”. Nowadays benchmarking means a gaining of practical knowledge, learning from others and information acquisition. Benchmarking is a general

comparison: critical evaluation of others’ results and searching for our weaknesses and strengths. Benchmarking is the continuous searching of solutions that are better than the company’s in order to be more competitive in the market. 33 Source: http://www.manta.hu/szolgalt/benchmarking.htm Download on 04.04. 2009. 34 Source: http://www.manta.hu/szolgalt/benchmarking.htm 56 http://www.doksi.hu The task is to analyze costs and performance, to search for opportunities, methods that can be used for improvement. The same factors should be analyzed in the competitors’ performance and these data should be compared. 9.5.1 Types of benchmarking Benchmarking has many types according to which fields are examined and evaluated. Some main benchmarking types: Internal benchmarking: It means the usage of benchmarking within the company, like examination and evaluation of functions of departments and branches within the company and comparison of their internal activities. This is one

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method Vectra-Line Plus Kft. usually uses in order to measure its performance. Competition benchmarking: It means that the benchmarking of direct competitors in the market the company operates in. This is a field in which Vectra-Line Plus Kft. can improve, because competition benchmarking can be a really useful way analyzing the competition. Functional benchmarking: It means benchmarking of the leaders in the market -on a specific area like sales etc. or in a specific function like human resources etc. This is also a field, in which Vectra-Line Plus Kft. can improve, when going international, this would be a very useful comparison for the company. General benchmarking: It means that the company separates its activities into areas and it means the benchmarking of these areas. These can be training, solutions for arguments at the workplace, team building or handling of customer complaints etc. 9.6 Growth strategies 57 http://www.doksi.hu Growth strategy means that the company shows

how the bringing of the products and services to new customers and new markets increases sales. Here are some examples for growth strategies according to an online source:35 Decreasing costs: The more business a company does the more advantage it can take from learning and economies of scale. Economies of scale are connected to reduction in price because factors like buying power or managerial specialization. It is one of the main objectives of Vectra-Line Plus Kft., it belongs to its long-term plans. Acquisitions: The companies usually can increase their growth by acquisition, mergers and takeovers. The company should look for acquisition targets, who can present new opportunities for growth. Vectra-Line Plus Kft. is planning to make a joint venture with other foreign enterprises. This also belongs to its main long-term plans. We can say that it is the base of its growth strategy. Online strategy: Internet sales can be a part of the growth strategy; it is not a bad idea to include

online elements in the growth strategy. It can be selling the products through an own website or advertise the products and services via internet. The web warehouse includes the company’s own introduction letter at eight different languages.36 The company established its online web warehouse in 2002. The aim of the web warehouse was to make possible for customers to be able to obtain information 24/7 about actual prices, discounts and products. This provides immediate information to customers, potential customers, business partners and everyone who is interested to the products of the company. Nowadays online trade is very popular, and the base of it is to have a warehouse where the company can satisfy customer needs, and provides an up-to-date and quick source of information. It also helps for new customers. The online web page helps them in registration and makes orders easier and faster. More and more customers choose to use this way of ordering. Registration for the website is

not necessary; the guests can also get the basic information about the company, and about prices and products. But in this case, guests cannot give orders or use special tools. About 6000 products can be seen at the web warehouse of 35 Source: http://entrepreneurs.about.com/od/businessplan/a/growthstrategy.htm Download on 04.04. 2009. 36 Sources: Internal source from Vectra-Line Plus Kft. 58 http://www.doksi.hu Vectra-Line Plus Kft. from the full product range, which is rather much. The web warehouse contains pictures and product descriptions. The webpage contains the five most popular products for the first three months. The business partners have the opportunity to send their introduction letter and they can establish and develop a similar webpage to what Vectra-Line Plus Kft. has but with their own design and own elements. New products: It is the most obvious way to increase growth to introduce new products in the market. It can be a variation of the core product, another

product line or a completely new one. The range of products is widening all the time. Vectra-Line Plus Kft. tries to serve the most popular models and to widen the choice of products. One of the long-term plans of the company is to introduce a new product or product range under the same brand name together with the members in the joint venture in the future. But this can be reached only if the joint venture is established. New client bases: The company should reach at first its target group, but if the company has reached the target customers already, the company can look for new client bases, for example if a company is a B2B (Business to Business) company, it can provide B2C (Business to Customers) services, or vice-versa. The company can increase its number of customers, if it considers reaching new customers with the existing offerings or with developing new ones. To find a new target group a new target market should be found or expand in the existing market. The company should

