Free Albania: A Critical Analysis Essay Example

Type of paper: Essay

Topic: Europe, Business, Food, Aliens, Marketing, Company, Economics, Politics

Pages: 5

Words: 1375

Published: 2020/10/14

INTRODUCTION: ABOUT ALBANIA

Albania is a country that is situated in Eastern Europe. It has a relatively small land mass, and a population of approximately 3 million people. The official language of the region is Albanian, a language that shares Slavic roots with other languages in the area, like Russian and Polish. Albania is a member of a number of important trade and social unions, including the United Nations; it also has membership in NATO, the Organization for Security and Cooperation in Europe, the World Trade Organization (WTO), and the Council of Europe. Although not currently a member of the European Union, it is under consideration for membership. This consideration for membership into the European Union is very important for the context of discussion here—the discussion in this particular paper will center on the entrance of a fast food franchise, Global Food Inc., into the Albanian market. If Albania does manage to integrate into the European Union, then the analysis associated with this particular country could change as well—entrance into the European Union has a number of benefits for emerging economies like Albania’s.
Albania was part of the Eastern Bloc for a very long time, meaning that it has a past that is closely associated with the now-defunct Soviet Russia and the socialist cultural tradition. However, the country has been a republic since 1991, and has made attempts to grow its economy quite steadily since then. Today, the GDP of Albania is $32.259 billion USD. (CIA.gov, 2015). Despite the growing economy, however, there are still challenges that Global Foods Inc. will face when trying to integrate into the Albanian market. Czinkota et al. (1997) write, “In the emerging democracies of Central Europe and the new countries of the former Soviet Union, the economic, social and political dimensions differ in major ways from the environment Western marketers are used to at home. In light of the transitions taking place, marketers should sense an obligation to help restructure society and improve the standard of living in this region” (Czinkota et al, 1997). The long-term history of communist and socialist politics has had a significant impact on the region.

MACROECONOMIC ANALYSIS

Albania has experienced significant growth since it restructured its government in 1991. Today, the GDP for the country is approximately $32.259 billion USD, with the per capita GDP approximately $11,700. While not quite at the level of most of the countries in Western Europe, the GDP for Albania continues to grow each year at the general rate of an emerging economy. The benefits of entering an emerging economy like the one in Albania are not to be considered lightly; if a company like Global Foods Inc. can establish a foothold within the economy before it fully develops, it could experience significant growth over time. Salter (2006) writes, “Workers, not products, were the heroes of the communist economy. Therefore, new state-owned products were introduced to accommodate employment needs, and were not the result of product competition or consumer demand. Brands existed, but they operated on a purely functional level, serving merely as product identifiers. There was no need to build equity in brands because consumers were basing their purchase decision on two things: affordability and availability. The emotional connection and loyalty to brands that influence purchases in the West simply did not exist. The purchase decision was reduced to pragmatism” (Salter, 2006). In short, the companies that are interested in integrating into post-Soviet countries like Albania have significant re-framing to do in terms of their marketing strategies, particularly in countries with strong socialist traditions.

PESTLE ANALYSIS

Political Issues
There are a plethora of issues that plague the company that is trying to establish foundations in Eastern Europe as a whole, let alone a country that has been a republic for such a short time like Albania. Albania is part of the former Eastern Bloc and as a result, still retains some of its old political ties to socialism and communism. Czinkota et al. (1997) suggest that: “The economic region of Central and Eastern Europe is characterized by growing differences between countries with regard to their political, economic, legal, and institutional conditions marketing strategies have to be tailored to the specific requirements of each country market. Yet there are commonalities in the areas of market selection, and marketing mix development which can be of use to firms desiring to enter these markets and to researchers who wish to pursue further work in this field” (Czinkota et al., 1997). Political issues that a company in Albania may face are not limited to holdouts from the Soviet era, however; there is still corruption at high levels of politics in Albanian society.
Politically, it is important for companies to develop relationships with other businesses in the area, which can be difficult—Czinkota et al. (1997) suggest that there may be some political preference for companies that are based in other Eastern European countries. This may also be another throwback to Soviet-era politics within Albanian society and economy (Czinkota et al., 1997).

