August
2009
Market Opportunities for NIRAS
in Poland Within Environmental
Services Field
Agnieszka Cieśla
Master’s Dissertation
International Business Economics
International Business Economics, 10th Semester
Aalborg University
IBE 10th semester, 2008
The Project Topic:
Market Opportunities for NIRAS in Poland Within Environmental Services Field
The project timeframe:
25.02.2009-25.08.2009
Supervisor:
Arnim Decker
Author:
Agnieszka Cieśla
-----------------------
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International Business Economics, 10th Semester
Table of Contents
1.
Introduction ..................................................................................................................... 5
2.
Problem formulation ....................................................................................................... 6
3.
Research design ............................................................................................................... 7
4.
Methodology ................................................................................................................... 9
4.1.
Theoretical view on the systems approach ................................................................ 10
4.2.
View on the company reality ..................................................................................... 14
4.3.
Data collection ........................................................................................................... 16
4.4.
Limitations of the research ........................................................................................ 17
5.
Presentation of the company ......................................................................................... 18
5.1.
Services ...................................................................................................................... 19
5.2.
Plans for growth......................................................................................................... 21
6.
Internationalization of the firm ..................................................................................... 22
6.1.
Current NIRAS’ position ........................................................................................... 24
6.2.
Internal internationalization factors ........................................................................... 24
6.2.1.
Implementation of international business competences ........................................ 27
6.2.2.
Market oriented company ...................................................................................... 28
6.2.3.
Conclusions ............................................................................................................ 31
6.3.
External internationalization factors-analysis of the business environment ............. 31
6.3.1.
Cultural Environment............................................................................................. 33
6.3.2.
Theoretical perspective on culture ......................................................................... 34
6.3.3.
Applying theory into a real business environment ................................................ 38
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6.3.4.
6.4.
Conclusions ............................................................................................................ 43
Legal forces ............................................................................................................... 44
6.4.1.
The sources of the environmental law in Poland ................................................... 44
6.4.2.
Potential partners for NIRAS from the public sector............................................. 45
6.4.3.
European Union ..................................................................................................... 48
6.4.4.
Funds for the implementation of environmental policy ......................................... 49
6.4.5.
Conclusions ............................................................................................................ 50
7.
Public Private Partnership (PPP) theory........................................................................ 50
7.1.
Organization of PPP .................................................................................................. 51
7.2.
NIRAS involvement in a PPP project in Poland ....................................................... 53
7.2.1.
Public tenders ......................................................................................................... 54
7.3.
Conclusions ............................................................................................................ 54
8.
Recommendations ......................................................................................................... 54
9.
Final conclusions ........................................................................................................... 58
10.
References ..................................................................................................................... 60
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International Business Economics, 10th Semester
1. Introduction
There are numerous incentives behind the internationalization process. One of the most
frequent motives is to gain access to new and larger markets in order to achieve growth. Firms
expand the market for their products by exporting or creating subsidiaries or joint ventures
abroad. Many firms go abroad to have access to new know-how and technology in order to
remain competitive. This indicates that various internationalization processes are undertaken
by firms to achieve different strategic goals. Globalization of the world brings new
opportunities as well as enormous complexity of the business decision makers. In Europe
companies operate in environment affected by diverse national cultures and institutional
influence of European Union. With the increase of international business ventures numerous
researches appeared trying to classify issues faced by international entrepreneurs and state
what factors would increase the international success. NIRAS’ objective is to expand its offer
in Poland and provide the environmental services there. The company has already a
subsidiary established in Poland within construction field and now wants to introduce other
offerings there within environmental technologies field. This is a challenging task because in
Poland which is a new European Union member and a post-communist country the
environmental field was neglected for many years. There is very short tradition of introducing
environmental technologies and sometimes there is lack of suitable legislations. On the other
hand, such situation can be an interesting and beneficial venture for NIRAS as it can bring its
experience, capacity and know-how to the Polish market and take advantage of the arising
environmental technologies sector as one of first players from the private sector. In order to
undertake this challenge NIRAS has to prepare carefully and search for arising opportunities
to offer their service. To identify properly such opportunities the company has to develop
certain internal competences and analyze external factors, which will allow to enter the Polish
market. In the environmental technologies sector it is important to know the legislations
concerning the issue as well as public organizations dealing with environmental management
and protection. It is also significant to get familiar with the business culture of the target
market, which will simplify the business relationships. Furthermore, the company has to
improve its market orientation in order to be more competitive and react better for the arising
market opportunities.
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International Business Economics, 10th Semester
This project will attempt to analyze the opportunities for NIRAS in Poland within
environmental services field and its outcome will be a strategy for entering this market. The
project will consist of two areas- theoretical and empirical. Theoretical part will serve as a
guidelines towards the empirical part. Deductive way of generating knowledge will be
adapted and the project will follow the assumptions of the systems approach, where a
company is perceived as an open system contingent to the environment.
2. Problem formulation
Obtaining an access to the foreign market is an objective for numerous companies nowadays.
It is especially evident for firms in Denmark where the home market is relatively small. An
increasing speed of competition and the globalisation of various industries put an enormous
pressure on companies to adopt global strategies1. Obtaining an access to the foreign
countries' markets is an objective for many managers. They have to internationalise in order
to gain adequate level of profits, in some cases, it is the only way to secure their existence on
the market and preserve a long-term profitability. An individual business cannot longer
compete as a separate entity, but rather as a coordinated network of interrelated foreign units.
In the new business economy, companies’ competitive position and level of their performance
depend on their management ability of to manage the international network of business
relationships. A company approaching the foreign market will find itself in a completely new
circumstances and reality. Every country has its specific culture and business environment. To
learn what are the market opportunities in a given country it is necessary to get familiar with
the complex business environment which includes the culture, economy, legislations and
other important factors. Apart from external issues influencing the internationalization
process, there is a set of internal characteristics that the company has to obtain in order to
succeed in a foreign market.
NIRAS offers a wide array of consultancy services. It has customers in both-public and
private sector. It has already established construction department in Poland which has
successfully operated for several years and now the company plans to enter Poland with
environmental consultancy services. In Denmark the environmental division serves mostly the
public sector. Its services depend considerably on national and international legislations and
1
Riusala, K., Suutari, V. (2004), p.743
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International Business Economics, 10th Semester
regulations. Similar situation is expected in Poland. The first steps of Polish environmental
division will be within the public sector, thus it is necessary to investigate the legal
environment there and get familiar with the natural environment protection and management
organization which is extremely important for NIRAS performance in Poland. In order to
generate the strategic knowledge which will facilitate NIRAS’ trouble-free action in a new
market it is necessary to investigate its conditions and determinants.
Consequently, considering the discussed assumption the project problem formulation will be
as follow:
What are the NIRAS’ market opportunities in Poland within environmental consultancy
services area?
The project will address also the following issues:
What are the conditions of successful internationalization of a firm?
How can NIRAS undertake an environmental project in the Polish public sector?
The research will be directed in a way which enable to investigate the market opportunities, to
get familiar with the natural environment organization and management in Poland and will be
concluded with a set of guidelines for NIRAS helping the company to undertake first steps in
Poland within the environmental consulting service. The project will also tackle the question
of internationalization of a firm in correspondence to NIRAS’ case and address the problem
of internal company’s characteristics necessary .for international success.
3. Research design
In the following section the structure of the project will be presented and explained. The
structure of the project is determined by the deductive way of reasoning. The aim of the
project is to answer the questions stated in the problem formulation and to provide the
guidelines for NIRAS concerning its market opportunities in Poland within the environmental
services area. The project will consist of theoretical and empirical part and will be presented
from the systems approach perspective. Theory will serve as an explanation of the observed
regularities and they will guide the collection of empirical evidence and will be sourced from
the available contemporary background literature. The analysis of theory and conducted
empirical study combined intend to generate legitimate knowledge concerning the issue of
research. Nevertheless, the obtained knowledge will be limited by some factors described in
the “Limitation of the research” section. The research will be conducted according the
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International Business Economics, 10th Semester
deductive method. The researcher, on the basis of what is known about the particular domain
and of theoretical considerations in relation to this domain, deduces knowledge which is
subjected to empirical study. Theoretical hypothesis will be translated into operational terms.
The data will be collected in relation to the concepts that make up the theory. Theory and
hypothesis come first and they drive the process of data gathering.2 The theoretical
background will be constituted by some definitions and considerations relevant to the research
scope. First of all, the literature review concerning internationalization of a firm will be
presented as it is important for the research question to present how the scholars perceive the
internationalization process. Then, some more particular aspects of the internationalization
concerning the NIRAS case will be presented. First, it will be discussed what internal
competences a company needs in order to successfully approach foreign markets and how to
improve the company’s market orientation. These issues will be followed with an elaboration
of external business environment, then the two questions will be related to each other. Having
created a theoretical platform for international market opportunities for NIRAS, the theory of
Public-Private-Partnership (PPP) will be depicted in reference to the company entering the
Polish market of environmental consulting service. Then it will be suggested how practically
NIRAS can approach and benefit from the PPP project in Poland. The theoretical platform
will be complemented with the Geert Hofstede theory of cultural dimensions. The theory will
help to understand social environment in a foreign market and provide the knowledge about
cultural differences between Danish and Polish business cultures and their possible
repercussions for business cooperation between these two countries. Even if the Hofstede
theory is relatively old, it has been chosen due to the fact that it is widely recognized and
approved by scholars and gives a valuable picture of cultural differences and characteristics.
All the theoretical considerations will be utilized empirically in favor of the company market
opportunities investigation in Poland. The research will be completed with strategic
guidelines concluding the project outcomes and giving suggestions for exploiting the market
opportunities for NIRAS in Poland within the environmental services field.
2
Bryman A, Bell E. (2007), pp. 11-13
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International Business Economics, 10th Semester
Figure 1: Research design
Source: Own Creation
4. Methodology
This section will present the systems approach under which the project will be elaborated. The
analytical and actors approach will not be presented in detail as they are irrelevant for the
project contents. The system approach is applied as it provides broader understanding of
NIRAS opportunities in Polish business environment. However, some elements of actors
approach cannot be eliminated due to the researcher’s subjective point of view on the scope of
research. The choice of the methodological approach has been made upon the fact that the
systems approach plays a dominant role in the study of both, business practice and business
theory and is relevant to the problem addressed in the project.
Searching for the market opportunities for NIRAS in Poland can be viewed as an analysis of a
particular system, its elements and environment. The internationalization process takes place
in an international environment. The company is one of many elements of the system and can
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International Business Economics, 10th Semester
be perceived through a set of elements connected to and influencing each other. The activities
of the company and its internationalization process are embedded in a certain system and can
be observed through this system’s components, relations and links. There are internal and
external factors influencing the company internationalization, both of them are connected to
each other and to the environment as well, creating a unique system. Investigating NIRAS’
market opportunities can be performed as investigating the given system possible synergies.
Internationalization of the company, through a system’s thinking point of view, is a process
which involves coordination from many parts of complex organization and is highly
influenced by external factors such as demand, size of foreign market, global competition, and
the nature and relationships the industry the company is operating in. Once knowledge about
international market is acquired, transformed and transmitted and the resource base is defined,
company internationalizes at a certain speed, committing resources outside domestic markets.
