Dimuth Nambuge Assistant Professor Department of Economics Slovak University of Agriculture Nitra

 What Foreign direct Investment?  Key terminology is – the “controlling interest” in a foreign company.  Does not need to be 100% ownership.  Importance of FDI  Host country  Ownership country

 P - Political  E - Economical  S - Social  T - Technological  L - Legal  E - Environmental  C - Cultural

 Spontaneous privatization  Privatization  Concentration begins  Accelerated concentration

 The period of spontaneous privatisation happened in , when the smaller shops were privatised, but when a significant number of private shops were established as well. Therefore the number of food retail shops started to grow.  Prior to the period food chains were vertically Integrated  Acquisitions and joint ventures in core products groups

 During the period of privatization (from 1991 to about ) the owners of the larger food retail chains have been changed. Most of the shops in the favourable areas have become the properties of multinational chains.  Some SME’s developed  Some were bankrupt  Large western companies concentrated on post acquisition issues;  Distribution, brand positioning, pricing strategy

 During this period number of self employed shops grew up.  Rationalization of manufacturing/ market strategy for “NEW EUROPE” 

 Transition period ( ) negative GDP growth.  Higher level of poverty and unemployment.  Entry costs were minimum  Entered mainly through acquisitions.  Anti dumping policies

North America (300million population Major brands well established Maximum economy of scale Costly advertising campaigns Mature markets Expensive listing costs Western Europe (350 million population Major brands well established Maximum economy of scale Costly advertising campaigns Mature markets Expensive listing costs Eastern Europe (400 million people) Most deals for 25 – 70 percent market share in major product groups have been attained to 3 to 40 billion dollars

 Knowledge spill over  High quality standards (ISO series)  High safety standards (HACCP)  Technological Transfers  Production line efficiencies  Increased yields through reserach  Environmental concerns

 Tax holiday incentives  Government and EU grants  Buyouts of small farms

Source: FDI markets, Financial Times, 2009, January

 Wholesale markets  Market Information Systems (MIS)  Measuring International Competitiveness  Improving market access to the supply chains of multiple retailers  Human Capital  Improving access for small farms  Stimulating intermediary organizations and marketing cooperatives

Discuss