Economic Issues

In terms of economics, Albania has still not recovered entirely from the 2008 economic crisis that shook the United States and the world at large (Growing Forward, 2012). Most models suggest that within time, the economy of Albania will recover and become significant within the context of Eastern Europe as a whole, but there is significant recovery to be done before this can happen (Growing Forward, 2012). In addition, economically, it is still easier for Eastern European companies to integrate into Albanian society. Liddle (2012) writes, “I think it’s long been possible to succeed in Eastern Europe with a franchised model, with [multi-concept franchisee] AmRest in Poland probably the key example of that. But I would also say there has been a significant acceleration in franchising activity across the region over the last five years, above all in Russia, where the success of franchised concepts has encouraged still more new entrants. While obviously a primarily company-owned strategy can work, as it can anywhere, I’d say there is now much more of a critical mass of capable partners in the region than was the case, say, five years ago” (Liddle, 2012). The traditional model of franchising is not as effective in places like Albania, and must therefore be redesigned in a more effective and efficient manner.
The current GDP of Albania is relatively small in comparison to other countries in Europe, although it has demonstrated significant levels of recovery from the 2008 economic crisis, unlike some of the other countries in the region, notably Greece (Growing Forward, 2012). This recovery sets the stage for international marketing integration into the Albanian economy, even if changes have to be made to marketing strategy (Growing Forward, 2012).

Social Issues

It is important to remember that although Albania is discussed within the social context of being a “former Soviet Bloc” country, many of the young people in the country do not remember being part of the Soviet Bloc, nor do they identify with that particular identity. Salter (2006) writes, “For many Eastern Europeans, the transformation from communism to consumerism is so complete that the days of buying Levi’s on the black market are a foggy remembrance. Yet the absence of global brand consultancies suggests that some marketers are struggling to see past the past. It’s understandable that investors would be cautious of the radical changes in the region, but it helps to remember that at the same time governments were changing in Eastern Europe, households were also changing in the West with the introduction of the Internet As with any change, there are those who are skeptical of it, and those who embrace it. In Eastern Europe, a whole new generation of consumers is demanding brands that can speak to them on a personal level—a generation that never stood in a bread line and never experienced life without trademarks” (Salter, 2006). Understanding that Albania is a country currently in transition—transition from one generation to a very different one, most notably—is important for any business that is looking to integrate into the country (Salter, 2006).
However, there are some issues that need to be taken into account when marketing to Albanians-- there are still vastly different ideas on social class and gender roles within the Albanian society that are not present in western society. These differences can be problematic for those who are interested in marketing to the Albanian people (Salter, 2006).

Technological Issues

As previously discussed, there are not many young people in Albania who remember being a part of the Soviet Bloc; if they do, it is a very distant memory. Kearny (2010) suggests, “Food availability has also increased as a consequence of rising income levels and falling food prices. This has resulted in considerable changes in food consumption over the past 50 years” (Kearny, 2010). This new food availability, coupled with increased technology, Internet access, and higher levels of education among the young has led to an increasingly westernized and more technologically advanced nation overall (Kearny, 2010). What has not necessarily changed within Albanian culture is the reliance on traditional forms of business structure; the franchise system, for instance, remains a system that is not heavily utilized in Albania like it is in other places around Europe (Growing Forward, 2012).

Legal Issues

Businesses in Albania do face some issues with corruption within the ranks of government, and there are both de jure and de facto legal rules that companies need to be aware of when they are trying to integrate into Albanian society (Czinkota et al., 1997). Czinkota et al. (1997) suggest, “Both companies and researchers should investigate the extent to which pre-existing business practices in the East can be of value in furthering the marketing concept. For example, the development and maintenance of close, personal relationships are of major importance in the region Some might even go so far as to claim that the socialist tradition of primacy of society over the individual is increasingly permeating the ‘capitalist economies’” (Czinkota et al., 1997). Albania is relatively open to the establishment of western business, although they do require that some businesses utilize state-owned third parties for distribution and other facets of the business cycle (Czinkota et al., 1997).