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consider whether there is a real need for its products, how many of potential customers are in the market and how much money they are willing to pay for its products. And it is very useful to use a market research before beginning to expand the consumer base. The goal of Vectra-Line Plus Kft. is to keep its existing customer base and increase the base of its customer base by entering into new markets. Increase the frequency of purchase: It means that the company should make it easier for customers to buy relative to the competitors. It can increase the frequency of purchase. Outside of loyalty programs, many other solutions exist, like responsiveness to requests, calls and e-mails, consistency in offers, accurate and timely billing and accessibility. That is why Vectra-Line Plus Kft. introduced its point collector program. It encourages customers to buy more frequently and stay loyal to the company. Increasing of the awareness of foreign partners can also encourage purchase. 59

http://www.doksi.hu There are other ways of increasing growth, it is mainly for retailer companies, and I just want to mention two of them: Franchising: This method is a good idea for those companies whose products are consistent and the customers have certain expectations about the company’s brand. This solution for growth is a very feasible one. Multiple locations: In case the activity of the company requires retail presence in the market, the company can look for opportunities to open an additional shop in a different place. The company should define its geographical strategy. The company should not assume to go international just because its products are successful regionally. 60 http://www.doksi.hu 10 Problems 10.1 Barriers to trade Though in the EU among EU members there is free movement of products and services and free trade, there can be many barriers to trade. These are usually governmental restrictions on international trade. Trade barriers mean restrictions,

invariably by government that prevents free trade among countries.37 In case of Vectra-Line Plus Kft. to reach its long-term plan, many difficulties may occur. The company has to take care of government restrictions and trade barriers. Just to mention some of the forms of government regulations and restrictions: • Import duties • Import licenses • Export licenses • Import quotas • Tariffs • Subsidies • Non-tariff barriers to trade • Export Restraints • Local Requirements • Embargo • Quotas Just to mention some of tariff and non-tariff barriers, I chose some sources to see some definitions of these barriers. “Tariffs, like most trade barriers, may be imposed for different reasons. Some tariffs are placed simply to earn money for the government. This might either be a flat fee on an item, or it might be based on the market value of the item. Other tariffs exist as a form of 37 Gerald Albaum-Jesper Strandskov-Edwin Duerr-Laurence Dowd:

International marketing and export management, edition 1994, page 59-65 61 http://www.doksi.hu protectionism, to make imported goods more expensive than they might otherwise be, in order to protect domestic industries. For example, if a country has a fairly high wage, and high labor standards, the cost of producing a single widget might be around ten units. If a nearby country can produce a widget for three units, then imports of that country’s widgets could easily drive the domestic industry out of business. So the country might place a restrictive tariff on widget imports, to make sure that domestic widgets always remained competitively priced, or even to make it unfeasible for widgets to be imported at all.”38 “Tariff is a tax on imports, and is stated as a percentage of value or on a per unit basis.”39 “Subsidies are another of the common trade barriers, and are often placed to protect domestic industries. Subsidies may actually be intended simply to make certain key

goods affordable to citizens of the nation, but the end result can still be to make imports non-competitive. Many food crops, for example, are heavily subsidized, to ensure the citizenry has a constant supply of affordable food. Steel is also often subsidized, to ensure a nation always has a domestic steel supply, which can be crucial during times of war when normal shipping avenues may be cut off.“40 “Quotas are specific provisions limiting the amount of foreign products that can be imported. In some countries they are also imposed on exports as part of national planning. The application of quotas may be global or on a country-by-country basis.”41 “An embargo can be seen as the most extreme of the trade barriers. Embargoes basically prohibit the import or export of anything with another country. This is often done as a form of punishment, or to try to force the country to undergo radical change internally as a result of a weakened economic state. Historically, the embargo was

