Poland Cultural and Economic Analysis

The Introduction of Starbucks Frappuccinos Into Poland

2009

Monfort College of Business University of Northern Colorado

12/1/2009 Courtney Eisenach, Kelsey Highland,

and Jeff D’Autremont

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Cultural Analysis

I. Introduction Company Profile: Starbucks is one of the world’s leaders in coffee and specialty

drinks. In 1971, Starbucks first opened in Seattle. In 1998, they went global to the

UK. From there the company has continued to spread internationally. In 1996,

bottled Frappuccino drinks were first introduced. We want to spread the bottled

specialty drink to consumers in Poland. On April 7, 2009 Starbucks was introduced

to Amsterdam and Warsaw. “Starbucks waited a long time to find the right

opportunity to enter Poland, a country that has enthusiastically embraced the coffee

house culture. We are excited to become a part of this growing tradition and a part of

the community” said Drew O’Mally, managing director. Buck Hendrix, president of

Starbucks Europe, Middle East and Africa. (Starbucks, 2009) states, “Poland as well

as the rest of central and Eastern Europe represents significant growth areas for

Starbucks.”

II. Executive Summary

Successful introduction of Starbucks’ Frappuccino beverage should occur based on

our research of the post World War II history of Poland, the social institutions like a

smaller family, improvements in educational achievement, a stable political system,

codified laws with trademark and patent enforceable laws and social organizations are

becoming very Westernized. Stable social institutions providing a safety net for

providing basic necessities for polish people will allow them to afford small luxuries;

prepared beverages fall into this category. This again follows the Westernized move

toward’s safety net systems for retirement and health care coverage. Religion is even

more important in Poland than in the United States. Religious gatherings often center

around consuming food and beverages. In fact, many churches in the United States

have coffee shops within their organization. When considering living conditions, the

Polish societies move towards Westernization should assist in the adoption of

Frappuccino consumption. Specifically, polish diet and nutrition should embrace the

convenience of canned drinks. This is supported by the polish families’ move

towards the consumption of prepared and convenience foods for dinner and eating

lunches that were prepared at home. Further, the move towards a more Westernized

culture will place pressure on time and increase the demand for time saving ways to

meet the demands of a busier lifestyle. Preparing cold drinks or hot drinks will

follow this move toward convenience consumption patterns. As in the United States,

sporting events are great venues for beverage consumption and the popularity of

soccer will give Starbucks’ an ideal environment to market Frappuccino beverages.

Finally, the Polish societies drive toward Westernization culture practices will aide

Starbucks’ successful introduction of Frappuccino beverages. Implementation of the

strategy should always reflect lessons learned in the market introduction of

Frappuccino in the United States.

III. History When considering the history of Poland and how it impacts commerce one should

primarily focus on Post World War II Poland. The Polish Committee of National

Liberation was set up in 1944 by the Communist Poles and Russians at Lublin, and a

few days later, was recognized as the temporary Polish government by the USSR.

The post war history has been dominated by communist dominance over the workers

of Poland. The rule was not welcome and one senses that the proud polish people

were not satisfied with being an ally of the Soviet Union. Centralized planning

imposed by the Communist government proved to inadequately provide for stable

food prices and resulted in shortages for basic necessities. In 1980, the trade union

solidarity was created in response to dramatically increasing fresh food prices. As the

80’s decade progressed martial law was rescinded and communism was replaced with

a return to democracy. Today democracy and capitalism is firmly taking root in

Poland.

Implications: My studies reveal that history is important to the polish people, just

like it is important to United States citizens. However, history should not have

significant implications for a successful Frappuccino introduction.

IV. Social Institutions

A. Family

Nuclear Family: The number of smaller households in Poland has increased. “In 2007

there were 13.7 million households in Poland, of which nearly 75% were of three persons or

fewer” (GMID-Consumer Lifestyles Poland , 2009). It is expected that smaller household

numbers will continue to increase within the years to come. It is typical to find large households

in villages. “In 2007 single person households accounted for 24.1 % of all households, up from

19.7% in 1995; two-person households accounted for 27.1%, up from 23.1 % in 1995; and three-

person households at 23.3%, were up from 19.8% in 1995” (GMID-Consumer Lifestyles

Poland , 2009). Three-person households usually consist of a mom and dad and a son or

daughter. It is not uncommon that couples only choose to have one child due to changing

consumer lifestyles. “In Poland the family model of one or two children is becoming widespread,

so parents can afford to spend more money per baby” (GMID-Consumer Lifestyles Poland ,

2009). The child will live with their parents until college. In the United States it is more common

to have a family of at least four or five. However, with the change in the US economy, couples

have been apprehensive to extend their families. The US family structure could start to look

more like Poland’s.

Extended Family: The Polish tradition is that families maintain a close tie. Many times

Grandparents will move back in with families to help with childcare, or to be taken care of by their

children.

Dynamics of Family: Under the family section it describes how it is more common for a

typical Poland family to consist of a mom and dad and one child. Parents are feeling the need to

be able to support one child the best possible. It is very responsible of them to recognize that

they can only afford one child and be able to give that child a life full of endless opportunities.

Parental Roles: Overall the Polish birth rate has increased from “9.3 in 2002, to 9.7 in

2007.” Until 2002 couples were affected by the overall difficulty of the economic situation.

“High unemployment rates and difficult material situations meant that young people consciously

decided not to have children. The number of couples with children has decreased by 670,000

from 6.7 million in 1995 to 6.0 million in 2007. The low share of this household type is partly

attributable to the fast growth of other household types, especially single-person households and

couples with no children” (GMID-Consumer Lifestyles Poland , 2009).

The amount of single parent households has decreased significantly since 1995. It has

decreased from 5.2 % to 3.5% as of 2007. A single parent household usually consists of “single

mothers who are divorced, resident in big cities, rather than unmarried mothers or widows with

children. Formerly, having a child while unmarried would have incurred malicious comments

and condemnation. Currently, bringing up children while unmarried has become socially

acceptable in urban areas, though in villages it is still a common view that lone parenthood is

unacceptable (GMID-Consumer Lifestyles Poland , 2009).

Marriage and Courtship: The men and women of Poland are conquering their

independence before tying the knot. In the mid 90’s it was common for a couple to get married

around the age of 23. If you were not married by the time you were 25 you were considered to be

an old maid or a bachelor. However, with recent lifestyle changes this is no longer the norm.

Women are getting married around the age of 25 while men are waiting until age 26. This change

in courtship has been caused by Western attitudes. “Much of this change can be attributed to the

migration of Poles. Young people, principally students and graduates moved to Western

countries for seasonal jobs, where they observed liberal Western attitudes towards marriage and

family in general. To some extent, such patterns were adopted by them upon returning to Poland.

Such a change in attitude has resulted in such phenomena as the later age of getting married and

the increasing number of young people who live alone” (GMID-Consumer Lifestyles Poland ,

2009). It is important for them to finish their education, find an acceptable job and feel the

independence from their parents before settling down.

Female and Male Roles: It is tradition that men and women greet each other by shaking

hands. Men tend to wait to shake a women’s hand until she has offered it first. Poles tend to be

more formal and conservative then westerners.

Implications: Starbucks Frappuccinos is going to be directly marketed towards men and

women between the ages of 15 to 64. The trend towards smaller households and higher income

households should allow for greater disposable income to be used on luxury food items.

B. Education

Primary education: Preprimary education is a major issue for Poland. It is considered to

be underdeveloped. “The number of children participating in pre-school classes is far below the

average of EU countries, where it is 80%. Pre-school education in Poland is seriously neglected

and requires considerable investment from the state budget. In large cities in Poland there is a

lack of places for public nursery schools and, “in some cases parents put their child on the

waiting list soon after birth in order to ensure a place” (GMID-Consumer Lifestyles Poland ,

2009). Private pre-schools are now being organized. Parents are concerned with the lack of pre-

schools available. It is a place where children are able to start learning the basics but it’s also a

good child care provider.

The Primary education system has changed since 1999. Before 1999 children went to

school for 8 years and then once they were 15 they applied for secondary or vocational school.

Now primary school has been shortened and grammar school has been created. (GMID-

Consumer Lifestyles Poland , 2009). Primary education is divided into two sections. The first

section is where one teacher is in charge of the students. She plays the role as a classroom

teacher. The second section is when students learn with different materials from different

teachers. At the end of six years, students take exit examinations. The exams do not affect a

student’s entry into secondary education.

Secondary Education: Students have multiple options for secondary education. They can

attend the primary secondary education program, specialist secondary school, technical

vocational school and fundamental vocational school. Depending on student choices they can

attend secondary schooling anywhere from two to four years. They must complete the Mutura

Exam before they are able to exit. Once they have exited, they then have the opportunity to

attend a university. (GMID-Consumer Lifestyles Poland , 2009)

Higher Education: Higher education rates in Poland have grown enormously. In 1991,

394,000 students were enrolled in higher education and today there are over 2 million students.

About 48% of adults between the ages of 19-24 attend some kind of institution. “There are 94

public colleges supervised by the Ministry of Science and Higher Education in Poland, including

35 state higher professional schools. Also, there are approximately 300 privately run colleges

operated in Poland in 2008, thereby substantially improving the scope of available education”.