Environmental Issues

Many of the ideals of the west have not permeated through Albanian society yet, and one of those ideals that has not quite become commonplace is the issue of environmental consciousness (Czinkota et al., 1997). As a result, Czinkota et al. (1997) write, “Conservation and recycling are much more ingrained in the minds of customers in the former centrally planned economies than in the West - albeit for reasons of shortage and not because of environmental awareness” (Czinkota et al., 1997). This lack of consciousness means that companies operating within Albanian space do not have to have the same rules and regulations they would have to have to be considered environmentally conscious in the west; however, the lack of rules and regulations mean that a company must establish their own rules and regulations regarding environmental issues (Czinkota et al., 1997). It should also be noted that Albania is geographically a very small nation, which means that it has very different requirements insofar as space is concerned. The company must be careful not to oversaturate the market due to the small size of the country,

NATIONAL CULTURE

Halal products—or those products that are acceptable for Muslims to eat and drink—are going to be a growing market in Albania due to the large number of Muslims living within the country. Almost 60% of the country is considered Muslim, and therefore the lure of Halal products, particularly fast food Halal products, is very strong (CIA.gov, 2015). Interestingly, the CIA (2015) notes that demographics on Albania cannot necessarily be trusted, as the Albanian government is known to manipulate the numbers to made Albania appear more homogeneous than it actually is, noting that there are certainly more than the three official minority groups that the Albanian government claims (CIA.gov, 2015).
The national culture of Albania, however, can be considered majority Muslim, and it is for this reason that any company integrating into Albanian society should consider Halal food as a priority. Providing this type of food and working into this niche could easily provide a foothold for a fast food company like the one under discussion here. Albania is much more traditional than many places, and holds its Islamic traditions in high regards.

POSSIBLE ENTRY METHODS

There are not as many barriers to entry for foreign companies looking to move into Albania than there have been in the past Kilsgård et al., 2008) One of the reasons for this lowered barrier for entry is the fact that Albania is still recovering, by and large, from an economic crisis that was quite severe, and a reaction to the economic crisis that struck the United States and Western Europe in 2008 and onward (Kilsgård et al., 2008). Experts suggest that: “Companies may sometimes consider it impossible or maybe just undesirable to export from domestic production to a foreign market. There are several advantages to produce in foreign markets among others the production costs are lower and also the fact that the company is closer to the foreign customer. Being closer to the customers gives the company a better understanding of the culture and customers needs, like product design or delivery” (Kilsgård et al., 2008). To enter into the Albanian market is to understand the need and the niche that must be filled; most notably, the niche that must be filled is the need for fast food that fulfills Halal requirements, as most of the country practices Islam with various levels of intensity (Kilsgård et al., 2008). Possible entry methods may include establishing a tradition of Halal food service, as well as a number of other targeted programs that help establish the business within the Muslim Albanian population (Kilsgård et al., 2008).

NATIONAL CULTURE AND MARKETING STRATEGY

The marketing strategy in Albania is clear: businesses must utilize the current cultural paradigms to be successful in the environment overall. Mueller (1995) writes, “Both public and private policy makers in these East European countries have a clear line of action which must focus on maintenance of these positive characteristics They do depend on a developed and integrated distribution system and it may be that education, training, and investment in these areas are the key to progress and any success in reducing buyers’ reliance on imports. Moreover, those Western companies pursuing a policy of active participation in reconstructing food distribution operations are the ones likely to reap a long-term return as domestic products improve and compete effectively with foreign sources” (Mueller, 1995). In addition, it should be noted that much of Albania still adheres to very traditional gender roles; when marketing products to this particular culture, sensitivity to religion as well as sensitivity towards cultural norms is fundamentally important (Kilsgård et al., 2008).