The development of the company on the international markets is influenced by the
relationships between companies including personal networks3. Internationalization of the
company has an impact on its structure, as the company grows. The CEO is no longer
associated to the headquarters, but has to divide attention between all outlets. The local
managers gain new roles and more responsibility in maintaining the local outlets.
4.1.
Theoretical view on the systems approach
One of the theoretical origins of the system approach is the “general systems theory”, which is
based on Bertalanffy’s “holistic theory of life and nature”4. A system is a whole formed from
the continual interaction of its components, which operates toward a common purpose.
Examples of systems include companies, biological organisms, communities and atomic
structures5. Within any systems, there are few or more interactions or feedbacks between
system’s components. For instance, component X can affect Y, and Y in turn affects X
through multiple cause and effect chains of interaction. In a system the cause and the effect
can be far away in a time and space. The effect might not be visible until days, weeks even
years later. The long-term effects might be either positive or harmful. The ability to connect
cause and effect results in a good decision-making6. Interconnecting parts of the system
function as a whole. Adding additional pieces or taking away pieces can make changes.
3
Blomstermo A., Sharma, D. D. (2003), p. 41
Arbnor I., Bjerke B. (1997) p. 30
5
Senge P. (1990) p. 90
6
O’Connor J., McDermott I. (1997) p. xvii
4
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International Business Economics, 10th Semester
Cutting a system in half does not result in the existence of two smaller systems, but causes a
damaged system, which will probably not function. The arrangement of the pieces is crucial
and the behavior of the system is dependent on its structure. Changes in the system structure
cause the changes in behavior7.
According to Arbnor and Bjerke, a system is “a set of components and the relations among
them”8. In the systems approach, the components refer to all the factors within a specific
system and the relations refer to the internal collections within the boundary of the specific
system. As to the relation outside of a system, Arbnor and Bjerke call it “system
environment” and define it as “the factors that are important to the system to consider but are
beyond its control”9. One feature of the systems is that layers of systems create them. In other
words, every component in a system can be a sub-system of its own. Any system can be
distinguished as an open system or a closed system. The former category includes systems
that have connections to their environment while the latter category includes systems that
have no connections to their environment. Business theory is usually focused on open
systems10.
According to Arbnor and Bjerke, there are four different types of systems models, as shown
on figure 2. The first type is “the mechanical systems model”. These types of systems are
closed and static, only internal relations are relevant. The second type is “the biological
systems model”. Systems of this type are open, which stipulates that the environment-system
relations are important. The third type is “the self-organizing systems model”. Systems in this
type are perceived as open and learning systems and have the ability to organize their
structures according to the new environment. The last type is “the value-laden systems
model”. This type of systems can be regarded as the third type. The system has its culture in
addition to this. Here, the culture is regarded as a set of basic values developed in a
company.11 The first two systems models can be viewed from a structural perspective, where
the emphasis is put on static structures and regulations. The last two system models can be
viewed from a procession perspective, where the focus is put on dynamic structures and nonregulative processes. A key word within this perspective is the learning organization, i.e. the
company.
Figure 2: Four systems models
O’Connor J., McDermott I. (1997), p.3
Arbnor I., Bjerke B. (1997), p. 111
9
Arbnor I., Bjerke B.,(1997), p. 112
10
Arbnor I., Bjerke B. (1997), 112
11
Arbnor I., Bjerke B. (1997), p. 122-125
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1. The mechanical systems model
2. The biological systems model
3. The self-organizing systems model
4. The value-laden systems model
Source: Arbnor I. & Bjerke B., p. 125
The core part of this project will be a discussion evolving around an open, dynamic system in
a complex reality. The system will be considered together with its culture which is a kind of
filter through which various conceptions and goals are classified. The system will be
presented not only as an open, learning and structurally changing entity but will involve the
ability and the interest of the individuals to participate in learning and in changing of
structures.
Conception of reality Conception of reality in systems approach, unlike that in analytical
approach, cannot be understood as a “sum up” of the entire components. Instead, it focuses on
the relations within a system, i.e. the synergistic effects brought out by the constitution of the
components. The whole is more than the sum of its parts. In a word, the reality in the systems
approach refers to an objective (or objectively accessible) reality, consisting of wholes, the
outstanding characteristics of which are synergies.12 According to Arbnor and Bjerke’s
conception of reality within the systems approach, the reality can be viewed in two ways, i.e.
the objective point of view and the pragmatic point of view. The objective point of view states
12
Arbnor I., Bjerke B. (1997), p. 70
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International Business Economics, 10th Semester
that the reality consists of concrete systems and sub-systems that can be observed objectively.
The pragmatic point of view states that it is not important whether the reality consists of
systems or not, the focus is laid on the explanation capability that systems has when
explaining the reality.
Conception of Science Conception of science is related to the perception of knowledge.
Knowledge in this approach depends on systems13 and it is more likely to be systemsdependent, which means it may differ from system to system. Therefore, knowledge
developed by the systems approach cannot be understood as general knowledge like it is in
the analytical approach14. According to Arbnor and Bjerke, the conception of sciences within
this approach is inspired from both natural sciences, where the emphasis is put on objective
relations, and the social sciences, where creation of knowledge and the hermeneutic learning
process is highlighted.
Scientific ideal Scientific ideal in systems approach states that the purpose is to provide a
better understanding of systems in business reality15. The level of ambition in this approach is
to diagnose system problem through systems analysis, e.g. positive or negative synergy, on
the basis of describing and explaining systems.
Ethical and aesthetical aspect The ethical and aesthetical aspect is highlighted in creating
knowledge through this approach. This is due to the importance of systems` interdependent
relationships inside and between companies as well as their surroundings.16
Criticisms of the Systems Approach A general criticism of the system approach is that it is
too abstract to view and understand reality properly. The perception of system thinking relies
on business’ relations, but lacks explanation in real life context. This means, that the system
approach is not suitable for research in all spheres, but can be better utilized in the research
areas where a system is often viewed as an explanation metaphor due to its strong explanation
capability.
Another criticism of the system approach is its lack of focus on the individuals, because it
considers the individuals and their subjectivity to be less valuable. Instead, it focuses on the
relations between the parts, which benefit the whole. In some cases the system approach is
considered to be insufficient because it lacks focus on individuals.
13
Arbnor I., Bjerke B. (1997), p. 52
Arbnor I., Bjerke B. (1997), p. 70
15
Arbnor I., Bjerke B. (1997), p. 146
16
Arbnor I., Bjerke B. (1997), p.146
14
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International Business Economics, 10th Semester
4.2.
View on the company reality
NIRAS as an international company can be perceived as a system which should give positive
synergy effect to its participating members and stakeholders. The goal of the system is to
make profit from the local and international business operations in order to maintain and
develop the organization activities on the international markets. The considered system
involves NIRAS positioned in a new environment, among new stakeholders. The system’s
goal is to utilize the opportunities arising within this environment. The goal for the project is
to identify market opportunities for NIRAS on the Polish market and design
internationalization strategy. Thus, the methodological goal according to deductive way of
research is to analyze the relevant theories and then derive from the research guidelines for
NIRAS.
NIRAS can be viewed as a social system which is creative, can provide meaning for their
members and has free will. Such system can determine its behavior and can grow
quantitatively and qualitatively. The picture below presents NIRAS in a perspective of the
systems approach. The company is a part of the system and has relations with other parts of
the system, other systems and with the environment as well. In this project NIRAS will be
approached from the system point o view and analyzed in the light of its connections and the
system possible synergies.
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International Business Economics, 10th Semester
Figure 3: The system model
INTERNATIONAL MARKET
Natural
environme
nt
POLISH MARKET
Polish
environmental
organizations
Global
community
Polish reality
and culture
NIRAS
NIRAS
Polska
EU
Source: Own creation
EXPLANATION OF PARADIGM
The following master thesis will be analyzed under the functionalistic paradigm since it is
laying out a pragmatic and objectivistic view on the how the reality should be perceived. The
functionalistic paradigm is fundamentally built on realism, determinism and the existence of
common valid laws.17 The system will be analyzed through the pragmatic paradigm. The
pragmatic system approach stipulates that the value of knowledge should be equal to the
17
Burrell, G., Morgan, G. (1979), pp. 25-26
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International Business Economics, 10th Semester
knowledge in practical use.18 Pragmatism believes that knowledge should be put into practical
use and that theories work in the real world when implemented in a company and put into
practice. In addition to this, a pragmatic seeks to find possible solutions to the problems. The
functionalistic paradigm attempts to explain the root of the problem through ideals of natural
sciences. The collective actions are explained through their functions within the social context
where they appear. The single parts are explained as a function of the whole system and are
analyzed in the context of their contribution to the whole system. Additionally, the pragmatic
approach is used. The project attempts to objectively investigate the relations between the
single parts within the company and the synergy effect that the whole system contributes to.
4.3.
Data collection
The data collected for the project purpose will be of primary and secondary character. The
primary data will include interviews conducted in the company with the two of managers of
the environment division and with a certain number of employees. The data collected in that
way embrace the company concerns for growth, plans for entering Polish market, the
expected opportunities and obstacles there, potential services that the company wants to offer
in that market, the relationships between NIRAS headquarters in Denmark and the
construction department in Poland and the possible cooperation of the two for introduction of
the environmental services in Poland. Also among the primary data are information about the
current position of NIRAS on the international markets, its plan for future internationalization
and development as well as scenarios for achieving the goals appointed. The primary data are
used for assessing the present situation of NIRAS in terms of its internationalization process,
evaluate its market opportunities in Poland and design some guidelines for the Polish market
successful entering. The primary data were collected through unstructured interviews with the
persons mentioned above. The secondary data sources include NIRAS’ business plan for
years 2009-2013, the company official websites both, international and Polish externally
available, the company brochures. Other secondary data originate in the adequate literature
concerning the topic- books, scientific articles, websites, dictionaries. Among the secondary
sources there are also Polish Public Organizations’ official websites, and the Polish
environmental law code.
18
Arbnor, I., Bjerke, B. (1997), p. 118
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International Business Economics, 10th Semester
However, some limitation of the data collection might occur. This is due to the fact that some
data are confidential and cannot be used in the project as they determine the company market
position to some degree. Limitations of the primary data is also due to the fact that managers
and employees tend to speak in favor of the company, which results in a biased distortion of
the real picture of the system. Managers might be afraid of information leakage, which can
influence the company’s position in a highly competitive environment. Interviews with
employees might provide their subjective opinions and beliefs, which can be at variance with
system’s approach applied in this thesis. The customers comprise the main asset of the
company, some of the information may be confidential, therefore very difficult or even
impossible to obtain. The limitation of the secondary data is that the writer’s professional and
cultural background, understanding, and method of research and interpretations of the data
might have influenced the data. Furthermore, the following project will be limited with a
deductive way of generating knowledge, where theories serve as guidelines towards areas
subjected to the research.
4.4.