(Poland: Higher Education Boom, 2009)

Literacy Rate: According to GMID the total literacy rate for residents over the age of 15

has been 99.3 percent for the past six years. Broken down into male and female categories is as

follows: male literacy 99.6 and female literacy 99.0

Implications: Students in secondary and higher education can benefit from

Frappuccinos. Frappuccinos have a large amount of caffeine that students tend to need to get

through their long days in class. A little pick-me-up is always needed. The Frappuccinos can be

sold in the vending machines at schools thus allowing students’ easy and unlimited access.

C. Political System

Political System: Poland’s political structure consists of a president elected every 5 years

who can serve two terms and holds the responsibility as head of state and the commander-in-

chief of the armed forces. There is a council of ministers that is led by the Prime Minister. “The

parliament consists of the 460-member Sejm and the 100-member Senate or upper house”

(Background Note: Poland, 2009).

Political Parties: According to the US Department of State, Poland’s Political parties are

as follows: Civic Platform (PO), Law and Justice (PiS), the Polish People's Party (PSL), the

Democratic Left Alliance (SLD), Social Democracy of Poland (SDPL), Poland XXI, and the

Democratic Party (PD).

Stability of Government: Political stability has been achieved by governments because

they alternate between the right and left sides of the orientation, but within well defined

boundaries. Many of the reforms are going to cause sustainable growth in years to come,

although not all people are in favor of the reforms. “The transfer of many responsibilities from

the central to local government strengthens the participatory democracy, allowing the people to

voice their opinions and influence policies” (Poland: Future Trends).

Special Taxes: There are four main indirect tax rates on value-added taxes. “First, 22% on

most goods and services, second, 7% on foodstuffs and construction materials, third, 3% on

unprocessed foodstuffs and fourth, 0% on exported goods and services and VAT exempt

including financial, insurance and health care. Excise taxes are charged on alcohol, cars, petrol,

and tobacco products. There is also a civil transactions tax ranging from 0.1% to 2%” (Taxia

(Poland-Local Government)tion: Poland).

Role of Local Government: In 1991, there were changes in the local government. Instead

of having 49 provinces there are now 16. The government is now structured into a three tier

layout; “municipalities/communes, 308 counties (powiaty), and 16 provinces. Each of these

divisions is governed by a council. Council members are directly elected, and appoint and

dismiss the heads of the municipalities/communes (wojt), the town mayors, the starosta or head

of the county, and the speaker of the provincial councils (Poland-Local Government).

U.S.-Polish Relations: The United States established diplomatic relations with Poland in

April 1919 when they had just formed the Polish Republic. Relations with the United States

improved over time as new leaders came to power who expresses interest in creating better

relations with the U.S. The Polish government has been a strong supporter of the American

military and economic presence in Europe. “In addition to supporting international

counterterrorism efforts, and NATO’s ISAF mission in Afghanistan, Poland cooperates closely

with the United States on such issues as democratization, nuclear nonproliferation, human rights,

regional cooperation in Central and Eastern Europe, and UN reform.” (US Department of State)

Implications: Poland’s government will be very supportive of implementing trade with

the United States. They should help and protect Starbucks movement towards sales at grocery

and convenience stores.

D. Legal System

Organization of Judiciary System: Poland’s Organization of the judiciary system is

organized into four tiers: regional, provincial, appellate divisions and a Supreme Court. The

Supreme Court is considered the highest. The Supreme Court and other courts are divided into

“criminal, civil, military, labor and family chambers. Judges are nominated by the National

Judicial Council and are appointed by the president for life” (Poland-Judicial System). Judges are

appointed to nine years. Although the system is independent it suffers from flaws such as

inefficiency, lack of resources and public confidence (Poland-Judicial System).

Code, Common, Socialist, or Islamic law country: Poland is a civil code law system, it is

a legal system that is made up of a collection of different laws that judges are required to follow.

Patents, Trademarks and other conventions: Poland’s patents, trademarks and other

conventions are all registered through The Patent Office of The Republic of Poland. On

November 10, 1919 Poland entered the Paris Convention for Protection. The Patent Office helps

companies fill and maintan their patents and trademarks. “Basic tasks of the Polish Patent Office

concerning grant and maintenance of legal protection are performed according to national

legislation regarding applications filed directly with the Office and according to international

agreements: For patent and utility model applications filed uner the Patent Co-operation Treaty

(PCT) and for trademark applications filed under the Madred Agreement Concerning the

International Registration of Marks” (UPRP).

Marketing Laws: Direct Marketing is very important for the success of Starbucks in

Poland. “New brands introduced on the market with experience gained during direct advertising

campaigns, often prove to be very profitable bestsellers” (Direct Marketing). It is very important

that someone from Poland be hired to conduct the marketing for Starbucks. This will give

Starbucks some insight regarding how to direct the marketing towards people in Poland.

Implications: If Starbucks manufactures beverages in Poland, then the technology and

proprietary recipes needed for production should be protected under Polish law. Also,

trademarks normally associated with Starbucks or uniquely created for Polish marketing

programs should be protected under Polish law. This is critical to have codified laws which are

enforceable.

E. Social Organizations

Group Behavior: Group Behavior has become very westernized. There is not a

significant difference in how people from Poland interact with each other then people from the

United States.

Social Classes: Research shows that Poland is largely made up of the working class.

There are six categories that define the class “(1) those who hold a middle position in the

scheme of social stratification, (2) those who work for themselves and at the same time are the

owners of the means of production, (3) those who possess qualification and education but do not

rule, (4) those who own their own business and capital, (5) those who acknowledge a certain

ethos associated with enterprise and independence, and (6) the intelligentsia; those with higher

education” (BNET).

Clubs, other organizations: Poland offers a relatively large number of clubs and

organizations. According to ExpatFinder.com there are clubs such as: Futbol, Cricket Lovers,

Mums & Tots of Warsaw, The Internationals Womens Group and Warsaw International Church.

Race, ethnicity and subcultures: Today Poland ethnicity is made up predominately of

97.6% Poles. The other 2.4% are German (1.3%), Ukrainians (.6%) and Belarussians (.5%)

(Encyclopedia of the Nations).

Implications: The label around the bottle is going to have to have to be written in Polish,

since Poles make up the majority of the country. Luxury beverages are an “affordable” luxury

for working class people.

F. Customs and Practices

1.) When greeting someone from Poland look them in the eye and have a firm hand shake.

2.) Poland is formal so it is correct to address someone by Mr. or Ms.

3.) Build a strong relationship on trust.

4.) Very common to build relationships over food. Never discuss work unless it is discussed

by the other party.

5.) If you are asked to a meal your host typically pays.

6.) Presentations should not only be factual but it should also be applicable for Poles.

7.) Decisions are not usually made right away, there is time made for discussion later.

(Kwintessential)

Implications: Starbucks must be familiar with Poland’s Business customs and practices

in order to succeed with the expansion of Frappuccinos into the grocery, convenience,

sporting events and vending machines business.

V. Religion and Aesthetics

A. Religion and Other beliefs

Orthodox doctrines and structure: Poland is one of the world’s largest religious

countries. 96% of the society in Poland is Catholic but according to Encyclopedia of the Nations

only 58% are active. Before World War II many citizens were Jewish. However, as of the late

1990’s there are less than 2000 practicing Jews. (The History Channel)

Relationship with the People: It’s very important to the society that people attend church

on a regular basis. Catholicism has stricter rules then other religions and requires dedication to

the church.

Which religions are most prominent? As mentioned above, Roman Catholicism is the

prominent religion of Poland. Second is Christianity and third is Muslim.

Membership of each religion: “About 509,500 people are registered members of the

Orthodox Church, 123,000 are Greek Catholics, 122,757 are Jehovah's Witnesses, and 87,300

are Lutherans (Augsburg). Other established Christian denominations include Old Catholic

Mariavits, Polish-Catholics, Pentecostals, Seventh-Day Adventists, Baptists, Methodists, the

Church of Christ, Reformed Lutherans, and the New Apostolic Church. The Muslim Religious

Union has about 5,123 members. About 5,043 people are Hare Krishnas” (Religion Poland).

Any powerful or influential cults? According to research there does not seem to be any

powerful or influential cults.

Visual Art: Polish art is very beautiful! They offer a wide variety of unique crafts such

as hand paintings with bright colors, leather purses, folk carvings, dolls, jewelry and many other

fascinating assortments. Please See Appendix one for pictures (Treasury of Polish Heritage).

Performing Arts: Poland is best known for their polish dancing. There are five main

dances: polonaise, kujawiak, mazur, oberek, and krakowiak. The music to the dances was

written in small villages. Today it is very common for people to discuss or go to a show

regarding Polish dancing. Polish dancing is very common in the US allowing audiences to view

many shows (PMC).

Folklore and relevant symbols: The White Eagle is the most important symbol of Poland.