POTENTIAL INFLUENCES OF CULTURE ON PRODUCT LINES

Albanian consumers may not react to products in the same way that their western counterparts do, primarily due to the fact that they do not have the same history or tradition insofar as these types of food places are concerned (Kilsgård et al., 2008). For instance, the Foodservice Profile of Central and Eastern Europe (2012) suggests, “Central and Eastern European consumers have a strong preference for cafés/bars. They have shown a taste for specialty coffee of good quality but are not yet ready to pay high level prices. The fast food subsector is not as developed as it is in North America, representing 25% of the market, as compared to 42%. However, it is expected that the region’s economic recovery will result in more investment in the fast food subsector” (Growing Forward, 2012). For the business that is interested in integrating into this environment, that means that there should be careful consideration done before a business is designed to fit into the Albanian society. Fast food restaurants that are incredibly successful in the west may not have the same kind of draw for Albanians and other Eastern Europeans; this is because the culture prefers places where the customer can sit, eat, and talk (Kilsgård et al., 2008).

CONCLUSION

Remaining aware of the cultural differences that exist for Albanians and western Europeans is very important for businesses, as these businesses may become entrapped in social and cultural misunderstandings that lead them away from a profitable existence in a place like Albania. Successful integration into the Albanian economy relies heavily on the cultural understanding that these businesses demonstrate throughout the business or restaurant establishment process in Albania as a whole (Kilsgård et al., 2008).

REFERENCES

Baron, P. and Mueller, R. (1995). Consumer perceptions in Eastern European food markets. British Food Journal, 97(2), pp.34-38.
Cia.gov, (2015). The World Factbook. [online] Available at: https://www.cia.gov/library/publications/the-world-factbook/ [Accessed 23 Jan. 2015].
Competitiveness of the European Food Industry. (2006). The Hague: European Commission.
Czinkota, M., Gaisbauer, H. and Springer, R. (1997). A perspective of marketing in central and Eastern Europe. The International Executive, 39(6), pp.831-848.
Dibb, S., Simkin, L., Pride, W.M., and Ferrell, O.C., (2012), Marketing Concepts & Strategies, (6th Edition), Cengage Learning
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Ferrell, O.C., and Hartline, M.D., (2014), Marketing Strategy Text and Cases, South Western Cengage Learning 
Growing Forward, (2012). Foodservice Profile Central and Eastern Europe. Agriculture and Agri-Food Canada.
Hooley, G., Piercy, N.F., and Nicoulaud, B., (2012), Marketing Strategy & Competitive Positioning, (5th Edition), FT Prentice Hall
Hollensen, S., (2012), Essentials of Global Marketing, Pearson
Hult, G.T.M., Pride, W.M., and Ferrell, O.C., (2013), Marketing Foundations, Cengage Learning
Jonscher, C. and Summerfield, A. (1994). Prospects for Western Food Companies in Central and Eastern Europe. British Food Journal, 96(1), pp.4-9.
Kearney, J. (2010). Food consumption trends and drivers. Philosophical Transactions of the Royal Society B: Biological Sciences, 365(1554), pp.2793-2807.
Kilsgård, D., Nero, M. and Sundin, E. (2008). Cultural differences when entering a new market .Kristianstad University.
Lee, K., and Carter, S., (2012), Global Marketing Management, (3rd Edition); OxfordMcDaniel, C., Lamb, C.W., and Hair, J.F., (2013), Introduction to Marketing,( International Edition), Cengage Learning
Liddle, A. (2012). Shedding light on the Eastern European restaurant market | Partners content from Nation's Restaurant News. [online] Nrn.com. Available at: http://nrn.com/partners/shedding-light-eastern-european-restaurant-market [Accessed 23 Jan. 2015].
Palmer, R., Cockton, J., and Cooper, G., (2007), Managing Marketing, Butterworth Heinemann.
PricewaterhouseCoopers, (2009). Glimmers amid the gloom: The outlook for the retail and consumer products sector in emerging markets.
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Sustar, B. (2004). Characteristics of the Product Standardization/Adaptation in the International Environment. The Marketing Review, 4(1), pp.47-71.
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The McKinsey Global Institute, (2013). A new dawn: Reigniting growth in Central and Eastern Europe.

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