Limitations of the research
The project will look upon market opportunities for NIRAS in Poland within the
environmental services field and the internationalization of the company from the system
approach perspective. This limits the project with the view of the reality through two other
approaches. The system approach projects each individual, as a part of the system and
therefore the actors should be analyzed as representatives of the system. Applying the
analytical approach enables the separation and the evaluation of individual units, their
activities and experiences with the project issues without placing them in a context of the
whole system. The actor approach, on the other hand, would have made it possible to
investigate the individual actors reasoning and understanding of the problem. The choice of
deductive approach limits the data collection and the generation of new knowledge because
the researcher can be bounded by the chosen theories. Deductive thinking aims to interpret
individual cases within previously derived theoretical concepts. The inductive and abductive
way of structuring the project was excluded. The underlying theories of internationalization,
international business environment, international business competences, market orientation
and PPP will serve as a guideline to the structure of the project and data collection. Moreover,
the theories identify the fields to investigate and research, which might make the researcher
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International Business Economics, 10th Semester
blind for other angles of the problems, experienced in the reality. The following project will
look into theories related to investigating foreign markets opportunities for NIRAS and its
successful internationalization from cultural and legal perspective. The project will not
analyze the theories of types of internationalization. The project will also exclude technical
and economical view on the international business environment and will focus more on
market opportunities for NIRAS within the public sector.
5. Presentation of the company
NIRAS was founded In 1956 and Since that time expanded to a large consulting engineering
company employing more than 1200 people. Throughout the growing period the company
was gaining new competences within the usual and specialized engineering fields. Thus,
NIRAS has capacity to handle large projects both in Denmark and internationally. NIRAS
provides consultancy services within building, industry, infrastructure, public utilities,
environment, climate change, energy, water, natural resources, agriculture, forestry, physical
planning, management, socio economics, corporate real estate services, property development
and development aid.19 NIRAS is organised in eight divisions and each division is subdivided into a number of business units. Two new divisions were formed in 2008. The
Climate Change and Energy division was a spin off mainly from the existing Environmental
division. The TP Group division was a result of the acquisition of TP Group.20
Niras’ business plan
TP Group is an independent consultancy company offering fully integrated services to real estate owners,
investors, operators and occupiers. Source :www.tpgroup.se
19
20
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International Business Economics, 10th Semester
Figure 4: NIRAS Group’s divisions
Ciwil Works
& Engineering
Building &
Industry
Environment
Planning &
Management
Climate
Change &
Energy
International
Consulting
Building &
Industry
Poland
TP Group
Denmark
Sweden
Finland
Poland
Estonia
Ukraine
Russia
Global
Source :NIRAS’ business plan 2009-2013
NIRAS’ divisions are defined by scope of services and/or geography. Divisions defined by
scope of service serve customers within company’s full geography, whereas the two divisions
TP Group and NIRAS Polska primarily serve the local markets in Sweden and Poland within
their respective service areas. Apart from the line management there are Office Managers,
Regional Managers and Country Managers representing NIRAS´ business interests and
different business support systems in the specific geography.21 Today, NIRAS is an
international group of companies with over 1,270 employees. 25% of the employees work
abroad and approximately one third of the turnover originates from markets outside Denmark.
There are subsidiaries of NIRAS in ten countries and the company has completed projects in
over 180 countries.
5.1.
Services
NIRAS specializes in engineering consulting which belongs to service area. According to
business literature service is a complex phenomenon. The word has a wide array of meanings
from personal service to a service as a product or offering. Any physical product can be
turned into a service, for example a machine which is used to treat a customer. Usually a
service involves a sort of interaction with the service provider and it is not an object but a
process or an activity intangible in its nature.22 Service can be described as a provider’s
application of competences for the other party’s benefit. It can take various forms- of action,
performance or promise that are exchanged for value. Providers and clients might be
21
22
Niras’ business plan. pp 1-4
Gronroos C. (2007), pp. 51-52
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individuals, firms, government agencies, or any organization of people and technologies. The
key is that providers and clients work together to co-create value – the client owns or controls
some state that the provider is responsible for transforming according to some agreement
between provider and client. Jim Spohrer et al. 2007 have discussed also a concept of service
system which can be specified as a value co-production configuration of people, technology,
other internal and external service systems and shared information such as language,
processes, metrics, prices, policies and laws. This system is characterized by internal and
external structures in which value is produced together with other service system directly or
indirectly. Instances of service systems can be families, firms, individuals, nations or
economies. 23
The literature generally proposes five distinct features of services24:
 Intangibility- refers to the fact that services do not always consist of physical items
which can be judged by customers at the same way as goods- by sight, taste, smell or
touch. More often they have a form of experiences which cannot be assessed before
consumption.
 Inseparability- means that many services are supplied and consumed at the same
time.
 Heterogeneity- the production of services is often embodied in the provider’s
personnel, thus there is potentially a variation in the way the service is produced and
in its quality.
 Perishability- some services cannot be stored and once they are not utilized they can
never be recovered, i.e. an empty seat on an airline flight.
 Ownership- usually the customer does not own the service but obtains an access to it.
Even though these are the features which differentiate services from goods there are just few
services displaying all these characteristics simultaneously. Most of them though has more
than one.
NIRAS services scope
Through the company eight divisions consultancy services within building, industry,
infrastructure, public utilities, environment, climate change, energy, water, natural resources,
agriculture, forestry, physical planning, management, socio economics, corporate real estate
23
24
Jim Spohrer et. al. (2007), pp. 71-77.
Buckley J. P. and Ghauri P. N. (1999), pp. 149-150
20
International Business Economics, 10th Semester
services, property development and development aid are provided. Property development and
corporate real estate services was added to the service portfolio with the purchase of TP
Group in 2008. The services are offered at a higher level in the value chain than many of the
traditional service areas and as such it constitutes a strategic move towards a larger proportion
of high value services in the portfolio.25 The environmental division is one of the biggest in
Scandinavia and employs around 250 employees. Main fields of the division activity are:
integrated water resources management, soil and groundwater pollution, assessments of the
environment and ecological systems - economy and biodiversity, natural resources
management, environmental consultancy to industry and waste management.
5.2.
Plans for growth
According to NIRAS’ annual report of 2008 the company plans to double its size in five
years. The firm goal is to expand especially in a Baltic region and become the “first choice”
for both –competent employees and visionary customers. Currently the head office is in
Denmark and in Europe there are subsidiaries in Sweden, Finland, Poland, Ukraine, Estonia,
Bulgaria and Russia. Overseas subsidiaries are located in Egypt, Zambia, Tanzania, Sri Lanka
and Malaysia. During 2008 NIRAS has undergone significant international growth both
organically and via acquisitions. Hence acquisitions in Sweden, Poland and Finland have
increased the number of employees in the foreign subsidiaries by 151 adding up to more than
20% of the Group’s employees. The company expects that due to the recent Danish and
international governmental recognition of issues related to climate changes there will be
substantial investments in renewable energy, energy conservation and preventive measures.
As a consequence substantial market growth is expected within the Climate Change & Energy
division. An increasing number of NIRAS’ customers are operating internationally. Growing
internationally with the customers is therefore a key element in the international growth
strategy of NIRAS. Growth will be pursued through a combination of acquisitions and
organic business development, but with an aim that more than half of the growth is organic.
Currently in Denmark NIRAS is number four among independent engineering consultants and
number seventy two in Europe. Companies Ramboll and Cowi are regarded as main
competitors of NIRAS and both companies are also present in Poland. 26
25
26
Niras’ business plan. pp 4-5
Niras’ business plan. pp. 11-12
21
International Business Economics, 10th Semester
6. Internationalization of the firm
The following sections will present the theoretical background chosen by the researcher to
investigate the problem of the project. The theory aims at helping to organize the particular
aspects of gathered knowledge and according to the deductive way of research serves as basis
for the empirical investigation.
Nowadays in the globalization era the home market is too small for numerous companies.
They look for development opportunities, new markets and new customers. The
internationalization can be defined as: “The process in which firms both increase their
awareness of the direct and indirect influences of international transactions on their future,
and establish and conduct transactions with other countries.”27
One of the most important NIRAS’ business goals is to be a preferred supplier in its field in
the Baltic Sea region and make its core competences available in the global market.
Consequently, growth and internationalization are among the company’s strategic tools used
to achieve its business goals. An increasing number of NIRAS customers is operating
internationally so a logical step for a company is to grow internationally together with its
market scope. For the Polish market the company has a plan to develop activities within
NIRAS Polska Civil Works, Infrastructure and NIRAS International Consultants. A plan for
the further future is to continue internationalization process and introduce the divisions:
Environment, Climate Change & Energy and TP Group in Poland.28 There are various
objectives of companies’ internationalization and they depend on the firm profile and the
industry it operates in. The figure below presents the most important incentives driving the
internationalization process.
27
28
Beamish P. W. (1990)
Niras’ business plan
22
International Business Economics, 10th Semester
Figure 5: Objectives of expansion of a company
Fulfill certain
needs within the
organization
Expand the
company
product line
Objectives of
expansion of
a company
Gain access to
new customers
Achieve competitive
economies of scale
Expand the
company
geographical reach
Source: Own creation
In order to design a strategy of internationalization of a firm it is important to include bothinternal and external factors into such plan. In a global business environment any firm which
wants to be successful outside its local market has to develop a set of competences allowing
to operate in foreign settings. These competences demand the involvement of managers and
employees aiming at gathering knowledge about target markets, make accurate decisions and
undertake suitable actions. International business competences should be adapted throughout
all the divisions of a company- marketing, human resources, R&D and others and the
divisions should cooperate on a success abroad. The company should also improve and
develop its market orientation in order to be competitive in the contemporary demanding
business environment. The internal firm’s capability to internationalize should result in
external actions undertaken in order to succeed abroad. One of such accomplishments is a
proper assessment of a company’s business environment. The following sections will present
the internal competences essential for a thriving international performance, the importance of
a developed marked orientation and way to achieve it and the manner in which NIRAS should
23
International Business Economics, 10th Semester
utilize the international business competences and market orientation. Then, the external
factors influencing NIRAS’ actions to be undertaken in Poland will be discussed.
6.1.
Current NIRAS’ position
Currently NIRAS operates both locally in Denmark and in some international markets as well.
The goal of the project is to assess NIRAS’ market opportunities in Poland within the
environmental services field which will be performed also in the light of other NIRAS’s
international activities. The biggest offices of NIRAS outside Denmark are in Sweden and
Poland. And the company aims at constant expanding its international scope. Gaining wider
market in Poland is a part of NIRAS internationalization strategy of becoming a preferred
consultant in the Baltic region and attract both the best customers and employees.29 The
NIRAS’ construction division in Poland is also important from the potential opportunities
within environmental consultancy perspective. The company can utilize the existing network
and experience of the managers and employees from this division in order to create a new
division either by organic growth or by mergers or acquisition.
6.2.