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used as a war tactic, and so was often considered a declaration of war. In modern times, however, although the most brutal of 38 Source: http://www.wisegeek.com/what-are-trade-barriers.htm Download on 01. 05. 2009. 39 Gerald Albaum-Jesper Strandskov-Edwin Duerr-Laurence Dowd: International marketing and export management, edition 1994, page 62 40 Source: http://www.wisegeek.com/what-are-trade-barriers.htm Download on 01. 05. 2009. 41 Gerald Albaum-Jesper Strandskov-Edwin Duerr-Laurence Dowd: International marketing and export management, edition 1994, page 63 62 http://www.doksi.hu the trade barriers, it is usually not viewed as an act of outright aggression, although a declaration of war is often accompanied by an embargo.”42 In case of Vectra-Line Plus Kft. a lot of barriers to trade may occur when entering to foreign markets. Any of these barriers can be a threat. Many problems and difficulties may occur in the implementation phase of establishing a joint venture. For

example: • Government restrictions: tariff and non-tariff barriers • Differences in the opinions of the members • Competition problems • Problems as a new entrant • The members may have other responsibilities and contracts with other manufacturers • Cultural differences • Legal problems Any of these can be a barrier for Vectra-Line Plus Kft. to reach its goals. The company should be aware of • Disadvantages: 1. Takes time and effort to build the right relationship 2. Partnering with another business can be challenging Problems may occur in establishing a joint venture: 1. The objectives of the venture are not a hundred per cent clear and communicated to everyone involved 2. Imbalance in levels of expertise, investment or assets brought into the venture by the different partners 3. Different cultures and management styles result in poor integration and co-operation 4. The partners do not provide enough leadership and support in the early stages

42 Source: http://www.wisegeek.com/what-are-trade-barriers.htm Download on 01. 05. 2009. 63 http://www.doksi.hu 5. Success in a joint venture depends on thorough research and analysis of the objectives 6. Objectives do not match It is important to review the business strategy before committing to a joint venture. This should help to define what can be sensibly expected. 64 http://www.doksi.hu 11 Solutions and suggestions According to the before mentioned problems, here are some solutions and suggestions I would advice to Vectra-Line Plus Kft. According to tariff and non-tariff barriers and the problem of cultural differences the solution can be an overall market research. Market research is a cure for many problems, because it shows the threats and the opportunities of a certain market. In case of Vectra-Line Plus Kft. it would be highly suggested that they should make an overall market research before entering to a market. The company usually makes competition and price

comparison and analysis; this is what they always do before entering to a market. They examine market situation, sometimes tariff and non-tariff barriers and they examine what customers buy the most frequently and what kinds of products they prefer. Many problems can be avoided by an overall market research. All legal and governmental problems, competition, customer behavior and cultural problems can be avoided if they are consciously analyzed. For this, I would ask a marketing expert, or the company can do it by its own with the help of STEEP, SWOT, Porter 5 and benchmarking analisis. What I highly recommend to Vecra-Line Plus Kft. is to use benchmarking process when analyzing competition, because only comparing prices might cause problems. During benchmarking the company does not look for just visible data, but it tries to find out the reasons. Benchmarking is used for improving the overall performance of the company. But only those companies can be successful, who has the ability

and willingness for continuous renewal, regular learning and changing, so benchmarking is a continuous process and can be regularly done. Benchmarking also means collecting data and analyzing them. When looking for data, the company should look for exact data to obtain an ambiguous comparison. Data can be collected from daily news, from the internet, journals, and statistical magazines or by surveys. Usually the biggest problem is how to start the process. It is a good starting point to ask the customers, intermediaries or suppliers who they think is the best in the market. The company can look for a consultant company, who collects the best methods into a data base. Benchmarking compares always to the best and it is process oriented. Comparing to the best decreases exaggerated self-confidence and widens the company’s view and encourages making efforts for reaching better results. 65 http://www.doksi.hu Benchmarking process is about to define where the company situates compared to