It represents three brothers: Lech, Czech and Rus who were representatives of their tribes and

were looking for a place for permanent settlement. They came upon a place in a forest where

Lech looked up and saw a White Eagle land in a nest; he took that as a good omen and they

settled there. (Info Poland) A Folklore that is very well known is about King Boleslaw. The

Story is told as such, “When King Boleslaw died, Poland lost a very able and brave ruler, one

who had united her and made her into a really great country. One legend claims that Boleslaw,

who was a great warrior, had earned his title of the Brave by fighting Poland's enemies at a

mountain called Giewont. This mountain forms part of the Tatra mountain range, and its shape, if

seen from a certain angle, is like the head of a sleeping knight. Within the mountain is a huge

dark cavern and there sleeps King Boleslaw and his knights. They are mounted on horses, with

their swords, bow and lances beside them. And if Poland ever needs them, then someone must

awaken them, and they will ride forth to serve the Polish nation. But once they have gone forth,

they will never return” (Anglike)

Implications: Gatherings centering around religious activities usually have food and beverages

associated with them. This would be an ideal situation to encourage the consumption of

Frappuccino beverages.

VI. Living Conditions

A. Diet and nutrition

Meat and Vegetable Consumption Rate: While this data is not available for Poland,

documentation from GMID confirmed that even with the increase in health awareness, sales

between 1995-2007 decreased 6.7% for vegetables. However, fruit sales increased by 35.3%.

Typical Meals: The Poles consume three main meals a day. They have a regular breakfast

consisting of eggs and toast. They are not accustomed to leaving work for lunch. Instead they

either have snacks or sandwiches. Obiadokalcja (dinner and supper) is the largest meal of the

day. The meal begins with a soup followed by a meat. Many times the poles like to cover their

meats in breadcrumbs or fry it. Since women are no longer staying at home, meal preparation has

begun to change. Frozen and prepared food is being used now to help save time and money

(GMID-Consumer Lifestyles Poland , 2009).

Malunutrition Rates: It is estimated that in 2008 fetal malnutrition rates and slow fetal

growth for Poland was .051869 deaths per one million people (Nations Master).

Foods Available: Meat is a very important part of the Polish cuisine. Bigos is a traditional

cuisine that is made up of a variety of meats such as pork, sausage and beef. Typical dishes

served are, flaki (sheeps stomach), golanka (pig leg) and pierogi (dough filled with cheese meat

or fruit). “The Poles are known for their thick, hearty soups, including borscht (beet soup) and

botwinkia. (Countries and Their Cultures, 2009). Sour cream and bacon bits are condiments that

are used in almost every meal. For dessert they indulge in “stewed fruit, fruit dumplings,

pancakes with fruit or cheese and jam donuts called paczki (Countries and Their Cultures,

2009).

Implications: Frappuccinos will be a new and exciting drink that can be added into the

Polish diet. Many Poles drink lots of tea, but now they can experience the satisfaction of drinking

coffee. It is typical that people drink Frappunccinos in the morning and afternoon. They are not

usually consumed after 5:00 pm because of the amount of caffeine. Poles are in a position where

they are becoming more Westernized. Drinking Frappunccinos from Starbucks will help

continue to increase Westernization.

B. Housing

Types of Housing Available: “In urban areas, Poles tend to live in blocks of flats called

co-operatives: privately owned and managed by housing co-operatives. This type of privately

owned flat is characteristic of buildings from the communist era.” (GMID-Consumer Lifestyles

Poland , 2009). People over the age of 24 are looking to buy a house. However with property

being very scarce and expensive they tend to live with their parents. “In the villages, brick and

stone structures with fireproof roofs have replaced the traditional wooden houses with thatched

roofs” (Countries and Their Cultures, 2009).

Do most people own or rent? As mentioned above most people tend to rent due to the

scarce and expensive housing. However this also reflects their income. Many people think that if

they can afford a house, it would be better to put money towards their mortgage then towards

rent.

Do most people live in one-family dwellings or with other families? It’s more common

for Poles to live in one-family dwellings. It only differs if newlyweds have to move back in with

their parents, or grandparents have to move in with their children.

Implications: There are no obvious implications in this section.

C. Clothing

National Dress: Poles dress a lot like Westerners; however, they are more conservative.

Women are not allowed to wear pants. It is not uncommon to see women wearing full skirts and

stockings and head scarves in rural areas. Many times clothing is homemade because clothing

can be very expensive. Many foreign retailers are introducing new clothing styles that are edgier,

but are very expensive. Younger generations like to wear jeans and sweatshirts. (Countries and

Their Cultures, 2009).

Types of Clothing worn at work: Depending on the size of the business it is custom that

men and women both wear suits and Poles avoid bright colors and patterns. Women are allowed

to wear scarves that have some color. The use of fragrance should be scarce and clean hair and

nails is a must (Business Etiquette Guide to Poland).

Implications: There are no obvious implications in this section.

D. Recreation

Types available and in demand: Gymnastics, soccer, swimming, hockey and volleyball

are very popular sports. Soccer is the most played and gathers the largest crowds. During the

winter, Poles like to go to Zakopane to go skiing. “Other outdoor activities include: hiking,

motorcycle racing, horseback riding and hunting” (Countries and Their Cultures, 2009).

Percentage of Income spent on such activities: No information is available for this

category, but according to the GMID activities and leisure has increased 44.25% between 1995-

2007.

Implications: Frappuccinos can be sold directly to consumers at athletic events, such as soccer

games. Soccer games draw the largest crowds thus allowing Starbucks a large marketing

opportunity.

E. Social Security

The Social Security of Poland is called The Social Insurance Institution. Any individual

who is employed in Poland is subject to this no matter what his or her nationality is. (Social

Security System in Poland)

Implications: A retirement program can assure that retirees and others have the basic

necessities covered and individuals could therefore afford a luxury drink like a Starbuck’s

Frappucino.

F. Health Care

The Heath Care Plan in Poland was reformed in 1999. The reform occurred because

money was being wasted. Now, “the Polish healthcare system is based on free-of-charge access

to medical services for those with health insurance and the freedom of choice of institution and

doctor providing these services. This means that the patient has the right to choose their doctor

(general practitioner – GP) and any necessary specialists from those fully qualified and

employed by the national health system. The patient also has the right to change their GDP up to

twice a year without cost” (GMID-Consumer Lifestyles Poland , 2009).” There are still many

problems regarding the system such as long waiting lists for treatments that will take time to be

fixed.

Implication: If there is an affordable and reliable health care system, individuals should be able

to afford items beyond necessary items normally associated with food and beverage.

VII. Language

Official Languages: Polish is the official language of Poland

Spoken versus written language: Most Poles speak and write Polish; the second most

used language is English followed by German (Children from Poland).

Dialects: Polish is spoken in many dialects, “Little Polish and Silesian (Spoken in the

South) and Mazovia and Great Polish (Spoken in the north). Kashubian or Cassubian, also heard

in the north, is often treated as a dialect of the Polish, although it evolved as a separate West

Slavic language” (The History Channel).

Implication: Labels on the Starbucks Frappuccinos must be written in Polish.

VIII. Works Cited

Treasury of Polish Heritage. (n.d.). Retrieved Novemeber 15, 2009, from Polish Art: http://www.polartcenter.com/ Background Note: Poland. (2009, October). Retrieved November 14, 2009, from U.S. Deptartment of State: http://www.state.gov/r/pa/ei/bgn/2875.htm Business Etiquette Guide to Poland. (2005, October 21). Retrieved November 18, 2009, from Etiquette Tips for Visiting Poland:

http://www.associatedcontent.com/article/9001/business_etiquette_guide_for_poland.html Children from Poland. (n.d.). Retrieved November 18, 2009, from http://www.qcda.gov.uk/libraryAssets/media/qca-05-1760-11334_poland.pdf Countries and Their Cultures. (2009). Retrieved November 18, 2009, from Every Culture-Poland: http://www.everyculture.com/wc/Norway-to-Russia/Poles.html GMID-Consumer Lifestyles Poland . (2009). Retrieved November 14, 2009, from Global Market Information Database: http://unco.blackboard.com/webapps/portal/frameset.jsp?tab_id=_2_1&url=%2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_33202_1%26url%3D Nations Master. (n.d.). Retrieved November 18, 2009, from Mortality Statistics: http://www.nationmaster.com/graph/mor_slo_fet_gro_and_fet_mal_percap-fetal-growth-malnutrition-per-capita PMC. (n.d.). Retrieved November 15, 2009, from Polish Dance Site: http://www.usc.edu/dept/polish_music/dance/polka.html Poland: Future Trends. (n.d.). Retrieved November 14, 2009, from Encyclopedia of the Nations: http://www.nationsencyclopedia.com/economies/Europe/Poland-FUTURE-TRENDS.html Poland: Higher Education Boom. (2009, April 5). Retrieved November 14, 2009, from University World News: http://www.universityworldnews.com/article.php?story=20090402210342370 Poland-Judicial System. (n.d.). Retrieved November 14, 2009, from Encyclopedia of the Nations: http://www.nationsencyclopedia.com/Europe/Poland-JUDICIAL-SYSTEM.html Poland-Local Government. (n.d.). Retrieved November 14, 2009, from Encyclopedia of the Nations: http://www.nationsencyclopedia.com/Europe/Poland-LOCAL-GOVERNMENT.html Religion Poland. (n.d.). Retrieved November 15, 2009, from Encyclopedia of the Nations : http://www.nationsencyclopedia.com/Europe/Poland-RELIGIONS.html Social Security System in Poland. (n.d.). Retrieved Novemeber 18, 2009, from http://www.uj.edu.pl/SPM/MCSocial.html Taxiation: Poland. (n.d.). Retrieved November 14, 2009, from Encyclopedia of the Nations : http://www.nationsencyclopedia.com/Europe/Poland-TAXATION.html The History Channel. (n.d.). Retrieved October 8, 2009, from Cultural Analysis of Poland : www.history.com/encyclopedia.do?articleld=219513 UPRP . (n.d.). Retrieved November 19, 2009, from The Polish Patent Office : http://www.uprp.pl/English Anglike. (n.d.). Retrieved November 22, 2009, from Polish Legends: http://anglik.net/polish_legends_boleslaw.htm