Internal internationalization factors
Before a company decides to internationalize it has to follow some conditions to be able to
do that. There are numerous medium-size companies which do not decide to approach foreign
markets or they do but without any success. This is due to the fact that the good condition of
the company on the local market is not sufficient to be successful abroad. There is a set of
intangible features which determine whether the company can internationalize or not. Before
NIRAS will attempt to challenge international markets it should revise or develop its abilities
to operate in a foreign environment. Internationalization process depends on some particular
company’s features. In order to decrease the risk level the company should obtain some
competences, which are vital in a successful internationalization process. Knight and
Daekwan (2008) describe these competences as intangible, overarching firm resource that
stimulates superior international performance in a company. They identify some core abilities
substantial for a firm which wants to be successful abroad. These competences are:
international orientation, international marketing skills, international innovativeness and
29
www.niras.com
24
International Business Economics, 10th Semester
international market orientation. Other scholars also mention cross-cultural competence as an
important factor determining international success or failure. International business
competences are conceptualized as multidimensional concepts reflecting the extend to which
the company adopts a bundle of international competences to perform international business
activities in foreign markets in an effective way. These competences have connotations to the
cultural issues, they include learning about international environment and ability of adapting
the whole organization to new environment through interactions with the foreign markets. The
list of competences was derived after interviewing managers of international companies and
combining the results with the available literature. In the study it was proved that high level of
international business competences results in better international performance of the firm in
terms of international sale growth, international market share, international profitability and
export intensity. Thus, any company willing to operate abroad should introduce the
development of these competences into its program.30
International orientation
As international business is risky the company has to adapt entrepreneurial and aggressive
attitude in order to succeed abroad. A firm with a strong international orientation tends to be
characterized by managerial vision and proactive organizational culture for developing
particular resources aimed at achieving goals in foreign market. International orientation
implies active exploration of new opportunities in foreign markets. It is likely that companies
possessing this feature will increase certain practices, processes and decision-making
activities associated with targeting new markets abroad and thus, will perform more
effectively internationally.
International marketing skills
This is the ability of creating value for foreign customers through effective market
segmentation and targeting and through integrated international marketing activities, by
planning, controlling and evaluating how the marketing tools are organized to differentiate
offerings from those of competitors. Firms with good marketing skills attempt to offer
products whose value is perceived by customers as better than the value of alternative
products. Without strong international marketing skills the firms are less likely to succeed
internationally, even if they offer superior products or services. As a result of globalization
buyers are better organized nowadays, have more information and higher demand. In such
30
Knight G. A., Daekwan K. (2008) pp 255-273
25
International Business Economics, 10th Semester
competitive environment international marketing skills are essential and assist firms to
operate more effectively. Such skills provide foundations for a company to interact in
different foreign markets and enable managers to create effective strategies aimed at
overcoming international challenges and to adapt them to local business environment. As a
conclusion it can be stated that international marketing skills help companies reach and serve
international customers more effectively.
International innovativeness
It can be described as a capacity to develop and introduce new processes, products, services or
ideas to international markets. The company should be open to innovations as this openness
determines the degree to which members of a given organization are willing to consider
adoption to innovation or whether they are resistant to it. It is kind of ability to recognize the
need for new ideas and take the actions to meet this need. There are two main sources of
innovations- R&D that draws on firm’s accumulated knowledge and market intelligence
including the innovations of other firms. The latter factors seems to be crucial if it comes to
international markets. Organizations without the capacity to innovate may invest time and
resources in studying markets but are less capable to translate this knowledge into practice
and act upon it. International innovativeness is crucial when a company internationalizes.
Technological leadership improves competitiveness of a firm and together with strong
international innovations it constitutes a source of processes, products and services that fit
international market better.
International market orientation
Market orientation is a critical concept in marketing and management concerning bothdomestic and international business. There are various definitions of this concept, generally it
can be defined as an extend to which the firm’s international business activities are oriented
towards customer and competitors and the extend to which these activities are coordinated
across functional areas in the firm. Kohli and Jaworski (1990) have synthesized the existing
definitions in their research and attempted to create a new term. According to previous
researches market orientation is a phenomenon consisted by three pillars: customer focus,
coordinated marketing and profitability and a market-oriented organization is the one n which
the three elements are operationally manifest. Kohli and Jaworski derived a broader definition
26
International Business Economics, 10th Semester
based on a literature and field study and stated that
31
market orientation is an organization-
wide generation of market intelligence pertaining to current and future customer needs,
dissemination of the intelligence across departments and organization-wide responsiveness to
it. In their definition the scholars approach the market orientation rather as a degree of a
certain continuum than a phenomenon present or not in the organization. Especially the
degree of market orientation can be specified as a degree to which the business unit obtains
and utilizes information form customers, develops a strategy meeting customers needs and
finally, implements this strategy by being responsive to the customer needs and wants. 32
Among the internal factors of a company internationalization, market orientation is the
broader one which to some degree includes other competences. Thus, it will be elaborated
further as it is important for NIRAS’ success in a new market. The companies with strong
international market orientation tend to achieve superior international performance. It is
crucially important for a firm to understand customers, competitors and other market forces
and to disseminate learning about these entities within the organization. All the international
business competences put together will create a ground for a strong market orientation of an
organization and ensure that the company will achieve a better business performance.
Cross-cultural competences
Such competence is an ability to develop and interpret criteria for personal and business
performance that are universal and independent from assumption of a single country culture
or context and to implement these criteria into various cultures, countries and contexts. Such
ability emerges from the appropriateness and effectiveness of a person behavior in a foreign
cultural environment.33
6.2.1. Implementation of international business competences
NIRAS operates already on international markets and is interested in a constant growth and
development. Within five years period the company wants to double its size in terms of
employee number therefore, it is necessary to pay more attention on their strategy concerning
international presence. Expanding the international market is the medium-term goal for
NIRAS. In order to achieve that it is necessary to develop international organization and
management skills. For NIRAS the Baltic Sea region is a target market for the future, starting
31
Kohli A. K., Jaworski B. J. (1990), pp.1-18.
Ruekert R. W. (1992), pp. 225-245
33
Muzychenko O. (2008), pp. 366-377.
32
27
International Business Economics, 10th Semester
from Poland the company can expand to the neighboring countries- Czech Republic, Slovakia
and Lithuania. The company should revise its international skills, design and implement some
strategy for international growth. International orientation is an important competence for
international growth. The company should constantly explore arising opportunities,
proactively develop resources and be focused on pursuing the set goals. International market
intelligence should be actively developed and thorough due-diligence should be performed.
Furthermore, it is important to follow the international marketing rules. NIRAS should
segment its target market and treat each segment separately with integrated international
marketing activities. Especially for environmental consulting the segmentation will be
specific as the nature of such service is different than this of typical goods. Moreover, the
company should permanently asses the organization of its marketing tools and compare it
with the competitors’ ones as it has been proved that the products of organizations of superior
marketing skills are valued higher by the customers. It is especially important in the
international environment where the customers are well informed and very demanding. High
competition level also imposes need for international innovativeness. In order to be perceived
as better than the competition the company has to constantly develop and introduce new or
improved services. In the engineering consulting business new technologies and services
appear everyday, thus NIRAS has to involve innovativeness into its strategy. The company
should value both sources of it- its own R&D and the market intelligence and use them for
implementing novelties into its service portfolio. Technological leadership will ensure NIRAS
international competitiveness. Another important factor for international success is market
orientation. The company has to make sure that its activities are oriented towards customers
and competitors and that they are coordinated across the functional areas of the firm. NIRAS
has to scrutinize all the market forces and use the knowledge of them for the organization
benefit. The result of introducing the international business competences will be improved
market orientation of NIRAS and, as a consequence, superior business performance.
6.2.2. Market oriented company
To enhance an international success NIRAS needs to improve its market orientation. Only
after that the company will be able to read the psychological and social factors determining
the customers actions. As a result the firm will know how to provide the offerings that the
customers want. In return, the market oriented company will meet its primary purposemaking profit. Kohli and Jaworski (1990) suggest that market orientation plays significant
28
International Business Economics, 10th Semester
role in the company business performance and is worth to devote some resources in order to
climb a higher business level. They have investigated when it is worth to develop market
oriented activities and what can be the exact benefits. It is argued that market orientation
depends on both internal and external antecedents and can be influenced by the business
culture. Numerous scholars enumerate three main elements of market orientation-341)
organization-wide generation of market intelligence relevant to customer needs 2)
dissemination of the intelligence across departments 3) organization-wide responsiveness to
it. The response is a two-steps activity-it involves design of the response and its
implementation. These three elements can lead to significant consequences for a company
such as cohesive product focus, clear leadership or better coordination of sales activities and
they can be completed when the company improve its international business competences. In
general it can be stated that a market oriented company has an unified focus for the efforts and
projects of individuals and departments within the organization, which provides to its superior
performance. The managers asked for the positive consequences of implemented market
orientation enlisted factors like increased profits, sales volume market share and sales growth.
Generally, which is important for NIRAS, market orientation increases business performance
in various perspectives. For example, market orientation has a positive influence on the
employees. The feeling of belonging to an organization in which all the individuals and
departments work toward a common goal of satisfying customers brings a sense of pride to
the employees and makes them more efficient and more committed to the organization. The
conclusion is that once NIRAS wants to improve its business performance, satisfy employees
and gain new markets- the degree of its market orientation may be one of the determinants of
success. The best way to raise the market orientation according to Kohli and Jaworski (1993)
is to place a lot of emphasis to the issue by the top managers through consistent and continual
reminders to the employees that it is critical to them to be sensitive and responsive to market
developments. It is also necessary to take some risk and accept some occasional failures of
new services or products as a natural part of business conduct. The authors of the research
also have noted that the process of raising the market orientation in a company has two
sources. First, it is top management and second, there should be attention put to the nature of
interdepartmental dynamics in an organization. The conflict between a company divisions
tends to limit the level of its market orientation when the connectedness facilitates it. Thus,
NIRAS should analyze the dynamics existing within its structure as a factor influencing its
34
Kohli A. K., Jaworski B. J. (1990), pp.1-18.
29
International Business Economics, 10th Semester
market orientation. Especially in Poland where at the beginning different divisions of the
company are supposed to cooperate, the manner in which they will interact will be a very
important determinant of market orientation. The authors suggest some ways to manage the
two interdivisional dynamics, conflict and connectedness. These can be common lunches and
sport activities as well as exchange of the employees across departments or cross-department
training programs. Thanks to such efforts employees can understand personalities of
managers from other departments, their culture and specific perspective. Another set of
factors influencing market orientation is the organization-wide systems. Issues like
centralization and formalization tend to influence the market intelligence generation and
dissemination and in consequence improve market orientation. The more centralized the
organization is the less market oriented it seems to be, therefore allowing employees to
participate in decision making process can have positive influence. According to Hofstede
research such attitude is a common practice in Danish firms so NIRAS should transfer it to its
international practices. Also rewording system can be important criterion of market
orientation, it helps to improve it when it depends on factors like customer satisfaction or
intelligence obtained more than on sales and profits amount. R. W. Reukert (1992) provides
more determinants of market orientation. In his research he suggests that also recruiting and
selection of personnel systems will influence the degree of a company’s market orientation as
it is important to find proper people who have commitment to serve customers, and train them
in such a way that they will perform the firm’s strategy properly.35
Finally to utilize and combine all the abovementioned competences on the international
market NIRAS needs to poses the cross-cultural skills. To accomplish a successful
internationalization strategy the company has to involve cultural factors which will
complement the internationalization tools. In order to utilize the internal internationalization
competences the company needs to asses the environment in which it is going to operate.
Such knowledge is essential in order to plan what tools and in what way to use on the
international market and to make the company more market oriented.
35
Ruekert R. W. (1992), pp. 225-245
30
International Business Economics, 10th Semester
6.2.3. Conclusions
Knight and Daekwan (2008) concluded that the companies that have possessed a high level of
the abovementioned competences were more successful performing internationally. Having a
strong international orientation can shape organizational culture and international market
orientation helps to collect and disseminate market intelligence on foreign customers and
competitors and to coordinate functional areas internally for international business activities.
