Economic sciences / 2. External economic activity

Klimova E.I., student of magistery

Donetsk state university of management

Factors providing success of

transnational corporations in Ukraine

Nowadays humanity is occupied by problems of globalization, influencing on all spheres of society’s life: economic, social, political, cultural. A process of globalization has an objective character, being the inevitable result of the world economy’s evolution, strengthening of worldwide connections. While forming the world market domination of transnational corporations (TNC) is being established on it.

According to definition of UNCTAD TNC (Transnational, Multinational Corporation) is an enterprise which unites legal entities of any legal forms and types of activity in two or more countries and carries out associate policy and general strategy due to one or more centers of making decisions.

The first multinational corporations came to Ukraine right after falling of “ferrous curtain”. The former citizens of country of the developed socialism at the beginning of 90th were surprised, when discovered that in the world existed detergent, not eating away a hand, tooth-paste, pleasant to the taste, shampoos which a scurf disappears after. The first “McDonald’s” snack bars of became real cultural phenomenon for a country, not spoiled by the domestic public catering,. It is possible to give many examples of such kind.

Just for a few years globalization firmly entered the world of the Ukrainian consumer. In course of time Ukrainians became more particular, and a lot of them were not even sure in the utility of global companies’ products. But it was late – most national consumers at mental level already had “steady attachment” to the products of transnational corporations. First of all TNC occupied the “eternal” segments of market – commodities of everyday demand, food stuffs, petrol, tobacco products.

In Ukraine TNC are divided in relation to local business in two large groups: companies, not having the real competitors among local industry (producer of hygiene facilities “Procter&Gamble” or tobacco companies), and corporations, which interests directly touch many Ukrainian enterprises (“Coca-Cola”, etc.) [1].

A primary objective of any TNC is a presence at the market at any cost. And Ukraine did not become an exception. Today a few tens of world large scale multinational corporations work in Ukraine. Ten of years backmost of them opened small representative offices with two-three workers in Kiev, which accompanied trial deliveries of goods. Now TNC are the active participants of the Ukrainian market. Majority from them are quoted on the exchange stocks of the USA and Europe [2].

Among the most known multinational corporations, operating in Ukraine, one can name “McDonald’s”, “Coca-Cola”, “Procter&Gamble”, “Nestle”, “Google”, “Nike”, “Adidas”, “Oriflame”, “Toyota”, “Ernst&Young” and other.

For comparison let’s take three TNC of different industries, operating in Ukraine, which, in our view, are the most successful today, and consider factors, which provide their success.

1. “Google” is the world’s largest searching system in the Internet, founded by Russian by Sergey Brin and American Larry Page. Stock of the company are quoted at the NASDAQ stock exchange in New York [3]. Google opened the representative office in Ukraine quite recently – in September, 2007, but already had time to succeed in our country. According to the data, provided by experts, today the company occupies dominant position among searching Internet-systems in Ukraine.

Factors which provide success of “Google” in Ukraine:

- the Ukrainian Dmitry Sholomko is appointed the head of representative Google’s office in Ukraine, who has been working during a year as a consultant of the company, and thus having certain work skills in it. The purpose of employment of a local manager was to the increase the volume of investments and to adapt new products;

- Ukraine is the third country in Eastern Europe after Russia and Poland by the number of the Internet users and swift growth of the Internet advertising market is expected in the nearest two years. Annually the number of the Internet users in Ukraine is being increased. Therefore the company’s choice of Ukraine for providing services is logical;

- “Google” successfully adapts its services for the Ukrainian users, that increases their amount;

- a basic source of the company’s profits the competitive context advertising. A client buys certain keywords, and the system gives out the site of a company on the top page of searching results at the proper query. Successful decisions of marketing specialists and advertising managers, as well as comparatively affordable prices of the basic type of services were resultative: “Google” occupies about 35% of the context advertising market in uanet [3];

- “Google”, unlike its competitors has the developed infrastructure on the reception of payments in Ukraine, including hryvnya plastic cards, and a large client base. Long before opening the representative office in Ukraine the company had plenty of the Ukrainian users: “Google” occupied the first place among the searching systems on the amount of addresses to the Ukrainian resources;

- strategy of “Google” related to competitors is not to watch after competitors, but satisfy users’ needs. Therefore top management of the company does not read statistical reports on the Ukrainian internet audience. And a confidence in that “Google” is a leader at the Ukrainian market, among other, is based on marketing research, which Google through certain partners carries out in our country from time to time;

- the company sends considerable investments into development of the Internet infrastructure and participates in the making of electronic commerce on the earliest stages;

- the managers of company prefer to create products, which users need, rather than follow the actions of competitors. It helps them to enter the market with innovative decisions;

- one of Google’s aims is localization of products package – they must satisfy the requirements of users in every separately taken country. A company works with the Ukrainian partners and attracts the specialists for localization of products.