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the others and what actions should be done to reach a better performance. Using benchmarking can help to solve the problems that may occur as a new entrant. As a new entrant the company can lower the threats and risks as low as possible if the company knows as much as possible about competitors and the market situation. The risks of legal problems can be lowered by exact contracts and agreements with partners and consumers. Different market situations cause distrustfulness among countries. It is one of the hardest problems that should be solved. Vectra-Line Plus Kft. should be a bit more trustful towards other partners, including foreign business partners, because this would lead to a faster implementation of a joint venture and it would lead to quicker foreign market penetration. Of course it is not that easy to become more trustful, mainly in this hard market situation. It is only changing of point of view. When establishing a joint venture many problems may occur. The biggest part

is the implementation part. Finding the appropriate partners is a rather hard job. To have an appropriate cooperation between members, the members should have the same objectives and same opinions. Vectra-Line Plus Kft. should be very convincing because it is a hard job to convince other partners in the implementation phase. People like to see that the alliance is working and then they join. But usually people do not like to start uncertain businesses. Another problem can be that the potential members may have other responsibilities and contracts with other manufacturers. So maybe the organization is appropriate to join, but it has an exclusive agreement with another manufacturer and it makes harder to contract. Vectra-Line Plus Kft. should calculate with that the companies might have other responsibilities towards other companies. This also can be avoided by market research. Imbalance in level of expertise, assets or others can also cause problems. This can be solved by choosing

companies in the early, implementation phase, who are at the same size and same market share, same activities and objectives. And somehow Vectra-Line Plus Kft. can avoid arguments caused by imbalance. This requires Vectra-Line Plus Kft. to analyze the chosen companies, to know as much as they can about the potential members and their customer base. For example Vectra-Line Plus Kft. wants to distribute with its joint venture its Top 5 or later its Top 10 products. In most countries copy paper and file are in the Top 5 products but it would be hard to agree on for example three different countries which other three products to 66 http://www.doksi.hu choose into the Top 5. In different countries different products are in demand. And this also can cause misunderstandings. But this can be solved by finding more compromise companies. To be able to find the most appropriate companies, Vectra-Line Plus Kft. should also study what similar businesses are doing, particular those that operate

in similar markets to VectraLine Plus Kft.’s. Seeing how they use joint ventures could help to decide on the best approach for the business. At the same time, Vectra-Line Plus Kft. could try to identify the skills they use to partner successfully. Vectra-Line Plus Kft. can benefit from studying its own enterprise. The company should be realistic about its strengths and weaknesses - consider performing strengths, weaknesses, opportunities and threats analysis (SWOT) to identify whether the two businesses are compatible. The company will almost certainly want to identify a joint venture partner that complements its own skills and failings. This kind of analysis would be very useful to be able to choose the most appropriate joint venture partners. When establishing a joint venture not just objectives need to match but the objectives should be clear and communicated to everyone. In this case Vectra-Line Plus Kft. can avoid misunderstandings and further problems. When thinking of a joint

venture it is imperative to have the company’s understanding in writing. Vectra-Line Plus Kft. should set out the terms and conditions agreed upon in a written contract. This will help prevent misunderstandings and provide both parties with strong legal recourse in the event the other party fails to fulfill its obligations while under contract. To avoid misunderstandings and further legal problems, a written Joint Venture Agreement should be written down. If the issues and objectives are exactly written down, it can protect the parties in legal arguments and avoid misunderstandings. The company should also remember to consider the perspectives of employees and bear in mind that people can feel threatened by a joint venture. It may be difficult to foster effective working relationships if the partner has a different way of doing business. Leadership styles and management styles can differ. In case of Vectra-Line Plus Kft. this will not be a threat, because the employees will not feel

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the difference in leadership directly. This will be a hard task only for the management team of Vectra-Line Plus Kft. to cooperate with others with different management styles. The solution can be for this problem to look for companies from countries that have similar market situations or to examine the leadership styles and management styles of the country. In this case there will be no surprises. This is why I suggest 67 http://www.doksi.hu Vectra-Line Plus Kft. to look for similar markets at the early stages and then open towards countries, which are very much different from Hungary. That is why I support the idea of searching for mainly Eastern-European companies at the beginning. 68 http://www.doksi.hu 12 Conclusion The aim of Vectra-Line Plus Kft. is to establish a joint venture with foreign business partners. They use many marketing strategies in order to reach their goals. According to the secondary research I have made and according to the results of the interviews