All the competences affect a company’s international performance positively and constitute
an intangible source of competitive advantage. On the top of that there are the cultural factors
which constitute kind of glue for all the international competences. Having possessed the
international business competences and improved market orientation the company can expect
progress in many fields such as financial performance, employees’ satisfaction and
commitment to the organization and general business performance which all are areas that
NIRAS desire to improve.36
6.3.
External
internationalization
factors-analysis
of
the
business
environment
Before NIRAS will apply its international competences in the Polish market it has to get
familiar with the new market surroundings. In order to assess NIRAS’ opportunities in Polish
market it is essential to analyze the business environment there. Thanks to such analysis the
company will be able to act quickly, take advantage of the opportunities before the
competitors do and respond to arising threats on time. NIRAS is a Danish company and it is
influenced by the environment in which it operates. When the company operates in another
country also the environment changes. Any business has to understand the surrounding
conditions and circumstances in which it operates in order to be successful. The forces in a
foreign environment are the same as those in domestic one but their values are usually
different. Furthermore, the foreign market forces are often difficult to assess. The
international environment consists of the interactions between domestic environmental forces
and foreign environmental forces when a business is done between them. Making decisions in
36
NIRAS’ business plan
31
International Business Economics, 10th Semester
international context is more complex than in domestic environment. Such decisions are
influenced not only by local forces but by international environments as well.37
International environment is created by several factors which can be divided into groups. To
characterize a foreign country business environment it is important to mention the following
aspects:
 The economic environment-consisted of factors like economic growth, unemployment
rate, currency exchange rate, financial and political health of the partners, etc;
 The technological environment- like infrastructure, services and products of
competitors, etc;
 The political-legal environment- political stability and risk, restrictions on
international financial flows, environmental policy and others;
 The socio-cultural environment-society structure, different values and attitudes,
traditions, etc.
In order to operate successfully in a given environment businesses must be able to respond
effectively to the factors in their environments that affect them. The environment can
constitute an opportunity or a threat for a company. A successful firm will be able to deal with
both- to overcome threats and take advantage of opportunities at least as well as its
competitors. Whether new international markets will provide opportunity for a firm will
depend on factors such as culture, infrastructure, politics of the destination country. In order
to understand and make benefit of the new surrounding, conditions and circumstances
environmental analysis is needed. The environment is not static and it is necessary to know
how it will change in order to respond in a way that will allow the company to achieve its
goals.38 For the purpose of the thesis only cultural and legal environment will be analyzed. It
was comprehended that for the particular situation these two aspects of the NIRAS business
environment in Poland are the most important for assessing the company market opportunities
in this country. The reason is that NIRAS’ activities depend significantly on legal regulations,
both-national and issued by EU. As for cultural environment, it was proved by numerous
scholars that this factor is vital for international business and when neglected can cause failure
of the venture.
37
38
Ball et al. (2008), pp. 23-26.
Wetherly P., Otter D. (2008), pp. 17-19
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International Business Economics, 10th Semester
6.3.1. Cultural Environment
Culture is understood as the shared assumptions, beliefs and values that the people of a
geographical [bounded] area acquire over generations39. These are historically derived and
created social institutions, cultural symbols, rituals and myths. But though some of the
assumptions, beliefs and values are relatively stable over time, culture is adaptive and
changeable. As the environment varies, people tend to adapt new symbols, myths, rituals and
to behave differently. Meanwhile, the fundamental assumptions, values and beliefs are altered
very slowly as they are rooted deeply in people’s minds.40 Business environment is changing
in many ways, so is the business culture which can be the most challenging element of the
international marketplace. According to Czinkota (2007), cultural factors have an important
impact on the flow of business. Each society has its own elements of culture. These elements
of culture are manifested through:
 Language
o verbal
o nonverbal
 Religion
 Values and attitudes
 Manners and customs
 Material elements
 Aesthetics
 Education
 Social institutions
One of the most important issue for a foreign company is cultural analysis, which includes
information that helps the company´ staff to take planning decisions. This information from
the cultural analysis must be more than collecting the facts; they must also be interpreted in
the proper way.41 Every society is composed of people and their culture and it is impossible to
speak about one without referring to the other. When people work in societies and cultures
different than their own, the problems they encounter dealing with a single set of cultures are
multiplied by the number of cultural sets they find in each of their foreign markets. E. T. Hall,
39
Sinha, Jai B. P. et al. (2004), p. 89.
Sinha, Jai B. P. et al. (2004). p. 40
41
Czinkota, M.R., Samli, A.C. (2007), pp. 316-331
40
33
International Business Economics, 10th Semester
a famous anthropologists claims that there are only two ways to adapt to foreign culture. First,
is to spend a lifetime in a country and the other is to undergo an extensive, highly
sophisticated training program that covers the main characteristics of a culture, including the
language. The program should be a profound study of what culture is and what it does,
imparting some knowledge of the various ways in which human behavior has been
institutionalized in a given country.42 Kotler (2005) mentions a term cultural environment. It
is made up by institutions and other forces that affect a society’s basic values, perceptions,
preferences and behaviors. People grow up in a particular society that shapes their basic
beliefs and values. They absorb a worldview that defines their relationships with others.43 A
company doing business internationally must be prepared to face such environment.
6.3.2. Theoretical perspective on culture
In the situation of a company internationalization the norms of behavior accepted by the
members of a given social group become increasingly important as. It should be noticed that
the behavior of individual person is influenced by different layers of culture- the national
culture determines the values that influence the business culture, which then determines the
culture of the individual. This structure can be presented in a form of a nest-where the
different culture levels are nested into each other.
42
43
Hall E. T. (1977), pp. 54
Kotler P. and Armstrong G. (2005), pp. 89-92
34
International Business Economics, 10th Semester
Figure 6: The levels of culture
Source: Hollensen 2003
 National culture- gives the overall framework of cultural concepts and
legislations of business activities.
 Business/industry culture- every business is conducted within a certain
competitive framework and within a specific industry (or service sector). This
level has its own cultural roots and history. Industry culture is very much
related to a branch of industry, and this culture of business behavior and ethics
is similar across borders.
 Company/organizational culture- the total organization often contains
subcultures of various functions. Functional culture is expressed through
shared values, beliefs, meanings and behaviors of the members of a function
within an organization.
 Individual behavior- the individual is affected by the other cultural levels. In
the interaction environment the individual becomes the core person who
interacts with the other actors in industrial marketing settings. The individual is
35
International Business Economics, 10th Semester
seen as important because there are individual differences in perceiving the
world. 44
In international business it is crucial to perceive the culture in the context of the country. It is
better to regard the culture as different from, rather than better or worse than the home
country culture. In this way the differences and similarities can be explored and can be used
as an advantage instead of causing obstacle for a firm.
Geert Hofstede Cultural Dimensions
In order to get a better understanding of culture, G. Hofstede created four key cultural
dimensions45 and studied the attitudes towards them among various nations. He enumerated
the following dimensions:
 Power distance
 Uncertainty avoidance
 Masculinity vs. femininity
 Individualism vs. collectivism
Later, in 1988, he added the fifth dimension, called “Long term versus short term
orientation”46, which helped to explain further differences between cultures and which was
neglected in former studies. Each of the dimensions measures a certain characteristic of a
particular culture. The countries were given a score depending on how high was the level of
measured trait in a society.
Power distance- it can be described as an extend to which the members of a certain group or
organization will accept the inequality of power distribution. It suggests that inequality is
accepted by both the followers and leaders. Power an lack of equality are typical
characteristics of any society. It can be stated that every society is unequal to a certain degree.
In societies of large power distance degree there is considerable hierarchy and inequality of
roles. Subordinates expect to be told what to do. In the opposite subordinates expect to be
consulted and the hierarchy is small.
44
Hollensen S. (2003), pp. 195-197
Hofstede, G. (1983), p. 46
46
Hofstede, G., Bond, H. M. (1988), p. 6.
45
36
International Business Economics, 10th Semester
Uncertainty avoidance- measures the tolerance of the society for uncertainty and ambiguity.
It indicates how comfortable or uncomfortable the members of the society are when facing
unstructured situation. Such situations can be new, surprising, unexpected or different from
usual circumstances. The cultures of high uncertainty avoidance level try to minimize the
possibility of unexpected situations occurrence by introducing rules, lows, security and safety
measures, and on the religious ground by believe in one absolute truth. The opposite type, are
more tolerant for untypical situations, they establish small amount of rules and are flexible.
On religious or philosophical level they are relativists.
Masculinity vs. femininity- it describes how the roles are distributed between genders. The
studies revealed that women's values differ less among societies than men's values. Moreover,
men's values from one country to another contain a dimension from very assertive and
competitive and maximally different from women's values on the one side, to modest and
caring and similar to women's values on the other. The assertive pole has been called
'masculine' and the modest, caring pole 'feminine'. The women in feminine countries have the
same modest, caring values as the men. In the masculine countries they are assertive and
competitive to a certain degree, but not as much as the men, so that these countries show a
gap between men's values and women's values.
Individualism vs. collectivism- measures the degree to which the societies are integrated into
groups. In individual societies there are weak ties between their members and everybody is
expected to be responsible for himself. In opposite, members of collective societies are
integrated into strong groups and protected by them in exchange for their loyalty.
Long term orientation vs. short term orientation- Values associated with Long Term
Orientation are thrift and perseverance, when values associated with Short Term Orientation
are respect for tradition, fulfilling social obligations, and protecting one's 'face'. Both the
positively and the negatively rated values of this dimension are found in the teachings of
Confucius, the most influential Chinese philosopher who lived around 500 B.C.; however, the
dimension also applies to countries without a Confucian heritage.47
The strengths and weaknesses of Hofstede’s model
Even though the Hofstede’s study is quite old, it was conducted 30 years ago, there is no other
study based on such a large sample (116000 respondents). Furthermore, the information
47
www.geert-hofstede.com
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International Business Economics, 10th Semester
population is controlled across countries so comparison can be made. The connotations of
each dimension are highly relevant for international managers. Additionally, no other study
compares so many other national cultures in so much detail. 48 It is not the unique theory
available for cultural differences explanations, but it is the most generally accepted and
despite being relatively old it is used in lots of research papers.
On the other hand it assumes that the national territory and the limits of culture correspond to
each other. But cultural homogeneity cannot be taken for granted in countries with a range of
cultural groups like US, Belgium or Spain. What is more, the respondents of the survey
worked in a single industry and a single multinational. In any country the values of IBM
employees are typical only for a small group, which is the only one social group represented
in the study. Some of the dimensions overlap each others, for instance the level of power
distance and the masculine/ feminine level. Still, in spite of some disadvantages the theory is
widely accepted and used by scholars in the international study.
6.3.3. Applying theory into a real business environment
Poland in Geert Hofstede’s cultural dimension
In the light of Geert Hofstede’s cultural dimensions Poland is a country of a very high
uncertainty avoidance level. This indicates that the society has low tolerance for uncertainty
and ambiguity and its members feel uncomfortable in unstructured situations. Such societies
create strict laws and rules in order to avoid vague situations. People from such culture are
also more emotional and motivated by inner nervous energy. Also masculinity level is
relatively high in Poland which means that men’s value dominate in the society.
Individualism is quite high which suggests that everybody in the society is expected to look
after himself. Power distance is quite significant which means that there is hierarchy in the
society. Long term orientation is at the medium level in Poland but it cannot be compared to
Denmark as there is no such measurement for Denmark.