2. “Adidas”. For more than 80 years the company has been a symbol of success in the world of sport. History of the company began in 1920, when a young bootmaker from Khertsogenauerakh (Germany) Adolf Dassler made the first pair of sporting shoes. “Adidas” products are sporting shoes, clothes and accessories. Today the stake of company makes about 30% of world market of sporting commodities [4]. The company works through a network of more than 100 branches, joint ventures and representative offices, located in different countries of the world, including Ukraine. According to the experts “Adidas” is a leader on sales of sporting commodities and accessories in Ukraine. The distributive policy of the company is built on the basis of dividing the world into five regions: Europe / Middle East, Africa, North America, Asia / the Pacific Ocean region, Latin America.

Factors which provide success of “Adidas” in Ukraine:

- absence of national companies in Ukraine, which would produce the analogical spectrum of commodities of the same quality level;

- none of competitors possesses such diversified set of trade marks, which can provide users with commodities both for winter and summer sports;
- “Adidas” is the true leader among the producers of sporting commodities in Europe;
- “Adidas” is one of the first trade marks on the production of sporting commodities, known on territory of the former USSR;
- the company cooperates with the stars of different kinds of sport;
- in “Adidas” garment Donetsk “Shakhtar” won the football Supercup and the Ukrainian championship;
- well-developed and consistently introduced into consumers’ mind positive image, supported by quality of products and service level, allows the company to take the leading place at the Ukrainian market;
- the staff of “Adidas” identify themselves with a brand and are its first adherents;
- development of the system of employees stimulation for understanding and connection of success of the company with their personal success and achievements;
- the company takes into account the national features of the Ukrainian market and consumer by recruiting local personnel both on leading and on other positions.
3. “Ernst&Young” is an international company, which provides professional consulting services in the sphere of taxes, finances, account and audit. The company unites more than 114000 specialists in 140 countries of the world and is an absolute leader in its field in Ukraine. The staff of “Ernst&Young” in Ukraine is about 350 specialists, who render high-quality services to many worldwide international corporations, as well as leading Ukrainian enterprises [5]. 

Factors which provide success of “Ernst&Young” in Ukraine:

- the company was the first among international audit companies, which began the activity in Ukraine (in 1991);
- “Ernst&Young” is the first among the companies of the “Great four”, that opened the second office in Ukraine (in Donetsk, 2006);
- the company unites knowledges and experience of the Ukrainian workers with experience of employees from its other offices all over the world;
- the company transmits international experience to its clients;
- “Ernst&Young” offers higher salary as compared to the national companies of this type, and also gives priority to recruiting young specialists;
- the company gives possibility of career growth with an opportunity of subsequent work abroad.
Thus, having analyzed the factors of success of TNC, which operate in Ukraine and are to date the leaders in their spheres of activity, it is possible to make the following conclusions. All transnational corporations in order to succeed in recipient countries must: position themselves as international companies, which follow administrative teams, feeling comfortable in the world; to develop integration and innovative strategies which rise the competitiveness of company; aggressively and effectively to realize the strategies and support them with large investments; to operate in the world as at the single large market; to have the ramified organizational structure and international management staff; to observe such important tendencies and requirements of the market, as being opened for the consumer, being economical, support of autonomy and enterprise of personnel.
 
Literature:
1. В.С. Калугин, Р. А. Ильичев. Железные объятия глобализации. // БИЗНЕС. – №30 (549), 2003. – С. 21-22.
2. From site: http://ictv.ua 
3. А.И. Онуфриенко, В.С. Селик. Google кликнул Украину. // КоммерсантЪ (Украина). – №158, 2007.
4. From site: http://www.adidas.com
5. From site: http://www.ey.com/Ukraine