Austria: A Market Ready to Explore
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MARKETING AND MANAGEMENT
In 1995 Austria joined the European Union (EU), and in 1999 they joined the European Monetary Union. The use of a common currency the “Euro” has facilitated trade and promoted economic stability for U.S. companies to manage pricing, balance accounts, and move products into Austria and throughout the EU member nations (“globaledge”, 2003). An unfavorable exchange rate for U.S. exporters turned positive in 2003 making the U.S. able to compete on more favorable terms in the near future.
Current economic reforms in Austria are increasing the attractiveness of foreign investment. There are several advantages to conducting business in Austria that will be particularly relevant in the year 2004. Austria is an international crossroads bordering on eight European countries which include Germany, Italy, Switzerland, Slovenia, Hungary, Slovakia, Czech Republic, and Liechtenstein. Austrias eastern neighbors, Czech Republic, Slovakia, Slovenia, and Hungary will join the EU in May of 2004. The impact of this is that Austria will become more centrally located.
Austrias market is well diversified and resilient. Government is seeking to remain competitive by pursuing investment in high potential industries such as telecommunications and electronics (“globaledge”, 2003). United States companies that are in the telecommunications and electronics industries have a great opportunity for exporting, joint venturing, and investment in Austria.
The U.S. is Austrias 3rd largest supplier of imports and largest trade partner outside of Europe (“CIA”, 2003). U.S. companies entering the market for the first time can benefit from the already established trade lines between the two countries. Austrias market is highly competitive with high demands placed on quality, service, and price. This type of market is ideal for supporting the favorable reputation of high quality American made technological and electronic products. A US company would be able to compete with EU member nations products by exporting these products to Austria.
US companies looking to export products to Austria are able to employ the services of the Commercial Services of the United States Embassy in Vienna (CS Vienna) acquire the information necessary to begin its operations (“globaledge”, 2003). The following services would be offered to such companies:
Finding agents, distributors and joint venture partners
Compiling customized market research analysis
Providing counseling and advocacy
Product and service promotion via trade shows
Although there are several benefits for a US company to launch of a new business in the Austrian market there are four barriers that a company must be knowledgeable of:
A license is needed to import food products
EU members do not pay tariffs and non-member nations may have to pay tariffs
If Austria experiences the affects of a weak economy again U.S. exports could be negatively affected
In 2004 the addition of four new members to the EU could create increased competition for U.S. companies
In addition to the aspects of the Austrian market that affect marketing and management there are other factors that must be examined. These factors affecting whether or not to conduct business in another country include: the physical forces that affect a country economically, various economic and socioeconomic forces, sociocultural forces, and competitive and distributive forces.
PHYSICAL FORCES
It is vital to examine the physical forces of a country including but not limited to the following: the location of the country, its political relationships, topography, climate, natural resources, and dynamic physical resources. The evaluation of these forces allows a more clear view of the business potential in a chosen country.
Austrias location is unique in the sense that it is a land locked country. It is located in Central Europe. On Austrias southern border is Italy and Slovenia. It borders on the north with Germany and Czech Republic. On the east border is Hungry and Slovakia, and on the western border lays Switzerland. Austria is about the size of Maine with a total land area of 2,562 kilometers or (2,562/1.62) 1,581 square miles.
The participation of Austria in the EU has improved trade relations with neighboring countries. Political relationships are generally good with the exception of a few minor disputes. Disputes with Czech Republic and Slovenia continue over nuclear power plants and post World War II treatment of German-speaking minorities (“CIA”, 2003).
The topographical layout of Austria is simple yet interesting. In the western and southern areas of Austria lie a portion of the Alps, Europes largest mountain range. Along the eastern and northern margins of Austria, the land is mostly flat or gently sloping. Austria occupies a strategic location because it lies at the crossroads of central Europe. Austria has many easily traversable Alpine passes and valleys. The major body of water in Austria is the river Danube. The population is concentrated on eastern lowlands because of steep slopes, poor soils, and low temperatures elsewhere in Austria (“CIA”, 2003). The elevation extremes range from the lowest point located at Neusiedler See 115 meters to the highest point of 3,798 meters located in the mountains at Grossglockner (“CIA”, 2003). Austria is subject to natural hazards such as landslides, avalanches, and earthquakes due to its mountainous regions. Despite its diverse topographical features, Austria is a unified thriving nation, one which has positive appeal to a US company.
Austrias climate consists of cool summers with occasional showers and cold winters with frequent rain in the lowlands and snow in the mountains. An average day in Austria would be cloudy with moderate seasonal temperatures. The climate of Austria is not extreme enough to be of major importance when considering the market.
Austria is rich in natural resources. Its natural resources consist of iron ore, oil, timber, magnesite, lead, coal, lignite, copper, and hydropower electricity (“CIA”, 2003). All of the aforementioned resources can be considered for trade purposes.
Some dynamic factors to consider are Austrias environmental issues. There has been forest degradation caused by air and soil pollution. The soil pollution