48
Hollensen S. (2003), p. 207
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International Business Economics, 10th Semester
Figure 7: Poland in Geert Hofstede’s cultural dimensions
Source: www.geert-hofstede.com
In case of Denmark it is striking that the individualism is at a very high level. That indicates
that everybody in the society is supposed to look after himself. The last three dimensions in
Denmark are at very low levels. The conclusions can be that there is lack of hierarchy there
because of lack of power distance, it is a feminine country as the masculinity level is
extremely low and Danish people are tolerant towards uncertainty and ambiguity due to low
level of uncertainty avoidance.
Figure 8: Denmark in Geert Hofstede’s cultural dimensions
Source: www.geert-hofstede.com
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International Business Economics, 10th Semester
Figure 9: Comparison of the two countries in terms of Geert Hofstede’s cultural
dimensions.
Source: www.geert-hofstede.com
Culture is a very important factor in case of international business activities. When the two
involved countries differ considerably there can be problems expected in communication and
cooperation between them. In case of Poland and Denmark there are some divergence in
terms of Hofstede Cultural Dimensions. First of all, the uncertanity avoidance level is much
lower in Denmark. This indicates that when in Denmark emploeeys are very self-dependent
and like to take initiative, in Poland they prefer to have strict rules and indications from the
manager. The two nations will react in a completely opposite way to an unstructured situation.
Danish employees will experience less anxiety, stress or desire to work extensively. Typically
such societies are unemotional, cosmopolitan and unconcerned with life-security. They accept
risk and change jobs often. Managers tend to make risky decisions, get involved id
unstructured activities and do not pay much attention to written rules. In Poland the situation
will be opposite. Also avoidance of responsibility is one of typical characteristics of societies
of high uncertanity avoidance. This can be an effect of long period of beraucratic system in
Poland which was organized by rigid rules and red-tape and when most of citizens were
deprived of free decision making rights. A good managerial practice in such situation would
be close supervision and centralized decision making process.
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International Business Economics, 10th Semester
The next important thing is power distance disparity between the countries. Managers from
flat organizational structure in Denmark will face huge hierarchy in Poland. In result, there
will be a high degree of centralization and unequal distribution of power. The subordinates
will accept colse supervisoin and the superiors will make effort to look powerful. Managers
often deny the need to consult subordinates during decision making process and the
employees can be afraid to disagree with the employer.
Also the level of masculinity varies, which indicates that different values dominate in the two
societies. In Poland, where it is higher, it can be expected that economic growth will be
considered as more important than conserving the natural environment-which is an important
information for NIRAS. Career success will be very desirable but also jeaulosy about
someone else’s success can be expected.
As for individualism level, it is slightly lower in Poland. Low individualism can indicate
shared responsibility which was common during the communist times. Low level of
individualism does not mean that such society will be good at group work, however such
skills are achievable.
Considering the abovementioned variations, it should be comprehended by Danish managers
that in order to be successful in business in Poland they should put some attention to the
cultural issues. Poland is a country with real business opportunities for foreign companies but
can be also acultural challenge. Every organization, including NIRAS developed its own
corporate culture which is sometimes in opposite to the culture of the target market. Thus,
there is a need for cultural analysis in order to start successful business in a given country.
The Hofstede model gives some insight into Polish culture and its distinction from Danish
culture.
The result of the study can assist potential investors like NIRAS with valuable knowledge
about business arrangements in Poland.
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International Business Economics, 10th Semester
Points to consider when doing business in Poland:
After analysys of the available literature and from the researcher’s own experience some
indicies can be derived concerning conducting business in Poland. From the study of the
Geert Hofstede cultural dimensions there are a few conclusions emerging for the foreign
managers planning business in Poland. Due to the high individualism level, group work can
be problematic to organize. As everybody has its own strong view it can be hard to find
consensus within a group and reach a common way of work. Furthermore, there are some
issues worth to consider before any business trip to Poland:
 Management Style49
In Poland there is a hierarchical business culture and managers tend to be authoritative. It
should be expected that the manager will issue direct instructions to the employees and due to
high uncertainty avoidance level the instructions will be detailed. Lack of clear instructions
can be regarded as poor management. The formal character of doing business in Poland
demands careful planning of any business trip in advance. Especially government and state
organizations are exceptionally formally organized. Such situation is a complete opposite of
the democratic management style in Denmark where employees are involved in the decisionmaking process and feel motivated when can make their own decisions.
 Meetings
It is common that people arrive to meeting prepared, and they expect the same from their
partners, lack of preparations can be regarded as lack of professionalism. An agenda is
prepared in advance and it is followed with little deviation. Meetings usually start and end on
time. A lot of importance is placed on titles and educational backgrounds, this information
should be printed on the business cards. Meetings are usually formal, though they can start
with a degree of small talk- a part of relation-building process.
 Communication styles
English knowledge level is quite high nowadays in Poland, so usually there is no need for
translator during business meeting. Opinions are expressed directly, and the truth is not
hidden behind diplomacy. There is not much of body language displayed. During talks
academic titles are often used before surnames and they are always used in formal writings.
49
http://www.worldbusinessculture.com/Business-in-Poland.html
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International Business Economics, 10th Semester
The formal character of doing business in Poland demands careful planning of any business
trip in advance. Especially government and state organizations are exceptionally formally
organized. Additionally, it should be comprehended that there is a lot of bureaucracy in
Poland and starting business there or even taking part in a public tender demands a lot of
documentation and formal activities.
 Tradition
It should be also remembered that in Poland such values as traditions, history and religion are
very important. People are very proud of their cultural heritage and the ability to survive as a
nation for centuries of wars and occupations. Therefore, people in Poland are very happy
when foreigners make attempts to know some of their language and history. In Poland
business values are often judged from the personal traits of the partner. Because of that Poles
need long time to get into business deals as they want to know more than the values of
balance sheets.
6.3.4. Conclusions
Doing business in Poland NIRAS should make some effort to get familiar with Polish culturenational, organizational and individual as well. For this purpose the Hofstede’s model of
cultural dimensions can be used as it gives insight into the country cultural profile and allows
to compare it with the company home culture. It can be exploited as a tool for finding a
cultural understanding and helping to improve communication between the two parties. This
generates some basis for designing a strategy to operate on the Polish market. The ability of
individuals within firms to fully grasp cultural differences and make adequate behavioural
adjustments is seen as one the key success factors in international operations.50 It can bring
considerable benefits to devote some time and effort in order to be acquainted with the
cultural environment in the target market country. The results of the conducted study can be
utilized by NIRAS during training or induction programs of managerial solutions or job
organizations before entering the Polish market. For successful transfer of NIRAS’ services to
Poland a great emphasis should be placed on effective communication skills and enhanced
cultural sensitivity, which can reduce its negative impact on the internationalization process.
Managers must analyze and become familiar with the hidden language of foreign culture to
50
Johnson, J. P., Lenartowicz, T. and Apud, S. (2006), pp. 525–543.
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International Business Economics, 10th Semester
make the firm international smoothly. It should be also remembered that Polish economy is
still in transition stage and it is not an easy task to make up for the years of socialism and
convert from centrally-planned economy to the market oriented.
6.4.
Legal forces
There are more and more interrelations in the world nowadays and also law reflects this trend.
When NIRAS will start offering its services in Poland it will be important to follow the local
law. Also numerous services provided by the company are strictly regulated by the law and
whether a given regulation is introduced in a country or not will determine the demand for
NIRAS’ services. Apart from national legislation also international law is important for
NIRAS-especially the one concerning environmental issues passed by the EU. NIRAS as a
company aiming at serving also public sector in Poland has to get familiar with the acts
concerning environmental protection there and with the local organizations in charge of the
environmental issues-as the company potential partners. Environmental consulting, which
NIRAS wants to introduce in Poland, depends considerably on the political prioritization of
environmental investments. And there are some organizations in charge of such investments
which can be potential business partners for NIRAS within the public sector.
6.4.1. The sources of the environmental law in Poland
Environmental law in Poland is regulated with the act from 27th of April, 2001 with later
corrections. It sets general rules of environmental protection in Poland and specifies particular
areas like protection of the environmental resources, pollutions’ prevention, acting in case of
damage, financing of the environmental protection, responsibility for environmental damages,
administration and institutions of environment protection and adjusting programs. Other fields
like water, energy, waste management, agriculture, noise, environmental investments,
environmental information or hazardous substances are regulated by separate acts. There are
numerous adjustments and changes in the law taking place now as it has to be in accordance
with EU demands and regulations.51 Apart from Polish regulations there are also these
resulting from adjusting Polish legislation to European Union requirements. Especially the
Water and Sewage Directives (91/271/EWG, 2000/60/WE) caused many changes in Polish
51
www.prawo.ekologia.pl
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International Business Economics, 10th Semester
law concerning waterworks and sewage treatment. The Minister of Environment, who is
responsible for implementing obligations ensuing from the Treaty of Accession, takes care for
the coordination of activities and programs of water-sewage management in Poland and also
ensures the compatibility of Polish legislation with the European Union requirements. It is
predicted that before 2015 Poland will achieve the demanded condition of water and sewage
systems, and there are proper legislation to accomplish this goal.
6.4.2. Potential partners for NIRAS from the public sector
Potential partners for NIRAS within the Polish public sectors will be these organizations
which are responsible for water management, environmental protection and other associated
fields. Such organizations are in charge of environmental projects in Poland, they control
other institutions, take care for the drinking water supply, control the water resources and are
responsible for the water works and waste management in particular regions of Poland. These
institutions will be from various organizational levels and having various degree of influence
on the environmental protection organization and infrastructure. First of all, such institution
will be The Ministry of Environmental Protection. It manages the environmental resources
and cooperates in this field with various institutions Polish and foreign in terms of its rational
development and usage. The Minister passes different acts and regulations, creates the
government environmental policy and implements it. It is also responsible for creating and
implementing a plan for water management and rational use. Also geology, forestry, and
control of environmental law obeying is among competences of the Minister. It can be a
potential business partner for NIRAS as in many cases it needs some professional advice and
support within environmental technologies development field and it controls other important
organizations.52
KZGW-The National Board for Water Management
The organization is responsible for water management and use and develops the country water
program. Another task is preparation plans for rivers’ basins management. The boards issues
information systems for the water management in particular areas including divisions of
rivers’ basins districts. It controls regional boards for water management, approves their plans
and represents the Treasury in relation to water management. KZGW also plans and
52
www.mos.gov.pl
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International Business Economics, 10th Semester
supervises implementation of the activities associated with the maintenance of water facilities
and investments in water infrastructure. It agrees the list of priority projects for the National
Fund for Environmental Protection and Water Management. The president of KZGW has
ownership rights to public waters belonging to the State Treasury and controls water
management in terms of flood protection, water usage, compliance with the terms of the
existing conservation areas established under the Law. It is also a coordinating organization
for implementing the Water Directive requirements and for implementation of some part of
the Infrastructure and Environment Program.53
RZGW- Regional Water Management Board
Regional Water Management Board is a state budget unit set up for implementation of the
management of the waters governed by the President of the Executive Board of the National
Water Management. There are seven regional water management boards in Poland. RZGW
main role is to pursue its activities in the area of the main objectives of today's water policy,
based on the management of water resources. This includes formation and protection of
surface water and groundwater in order to achieve and maintain a good condition of these
waters and aquatic ecosystems in accordance with the requirements of the Water Framework
Directive, creation of conditions to meet the legitimate water needs of the population and the
economy (industry, agriculture, shipping, energy and water recreation) with respect of the
principles of sustainable development of water use and protection of people and property
against threats that may occur as a result of extreme events (floods, drought).54
53
54
www.kzgw.gov.pl
www.krakow.rzgw.gov.pl
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International Business Economics, 10th Semester
Picture 1: Regional water management boards in Poland.
