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Croatia Pest Analysis

Categories: Pest analysis

Material quality (the hotels’ interior design and entertainment activities) – Immaterial quality (quality in services and organization) (www. oecd. org) Pure service performance would diminish the profit. Therefore, the organization provides staff training, job security and high supervision in order to maintain quality human resource management. Technology such as OnQ forecast management System is implemented. (www. microsoft. om) Through this system the organization becomes precise in pricing and financing strategies and meets the customer preferences. (Ganesh D. at al. , 2001) Given that the company belongs to the tourism industry, the remaining value chain is: Principles > Intermediary > Customers Hamilton Hotels build vertical integration with their principles which provides additional activities.

(Smeral, 1998) The cooperation includes arrangements with restaurants, leisure, recreation centers and banks and insurance companies.

This vertical integration is expanded with airlines, rent a car and credit card companies. (www. oecd. rg) As far as the geographical expansion and the promotion of the Hamilton Hotels are concerned, intermediaries perform as major device.

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The most appreciated influencers are travel agencies. (Smeral, 1998) According to the management of Hamilton hotels, services after the accommodation could only increase the cost. In order to maintain low prices and meet the standards of customers, unnecessary services have been removed (Smeral, 1998)

PEST analysis

Political analysis

Croatia is constitutionally parliamentary democratic country. Signing the Dayton Peace Accords in 1995, brought high level of security and protection. (www. state. ov) Though, corruption is awkward issue that remains. In addition, the political forces in the country, in 2004 outlined a Commission that will prevent conflicts of interests and legislation that will stop money laundering.

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(www. buyusa. gov) In order to secure the success of transition into a market economy, Croatia implements reforms in legal institutions, policy development and investment plans. While being influenced by the requirements from the EU membership, Croatia has executed several projects for harmonization. (Strategy for Croatia, 2005) First step was to prepare the legal Croatian system according to the EU norms and rules.

According to Anon (2005) “ EU policies, as well as the obligations from its IMF stand-by arrangement, World Bank structural adjustment loans and WTO membership- commit Croatia to increase transparency and to equitable application of laws to both domestic and foreign business”. Thus, Croatia maintains good connections with many significant EU political and financial institutions and its neighbors. The market economy involves implementation of government anti-inflationary policy and progress of the private sector through privatization. Priority Action Plan (PAP) was the result of the government aim. Strategy for Croatia, 2005) 3. 2 Economic analysis Under the tight fiscal and monetary policy, Croatia had 4. 3 % growth of GDP in 2005 ( 30 950 million €). (www. shelter. incom. hr) The forecasting predicts continuously improvement since increased personal consumption and service growth, especially in the tourism industry, will occur. (www. balcanionline. it) Croatia applies its monetary policy to maintain price stability and stable value of national currency. (www. hgk. hr)

The inflation rate in 2005 was 3

The impact of unemployment in Croatia can’t be evaluated because of grey economy. However, the unemployment rate for persons older than 15 years in 2005 was 12. During the last period, banks improved their performance through loan activities. Loans for personal consumption dominated in 2000-2001, thus nowadays, corporate loans indicate the boosting investment activities. (www. balcanionline. it) According to the Global Competitiveness Index in 2006 , Croatia is ranked on the 51st place, which is 13 places up from the previous year. (www. apin. hr)

Social analysis

Researches show that Croatian consumers prefer the domestic product if it has equal price and quality as foreign products.

Also, they prefer easy available, attractive, intensively advertised and products with good value for money. (www. croatiasa. com) The population is ageing and the standard of living in Croatia rises with small step. Thus, people between 20 and 55 years have the highest disposable income. The consumer lifestyle is influenced by the Italian model of healthy, sport life. (www. hrcak. hr) Consequently, investing in sport centers, summer resorts, spa and ski resorts are the main investing attraction nowadays. (www. croatiasa. com) Croatian are aware of green issues and put effort to protect the environment.

Major issues for Croatia are waste management, water treatment and sewerage. Since tourism is the main investing attraction, Croatia implemented project for 177 coastal towns in order to find adequate protection. (www. croatiasa. com)

Technological analysis

Croatian Program for Innovative Technological Development is established in order to reinforce the R&D activities. (www. unpan1. un. org) According to Anon (2004 p. 17) R&D is reinforced since “the Ministry of Science, Education and Sports (MSES) appoints councils for specific areas of science like natural, technical, biomedical, bio-technical, social science and the humanities.

In 1975 Croatian IT Society was established. This organization uses IT and enables easier communication in Croatia through: organizing research and development projects and providing services, information and advice, especially for interdisciplinary activities. (www. ifip. or. at) One recent activity is installation of ECDL. Another advanced technology program is E-learning academy (ELA) that provides learning at a distance. (www. e-mentor. edu. pl)

Entry mode

Given that Hamilton Hotels intend to expand the business, adequate entry mode would be acquisition. Alvarez-Gil at al. , 2003) Acquisition is less risky since the company will operate with familiar operations.

Additionally, income will increase by using the already existing skill force, technology, capacity and easy available local capital and market research. (Hereemann, 2006) Croatia with 4. 5 million population, Slovenia as neighbor and direct access to Adriatic Sea, has convenient attractions. Skilled labor, developed transport infrastructure and easy communication are another advantages. (www. croatiaproperty. rg) According to the Investment Promotion Law level foreign and domestic investors are delighted with equal incentives. (www. croatiaproperty. org) With only 1 month required to register the business.

Croatia proposes several incentives:

  • corporate tax Companies that invest approximately 700 000 $ and will create 10 new jobs, have 10 ?
  • corporate tax level. 30 jobs and investing 1. 8 million $ brings 7 ? tax. 3 ? tax level is for 3. 5 million $ invested with 50 jobs and 0 ? tax level is for 10. 6 million $ and 75 new jobs. (www. mingorp. hr) 2)

Property ownership rights

  1. Foreign company in Croatia established for business activities is registered as domestic legal entity (www. croatiabiz. com )
  2. Repatriation of profits Foreign investor can relocate the earnings without legal restrictions according to the Foreign Exchange Transaction and Trade in Gold Act (www. croatiabiz. com )

Free zones

Free Trade Zones are built in the area affected by wars. The government offers 50 % deducting of corporate tax if operations are launched there. Those companies that are involved in building the infrastructure in the free zones, don’t pay corporate tax.

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Croatia Pest Analysis. (2018, Oct 01). Retrieved from

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