General analysis of Europe

This paragraph will give an extensive explanation about why we picked Europe as an expanding region for Mars. When talking about Europe we mostly mean Eastern Europe, since this market has not been completely accessed by Mars jet. We believe that Mars will have great business opportunities here for the following reasons: Well developed and fast growing infrastructure, low labor costs, Central and Western Europe are easily accessible and few cultural differences. We will now expand on these points. Infrastructure The infrastructure in Eastern Europe has developed rapidly during the last decade. The governments are trying to keep up with the Western countries so there are multiple plans constructed to improve the infrastructure. To help Eastern Europe with catching up the EU funds a lot of infrastructure projects, this should give them a big boost. The budget of the national government will also be used of course, but a bigger source of investments is the Public Private Partnership (PPP) investments. Publicprivate partnership (PPP) describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. We expect Poland to be unattractive for expansion because wages have been rising lately, but when expanding to countries like Ukraine or Romania Poland will be useful for passing through when heading towards Western Europe. We included tables stating which infrastructure-improving projects are recently finished and which have been planned. A country that might be worth examining more extensively is Romania, this country is rapidly developing and has recently joined the European Union. Despite these factors they still have relatively low wages compared to other Eastern European countries. Their infrastructure also needs a lot of modernization but the road network is very decent. During Romanias process of transition towards market economy, the transport sector was restructured in response to: the decline in the heavy industry, the reorientation towards international trade, the elimination of regulatory restrictions to road freight traffic, the privatization of road hauliers and the progressive alignment to market conditions, the restructuring of state-owned transport undertakings and the rapid increase in personal car ownership. This restructuring resulted in an overall decline of rail transport, and an increase in the roads sector. (www.pwc.com, Building new Europes infrastructure) When deciding where to expand to, accessibility of the main market is also taken into consideration. Most of Mars factories and warehouses are situated in Central and Western Europe (figure X), it is very important how easily these can be reached. The distance that has to be travelled to get to the main market is crucial when making expanding decisions. To make things clearer we have included the following maps (map x and map x). On map x we can see the railroad infrastructure in Europe and map x is a normal road map. When looking at the road map there seems to be a rather direct road towards Germany which could be an important connection (ClujBudapest-Vienna-Nurnberg). A second important factor could be the airport of Budapest, since it is relatively close to Cluj and when spreading products from Eastern Europe through the rest of Europe this could be a fast way of doing this. Another option is to use the railroads to spread the products. Mars could distribute their products via Lviv and then using the direct railroad connected to Western Europe

(Lviv-Krakow-Wroclaw-Leipzig) to reach that market, or using the railroad from Lviv to Berlin (LvivWarsaw-Poznan-Berlin). Labor costs A second reason for expansion to Eastern Europe could be the labor costs. A few years ago Poland was one of the most popular countries to expand to, but since wages have been rising lately a lot of companies went more towards the South-East of Europe. Starting in 2007 the wages in Poland have been rising higher than the productivity. The information technology market is also growing rapidly in Romania since a lot of former welleducated people are coming back because they now see more job opportunities here. These factors already attracted multiple large companies. An example is the northwestern Romanian city of Cluj, where Nokia announced last week it plans to open a cell phone plant and tech center. Nokia will invest 60 million, or $80 million, in the project, which the government says eventually will create 15,000 jobs. (New York Times, 2007) Table 2 will give an overview of the labor costs in Europe; it shows that Romania and Bulgaria have the lowest wages. Romanias labor costs are less than half of the average of the labor costs in Poland which have always been valued as cheap. Combining this with the fact that the workforce is getting more educated could give Mars some crucial reasons for expanding.

Cultural differences Although Western and Eastern Europe are not that far apart, there are some cultural differences which Mars should take into consideration. One of the most important differences is that Eastern and Southern Europeans refuse to let their day be influences by time. So these cultures have a very relaxed attitude towards work and punctuality, which is a big contrast with the stressful Western culture. This means that Mars should hire managers who are capable of handling this difference, because there is a possibility . Another difference is the position of women within society. In these times it is not strange that women have the same job as men and get equally paid, but the view that men should be in charge is still present in Eastern Europe. So if Mars would hire Western female managers to work in Eastern Europe this might cause some troubles in accepting this by Eastern European men who have to listen to her demands.