Source :www.rzgw-poznan.pl.
National Environmental Protection Inspectorate (Główny Inspektorat Ochrony
Środowiska)
The inspectorate is responsible for controlling the obedience of environmental protection
rules. Investigating the condition of the environment according to rules of National
Environment Monitoring program through:
 monitoring of compliance with environmental protection and rational use of natural
resources
 studies of the environment, observation and assessment of its condition and the
changes taking place
 development and application of analytical research, control and measurement
 organizing and coordinating the National Environmental Monitoring.
Apart from the national inspectorate, there is a network of regional environmental
protection inspectorates (WIOŚ). Their activities may be divided into three groupsinspection department, monitoring department and laboratory.
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International Business Economics, 10th Semester
Waterworks and Sewage System Management in Poland
There is a network of public and private organizations dealing with waterworks and sewage
systems in Poland. Some of them could also be business partners for NIRAS. It depends from
region how they are managed and organized.55
6.4.3. European Union
European Union is an important player on the market of environmental technologies. Its
directives determine the organization of water management in the member countries. In
Poland which is a relatively new member the progress of the Water Framework Directive
2000/60/WE is slower than in Denmark. It gives an opportunity to NIRAS to use its
experience and benefit from numerous projects concerning Water Directive running in
Poland. The goal resulting from the Water Directive in Poland is to achieve a good condition
of water resources. This involves a lot of work and NIRAS could bring experience,
technology and capacity which is very often missing in case of Polish companies offering
environmental technologies. Another point is a special support program from European
Union called Infrastructure and Environment Program 2007-2013. Within this program
there are numerous projects running and planned which comply with NIRAS profile. And it
can be stated that there is not enough experienced organizations to perform these projects,
therefore there is a niche for environmental technologies providers. The aim of the program is
the improvement of attractiveness of Poland as a place for investors through development of
technological infrastructure and improvement of the condition of environment. The program
is partially financed by the EU. EU priority goals constitute 66,23% of the expenditures from
the EU funds of the program. 37,6 billions Euro will be spent on the program (27,9 from EU
funds). The main issues of the program are:
 Water and wastewater - 3 275.2 million euro
 Waste management and protection of the Earth's surface - 1,430.3 million euro
 Resource management and counteracting environmental risks - 655.0 million euro
 Nature conservation and development of environmental attitudes - 105.6 million euro
 Environment-friendly energy infrastructure and energy efficiency - 1 403.0 million
euro
55
www.gios.gov.pl
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International Business Economics, 10th Semester
There are numerous public tenders announced every day and covered from the sources of the
program. Within the next few years the number of environmental projects running in Poland
will be increasing so there are major premises to expect that the potential market for NIRAS
in Poland will increase considerably in the nearest future.56
6.4.4. Funds for the implementation of environmental policy
It is estimated that the necessary funds for the implementation of the environmental policy
program for years 2009-2012 will amount 66,2 billion PLN (15,21 billion EUR) according to
prices from 2007, and 63,5 billion PLN for a period 2013-2016 (14,59 billion EUR). These
costs result mainly from obligations connected with the European Union Accession Treaty. It
is estimated that more than 80% of the abovementioned funds will be spend for complying
with the European Union environmental standards. The division of the funds according to
direction of investments in the period of 2009-2012 will be as follow:
 Air protection- 19,3 billion PLN (4,44 billion EUR)
 Water protection and management- 36,1 billion PLN (8,3 billion EUR)
 Waste management- 6,7 billion PLN (1,54 billion EUR)
 Other goals- 4,1 billion PLN (0,94 billion EUR)
As far as the structure of the funds for years 2009-2012 is concerned, 43% will come from
private funds and 57 from public. Among the public funds 11% will be from local
governments, 21% from the National Fund for Environmental Protection, 5% from the state
budget and 20% from external funds like European Union Funds and others. The most
important goals in Polish Environmental Policy in 2009-2016 will be water protection and
management, air protection and waste management. The increase of spending on research and
development in environmental protection and the implementation of eco-innovation is
planned in the nearest future. Till 2016 environmental projects will be supported significantly
with the national system of environmental funds and funds from abroad. Private companies
have to follow certain rules and limits of acceptable public support specified by the European
Union regulations. It should be also mentioned that the system of financing the environmental
protection is based on the program of the National Fund for Environmental Protection and
56
www.pois.gov.pl
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International Business Economics, 10th Semester
Water Management and the Regional Funds for Environmental Protection and it is supported
by some EcoFunds and Bank of Protection of the Environment (BOŚ).57
6.4.5. Conclusions
In order to be successful facing the Polish market NIRAS needs to be aware of the legal
regulations concerning environmental issues. Especially entering the public sector as it
performs on the basis of the particular legislations. The company also should know which
public organizations can be potential partners for them. The knowledge of the country legal
organization will allow NIRAS to prepare the suitable way of acting. It will be much more
effortless to approach the Polish market of environmental services after analyzing the actors
present there and with awareness of the rules determining it. The situation presented above
gives good conditions for NIRAS for operating in Poland. As a company with core
competences of water management, soil and ground water pollution, waste management and
others connected to natural environment NIRAS will find a huge market for its services in
Poland and can help to create traditions and capacity for environmental protection
management in this country.
7. Public Private Partnership (PPP) theory
In modern, developed societies the public sector is a major economic player nowadays.
Successful public projects can be seen as a significant opportunity for private business,
especially in such fields as building, infrastructure, consulting services or transport. There are
numerous differences between the public and private sectors, for instance in management
approaches and in environments surrounding both sectors, but it is unavoidable that they
merge with each other. The operation of the market always depends on certain forms of law
and public policy like private property rights, law of contract or the regulation of money as
means of exchange. Business decisions, on the other hand, influence society and public
sectors in terms such as the environmental impact of production, types of jobs needed in the
economy or the level, type and locations of employment. There has to be some balance or
combination of the state and the market in order to achieve the public interest or a common
57
Polityka Ekologiczna Państwa (The National Environmental Policy)
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International Business Economics, 10th Semester
good of the society.58 Business has an important stake in various areas of government activity
because often it is a direct or indirect beneficiary or supplier of goods and services to the
public sector. For companies like NIRAS public sector will be a very important customer as it
provides the physical infrastructure and offers consulting for public sector. It can be stated
that a business never operates in a truly free market, but always in a political environment in
which government decisions influence the threats and opportunities that a company confronts,
both in a national and international context.
59
Apart from national governments also
supranational governments should be mentioned. An example can be European Union, which
is especially important for NIRAS as through its directives it creates and influences
environmental policies in the member countries and these policies influence the market on
which NIRAS operates. European Union law in many cases takes precedence over national
regulations. For the company approaching public sector projects it is necessary to investigate
the legal environment of the target country in order to get familiar with the local rules and
policies.
7.1.
Organization of PPP
Public and private sectors often perform joint projects nowadays and the cooperation takes
form of public-private partnership. Public-private partnership (PPP) can be defined as
“People and organizations from some combination of public, business and civil
constituencies, who engage in voluntary, mutually beneficial, innovative relationships to
address common societal aims through combining their resources and competencies”.60
Often private organizations are asked to tender for public contracts through the “public
procurement”. This system has strict rules on how contracts are awarded and they are tied to
agreed and expressed needs of central or local governments. PPP brings together the
relationships between the private and public sectors so that particularly the private sector is
taking responsibility for providing public services. The public sector gains by new
management techniques brought from private sector, the private sector apart form financial
incomes benefits from control of its involvement in service provision.
61
As the private sector
is not funded by the government, the actual motive for involvement in a PPP usually is the
expected profits. One of the benefits that a private company would gain from a PPP is the
58
Wetherly P, Otter D. (2008), pp. 276-280
Wetherly P, Otter D. (2008), pp. 98-99
60
Nelson J, Zadek S. (2000), p 14
61
Wetherly P., Otter D. (2008), pp.285-286
59
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International Business Economics, 10th Semester
promotion of their public image, which is becoming more and more important nowadays.62
Additionally, PPP can provide more-efficient, lower-cost reliable services, helps to keep the
public sector administration costs down and can reduce the project life-cycle costs and
delivery time. It also helps to improve quality and efficiency of the services and facilities
innovations in infrastructure development. It transfers risk related to construction, finance and
operation of project from public to private sector and helps to promote local economic growth
and employment opportunities.63 Ghobadian et al. (2004) mention two additional reasons for
more extensive use of PPP projects. First, the private sector will get to know the needs of the
public sector client over time. Secondly, the private sector has more to offer than the public
sector in terms of skills, technology and knowledge therefore providing better quality
facilities.64
There must be some conditions fulfilled in order to enhance the PPP success probability.
There are some areas which determine proper functioning of public-private cooperation. Most
scholars agree that one of these factors is a good coordination across projects, functions and
organizations. To set a proper coordination it is important to have decision makers established
from the beginning of the project, the progress of the given venture should be consistently
monitored, the project should be goal-directed and measured by the results, there should be
clear and adequate working methods and agreements and finally, the private sector should be
free to fulfill its entrepreneurial role and there should be mutual confidence. Apart from
coordination it is important to allocate risk properly and perform thorough and realistic costbenefit assessment.65 There are always other issues as well, which are specific for a given
project and cannot be generally specified. The literature also enumerates the most important
obstacles appearing on the way of public-private partners. They can be of social, political or
legal nature, they can concern many issues like unfavorable economic or commercial
conditions, inefficient public procurement framework, lack of mature financing techniques
and they can lie on both- the public or the private sector side. Also the natural differences
between the partners can be a source of obstacles. There are many factors to consider but
generally it can be stated that the success of PPP depends on the competence of a government,
the selection of appropriate concessionaire, an appropriate risk allocation between the two
parties and a proper financial system.66 Despite the possible difficulties, when correctly held
62
J.LaFrance, M.Lehmann (2005), pp. 216-229
Young Hoon Kwak et al. (2009), p.45
64
Ghobadian, A.et al. (2004), pp. 271-302
65
D. Tranfied et al. (2005), pp. 165-175
66
X.Q. Zhang, (2005), pp. 71-80.
63
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International Business Economics, 10th Semester
PPP can be a key strategy for delivering public service and infrastructure. Therefore, it is very
important to understand and enhance knowledge of PPP nature.67
7.2.
NIRAS involvement in a PPP project in Poland
To get involved in a PPP project can be an excellent way for NIRAS to enter Polish market.