(primary research) I can say that to establish international alliances the company needs more capital and more relationships. Till they do not focus really on reaching their objective, I do not advice to start a joint venture. To be successful, the company needs to concentrate its attention and its resources on the objective, otherwise the effort will fail. If the company would make more effort to reach its objective, they should make an overall market research before going international. It is not enough to examine prices and products. The overall examination of market situation, competitors, barriers and customer behavior is required to become successful. I would advice them to you STEEP analysis, Porter 5 analysis and benchmarking strategies in order to examine the foreign market. The activities, objectives and internal and external examination of the potential partners are needed to make sure that the company will be appropriate to cooperate with. SWOT analysis of the partners and

benchmarking analysis provide help in decision making. Furthermore, I would maintain their marketing communication, because it works well, but I would think of solutions more based on customer needs on a certain market. 69 http://www.doksi.hu References Books 1. Bartha Judit-Fazekas Judit-Harsányi Gyöngyi-Miskolczi Bodnár Péter-Ujváriné Antal Edit: Speciális társaságok, edition 2003, KJK-KERSZÖV Jogi és Üzleti Kiadó, Budapest 2. Dr. Józsa László: Marketing, edition 2000, Veszprémi Egyetemi KIadó, Veszprém 3. Woodrow H. Sears-Audrone Tamulionyte-Lentz: Succeeding in business and Eastern Europe: A guide to cultures, markets, and practices, edition 2001, ButterworthHeinemann, USA 4. Gerald Albaum-Jesper Strandskov-Edwin Duerr-Laurence Dowd: International marketing and export management, edition 1994, Addison-Wesley Publishing Company 5. Subhash C. Jain: Marketing planning and strategy, 6th edition 6. Szabó Katalin-Kocsis Éva: Tanulás és felejtés vegyes

vállalatokban, edition 2003, Oktatási Minisztérium, Budapest Studies 1. Presentation of Klegárth Adriána-Reicher Mária: Transznacionális vállalatok közötti kooperáció 2. Presentation of Miklós Soós: Consulting and strategy 3. Presentation of Dr. Réthy István: Marketingstratégia Online sources 1. www.vectraline.hu- the official homepage of Vectra-Line Plus Kft. 2. http://en.wikipedia.org/wiki/Joint venture 3. http://www.thetimes100.co.uk/theory/theory--market-product-orientation--211.php 4. http://www.economicshelp.org/blog/wpcontent/uploads/2008/01/economies of scale.PNG- graph of economies of scale 70 http://www.doksi.hu 5. http://www.market-iq.hu/marketing strategia.html 6. http://www.docstoc.com/docs/288688/Porters-Five-Forces-of-Competitive-Positiontable of Porter 5 model 7. http://www.manta.hu/szolgalt/benchmarking.htm 8. http://entrepreneurs.about.com/od/businessplan/a/growthstrategy.htm 9.

http://www.penzugysziget.hu/kozgazdasag/vallalatok-a-nemzetkozi-piacon.html 10. http://www.wisegeek.com/what-are-trade-barriers.htm Other sources 1. Internal sources from Vectra-Line Plus Kft. 2. Meetings and reports of Zsolt Kárpáti, chief executive of Vectra-Line Plus Kft. 3. Internal sources from Fortuna Office S.R.O. 71 http://www.doksi.hu Appendices 5. Table43 43 Source: Subhash C. Jain: Marketing planning and strategy, 6th edition, page 24 72 http://www.doksi.hu 6. Table44 44 Source: Subhash C. Jain: Marketing planning and strategy, 6th edition, page 25 73 http://www.doksi.hu Interviews Interview 1 I (=Interviewer): Would you tell some words about your company and your activities? F.O.: Fortuna Office is a paper and stationary wholesaler on the Slovakian market. The company was established three years ago. The company headquarters in Bratislava. It is not a big company but it is becoming more and more known. I can say that from 30 wholesalers about 25 knows

