International Business Slovenia Report

Introduction / Abstract to Report:

For this piece of coursework we will be acting as Partners for a leading Management Consultancy based in London. We have been asked to set up an office in Ljubljana, Slovenia and provide the Senior Partners with a report that consists of the following:

An analysis of the political, economic, technological and legal factors that may impact our firm

An in-depth analysis of the cultural issues that we feel should be addressed and give recommendations on how these cultural problems should be tackled

A description of the cultural life-style and practical issues that could be encountered in Slovenia

Background to Slovenia:

The official name of the country our partners are setting up a new consultancy in is The Republic of Slovenia. The country is situated at the crossroads of Central Europe, The Mediterranean and the Balkans and shares borders with Italy, Austria, Hungary and Croatia (World Map, 2006).

The estimated population (according to The Bureau of European and Eurasian Affairs, August 2006) was 2,010,347 which is made up of 83.6% Slovenes, 1.81% Croats, 1.98% Serbs, 1.10% Bosniaks, 0.32% Hungarians, 0.14% Montenegrins, 0.20% Macedonians, 0.31% Albanians, 0.11% Italians and 0.17% Roma.

Almost 60% of the entire population is Roman Catholic and although the official language is Slovene, in the border regions Hungarian and Italian languages are frequently spoken. However, our partners will be happy to hear that English is widely spoken and understood by the majority of business people and students.

Our partners will also be happy to hear Slovenia has a workforce of 920,000 which accounts for almost half of the countries entire population. The unemployment levels in Slovenia have been rapidly falling in recent years and Slovenia can also boast an impressive higher education enrolment ratio of 26.2%. Slovenia gained EU membership 2004 and the benefits membership brings should ensure the future of Slovenia is a prosperous one.

Part One: Political, Economic, Technological and Legal Factors:

In this part of the report we will be providing the Senior Partners with in-depth background information on the current political situation in Slovenia. We will then move on to assessing the economic and technological developments as well as addressing the legal factors for our partners to consider.

Political Factors:

Slovenia enjoys excellent relations with the United Kingdom and both co-operate together on a number of fronts. A strong indication of SloveniaЎЇs recent political development came when they occupied a non-permanent seat on the United Nations Security Council from 1998-2000 and had previously gained membership to the United Nations in May 1992 and The Council of Europe in May 1993.

In 1996 Slovenia signed an association agreement with the European Union but did not gain full membership until May 1st 2004. Operating in an EU member state will give our Senior Partners free movement of capital and the opportunity to invest in an up and coming area where labour and land purchasing costs are likely to be considerably lower than the UK.

Since the break-up of the former Yugoslavia, Slovenia has had an excellent human rights record which brings the stable political environment our Senior Partners would naturally want to operate in. Janez Jansa was elected as prime-minister on November 9, 2004 and his government openly share the view of building closer relations with Western Europe by ensuring Slovenia remains EU and NATO members. This is good news for our firm as it will reduce bureaucracy and red tape as the government is actively seeking foreign investment.

Overall, I would say the stable political environment in Slovenia that is headed by a government that actively seeks Western investment should ensure our firm has a good foundation to build a successful business. However, it is important to remember Slovenia is a young country (15 years independent) and a change in political power could cause the political environment to become less stable. I believe our firms Senior Partners should take confidence in SloveniaЎЇs political environment and be encouraged by the huge political progress it has made in such a short period of time.

Economic Factors:

SloveniaЎЇs economy has enjoyed great success since independence was gained. This (according to Janez Jansa) has been a result of embracing liberal trade and rewarding enterprise by providing financial support for small business development. SloveniaЎЇs EU membership ensures free trade participation with fellow EU members and this has resulted in Slovenia recording a record GDP (2005) of U.S. $34 billion, up 3.9% from the previous year.

SloveniaЎЇs well managed education system has resulted in a highly knowledgeable and multi-skilled workforce. This is good news for our Senior Partners as less finance will be required on training and development as many workers will already possess the desired skills. Despite the continuous success SloveniaЎЇs economy has enjoyed, wages remain relatively low compared to fellow EU member states such as UK and France. This will further reduce costs for our Senior Partners as staffing expenses will be significantly less than their UK staffing costs.

The Slovenian government rates controlling inflation as one of its top priorities and has been good to its word by reducing inflation levels from over 200% in 1992 to just 3.6% in 2006. If the government can successfully control inflation then the cost of living for Slovenian workers will remain low and this will enable our Senior Partners to keep wages costs at a low and stable level.

In March 2004, Slovenia became the first transition country to graduate from borrower status to donor partner at the World Bank. Slovenia plans to adopt the Euro by 2007 and has met the EU's Maastricht criteria for inflation. Despite its economic success, Slovenia faces growing challenges. Much of the economy remains in state hands and foreign direct investment (FDI) in Slovenia is U.S. $19.62 billion, which is one of the lowest in the EU on a per capita basis.

However, our Senior Partners should be aware that over two-thirds of SloveniaЎЇs global trade is with EU member states. Slovenia must ensure it continues to build good relations within the EU as fall-outs would result in dramatic loss of trade