This master's thesis will deal with the different market entry strategies of German companies in Bulgaria. More specifically, I will focus on small and medium-sized enterprises (SMEs), since they do not have the financial strength and confidence of large enterprises and corporations, and it would be interesting to examine their behaviour when entering a foreign market. An overview of the micro- and large enterprises will also be presented in order to further support the statements made about SMEs. Through an empirical and comparative analysis of a report of the German-Bulgarian chamber of industry and commerce, I will give an answer to the question, whether is this even worth it and if so, what strategy would be most successful for them and what factors influence the most.
The analysis will begin with a more global overview of international business and especially internationalization. The definition of internationalization, its meaning and its relation to entering foreign markets will be presented. In the third chapter, the term market entry will be introduced, as well as the different possible strategies and variations for this. The fourth chapter will focus on small and medium-sized enterprises - what exactly they are in general, in Bulgaria and in Germany, what are the main differences between them and the large ones and why they are important. After that, a legal framework of the situation in Bulgaria will be presented - the economic development of the country, its business environment, corporate law, forms and taxes.
All this will be considered in order to get to the heart of this thesis in the sixth chapter - the empirical and comparative analysis and the results drawn from them. Concrete samples with German companies in Bulgaria will be used in the study. Several variables will play a role in my research such as location, type of the enterprise, market entry method, industry and market participation. Based on it, specific problems will be discussed and finally conclusions will be drawn on the determining factors of market entry behaviour of German companies on the Bulgarian market. The master thesis will end with a summary of the main conclusions.
Table of Contents
1. Introduction
2. Internationalization
3. Market entry
3.1 Definition
3.2 Market entry strategies
3.2.1 Export
3.2.2 Cooperation through contractual agreements
3.2.2.1 Licensing
3.2.2.2 Franchises
3.2.2.3 Joint ventures
3.2.3 Direct investments with the aim of sole ownership
3.3 Summary on the market entry of SMEs
4. Small and medium-sized enterprises
4.1 General definition
4.2 SMEs in Bulgaria and Germany
4.2.1 SMEs in Bulgaria
4.2.2 SMEs in Germany
5. Framework in Bulgaria
5.1 Bulgaria before 2007
5.2 Bulgaria after 2007
6. Empirical and comparative analysis of the market entry of German companies in Bulgaria
6.1 Data collection and selection
6.1.1 Companies registered in Germany
6.1.2 Companies registered in Bulgaria with German participation
6.2 Results and analysis of data
6.2.1 Time of occurrence and turnover
6.2.2 Descriptive analysis of the sample
6.2.2.1 Analysis of the companies registered in Germany
6.2.2.2 Analysis of the companies registered in Bulgaria
6.2.3 Further analysis of the relationships between the variables determined
6.3 Evaluation of the knowledge gained
7. Conclusion
8. Summary of main conclusions
Research Objectives and Themes
This thesis examines the market entry strategies employed by German small and medium-sized enterprises (SMEs) when entering the Bulgarian market. It seeks to answer whether such an entry is profitable and which specific strategies and influencing factors lead to the most successful outcomes in the current Bulgarian business environment.
- Analysis of internationalization and market entry strategies within the SME context.
- Evaluation of the Bulgarian economic and legal framework for foreign direct investment.
- Empirical and comparative analysis of German companies active in Bulgaria.
- Investigation of the relationship between firm size, industry, and entry mode preference.
- Strategic recommendations based on the experiences of existing German-Bulgarian business collaborations.
Excerpt from the Book
3.2.2 Cooperation through contractual agreements
Cooperations are signed for a pre-agreed or indefinite period of time with the knowledge that by merging similar resources and combining similar competencies, goals are being pursued which alone cannot be achieved. The partners influence this process in different ways. In order to achieve the goals, agreements between the cooperation partners are necessary and compromises have to be made. SMEs are usually in a worse negotiating position, so there is a risk that they will be deceived. However, cooperations offer different advantages that will be explained below. The cooperation partners can certainly pursue their own – different goals. It is crucial that they are coordinated in such a way that they do not contradict each other, and that each partner takes on the task necessary to achieve the cooperation goal.