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Direct Marketing in Poland. Kling. November 20, 2009

IX. Appendix

Economic Analysis

I. Introduction Poland has a very booming economy and has been very successful in terms of growth and

development of technology as well as research centers. Their labor force is highly

educated with it mostly concentrated in the service segment. Poland is still in the

developing stage, but is growing significantly as supermarkets and hypermarkets take

over smaller owner-operated shops. Through the use of technology and communication

systems available we will be able to successful distribute and promote Starbucks

Frappuccinos throughout Poland.

II. Executive Summary A. Population

Poland is experiencing a decrease in population and will continue to see this

decrease due to the decline in birthrates. Parents are abandoning the concept of large

families and moving towards a more traditional style consisting of one to two

children. Men and women have an average life expectancy of around 75 years of age

with women having a higher life expectancy than men. The age distribution of the

population is concentrated around the 15-64 age groups with most of the Polish

moving from urban cities to the rural countryside. Poland doesn’t have a lot of

diversity with the majority being Polish.

We will be targeting the 15 to 34 age group while marketing towards the 15 to 64

age group since they account for most of the population and are financially stable and

we can easily access the 15 to 34 age group at schools and work.

B. Economic Statistics and Activity

Poland represents a growing market with the potential to make Frappuccino sales

increase dramatically. Many companies have entered the Polish market and are currently

enjoying large increases in profits. With a GDP of $530 billion, Poland’s 38 million

citizens will be equipped with enough individual income to purchase Starbucks’

Frappuccinos on a regular basis. Currently, GDP in Poland is growing at a rate of 4.8

percent which will make Starbucks’ target market bigger as time goes on. Individual

income in the country is $16,000 per person and continues to grow each year. Starbucks

should try to penetrate the urban markets first because personal income is greater in those

markets compared to rural areas of the country. Households have an average income of

$37,000 which gives Polish families the option of purchasing Starbucks’ products.

Distribution of wealth in Poland is similar to the US’s. If Starbucks can market to the

middle and upper classes like they do in the US, Frappuccino sales will see immediate

increases.

Transportation of the Frappuccino product can be done effectively if the correct routes

are selected. Many roads and railways are outdated but there are enough transportation

networks to effectively deliver products to key locations. Ports have been used for over a

decade in Poland and have developed efficient systems for product distribution.

The target market in Poland is big enough to represent a substantial increase in sales if

effective communication is established. Starbucks’ marketers can use many different

communication techniques to help potential consumers learn about their Frappuccino

drinks. Television, radio, and internet communications will have the greatest impact on

company sales because these media channels have the largest audiences.

Finding effective workers in Poland will not be a difficult task for Starbucks. Employees

in the country are much like their counterparts in the US with similar benefits such as

vacation time and pension plans. Wage rates are lower in Poland than in the US which

will allow Starbucks to allocate savings in labor to cost of importing.

Many of Poland’s state-owned industries have been sold to private investors and the trend

is predicted to continue into the future. Private companies are much more efficient and

produce higher levels of GDP that can translate into increased purchasing power of

Polish citizens. Starbucks’ target market will continue to grow as industries are

transferred to private companies.

Poland’s trend of attracting foreign direct investments will also increase Poland’s GDP

and allow Poles to enjoy higher incomes to spend on available products.

Restrictions on trade are kept at a minimum to increase economic traffic between

countries. Standard tariff and tax rates are applied to imported products so costs can be

easily determined by Starbucks’ financial managers.

The dollar is currently gaining value against the Zloty so purchasing plants and

equipment in Poland will be cheaper for Starbucks. These savings will be a huge benefit

for the new Frappuccinos product struggling for initial profits.

Inflation in Poland is around 4 percent so escalation charges should be written into all

contracts to avoid the negative effects inflation can inflict.

C. Developments in Science and Technology

Poland is currently the technology research and development hub for most of

Central and Eastern Europe and has a quickly developing electronic industry. They’re

up-to-date with technology and currently have access to telephones, mobile phones,

computers, internet, radio, cable and satellite television, newspapers, magazines,

automobiles, and airports. Due to their fast increase in technology and research

development many multinational corporations are looking to hold their research and

development centers in Poland.

Poland has a very talented labor force due to the high education levels and

language aptitudes of the Polish with the total population at 17.01 million. The three

main sectors of the labor force are agriculture, industry, and services. The quickly

developing technology industry with help to improve the economy so more people

can purchase Starbucks Frappuccinos and we will be able to distribute them to the

large well-educated labor force.

D. Channels of Distribution

Retail outlets in Poland are still in the developing stage with about 200 hypermarkets

and 2,500 supermarkets. This expansion towards larger corporate-owned stores is

pushing smaller shops out of business. As Poland is very up-to-date with technology

they allow for most forms of operation with the most common being credit cards.

Most banks are now open 24 hours and are offering online banking services, which

allows for easier and quicker transactions. The use of wholesalers is common

especially with foreign firms looking to do business in Poland. We will be able to use

wholesalers to distribute Starbucks Frappuccinos to hypermarkets and supermarkets

making for a successful implementation of our product in Poland.

E. Media

As the largest broadcasting market, Poland has access to all forms of media including

television, radio, newspapers, magazines, journals, and the internet. Coverage of these

types of media is available all over Poland with radio and newspapers the most

widespread but currently in decline of popularity amongst the Polish. We will be able

to use advertising agencies in Poland to reach our target market through the use of the

internet and television since it is the most used and is growing in popularity. The use

of market research companies will also be useful when researching our target market

so we can understand their habits and reach them through the most suitable types of

media.

III. Population

A. Total

1. Growth rates

i. Between 1995 and 2007 Poland saw a decrease in population of about 0.4% with

the current total population at 38.1 million. In terms of population Poland is

currently ranked 30th

in the world and 8th

in Europe. This decrease in population

is due to the Polish abandoning the concept of large families and moving to a

more traditional/westernized view of families consisting of 1-2 children instead of

2-3 children. (Euromonitor International, 2009)

2. Number of Live Births

i. As of 2007 the number of live births in Poland was 369.22, which has dropped

signifcantly over the years. The most dramatic decrease was seen from 1995

to 2000 with 433.11 live births in 1995 and 378.35 in 2000. (Euromonitor

International, 2009)

3. Birthrates

i. The birthrates in Poland have been in decline throughout the years with about 1.6

children born per female in 1995 (Euromonitor International, 2009) and decreased

to 1.28 children born per female in 2009. (Poland Statistics, 2009)

B. Distribution of Population

1. Age

This is the 2010 estimate of age distribution across Poland.

i. 0-4 yrs: 1,820,000

ii. 5-9 yrs: 1,787,000

iii. 10-14 yrs: 2,038,000

iv. 15-19 yrs: 2,529,000

v. 20-24 yrs: 2,955,000

vi. 25-29 yrs: 2,266,000

vii. 30-34 yrs: 3,025,000

viii. 35-39 yrs: 2,634,000

ix. 40-44 yrs: 2,328,000

x. 45-49 yrs: 2,524,000

xi. 50-54 yrs: 2,990,000

xii. 55-59 yrs: 2,807,000

xiii. 60-64 yrs: 2,123,000

xiv. 65-69 yrs: 1,373,000

xv. 70-74 yrs: 1,356,000

xvi. 75-79 yrs: 1,133,000

xvii. 80+ yrs: 1,242,000

xviii. The average age of the Poland population in 2010 will be 37.8

years and is expected to rise to 39.5 years by 2015. (Euromonitor

International, 2009)

xix. The average life expectancy of men is 71 years and the average life

expectancy of women is 80 years. (Country Profile: Poland,

2009)

Implications: Based on the age distribution, our product will be best served to the 15-64 year-

old group since they account for most of the population and will find it most useful to them.

Since they account for the majority of the population they will be have a big influence on the

other age groups.

2. Sex

i. Male population accounts for about 18,326,000 of the total population in 2010

ii. Female population accounts for about 19,604,000 of the total population in

2010 (Euromonitor International, 2009)

3. Geographic areas (urban, suburban, and rural density and concentration)

i. Urban population: 4,424,000 (Euromonitor International, 2009)

a. Population is dispersed among a number of population centers (U.S.

Commercial Service and U.S. Department of State., 2009)

ii. Rural population: 9,291,000 (Euromonitor International, 2009)

a. Accounts for 25% of the population (U.S. Commercial Service and U.S.