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our name in Slovakia. Not long ago Fortuna Office became the partner of Vectra-Line Plus Kft. in its joint venture and we are strategic partners of Vectra-Line Plus Kft. I: How did you contact with Vectra-Line Plus Kft.? F.O.: I heard of the company by relationships. Then I began to buy from Vectra and since then I am a regular buyer of the company. And this is how I contacted with the company. I: Why did you choose Vectra-Line Plus Kft.? F.O.: Because it has all the products I need and it can serve me from stock, so it is much faster this way. I: How do you see the position of Vectra-Line Plus Kft.? F.O.: I think the position of Vectra-Line Plus Kft. is stable. The company is present in the market for 10 years now and I would reckon it among the biggest ones. Maybe the reason why the company is so stable is its aggressive business politics. Without it the company might not be that stable. I: Do you find appropriate the strategic steps of Vectra-Line Plus Kft.? F.O.: More or less. I:

Why? F.O.: It’s marketing communication works very well, regarding competition and business partners the company has an aggressive business politics as I mentioned. I: How do you see the strategic steps of Vectra-Line Plus Kft. in foreign penetration? F.O.: Entering to foreign paper and stationary markets is a very hard job these days. The market is rather saturated. To be able to keep up, a lot of money is needed. A huge amount of capital is becoming a requirement. Vectra-Line Plus Kft. has got not enough capital to be able to successful in foreign markets. But I think the main problem is that the exercises are not allocated in the appropriate way and this can be a barrier to development. Sometimes I see 74 http://www.doksi.hu that the tasks of the employees are blurred. Otherwise I think importing and exporting are not the strengths of the company. And, also foreign penetration. The disadvantage of importing is that money stays and is not rotated. That is why Vectra-Line Plus

Kft. does not prefer it I think. If the company could buy in much bigger quantities, it would worth it for them. In that case they would obtain very good prices from manufacturers. I can say that the company can improve very much in these fields. I: Do you think Vectra-Line Plus Kft. is competitive in the market? F.O.: Definitely. I: Why? F.O.: I think the company can satisfy customer needs and it is able to compete with the requirements of the Hungarian paper market. They have every goods on stock and it is an advantage for them and helps them to be able to be competitive in the market. And, they offer a huge range of products. In the Hungarian market it has enough capital to stay stable and it makes it competitive. Other things that makes Vectra-Line Plus Kft. competitive in the market are for example that the company has an own warehouse, they do not rent a building, they have their own machines and trucks and everything is in their own, they do not rent anything. Since they are in

the market for ten years now, they are known in the paper and stationary market and it provides many advantages for the company. I: Do you think the prices of Vectra-Line Plus Kft. are competitive? F.O.: Absolutely. The prices are very competitive in the Hungarian market. The purchasing sources are almost the same as in the Slovakian market. I: What do you think of the marketing communication of Vectra-Line Plus Kft.? F.O.: The Company communicates with customers very well; it is developing all the time to keep up with the changing trends and requirements. It has renewed its web warehouse recently; they are finding new ways to satisfy customer needs. I think their marketing communication works very well. I: Why is it advantageous for you to cooperate with Vectra-Line Plus Kft.? F.O.: Because Vectra-Line Plus Kft. is a bigger company than Fortuna Office and the relationship with Vectra-Line Plus Kft. helps in further development of the company. Not just in development but in price

advantages it is good for Fortuna Office to cooperate with VectraLine Plus Kft. I: What would you suggest to change in the marketing strategy of Vectra-Line Plus Kft.? F.O.: I would emphasize concentrating more on foreign markets and control the allocations of tasks so they can avoid confusion. 75 http://www.doksi.hu I: What are the reasons why you have joined this joint venture? F.O.: As I mentioned Fortuna Office is not a big company in the Slovakian market. This joint venture is a good chance for the company in further development and of course it provides price advantages. Cooperating with Vectra-Line Plus Kft. provides advantages. This cooperation also helps in faster serving of customers. I: How could Vectra-Line Plus Kft. convince you to join? F.O.: It was not hard, because the companies are cooperating with each other from the beginning and Fortuna Office found it advantageous to cooperate with Vectra-Line Plus Kft. We were first the buyers of Vectra-Line Plus Kft. and we