Cooperation differs from export because the focus is on the transfer of knowledge and skills which can lead to export opportunities. In addition, they sometimes offer considerable strategic advantages over export and classic direct investments: For international companies, cooperation can be of particular value with regard to possible structural change and “local know-how”, since this knowledge is only based on experience and cannot be purchased.
Summary of Chapters
1. Introduction: This chapter introduces the core subject of internationalization and sets the scope for studying German SME behavior within the Bulgarian market.
2. Internationalization: It defines internationalization strategies and highlights the necessity of systematic planning for companies seeking to operate beyond their home borders.
3. Market entry: This section details various entry modes, ranging from low-resource exports to high-capital joint ventures, and evaluates their suitability for SMEs.
4. Small and medium-sized enterprises: The chapter provides legal and economic definitions of SMEs in Bulgaria and Germany, serving as a basis for the empirical comparison.
5. Framework in Bulgaria: It analyzes the economic and legal environment of Bulgaria, distinguishing between the periods before and after its EU accession in 2007.
6. Empirical and comparative analysis of the market entry of German companies in Bulgaria: This core chapter evaluates data from German-Bulgarian corporate partnerships to identify preferred entry modes and influencing variables.
7. Conclusion: The section summarizes the findings regarding the behavior of German SMEs in Bulgaria, emphasizing the role of market conditions over size-based restrictions.
8. Summary of main conclusions: This chapter synthesizes the primary insights of the thesis, confirming that environmental factors are the main drivers of strategic decisions for foreign firms in Bulgaria.
Keywords
Internationalization, Market entry strategies, German companies, Bulgaria, Small and medium-sized enterprises, SMEs, Foreign Direct Investment, Export, Business cooperation, Joint ventures, Economic framework, Business environment, Strategic management, SME definitions, Corporate investment
Frequently Asked Questions
What is the core focus of this research?
This thesis examines the entry behaviors and strategic choices of German small and medium-sized enterprises (SMEs) as they establish operations in the Bulgarian market.
What are the primary thematic areas covered?
The work covers theoretical frameworks of internationalization, legal and economic realities in Bulgaria, and an empirical analysis of German companies currently operating in the country.
What is the main objective of this study?
The primary goal is to provide a comprehensive overview of how German SMEs approach the Bulgarian market, identifying which strategies are most successful and what external or internal factors drive these decisions.
Which scientific methods are utilized?
The research relies on an empirical and comparative analysis of 85 German-affiliated companies in Bulgaria, using data derived from the official reports of the German-Bulgarian Chamber of Industry and Commerce.
What does the main body of the work address?
The main body bridges the gap between theoretical market entry strategies (such as exports, licensing, and joint ventures) and practical observation of successful corporate implementations in the Bulgarian context.
Which keywords best characterize the analysis?
The core keywords include market entry strategies, SMEs, Bulgaria, German investment, internationalization, and corporate framework.
How does the legal environment influence SMEs in Bulgaria?
The research finds that companies favor the limited liability legal form (EOOD/OOD) because it is competitive, relatively simple to register, and offers tax efficiencies beneficial for smaller or unpretentious business operations.
Do SMEs face different market entry hurdles than large corporations?
Yes, while large corporations have more financial flexibility to invest directly, SMEs are often constrained by limited resources, leading them to prefer safer entry models like indirect exports, local sales partnerships, or franchising.
What role does the South-West region of Bulgaria play?
The South-West region, dominated by the capital city of Sofia, is the most frequently chosen location for German SMEs due to its superior infrastructure, higher purchasing power, and increased market demand.
- Citar trabajo
- Andrea Büger (Autor), 2022, Exploring Market Entry Strategies of German SMEs in Bulgaria. An Empirical Analysis and Comparative Study, Múnich, GRIN Verlag, https://www.grin.com/document/1437220