Department of State., 2009)

iii. On average in 2007 there were about 124.1 people per sq km. (Euromonitor

International, 2009)

iv. Population of major cities: (Euromonitor International, 2009)

a. Warsaw: 1,685

b. Lodz: 757,000

c. Krakow: 748,000

d. Wroclaw: 627,000

e. Poznan: 560,000

4. Migration rates and patterns

In the 1990’s the majority migrated to the United States as their most popular

destination, but now they prefer European countries. More specifically Poles

looking for a job desire the more developed countries of Western Europe whereas

young poles who are english literate would rather go to England or Ireland to look

for a job. Germany and Austria are prefect destinations for the middle-aged poles

as they favor the shorter distance, but Italy and Spain are also popular destinations.

(Poland Statistics, 2009)

i. Ethnic groups

a) Polish: 96.7%

b) Germans: 1.3%

c) Ukrainians: 0.1%

d) Byelorussians: 0.5%

e) Other unspecified: 2.7% 2002 Census

(Poland Statistics, 2009)

II. Economic Statistics and Activity

A. Gross national product (GNP or GDP)

1. Total

Poland is one of the largest markets of the former Soviet bloc with a population of

38 million. The hard working citizens contributed around $530 billion in gross national product

in 2008 and the total is expected to grow (U.S. Commercial Service and U.S. Department of

State., 2009). The gradual integration into the European Union has allowed Poland to restrict

government intervention in their markets and fuel the country’s economy much more efficiently.

Over the past few years, Poland has been increasing its international commerce by eliminating

trade barriers. The country eliminated the last border checks along its intra-EU borders in late

2007 when they became part of the Schengen free-transit zone. By decreasing the number of

trade barriers, Poland can enjoy a higher gross domestic product and an increase in future

economic growth. The economic development displayed in Poland’s national product shows an

increase in the total purchasing power of Polish citizens. Since Starbucks has a youth-oriented

target market whose incomes are higher than average, the $530 billon in national product will

provide Starbucks with enough consumers to make market entry appealing.

2. Rate of growth (real GNP or GDP)

Poland’s real GDP growth rate in 2008 was down from the previous year by about 2 percent. In

2007 the real growth rate was 6.7 percent and by the end of 2008 the rate had slowed to 4.8

percent. Future forecasts of real GDP growth in 2009 are indicating another 2 percent decrease

in GDP (U.S. Commercial Service and U.S. Department of State., 2009). It’s important to

note that even with a declining GDP, Poland exhibits economic signs that point to a healthy

future. Poland is one of the few countries in the EU with a positive GDP growth rate for 2009.

On average, the 27 member countries in the EU will display a negative rate of growth due to the

poor economic conditions around the world. The primary sources of real GDP growth in Poland

are exports, individual consumption, and large amounts of foreign investment. In 2009,

commercial construction growth will lead all other economic sectors of the country because of

record-breaking amounts of foreign investment in 2008. Poland has enjoyed 17 straight years of

economic expansion and a slowed GDP growth rate should not hinder Starbucks expansion into

this new market. The fact that the GDP rate of growth is rising is a good sign for Starbucks’

products because when it increases it will create new demand on every level of income. Poland

has taken longer than other eastern European countries to privatize because they wanted to

restructure their government first

B. Personal income per capita

Poland’s economy started seeing significant declines in consumer consumption in 2008

and this trend will carry over into 2009. Slowed production has led to a decrease in the total

number of jobs, and the reduction of commercial investments will continue to decrease consumer

confidence. The amount of income in Poland for each individual is relatively small and urban

dwellers tend to have more purchasing power than those living in rural areas. Although changes

are being made to increase Poles’ purchasing power, Poland is still one of the lesser-developed

countries in Europe. Individual income in Poland is about $16,000 (Cateora, Gilly, & Graham,

2009)Personal income per capita in the country could make market entry there unattractive at a

glance but once again, marketers for Starbucks must look at the history of personal income to

better understand the situation. From 2007 to 2008, personal income increased on average by

$50 per month. In 2009, economic forecasts suggest that wage increases will be about the same

as 2008, thus adding another $50 per month to the purchasing power of its citizens. The

implications of the rising personal income to Starbucks are an ever-growing potential market for

the Frappuccino products. If the trend were to reverse direction, Starbucks will suffer from loss

of sales due to the elasticity of the Frappuccino products.

C. Average family income

The average family income in Poland is about $37,000 (Euromonitor International, 2009). The

average household size in Poland is between 3 and 4 people, indicating extended family

members will usually live separately. The implication this has on average household income is

that families will have more expenses that will decrease their purchasing power.

D. Distribution of wealth

1. Income classes

The distribution of wealth in Poland reflects similar trends found in the US. The middle class

makes up the biggest percentage of the Polish population. Extremely wealthy individuals are

very small in numbers and poverty is not a big issue within the country. Starbucks should use a

pricing strategy that reflects US income classes and distribution of wealth.

E. Minerals and resources

Poland enjoys a variety of natural resources such as coal, copper, sulfur, natural gas, silver, lead,

and salt (U.S. Commercial Service and U.S. Department of State., 2009). The country

maintains a steady supply of these resources and no major changes are predicted to occur in the

near future. However, if some of the state-owned mines sold their operations to private

companies, GDP could cause increased profits for Starbucks.

Agriculture is one of Poland’s least efficient segments employing over 15 percent of the

population and contributing only 4 percent to GDP. EU subsidies and favorable tax laws make

farmers less competitive than farmers in other countries. Products found in Poland include

grains, hogs, dairy, potatoes, horticulture, sugar beets, and oilseed. If owners of small farmlands

were to sell their plots to more efficient corporations, there would be a significant increase in

GDP. Starbucks would benefit from these exchanges because the increase in GDP would

enlarge the target market and increase individual purchasing power. (US department of state,

2009)

F. Surface transportation

1. Modes, usage, availability

Starbucks’ costs of doing business in Poland will be higher than expenditures associated with

domestic production because of Poland’s outdated transportation systems. By not modernizing

its networks of roads, railways, and airports, the country essentially eliminates potential

customers willing to buy Starbucks’ Frappuccinos. Poor transportation systems will make

regional distribution from Poland to neighboring countries nearly impossible. If Starbucks is

thinking about entering Poland to market their products, the sales in the country will have to be

sufficient enough to cover all associated costs.

Poland has a variety of transportation modes but many of the systems require extensive work.

The majority of the nation’s roads are two-laned with limited expressways that connect the major

cities of Lodz, Poznan, Wroclaw and Krakow (US department of state, 2009). Starbucks will

have to devise an alternative transportaton strategy if its products are going to be delivered from

the port cities of Gdansk and Gdynia or the city of Warsaw because there are no modern roads

linking these cities to the rest of the country. Government spending will continue to accelerate

improvements in Poland’s road and highway systems, but Starbucks should not expect the

country to start new road projects in the near future. The legal and bureaucratic obstacles that

Poland must combat in order to build new roads takes a substaintial amount of time. Starbucks

should develop a distribution system that utilizes existing roads to deliver bottled Frappucinos.

If the shipments are to arrive by sea, roads from the port city of Gdynia can be used to deliver the

Frappuccino product to central locations in Poland. Other methods of transportation will have to

be used in places with inadequate road systems.

The railway structure in Poland stretches over 20,000 kilometers but the quality of the system is

very low. The state-owned railway needs a great deal of work to rehabilitate the track and create

conditions suitable for product distribution. The railways from Port Gdynia are in excellent

condition and have been transporting shipments for years. If Starbucks would like to ship their

products to Poland, trains will be able to effectivley distribute products to the major cities in the

country. Starbucks should try to stick with the major railways in Poland that distribute products

to key locations because if there is a problem shipping, it will have a negative effect on product

turnover and net income for the company. As the railways become more developed, Starbucks

can reach more potential customers by adding new routes.

Poland’s airports are in the process of being modernized to accommodate the large number of

people visiting for the European Soccer Championships. An estimated 2.5 billion Euros is to be

used to expand airport terminals and update infrastructure in Krakow, Poznan, Wroclaw and

Gdansk (U.S. Commercial Service and U.S. Department of State., 2009)In 2008, Warsaw’s

Frederic Chopin Airport added a second terminal to increase travel capacity. Eastern Poland

faces major difficulties regarding air transportation simply because there are no commercial

airports in the area. The implications of future growth in air travel provide a few different

benefits that will make product entry there appealing. By modernizing existing airports and

adding new ones, Poland can offer more transportation avdvantages that will help distribute

products quicker and cheaper than before. The airport networks will not only benefit Starbucks

directly but indirectly too. By increasing air travel, Poland’s airports will attract new investors

from across the globe. If the country increases its investments in commercial areas, new jobs

and higher GDP growth rates will raise personal incomes and expand the total target market.

Poland’s ports are well established and can take cargo containers from arriving ships and place

them on trains or trailers to be delivered. There is adequate storage space available if needed and

arrangements can be made through the port. Port Gdynia is the biggest port in Poland and in

2008 it transported over 15,468 metric tons of cargo in 610,767 cargo containers

(www.portgdynia.pl, 2008). The ability to quickly unload cargo ships and get the containers to

the final destination will allow Starbucks to easily ship products to Poland and distribute them

effectiely.