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found it an opportunity to join its joint venture. I: How does cooperation works with Vectra-Line Plus Kft.? F.O.: It works very well. Vectra-Line Plus Kft. and Fortuna Office can work together easily. Also the Slovakian paper market and the Hungarian paper market are very similar to each other. The market requirements and needs are I think about at 80% the same, so the objectives in serving customers are almost the same. The market situation is also similar so the two companies can understand each other very well. I: How do you see the further development of this joint venture? What do you expect? F.O.: It is very hard to find the appropriate partners for this. I think the companies are very distrustful with each other nowadays. Companies from different countries do not trust in the others. In the beginning it is very hard, because all the companies would like to see whether the join venture works well. They say that they would join as fifth if four other have already joined. They do

not like to be the first ones to join because then they can not know what to expect. They want to be sure in that it will worth it to join. And joining requires capital and sharing of other techniques. This does not attract very much company, because they usually do not like to share with others. This can also be a problem. To find a good manufacturer is not a hard job, there are many good manufacturers. Anyway, the barrier to a successful joint venture can be communicational and organizational problems. With Vectra-Line Plus Kft. we do not have any of these. I: Thank you very much for your cooperation. Interview 2 I: Would you tell some words about your company and your activities? 76 http://www.doksi.hu AC Trade: The Company was established in 2004. We distribute hygienic papers and typographic papers. I buy the goods from Krpa and I sell them in Hungary. Vectra-Line Plus Kft. is my biggest partner. AC Trade is an enterprise with about 27000 EUR profit per year. I: How did you

contact with Vectra-Line Plus Kft.? AC Trade: I heard about Vectra through Alt és Társa Kft., because this company represents Krpa in the Hungarian market. Krpa has an exclusive contract with Alt és Társa Kft., it sells only through Alt és Társa in Hungary, and I sell through them. So, somehow this is how I met Vectra. I: Why did you choose Vectra-Line Plus Kft.? AC Trade: Because Vectra has a fanfold manufacturing mill and I transport raw materials there. I also buy from Vectra and distribute goods in the Slovakian market. So we have an overall cooperation with Vectra. I: How do you see the position of Vectra-Line Plus Kft.? AC Trade: According to fanfold manufacturing, fanfold market is becoming narrower, less fanfold is used. Toner-based and liquid inject printers are much more popular nowadays, so fanfold will be less popular and profit on it will be less, too, and I will be forced to transport less materials. But, anyway, strong and stable. I can sell Vectra’s goods on the

Slovakian market, so their offer is appropriate for me. I am thinking of completing my working area. I mean that I have a long relationship with Vectra, it is about since 2005, and I am thinking about an exclusive contract with Vectra. I: Do you find appropriate the strategic steps of Vectra-Line Plus Kft.? AC Trade: They do not transport directly to small and middle sized companies in the Slovakian market. I think this a good strategy. They work with only a few partners here and I think that it is also an advantage for them. I: How do you see the strategic steps of Vectra-Line Plus Kft. in foreign penetration? AC Trade: They are strong in the Hungarian market, but I think that in other foreign markets they are not considerable. I mean in Slovakia they are not very well-known, the customers are not that aware of their products. But it is good in my point of view, because this way I do not have to compete with them directly. I: Do you think Vectra-Line Plus Kft. is competitive in the

market? AC Trade: Well, I think they are. They have the advantage which comes from the exchange of Forint and Euro. If I buy in Hungary, I can buy for Euros favorably. My purchasing opportunities increase with about 5-10%. 77 http://www.doksi.hu I: Do you think the prices of Vectra-Line Plus Kft. are competitive? AC Trade: Yes, I think they are competitive. They buy from manufacturers and importers. They have continuously goods on stock. Circa 80% of the products are on stock. And they offer for us free delivery above 70 EUR purchase. Through their web warehouse I can comfortably see the latest prices, does not require personal contact, I can see the items, which and how many of them are on stock, so I can calculate with it. I: Why is it advantageous for you to cooperate with Vectra-Line Plus Kft.? AC Trade: Maybe because of its favorable prices and its services. I: What would you suggest to change in the marketing strategy of Vectra-Line Plus Kft.? AC Trade: I think that Vectra is

