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Strategy Analysis for Bluebird Toys PLC Regarding the Collapse of Communism in Eastern Europe

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To: Mary Collis From: Jaskaren k Dhaliwal Title: Bluebird Toys Plc. Date: 19/02/02 1. Terms of reference This report will focus on the following: - * The major implications for businesses in Western Europe following the fall of the eastern European communist governments in 1989 and 1990. * The key implications for the future strategy of Bluebird Toys of the changes currently taking place in Europe. * A demographic, economic and cultural profile of a potential new East European entrant to the EU with an evaluation of the suitability of the selected country as a possible production location for Bluebird. * Provide an evaluation of the possible advantages and disadvantages to Bluebird toys of EU enlargement. 2. Introduction 2.1 Prior to 1998-99 Eastern Europe was a satellite of the former Soviet Union. It was a dependant of on the former Soviet Union. The government was non democratic. There was a lot of influence by media how the state was controlled. Soviet military power was used to over come and rebel against the communist governments as in Hungary 1956 and Czechoslovakia 1968. All assets were owned and controlled by state. People would have to work where the state ministries said also it would determine what would be produced. Any decisions that had to be made concerning resource allocation production, distribution pricing would state committees working towards five year make all national plans. Each sector of the economy had to meet targets set by government and each enterprise was expected to meet specified production targets. This would be measured mainly by the quantity produced rather than the quality. There were four main spreads of economies across the central and Eastern Europe: * 1917 Bolshevik revolutions * 1920 command economic system had evolved following philosophy of Karl Marx. ...read more.


4.2 Resources opportunites, overall resources are cheap in eastern and central Europe, assets are cheap. As result of privatisation production facilities and company assets, cheap raw materials mean low costs input for manufacturing firms like Bluebird toys Plc. So they would have to pay less to make products. Not only is material cost low but labour costs ate too in comparison to Western Europe. Car manufacturers e.g. Fiat, BMW, and Ford have all quoted low labour costs as one of a number of reasons for setting new investments in central Europe. Companies concerned with the labour concentrated production costs in areas like textiles, clothing and consumer electronics have also looked to central & locating new investments in central Europe. This is a low export base for them. The following are major factors that determine demand for a product in a particular country is: - * Present income levels or PDI (personal disposable income) * GDP per head figures (Gross domestic product) * Population figures * Estimates for growth in each 4.3 There can be certain obstacles in the way of foreign investment: such as a war in the country this could slow down any production output. Bureaucracy this could lead to bad communication, delays in permission to expand e.g. new buildings etc.also employing people could be difficult. Widespread environmental pollution. Also inflation could be problem unemployment are economic problems which have repercussions for a large number of individuals and organisations. When unemployment is high the population as a whole will spend less because it has less money to spend. Therefore this affects industries and organisations. All countries do not meet EU standards on urban waste, drinking water, toxic substances released into seas and rivers. ...read more.


Any change in incomes will affect the types of goods and services. Any change in incomes will affect the types of goods and services they buy. * The relative price of substitutes products, where the purchase may be viewed as better value for money. * The size of the population * Consumer tastes, fashions, and habits * Government measures influencing consumer behaviour. Social factors- is population demographics, Income distribution, and levels of education, social trends, and degree of consumer awareness. Legal factors- there is a lot of legislation involving international business some of theses are Health and safety, consumer protection, Employment practises, Environmental legislation, Patents &trademarks. Technological Factors- there could be problems workforce getting to grips with new machinery, production methods, speed of technological transfer degree to which country is keeping up with new technological developments. 7. An Evaluation of the advantages & disadvantages for UK business of EU enlargement * The combination of the central and Eastern European countries with the rest of Europe will encourage democracy and strength throughout the continent. * It is said that larger European union will have more powerful say in world affairs. * With its appearance as an important economic and power, the European Union is progressively more called upon to act as an intermediary and stabilising force in world contact. * Enlargement in the east would lead to an increase of 30% in the population and an adding together of 100 million potential consumers within the single market. * UK companies will benefit a great deal from access to the largest single market and investment in the world. * Flexible labour markets are larger and diverse. * Also increase in trade will speed up the economic development of the transition economic development of the transition states. * Economic development will increase the purchasing of the new member states creating demand for EU goods and services. * ...read more.

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