GENERAL: CARGO STATISTICS from years 2004 - 2008 ( in metric tons)

2004 2005 2006 2007 2008

2004 2005 2006 2007 2008

Total 10744 12230 14199 17025 15467

(www.portgdynia.pl, 2008)

G. Communication systems

1. Types, availability, usage rates

There are a variety of different marketing techniques that Starbucks should consider when

communicating to their target market. The list includes direct mail, telemarketing, traditional

advertising (billboards), catalog sales, TV and radio. The methods that Starbucks should

consider when marketing are the internet, television and radio because these have proven to be

the most useful marketing tools. Television reaches almost every person in Poland and is the

most useful channel for marketers. Although costs associated with television have increased a

great deal over the past few years, the increase in sales revenue will outweigh these added costs.

The radio in Poland has over 200 different stations with 5 major radio networks to effectively

advertise the Frappuccino product (U.S. Commercial Service and U.S. Department of State.,

2009). In the future, Starbucks may want to use newspapers to reach people in rural areas but for

now the focus should be on the other three methods. Setting up product trials will also allow

Starbucks to penetrate the Polish market because many Poles are hesitant to believe advertised

claims until they try it themselves. If the internet is going to be used by Starbucks, it is

important that all advertisements follow the Law of Personal Data Protection and Law of

Protection of Consumer Rights set by the European Union. Sending unwanted advertisements

via internet will violate the Robinson List law so Starbucks should try to make a site that will

allow them to send advertisements to people who want them (U.S. Commercial Service and

U.S. Department of State., 2009). Starbucks can ask visitors of their site if they would like to

receive recent ads and promotions via website membership. Because Poland is relatively new to

the internet, lawmakers are currently revising existing internet laws and managers should

consistently update themselves with the best information available to avoid complications. Some

good sources of new internet legislation are in the nation’s Country Commercial Guides and the

Commercial Service guides. All marketing should adhere to general policies set by Starbucks

mission statement and unclear or misleading messages should be avoided. Not only will false

advertising cost the company sales, but the legal costs associated with poor marketing will make

new product placement nearly impossible.

Regular internet usage is typical among most Polish companies and over 14 million Poles have

access to it. Corresponding through e-mails and internet sites has proven to effectively

communicate messages and negotiations. In 2008 an estimated 80% of Polish businesses used

the internet to communicate to their target markets. Another 15% of businesses actually

conducted business transactions online. Only 5% of companies said they didn’t use the internet

on a regular basis. Direct mail was used by 65% of companies and telemarketing techniques

were used 30% of the time. Telephone usage has increased over the past decade and 2008

research shows around 12 million Poles with landlines and a staggering 36.7 million people with

mobile phones (Poland - Science and technology , 2000). Computers are becoming increasingly

important but even though 65% of the population owns computers, only 40% have access to the

web and 11% of households enjoy the faster broadband network (U.S. Commercial Service and

U.S. Department of State., 2009). More and more Poles are using the internet to buy products

but Starbucks should use the internet to complement product sales from traditional retailers. In

addition, Value-Added Tax will be added to all internet sales from non-domestic companies by

the EU.

H. Working conditions

1. Employer-employee relations

The Labour Code and civil law contracts govern how employers can treat their employees

(Euromonitor International, 2009). Many of the conditions stated in the codes are similar to the

US such as 8-hour workdays and 40-hour work weeks. Sweat shops are illegal and age

requirements are present. Any worker from Poland working for Starbucks will have to sign a job

contract before they start working and it must state all terms of employment.

2. Employee participation

Human resource managers from Starbucks are going to want to hire the best workers in Poland to

help distribute the Frappucino products. The country is rich with skilled workers who will

provide their services for less than what their counterparts charge in America. Poland has one of

the lowest wage rates in the EU and because of the general central location of most workers, they

can distribute the product efficiently and inexpensively. The country has a high level of literacy,

meaning they have the skills to communicate and learn effectively. About three-fourths of the

Polish people live in urban areas such as Warsaw and Lodz and they will generally have a higher

level of income compared to those living in rural areas of the country.

3. Salaries and benefits

Salaries paid to Polish employees will be less than those in the US and benefits are similar in

many ways. Workers with higher levels of education will be paid a higher salary just like in the

US. The minimum wage that can be written into a job contract is 1276 Zlotys. Twenty days of

paid vacation will be mandatory within the first year of employment and an additional week

must be rewarded to employees with 10 or more years of employment. There are 12 national

holidays where employers cannot force employees to work and overtime is limited to 150 hours

per year (Euromonitor International, 2009). Starbucks will enjoy cheaper labor but it must be

able to account for longer vacation periods. Employees should maintain organized workplaces

so that when they take a vacation, someone else can step in and work efficiently. The salaries

and benefits that employees will enjoy must be stated in the job contract and will be enforced by

law.

I. Principal industries

The major types of industry included in Poland’s economy are machine building, iron and steel,

mining, shipbuilding, automobile manufacturing, furniture, textiles and apparel, chemicals, food

processing, glass, and beverages (Euromonitor International, 2009). Poland makes about 20

percent of Europe’s flat-screen television sets and is predicted to grow much more in the near

future. Steel, automobile, and appliance industries are in decline and future expectations look

bleak. Poland exports 95 percent of its automobiles and the worldwide economic decline will

continue to hurt the industry (Euromonitor International, 2009). After the communist reign

ended, state-owned industries became privatized and highly efficient. These principal industries

have strengthened the Polish economy and now they make up the majority of the entire GDP.

Through the privatization of state-owned industries, GDP has increased and will allow Starbucks

to enjoy a much bigger market. (US Department of State, 2009)

1. What proportion of the GNP does each industry contribute?

Agriculture makes up about 4 percent of the total GDP and can increase significantly if smaller

farms sell their land to more efficient farming corporations. Mining makes up 2.3 percent of the

country’s GDP and will continue to slowly increase in the future. Manufacturing in Poland

creates 17 percent of GDP and that number will continue to grow. Power has remained stable

with steady increases over the past 4 years and it now makes up 2.8 percent of GDP. The

construction industry makes up 5.7 percent of GDP and has seen a pattern of large increases each

year. Transportation supports 6.2 percent of GDP and current investments in the industry will

increase this number in the future (Euromonitor International, 2009).

2. Ratio of private to publicly owned industries

As of now, the government still owns a large amount of the country’s industries such as airports,

railways, mining operations, energy production, and financing. Many experts predict that in

2009 and 2010 the government will sell these industries to private investors. Once these

industries become privatized, efficient management will lead to higher profits and boost the

nation’s GDP. This will impact Frappuccino sales indirectly by increasing the income each

person makes and thus increasing the size of the target market.

J. Foreign investment

The public attitude regarding foreign investment in Poland is a positive one. Continued

investment by foreign companies has increased employment levels and improved the country’s

GDP. Investments in 2007 were the highest they have ever been at $17.6 billion. In 2008 the

investments dropped almost 8 percent to $16.2 billion (Euromonitor International, 2009).

Experts predict that foreign investment for 2009 will drop substantially due to a decrease in

exports of cars and electronics. Residential construction in the country will also have a huge

impact on foreign investment because almost no new houses are being built. Poland is going to

be the biggest recipient of EU budgeted funding until 2015. An estimated $90 billion in total

spending will be delegated to projects involving infrastructure, environment protection, and

remediation projects. Although economic forecasts predict declining FDI rates in 2009, a

substantial amount of FDI will still be poured into Poland’s economy. A number of foreign

companies are investing in areas such as specialized mass production in the service sector and

there will be heavy investments in research and development centers to create future jobs. CS

Warsaw and the entire Embassy staff have helped existing companies and will continue to aid

new foreign companies in Poland because the investments made by these companies boost the

overall economy.

K. International trade statistics

1. Major exports, total value, trends

Poland’s major exports are furniture, cars, ships, coal, and apparel. They make up a big part of

the $169.5 billion in total exports the country creates (Euromonitor International, 2009). Exports

in Poland are projected to decrease in 2009 due to the worldwide economic recession and

insufficient domestic investments. The inability of attaining funds to invest in Poland’s key

export markets has slowed the total number of exports the country distributes internationally.

The country saw a 4.8% decrease in exports in 2008 and economic forecasts are predicting

exports to decline again in 2009.

2. Major imports, total value, trends

Poland has a variety of products and services they import but the most notable are imports of

crude oil, passenger cars, pharmaceuticals, car parts and computers. The total amount of imports

in 2008 was around $206.1 billion (Poland - Science and technology , 2000). Starbucks will

enjoy future profits in the Polish market due to its continued increase in its domestic demand and

general attraction for U.S. products. Poland will continue to import equipment and services that

will increase their technological dexterity to levels observed in the West. If Starbucks is going to

introduce new industrial equipment to Polish distributors and agents, the company must use

direct relationship marketing because new industrial equipment purchases are a huge expenditure

for any company. By providing financing options, technical training, and promotional support,

Starbucks will be able to distribute its Frappuccino product much more efficiently to its target

market. A good place to find skilled distributors is by attending Polish trade fairs such as the

annual June Poznan International Fair. In Poland, the attitudes regarding distribution of

imported products are different than that of the US. Polish distributors tend to desire exclusive

relationships with the principal company. If Starbucks uses an assortment of distribution

channels some distributors may feel some animosity toward others. Expenditures in marketing

will benefit everyone else without making competing distributors incur marketing costs of their

own. Another important factor to keep in mind regarding importing is the fact that Poles like to

order small amounts due to limited capital and high credit rates. Once a product proves its

profitability, larger orders are usually placed. Starbucks will have to share the burden of

introducing a new product in Poland if the company desires repeat purchases in larger amounts.