They can expand into a new market and through a public sector gain promotion of the
company image. There is a huge tradition worldwide for PPP ventures in fields like water
delivery, sewage treatment or environmental technologies and they tend to be advantageous
for both parties. From the legal point of view, there are a good conditions in Poland for
public-private initiative as there was a new act passed recently, aiming at simplifying the
procedure for PPP and encouraging the private sector to get involved in the public ventures. It
is addressed mainly to companies specialized in infrastructure, construction and
environmental technologies hence also NIRAS can benefit from it.68
NIRAS has a long experience in participating in PPP projects in Denmark and abroad and it is
expected that the public market share will grow during the next years.69 As an experience,
credible participant of PPP in Denmark it can transfer its know-how to Poland and benefit
there from it. Poland as a country of centrally planned economy till 1989 did not have a lot of
time to develop a tradition of PPP ventures so the country can also take advantage of NIRAS’
knowledge in this field. Especially that currently there are numerous projects running or being
planned aiming at adjusting Polish environmental management to European Union standards
involving both public and private sectors. PPP in Poland is regulated by the Act on PublicPrivate Partnership from 2008.70 NIRAS can take advantage of the fact that PPP does not
have a long tradition in that country and there is a demand for organizations experienced in
this area. Thus, the company should involve the rules of PPP into its strategy for operating in
Poland. Moreover, there is a lot of support from the EU for the water supply, sewage
treatment and other similar projects in Poland and this can be also a benefit for NIRAS,
especially as it has some experience in applying for EU funds. To initiate the PPP in Poland
NIRAS should look for some favorable projects and partners. In order to do that the analysis
of the new market environment will be performed to state where and how the company could
act. After successful PPP project attempt, NIRAS would become a credible player on a Polish
67
Young Hoon Kwak et al. (2009), p. 19
Young Hoon Kwak et al. (2009), p. 22
69
NIRAS’ business plan
70
www.partnerstwopublicznoprawne.info.pl
68
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International Business Economics, 10th Semester
market and a favorable opinion would allow the company to win new customers within both
public and private sectors. As NIRAS has already opened its construction department in
Poland it could be exploited in order to get access to Polish market and enhance the likelihood
for introducing the environmental services there. Also the area where the construction
department is situated would be the most favorable for the start up, as the company brand is
already recognizable there and it would be easier to win customers through the Polish
subsidiary.
7.2.1. Public tenders
The most obvious way for undertaking a PPP project in Poland for NIRAS is to make an offer
in a public tender. Therefore, NIRAS should know the general rules of organization of the
public tenders in Poland. They are regulated by an act from 29th of January, 2004-The Law of
Public Tenders”. Usually they are announced by a certain governmental organization in a
form of contest. There are some basic rules that have to be met by the body responsible for the
organization of such tender. The participants have to be treated equally, there have to be
impartiality and fair play, they have to be available to the public and there has to be a proper
documentation drawn up. Additionally, there is a certain set of regulations for every single
public tender depending on its nature.71
7.3.
Conclusions
To challenge the Polish market NIRAS needs to design a proper strategy. For the initial stage
of the company presence on a new market it could be beneficial to undertake a project in a
public sector. There are numerous investments in Poland nowadays within the area of NIRAS
activities and there is also more and more PPP initiatives taking place there. Thorough
preparations and a good plan would allow NIRAS to benefit from investments and gain a
good position on the market.
8. Recommendations
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International Business Economics, 10th Semester
This section will present strategic recommendations for NIRAS concerning its market
opportunities in Poland within the environmental services market. The aim of strategic
guidelines is to identify some steps for the company to follow in order to undertake successful
venture within environmental services sector in Poland. The recommendations will be based
on the research conducted in order to investigate NIRAS’ market opportunities in the
discussed market.
 In order to enter the new international market NIRAS needs to create precise time
framework indicating when the particular steps will be accomplished. It is very
important to complete the task one step after another. Some procedures- like taking
part in a public tender may be long-lasting and involving many stages, preparations of
documentations, translations, etc. Thus the company has to keep its activities in order
and be consistent, the competences should be divided clearly. Especially, that
according to the cultural research conducted, it is essential to be well prepared when
dealing with Polish managers and to be professional and to have a plan. Acting in such
way NIRAS will be able to assess the completed parts of its plan and to forecast the
best way for the future accomplishments.
 Once the company has the goal established it has to define the way to achieve it.
NIRAS’ goal is to enter Polish market with environmental services. Throughout the
previous sections some aspects of this problem have been discussed. From the
research conducted there are some remarks emerging. First of all, the company has to
develop some abilities in order to penetrate foreign markets successfully. Even though,
NIRAS has already possessed some international business competences it has to
permanently keep them updated. In a dynamic and shifting environment everything is
changing very fast. Thus, the company has to make sure that its strategy is based on
the newest international business competences and the target market is well
recognized. Having high level of the international business skills the company can
assess and evaluate its international business environment. then can utilize the
information obtained and turn it into actual business actions. The managers of NIRAS
should strive to improve the market orientation of their business to attain higher
business performance and competitive advantage over their competitors. The proved
consequences of market orientation introduction, like better general business
performance and employees satisfaction should be convincing enough to include this
concept into the strategy of challenging new markets. Managers in NIRAS has to
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International Business Economics, 10th Semester
collect, interpret and use information from the external environment serving as
foundation for selecting goals and developing strategy for fulfilling them. On that
basis they can allocate resources for various programs within the company.
 In the project there was an assessment of two dimensions of the NIRAS’ foreign
market environment performed as it was comprehended that for the project problem
the two environments-legal and cultural are the most important. After the analysis of
the legal aspect of the environmental services providing NIRAS can be aware who are
the actors within the private sector on its target market, how they are organized and
who holds the key responsibilities. Thanks to that information the company can
identify its potential partners and customers and get prepared for the new market
circumstances. The analyzed situation can also generate some obstacles for NIRAS.
There is very short tradition in Poland of cooperation between the public and the
private sectors. It is due to the fact that the country is still in stage of transformation
from centrally planned economy to the market one. Thus NIRAS can expect that
serving public sector by private companies in Poland is not well organized yet.
Additionally, the environmental protection and management in Poland is far behind
that of the western countries like Denmark. This is due to the fact that during
communist times these issues were totally neglected and there is lack of experience
among the actors involved in this field. On the other hand, that can be an advantage
for NIRAS as it can gain the market by bringing its experience and capacity.
Especially, as it was established before there is a huge potential in Poland within
environmental services. The regulations concerning the environmental protection,
pollutions and natural resources are created or improved very intensively in Poland
nowadays as it is an urgent issue to protect the environment and to catch up with the
other countries of the European Union in this field. Therefore there is a niche within
this field and demand for new environmental technologies and services which NIRAS
can deliver. Additionally, there is a huge campaign conducted aiming at bringing the
public attention to environmental issues, to teach people how to live in an
environmentally friendly way and respect their natural environment. This finally will
result in emergence of a private market of environmental services and technologies.
There are already legislations making people to take responsibility for environmental
losses but there is need for public awareness in this field to fulfill the legislations and
to create demand for environmental services in the private sector. This will happen
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International Business Economics, 10th Semester
very soon and NIRAS can also become an experienced player on this new market. All
these actions are supported by the European Union funds, which ensures a stable
financial side of the ventures in this field. To benefit from such situation NIRAS has
to launch its market intelligence into the new market and to keep up with the most
topical data.
 All the actions on the Polish market should be conducted with attention to the sociocultural angel. As the research has shown there are numerous differences between
Danish and Polish business cultures. Even though the two countries are situated in a
geographical vicinity they have completely opposite history and economy which
results in differences in all the levels of cultural profile. Numerous scholars and
practical examples have proved that cultural differences can lead to international
business fiasco. In order to avoid that, NIRAS has to use tools like the Hofstede
cultural model to design the best way to deal with the foreign business partners,
customers, suppliers, governments, etc. For the best effects there could be a cultural
training conducted for employees involved in the new market operations and it would
be a good idea to employ some persons acting as middlemen- who are aware of both,
Danish and Polish cultures, and who can help to organize the company functioning in
Poland.
 After obtaining the knowledge about the foreign business environment and cultural
preparations NIRAS can undertake a PPP project in Poland and in consequence make
its way to the Polish market. To enter such project a company should search for
suitable public tender. Such public tenders are always announced to public through the
websites of particular organizations. There is a big chance for NIRAS to win the
tender in the field of water works, sewage systems or similar as there is very few
companies experienced and big enough to deal with such projects in Poland. For this
purpose NIRAS has to get acquainted with certain legal acts concerning public tenders
organization and PPP rules in Poland. The company should also choose a good area of
Poland to start introducing its services as there are considerable differences in
development and organization of the regions in Poland. As there is already a
construction division of NIRAS existing in Cracow it would be easier to open another
division in this region as well. In such way the company can utilize the knowledge of
NIRAS brand there and the network already created by the division. One successful
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International Business Economics, 10th Semester
project undertaken within the environmental services area will help the company to
develop further and introduce other services of NIRAS in Poland.
9. Final conclusions
The aim of the project was to assess the market opportunities for a Danish company-NIRAS
in Poland within environmental services field. The factors of a successful internationalization
of a company were formulated and referred to the NIRAS case. The research was supported
with suitable theoretical and methodological background. It was stated that the local markets
are getting not sufficient for numerous companies nowadays and they are looking for
international market. This phenomenon is especially evident in Denmark, where the local
market is relatively small and companies have to go abroad in order to stay competitive.
NIRAS has already gained some international markets and now it wants to offer its
environmental services in Poland, expand the company, gain new customers and the
competitive advantage. By the growth and presence on the new markets the company wants to
become the first choice within its field for both –the best customers and employees as well.
For the purpose of the project it was investigated what factors are crucial for a company in
case of challenging a new market and it was concluded that both- internal and external aspects
will influence the process. The company has to improve its international business
competences, become more and more market oriented and sensitive to the customers needs. It
is necessary to devote some resources to achieve superior international market orientation,
marketing skills, innovativeness and cultural competences. When the company will approach
a new market it has to be aware that it is embedded in a set of unique environmental factors
which influence the business performance. For NIRAS which aims at serving the public
sector it is crucial to know the legal environment and the proper institutions which can
become both- its customers or business partners. A good way of approaching the public sector
would be to get involved in a PPP project or initiate such project in cooperation with Polish
central or local government. Before approaching the Polish market NIRAS has to devote
some attention to the cultural factor. Numerous scholars and practical evidences have proved
that culture can be determining factor of international business and a company has to make
some cultural preparations before going to the particular country. As a tool for such
preparation can be used scientific research of cultural differences conducted by Hofstede, Hall
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International Business Economics, 10th Semester
or other authors. Managers of a company should utilize it in order to gain valuable knowledge
about business culture of the target country. Finally, NIRAS should be aware of a set of
obstacles and opportunities connected to the Polish market of environmental services
identified in the course of the research and presented in the recommendation section. There
were numerous companies approaching international markets without any success. The
failures were due to many reasons like lack of proper preparations, lack of cultural
understanding and others. Nevertheless, it is highly probable that NIRAS can be successful in
Poland if it will devote some resources first and plan a careful strategy.
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Reports
Niras’ business plan 2009-2013
Prawo ochrony środowiska (The Polish code of environmental protection)
Strategia ochrony środowiska do 2016 (The Polish national environmental strategy till 2016)
Websites
Geert Hofstede’s Cultural Dimensions, www.geert-hofstede.com, Accessem on 17.04.2009
NIRAS’ international website, www.niras.com, accessed on 17.04.2009
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Website
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the
Water
Management
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of
the
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www.krakow.rzgw.gov.pl, accessed on 29.07.2009
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63