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a bit too careful with other partners, mainly with new ones. A lot of time is needed for them to strengthen relationships with partners, I mean years. It is hard for them to open towards foreign countries. I know it is important to be careful but I suggest that they should trust a bit more in their partners. I: What do you think of the marketing communication of Vectra-Line Plus Kft.? AC Trade: I regularly receive news letters from Vectra. These are very good. I receive catalogues, monthly magazine about discounts. I always find products which are appropriate for me. I like their catalogue and I thought about translating it to Slovakian and distribute it among Slovakian partners, because unfortunately it is only in Hungarian, so I can give it only to those who speak Hungarian. But this is a 270 pages catalogue, so it is a costly and hard job to translate it. I: Would you be interested in an alliance with Vectra-Line Plus Kft., to be the part of a joint venture? AC Trade: Well, I would

consider it, but in the present situation I have no background and networks that would make it possible. But anyway, I would be glad to distribute the products of Vectra in Slovakia, but for an alliance, a joint venture I have no background at this moment. I: Thank you very much for your cooperation. Interview 3 I: Would you tell some words about your company and your activities? SC Adiva: This is a Romanian company. This is not a very big company, smaller than VectraLine Plus Kft. We are a wholesaler of paper and stationary products. 78 http://www.doksi.hu I: How did you contact with Vectra-Line Plus Kft.? SC Adiva: One of my colleagues suggested traveling to Hungary on a business trip to look around and we contacted with more Hungarian companies. And we found Vectra-Line Plus Kft. the most interesting. I: Why did you choose Vectra-Line Plus Kft.? SC Adiva: Because most of the Hungarian companies told us that they do not have products on stock, they can not show their products,

they did not know what they have on stock, they told that we had to introduce ourselves a week before we visit them and we did not have time for this. We found not so big companies, about 3 or 4. The last one was Vectra-Line Plus Kft. who we visited and we found it interesting. At Vectra-Line Plus Kft. they showed us their show room, they showed us their products, they showed the warehouse and how many items they have on stock. This attracted us and the product range was also interesting for us. I: How do you see the position of Vectra-Line Plus Kft.? SC Adiva: Stable. I: Do you find appropriate the strategic steps of Vectra-Line Plus Kft.? SC Adiva: They are interesting. I: Why? SC Adiva: Because I talked them to make a contract to increase 30 days payment to 60 and nothing has happened since then. Sometimes things with foreign partners are a bit slower than with Hungarian partners at Vectra-Line Plus Kft. I: How do you see the strategic steps of Vectra-Line Plus Kft. in foreign

penetration? SC Adiva: It is a hard job nowadays to enter to the market. In Romania multinational companies are starting to break into the market. They give you 60 days payment. They give the same prices. It is very hard to compete with them. Also prices have fallen in Romania and this also makes the market situation harder. Though Vectra-Line Plus Kft. has I think good penetration strategies. They use appropriate strategies in the Romanian market in order to be competitive in this market. I: Do you think the prices of Vectra-Line Plus Kft. are competitive? SC Adiva: I do not know in the Hungarian market, but in the Romanian market they are more or less good. In case of some goods they are not that competitive. I: Do you think the prices of Vectra-Line Plus Kft. are competitive? SC Adiva: They are more or less good. Our company is looking for very cheap products from Europe and Asia, and in case of paper and stationary products Vectra-Line Plus Kft. can offer very good prices. Cheap

prices that are competitive in the Romanian market. 79 http://www.doksi.hu I: Why is it advantageous for you to cooperate with Vectra-Line Plus Kft.? SC Adiva: The biggest advantage is for us that they offer their products from stock. I: What do you think of the marketing communication of Vectra-Line Plus Kft.? SC Adiva: It is very good. I am informed all the time by e-mails and they send news letters regularly. They answer to e-mail as fast as they can. Marketing communication works very well. I: Would you be interested in an alliance with Vectra-Line Plus Kft., to be the part of a joint venture? SC Adiva: I have heard about it. I find it interesting, but we are not that big company. I think we would consider it. I: Thank you very much for your cooperation. 80

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