3. Balance-of-payments situation and recent trends

Poland displays a deficit in its balance of payments of about $36.6 billion (Euromonitor

International, 2009) meaning they import more goods than they export. Since Poland is spending

more on imports, the GDP is being lowered and therefore, weakening their currency. Currently

the country is facing problems with their banking system and Starbucks should realize that banks

are facing liquidity issues. Starbucks should never use open accounts and they should be

tentative to use certificates of deposits when financing operations because of the unstable

banking network.

4. Exchange rates, current rate, trends

The trend for Zloty currency exchange has recently reversed as of late 2008 and has started to

significantly depreciate in value against the US dollar. In 2006, the Zloty exchange rate was

3.1PLN/1$. By 2008, the exchange rate decreased the number of Zlotys used to purchase $1 of

US currency and the rate of exchange was 2.41 PLN/1$ (Euromonitor International, 2009). In

February of 2009, the exchange rate jumped almost 100% to 3.90 Zlotys for one US dollar. Now

that the Polish currency is depreciating against the US dollar, Starbucks will be able to purchase

plants and equipment in Poland for less than they would have paid in the previous years. If the

current exchange trend reverses direction and the Zloty starts to appreciate in value, consumers

of Starbucks’ Frappuccinos will purchase more drinks because the drinks become cheaper and

more affordable. Starbucks pricing policies in Poland should cautiously price the product

because at current exchange rates, any US product will be very expensive and unappealing to

purchase. Managers should also be concerned with how quickly the Zloty appreciates and

depreciates in value. The 100% depreciation that is seen in 2009 occurred in a 12-month period

of time. Since most of the local Polish firms are self financed, Starbucks should try to arrange a

financing plan that will give the company a competitive edge over any local competition.

L. Trade restrictions

Starbucks should try to find a local importer to help distribute the Frappuccino product because

there are limited laws restricting their abilities. Agreements can be made as long as both parties

can mutually benefit from the transaction. The European Commission’s Directorate General for

Competition will impose regulations of large transactions that will heavily affect competition in

Poland. Since Starbucks is large enough to affect local trade, managers should not make any

trades without their consent.

1. Embargoes

Poland does not have any significant embargoes that will affect business transactions for

Starbucks’ Frappuccinos.

2. Quotas

Quotas are set by the Combined Nomenclature code which is based off of the international

Harmonised System. Starbucks will not be affected negatively by these quotas.

3. Import taxes

Taxes regarding imports in Poland are kept at a minimum to decrease barriers and increase trade.

Starbucks will have to incorporate these import taxes into the overall pricing strategy.

4. Tariffs

Poland does not charge tariffs for products entering their market from other EU member

countries. However, all other countries exporting their products to Poland must pay the common

external tariff (U.S. Commercial Service and U.S. Department of State., 2009). If Starbucks is

going to import its Frappuccinos to Poland, tariff costs must be added into the price or somehow

accounted for.

5. Licensing

Licenses are provided by the Minister of Economy and are based off the quantity of imported

products. Once Starbucks submits the paperwork for licensing, the transaction will occur within

5 business days. Starbucks will have to pay a $35 fee to obtain the licensing.

6. Customs duties

Poland uses Common Customs Tariffs and Commission Regulations to set duties for non-EU

exporters. All duties regarding imports will be found in the Integrated Customs Tariff of the

European Communities. Current information is available online for Starbucks’ finance managers

to view and to select preferential rates that will increase profits.

M. Extent of economic activity not included in cash income activities

1. Countertrades

Countertrades are not usually offered in Poland and Starbucks should not try to enter a contract

involving any counter trades.

2. Foreign aid received

Foreign aid is not going to impact business operations for Starbucks because the US does not

send enough aid to prevent Poles from purchasing their products

N. Labor force

1. Size

Participation in Poland’s workforce is ranked among the lowest of EU members. Roughly 65

percent of the adults who can work actually have jobs. This is about 10 percent less than the US

workforce and 6 percent less than the average EU workforce. The total size of Poland’s

workforce is about 15.5 million and their ages range from 15 to over 65 years of age. These

statistics may cause labor in Poland to be more expensive but for the most part there are no

negative consequences. Since the target market for Starbucks’ Frappuccinos is primarily youth-

oriented, the company is concerned with the number of younger workers in Poland. There are

about 4.3 million workers with ages between 15 and 29 and another 2.5 million workers between

30 and 34 years of age (Euromonitor International, 2009). This large number of younger

employees will provide Starbucks with a substaintial target market with disposable income to

purchase their product. If Frappuccinos appeal to a fraction of these consumers, Starbucks will

enjoy a large volume of sales that will increase profits for the company.

2. Unemployment rates

Poland’s unemployment rate in 2009 is predicted to increase from the 2008 rate of 9% to around

12% (Euromonitor International, 2009). This increase may concern potential investors but it is

important to see the country’s historical unemployment levels to better understand the situation.

In 2004, Poland had approximately 20% of workers unemployed and faced challenges of Poles

immigrating to other EU countries in search of work. The implications of these high

unemployment rates were a loss of domestic capital that has cost the country around 6 billion

dollars in wage remittances and a decrease in the purchasing power of individuals. Starbucks

should focus on the fact that over the past 5 years, unemployment and emigration levels have

decreased while many other countries faced increases in unemployment. In addition, the number

of unemployed workers in urban areas is much less than the national average thus increasing the

purchasing power of those individuals. Poland is a growing market occupied with numerous

indicators of future economic success. The decrease in unemployment just before the end of

2008 can be attributed to large amounts of foreign investment that created new employment

opportunities within the country. Since foreign investment rates in 2009 are predicted to fall,

unemployment rates will naturally rise.

O. Inflation rates

Average rate of inflation in Poland is 4.2% (US Department of State, 2009). An escalation

charge should be written into any final contracts to combat this changing inflation rate.

Starbucks should be careful when leasing any assets such as buildings and equipment because

the rate of inflation can manipulate the profits of the company. Since inflation increases

consumer prices, Starbucks’ target market may be excluded from the market if inflation

continues to increase. Starbucks can elude the negative effects of inflation in a variety of

different ways. Starbucks could increase costs in transfer pricing, charge for additional services,

or they could choose to separate the initial product into components to sell separately.

III. Developments in Science and Technology

A. Current technology available

Poland is currently the technology research and development hub for most of

central and Eastern Europe, which allows them to create a more modernized and

efficient economy that is attractive to investors. (Euromonitor International,

2009)There are research institutes of every type in Poland from the institute of

aviation to the institute of tourism. (Science Institutions, 2009)Poland has stressed

the importance of computers and the internet in education systems since the start

of the technological revolution of the 1990’s. (Dorota Batog, 2009) They’re very

up-to-date with technology and currently have use of telephones, mobile phones,

computers, internet, radio, cable and satellite television, newspapers, magazines,

automobiles, and airports. Due to this fast increase in development of the

electronic industry many multinational corporations are looking to hold their

research and development centers in Poland. The number of research and

development centers has reached 40 and employs over 4,500 people, which

contributes to the economic growth and redistribution of wealth among the Poles.

(Euromonitor International, 2009)

B. Percentage of GNP invested in research and development

Research and development expenditures from 1987-1997 accounted for 0.8% of

GNP. (Poland - Science and technology , 2000)

C. Technological skills of the labor force and general population

Poland has a very talented labor force due to the high education levels and

language aptitudes of the Polish. (U.S. Commercial Service and U.S. Department

of State., 2009) The total labor force in Poland estimated at 17.01 million in 2008.

The labor force is broken down into three main sections: 17.4% agriculture,

29.2% industry, 53.4% services. (Poland Statistics, 2009)

As of 2008 the unemployment rate was at 9.8% compared to 12.8% in 2007.

Technological development has been increasing at a steady rate with wide usage

of cellular phones and the internet among the Poles. As of 2008 there were about

44 million cellular phones compared to only 10 million telephones being used and

on average 16 million internet users as of 2007. (CIA, 2009)

Implications: With Poland being the major source for research and development

this will help to improve our economy so more people will be willing to purchase

Starbucks Frappuccinos. We can also advertise our product towards the large

well-educated labor force.

IV. Channels of Distribution A. Retailers

A. Number of retailers

i. Typical size of retail outlets

a) Retail outlets in Poland are still in the developing stage with

about 200 hypermarkets and 2,500 supermarkets. “There has

been a marked shift toward supermarket expansion in medium-

sized cities and very fast development of discount chains all

over Poland, and a determined effort by international chains to

reach medium and small towns, until now dominated by

traditional distribution channels." (Advanstar Communications,

Inc., 2006) This shift towards supermarkets is forcing smaller

shops in the area to close causing for the transfer from small

owner-operated shops to large corporate-owned supermarkets.

