Economy In Transition - Croatia

Essay by PaperNerd ContributorUniversity, Master's January 2002

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An introduction to the issues that have arisen in the transformation process of the Croatian economy and the problems that have to be considered prior to setting up a manufacturing base.

Since the first democratic elections took place in Croatia in April 1990, and the Croatian Democratic Union (HDZ) came to power in a landslide victory, there has been a concerted effort towards transforming the Croatian economy into a free-market system.

Any economy in this early stage of transition however, faces many challenges as well as opportunities for any company looking to invest in the area.

To initiate a sustained successful operating base in Croatia it is necessary to create a company that recognizes the turbulence of the business environment created by the transition of the Croatian political and economic system as an opportunity rather than a threat. The measure of a company's competency will be measured by its ability to manage its resources dependent on the requirements of the problem that is to be solved.

Lyrad Plc, is owned by a Japanese parent company but has European Head Offices in France. It is a successful manufacturer of electronic goods across a range that includes televisions, video recorders and state of the art digital cameras. Since the opening up of opportunities in the former communist countries in Europe it has been considering the opening of a manufacturing base in this area to complement its current Western European operations. The growing demand for electronic goods has prompted Lyrad to investigate further the opportunities and challenges that it can expect to encounter.

Immediate benefits for Lyrad have been identified in the availability and cost of the labour force. Croatia has high unemployment and low wage levels compared with developed European economies, however the workforce does lack skills, knowledge and experience. Therefore, to...