Term Papers on A HOLD IN THE CZECH REPUBLIC

Term Paper Title	A HOLD IN THE CZECH REPUBLIC
# of Words	2420
# of Pages (250 words per page double spaced)	9.68

A HOLD IN THE CZECH REPUBLIC

Table of Contents

Introduction.     p. 3
The Czech economy     p. 3
Euronova     p. 4
Brief profile of Euronova's retail store chains     p. 5
The Marketing Concept     p. 6
Conclusion     p. 8

Appendix I: Division of FDI in the Czech Republic     p. 10
References     p. 11
Introduction
Royal Ahold N.V. is one of the biggest players on the food and beverage retail markets as it owns or franchises about 3,200 supermarkets, hypermarkets, and discount stores in 17 countries. Royal Ahold (hereafter referred to as "Ahold") is a leading supermarket operator in the US (mainly on the East Coast under the BI-LO, Giant, Tops, and Stop & Shop names). It will grow even bigger in the US with its purchase of Giant Food Inc. (unrelated to its existing Giant stores). Ahold  also has liquor and confectionery stores, an institutional food supply company (GVA), and a majority share in a leading Dutch wholesale food distributor (Schuitema).

The holding company is rapidly expanding in Asia and Latin America. Besides in these countries, Ahold is recently also active in Central Europe and Russia. Since the economies in Central European countries have just become more open and freer, Ahold has seen a promising business opportunity over there. One of the countries in Central Europe to which Ahold has already expanded business activities is the Czech Republic. Nowadays, Euronova, Ahold's subsidiary in the Czech Republic that specializes in food retailing, is the largest foreign investor in this country. Since the Czech Republic has a merging economy, many competitors are looking for capturing the Czech market. The thesis statement that will be elaborated on in this paper is the following: In order to gain and maintain considerable market share Ahold's subsidiary Euronova has to develop and adopt a good marketing strategy.

Before analyzing the right marketing strategy for capturing the Czech market, an overview of the Czech economy and a profile of the four Euronova retail formulas will be given.

The Czech economy
On January 1st 1993, the former communist country Czechoslovakia was separated into the Czech Republic and Slovakia. Ever since, the government has stimulated cooperation with all other European countries both in economical and political ways. The Czech Republic possesses a strategic location right in the center of Europe with very good access to both established western and emerging eastern markets. It accommodates 10 million residents, and prospects for the future are that this number will hardly change, so the market potential is limited. The year 1997 was a year that ended the approximately three-year period of relatively dynamic growth of the Czech economy. This economic growth, however, was accompanied by certain economic imbalances. In the years 1994, 1995 and 1996 it was connected with a growth of domestic demand that exceeded growth of domestic supply. This disproportion resulted in a deficit of trade balance and deficit on the current account of the balance of payments. Accordingly, the Czech Republic is welcomes FDI and since the early 1990s it has been actively promoting inward foreign direct investment. International comparisons reveal that it has been among the most attractive countries for foreign direct investment in Central and Eastern Europe with the total of US$8 billion of FDI attracted from 1990 to September 1997. 'Data available suggest that foreign companies have been performing well in the Czech Republic. Many foreign-owned Czech companies have indicated to CzechInvest( ) their desire to expand their operations in the Czech Republic, to hire more staff and build new plants.'

Most foreign direct investment since 1990 has come from Germany, the Czech Republic's largest neighbor. The Netherlands and the USA ranked second and third followed by
Switzerland, France and Austria (see also Appendix I). The year of 1997 saw a growing interest among Asian companies to invest in the Czech Republic.

Euronova
Euronova began its operations in the Czech Republic in 1991 when the first MANA sup...

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