(Polska, 2000)

b) Retail shops currently employ about 1.35 million workers as of

1999 or 13.9% of those employed in Poland. (Polska, 2000)

B. Customary markup for various classes of goods varies diversely and is

dependent upon the type of product and if it was imported from a foreign

company.

C. Methods of operation (cash/credit)

a) Poland’s shops are up-to-date with technology and allow for

both cash and credit. As Poland becomes more westernized

credit is becoming a more popular form of operation. Retail

banking has made considerable progress throughout Poland as

Polish banks are offering more services such as 24 hour access

to accounts via the internet and phone as well as internet

banking. (U.S. Commercial Service and U.S. Department of

State., 2009)

D. Scale of operation (large/small)

a) Poland is moving from small-scale operations to large-scale

operations.

E. Role of chain stores, department stores, and specialty shops

a) Specialty shops started appearing in Poland in about 1990 such

as clothing stores and drug stores. (Polska, 2000) Poland is

now composed of large supermarkets and hypermarkets with

many of them being owned by foreign companies. Most of the

smaller shops owned by the Polish are quickly going out of

business as more of the major retail outlets open in Poland.

(Advanstar Communications, Inc., 2006)

Implications: As the supermarkets and hypermarkets continue to dominate the Polish

market the distribution of our Starbucks Frappuccinos to these markets will make our

product successful.

B. Wholesale Middlemen

1. Number and size

i. Many of the goods imported into Poland are distributed through

wholesalers who then supply the retailers with the products. Most

owners or retail shops purchase their goods straight from

wholesalers. (U.S. Commercial Service and U.S. Department of

State., 2009)

2. Customary markup for various classes of goods varies diversely and is

dependent upon the type of product and if it was imported from a foreign

company.

3. Method of operation (cash/credit)

i. Most of these transactions are done through the internet with a

credit card or through the use of money transfers. A national

system for electronic systems was established in 1997 called

ELIXIR, which commonly uses payment cards as a form of

transaction. Checks as a form of payment are available, but aren’t

recommended as the use of them isn’t widespread across Poland.

(U.S. Commercial Service and U.S. Department of State., 2009)

4.Import/export agents

i. There are many agents available to U.S. firms looking to do

business in Poland. The use of local agents is common in Poland.

(U.S. Commercial Service and U.S. Department of State., 2009)

5. Warehousing: There are warehouses available to U.S. firms looking to

store their products in Poland for distribution. Warehousing is subject to

rent and other charges and businesses should be aware of these charges

before being issued a warehouse. (U.S. Commercial Service and U.S.

Department of State., 2009)

6. Penetration of urban and rural markets

i. The rural markets account for twenty-five percent of the

population and is increasing as more people move to the

countryside. Urban markets are distributed among a number of

population centers and are easier to access within the city. (U.S.

Commercial Service and U.S. Department of State., 2009)

Implications: The use of wholesalers will be beneficial to Starbucks so they can

distribute the Frappuccinos to the different supermarkets and hypermarkets. It

will also be beneficial to reach the rural market as those continue to increase in

population.

IV. Media Availability of Media

Poland has the largest broadcasting market in Eastern and Central Europe, which

allows for Poles to have easy access to all forms of media. This includes:

television, radio, newspapers, magazines, journals, and the internet. Television

has become the most popular as it is widely available in all parts of the country,

but the internet is slowly taking over as it is becoming more accessible to the

public. (Country Profile: Poland, 2009)

A. Costs

The cost of media is unavailable.

B. Agency Assistance

There are two main market research firms, Pentor Research International and

Millward Brown SMG/KRC that are experts in helping companies conduct

research about local Polish consumers and their target market as well as offering

the latest advancements in information technology. These firms are proficient in

almost every industry and type of advertising medium a company may be looking

to use. (U.S. Commercial Service and U.S. Department of State., 2009)

There are also many advertising and public relations agencies in Poland to help a

company develop their advertising campaigns after their research is completed

and to aid in improving a company’s relationship with other businesses and the

public as well as maintaining a respectable public image. (U.S. Commercial

Service and U.S. Department of State., 2009)

Implications: Both of the market research firms are experts when it comes to

helping their clients do research on their target market and the best form of

advertising available and suitable to their target market. We will need to do

research on the both companies to find one most fitting for us when developing an

advertising campaign for Starbucks Frappuccinos. After completing research we

will also be able to use an advertising and public relations agency to help us

develop an advertising campaign as well as main a respectable public image.

C. Coverage of Various Media

Advertising is very important in Poland in order for a company to develop their

image and the brand image of their products. Television is the most effective

advertising medium since it reaches almost every home in Poland and it shows the

most growth for products advertised through television commercials.

The use of the internet as an advertising medium is growing as more people are

gaining access to the internet. In 2008 sales grew by 40% to generate $5.4 million

in sales. This is mainly driven by the younger generation who are aware of the

advantages of the internet in particular social networking sites especially the

recently launched Polish version of facebook. The internet is also being used as a

valuable selling tool since Polish customers no longer require face to face contact

with a person selling a product. (U.S. Commercial Service and U.S. Department

of State., 2009)

Radio is also popular with about 200 local radio stations and 2 national networks.

Print media has grown to include many publications with major newspapers

reaching every corner of the country and other publications such as magazines

and journals in circulation throughout the country. (U.S. Commercial Service and

U.S. Department of State., 2009)

Print media is found to be an effective means of reaching the customers and

candidates for jobs. (U.S. Commercial Service and U.S. Department of State.,

2009)

Trade Fairs are also another means of advertising, but are slowly loosing their

popularity and attraction to key Polish and international businesses. (U.S.

Commercial Service and U.S. Department of State., 2009)

There is currently a ban on cigarette and alcohol advertising for broadcasters and

alcohol ads on display and in print media. Poland has also banned the use of

pharmaceutical advertising except for over-the-counter drugs and in professional

publications. (U.S. Commercial Service and U.S. Department of State., 2009)

D. Percentage of population reached by media

Polish radio reaches over half of the population even though its use is in decline.

More than 300 newspapers, but only 30% of Poles actually read the newspaper.

As of November 2008 there were 20 million internet users which is about 52% of

the population. (Country Profile: Poland, 2009)

Implications: Starbucks will receive the greatest benefit from the use of the

television and internet as our main sources of advertising in the media. Radio

advertisements may work for a short time until the rate of decline becomes too

drastic.

V. Sources of Information

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CIA. (2009, November 11). The World Factbook. Retrieved November 15, 2009, from Central Intelligence Agency: https://www.cia.gov/library/publications/the-world-factbook/geos/pl.html

Country Profile: Poland. (2009, August 21). Retrieved November 15, 2009, from BBC: http://news.bbc.co.uk/2/hi/europe/country_profiles/1054681.stm#facts Dorota Batog, W. B. (2009). Poland-Summary. Retrieved November 20, 2009, from StateUniversity.com: http://education.stateuniversity.com/pages/1218/Poland-SUMMARY.html

Euromonitor International. (2009, January). Consumer Lifestyles-Poland. Retrieved November 2009, 15, from GMID: http://unco.blackboard.com/webapps/portal/frameset.jsp?tab_id=_2_1&url=%2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_33202_1%26url%3D

Euromonitor International. (2009, April). Poland-Consumer Electronics. Retrieved November 20, 2009, from GMID: http://unco.blackboard.com/webapps/portal/frameset.jsp?tab_id=_2_1&url=%2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_33202_1%26url%3D

Poland - Science and technology . (2000). Retrieved November 23, 2009, from Encyclopedia of the Nations: http://www.nationsencyclopedia.com/Europe/Poland-SCIENCE-AND-TECHNOLOGY.html

Poland Statistics. (2009). Retrieved November 16, 2009, from globalEdge: http://globaledge.msu.edu/countries/Poland/statistics/

Polska, R. (2000). Country Overview. Retrieved November 23, 2009, from Encyclopedia of the Nations: http://www.nationsencyclopedia.com/economies/Europe/Poland.html

Science Institutions. (2009). Retrieved November 23, 2009, from Poland: http://www.poland.pl/directory/index,Science_institutions,cid,5592.htm

U.S. Commercial Service and U.S. Department of State. (2009, February). Doing Business in Poland. Retrieved November 10, 2009, from Globus & NTDB: http://unco.blackboard.com/webapps/portal/frameset.jsp?tab_id=_2_1&url=%2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_33202_1%26url%3D

US department of state. (2009, October 1). Retrieved November 20, 2009, from www.state.gov: http://www.state.gov/r/pa/ei/bgn/2875.htm

US Department of State. (2009, October). Retrieved November 29, 2009, from Background Note: Poland: http://www.state.gov/r/pa/ei/bgn/2875.htm#foreign

US. Department of State. (n.d.). www.portgdynia.pl. (2008). Retrieved November 20, 2009, from Port gdynia: http://www.port.gdynia.pl/a_stat0.php