Strategies of the Development of Entrepreneurship and SME
Strategies of the Development of Entrepreneurship and SME
Strategies of the Development of Entrepreneurship and SME
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Federal funds, private capital, especially because <strong>of</strong> forthcoming winter Olympic Games inSochi. The criminal situation in <strong>the</strong> region is not so sharp as in its neighbouring countries but<strong>the</strong> closeness <strong>of</strong> Chechnya makes especially international investors concerned about possiblelosses. Ukraine is right in <strong>the</strong> middle <strong>of</strong> two peers.Domestic dem<strong>and</strong>The growing number <strong>of</strong> rich people in <strong>the</strong> country, <strong>and</strong> primarily <strong>the</strong> size <strong>of</strong> <strong>the</strong> middleclass is <strong>the</strong> most critical issue to determine <strong>the</strong> influence <strong>of</strong> <strong>the</strong> dem<strong>and</strong> conditions over <strong>the</strong><strong>SME</strong> sector. Among <strong>the</strong> three countries Russia has <strong>the</strong> largest population <strong>and</strong> <strong>the</strong> long lastingtradition for people from its Nor<strong>the</strong>rn territories to spend vacations on a Sea cost. The climate<strong>of</strong> Ukraine <strong>and</strong> Moldova is not as diverse as in Russia. The growth <strong>of</strong> savings <strong>of</strong> Russian peopleresults in <strong>the</strong> dramatic increase (especially during last 5 years) <strong>of</strong> dem<strong>and</strong>. Ukraine isexperiencing a much lower increase <strong>of</strong> domestic dem<strong>and</strong> for <strong>the</strong> services in <strong>the</strong> region, <strong>and</strong>notably it depends on waves <strong>of</strong> political stability in <strong>the</strong> country. For Moldova <strong>the</strong> domesticdem<strong>and</strong> is quite low.Global dem<strong>and</strong>With dramatically growing influence <strong>of</strong> <strong>the</strong> global economic, social, political <strong>and</strong>technological factors over <strong>the</strong> countries’ life <strong>the</strong> global dem<strong>and</strong> for <strong>the</strong> <strong>SME</strong> businesses products<strong>and</strong> services in <strong>the</strong> Black Sea Region. The major interest in its development is represented by<strong>the</strong> population <strong>of</strong> <strong>the</strong> neighbouring countries. Thus economic growth <strong>and</strong> increasing size <strong>of</strong> <strong>the</strong>middle class in Russia is generating a source for <strong>the</strong> development <strong>of</strong> <strong>the</strong> entire region. Russiansare <strong>the</strong> <strong>of</strong>ten guests in Ukrainian, Azerbaijan’s <strong>and</strong> Turkish resorts as well. But <strong>the</strong> luxuryservices are usually sold primarily to EU citizens. The growth <strong>of</strong> <strong>the</strong> interest <strong>of</strong> Europeans inRussian <strong>and</strong> Ukrainian resorts creates a potential for <strong>the</strong> <strong>SME</strong> sector development. The onlyrequirement for that is <strong>the</strong> country’s economic <strong>and</strong> political stability. The image <strong>of</strong> <strong>the</strong> region isfar away from <strong>the</strong> desirable but Russia’s efforts for having Olympic Games hosted by Sochicould result in <strong>the</strong> boost <strong>of</strong> <strong>the</strong> interest <strong>of</strong> <strong>the</strong> foreign tourists in <strong>the</strong> whole region (Ukraine &Russia). Ano<strong>the</strong>r argument should be taken in account as well – <strong>the</strong> European, <strong>and</strong> globalcommunity is getting more exposed to internationalization, to learning more about differentcountries, regions, cultures, <strong>and</strong> to travelling.Thus global dem<strong>and</strong> could become a key for <strong>the</strong> incredible growth <strong>of</strong> <strong>SME</strong> economy in<strong>the</strong> region.<strong>SME</strong> strategy, structure <strong>of</strong> <strong>the</strong> sector, <strong>and</strong> rivalryThe rivalry in <strong>the</strong> <strong>SME</strong> sector industries is generally considered to be one <strong>of</strong> <strong>the</strong> mainindicators <strong>of</strong> <strong>the</strong>ir developments. The most competitive industries attract <strong>the</strong> increased number<strong>of</strong> startups.Porter’s industry analysis could be used here to get a clear underst<strong>and</strong>ing <strong>of</strong> <strong>the</strong> rivalryin <strong>the</strong> <strong>SME</strong> sector in each <strong>of</strong> <strong>the</strong> trio countries.The external strategic analysis requires <strong>the</strong> application <strong>of</strong> “Five Forces Model” introducedto <strong>the</strong> academic <strong>and</strong> practicing community <strong>of</strong> managers by Michael Porter as well (Porter,1979), <strong>and</strong> added by <strong>the</strong> six force (A. Grove, CEO <strong>of</strong> Intel) – complementary products <strong>and</strong>services. The five forces are: bargaining power <strong>of</strong> suppliers; bargaining power <strong>of</strong> buyers; threat<strong>of</strong> substitutes; risk <strong>of</strong> entry by potential competitors; intensity <strong>of</strong> rivalry (Figure 2).All <strong>of</strong> <strong>the</strong> forces, except bargaining power <strong>of</strong> suppliers (since <strong>the</strong>y again belong to <strong>the</strong><strong>SME</strong> sector, which is represented by small number <strong>of</strong> firms), are weak. The scale <strong>of</strong> weaknessdiffers in Russia, Ukraine <strong>and</strong> Moldova, with <strong>the</strong> worst situation for <strong>the</strong> last one. In this case it72