Strategic Aspects of TNCs Entry into the Markets of Central and Eastern Europe

Ing. Stepan Zhukevych

Master's thesis

Abstract:

It is difficult to overestimate the role of transnational corporations (TNCs) in the modern world, since their activity in the country is not only an indicator of a favorable business environment, but also a significant factor for economic growth through investment, location of production facilities, research centers and the labour force engagement. The relatively recent political and economic changes in Central and Eastern Europe (CEE) in the late 20th century have led to the liberalization of the economy in the region. For TNCs, this is not only a chance to open new opportunities, but also a challenge because of the specifics in the business environment. The main aim of the research is to identify the factors that most influence the choice of entry strategy for TNCs in the markets of CEE region. The first part is concentrated on concepts, motives and models of transnationalization, including the methodological foundations of market analysis. The second part contains an analysis and assessment of business environment in terms of TNC expansion in countries such as Ukraine, Poland and the Czech Republic. The methodology used for market evaluation is PESTEL - analysis, which deeply observes markets and helps to identify potential opportunities and threats. Additionally, the correlation analysis was conducted to calculate the level of the impact on the economic growth from TNC’s activity and the reverse effect on the region that testified the fact of the positive effect from the foreign direct investment inflow on the economy. Besides, several recommendations on the market entry strategy were provided to operate on the CEE markets considering the specifics of doing business in the analyzed states.

Abstract:

It is difficult to overestimate the role of transnational corporations (TNCs) in the modern world, since their activity in the country is not only an indicator of a favorable business environment, but also a significant factor for economic growth through investment, location of production facilities, research centers and the labour force engagement. The relatively recent political and economic changes in Central and Eastern Europe (CEE) in the late 20th century have led to the liberalization of the economy in the region. For TNCs, this is not only a chance to open new opportunities, but also a challenge because of the specifics in the business environment. The main aim of the research is to identify the factors that most influence the choice of entry strategy for TNCs in the markets of CEE region. The first part is concentrated on concepts, motives and models of transnationalization, including the methodological foundations of market analysis. The second part contains an analysis and assessment of business environment in terms of TNC expansion in countries such as Ukraine, Poland and the Czech Republic. The methodology used for market evaluation is PESTEL - analysis, which deeply observes markets and helps to identify potential opportunities and threats. Additionally, the correlation analysis was conducted to calculate the level of the impact on the economic growth from TNC’s activity and the reverse effect on the region that testified the fact of the positive effect from the foreign direct investment inflow on the economy. Besides, several recommendations on the market entry strategy were provided to operate on the CEE markets considering the specifics of doing business in the analyzed states.

Keywords

Transnational Corporation, internationalization, PESTEL, analysis, market entry strategy, correlation, FDI, Central and Eastern Europe.

Language used: English

Date on which the thesis was submitted / produced: 17. 5. 2021

Thesis defence

• Date of defence: 25. 6. 2021
• Supervisor: Ing. Bc. Alena Šafrová Drášilová, Ph.D.
• Reader: M.Sc. Ye Zhang

Masaryk University

Faculty of Economics and Administration

Master programme / field:
Business Management / Business Management