Name: Medintu Beatrice Laura

Date: 15.11.2019

The purpose of this report is to provide general information obtained through ratio analysis,
regarding the profitability and financial stability of Austria for a foreign direct investment. In
fact, the report will determine whether it is worth the chance for ORBICO Group Ltd. to expand
its current business operations with another branch in Austria.

Today Europe's largest distributor, Orbico's story began in 1987 in Switzerland, when Branko
Roglić founded the first Orbico Company. Now, with more than 30 years experience on the
distribution market and more than 6 thousands of employees, Orbico Group operates in 20
countries, with business in three main divisions: FMCG, beauty and tourism, with a revenue of
over 2 billion euros. As a distributor, Orbico Group represents a large number of high quality
global brands, from diverse categories: tobacco, non-food, personal care, food and beverages,
electronics, automotive, toys, beauty and style. Orbico Group has a long term win-win
relationship with their partners, many of whom are global market leaders in their categories. This
is why Orbico offers a wide range of services from distribution, logistics to sales, marketing,
brand management, merchandising and retail, reaching in 2018 almost 80.000 customers and
160.000 outlets. Orbico offers their partners a cluster business model, providing them with a
single point of contact and fewer logistics points which saves money and time. Making for
simplicity, savings, smart stock management and cost effectiveness. Orbico supplies the major
players on the market and cooperate with renown retail chains as well as local independent
retailers, drug stores and pharmacies.

In Austria, Orbico Group operates just through Orbico Beauty, one of their main divisions. Since
it was established in 2011 in Vienna, it has reached by 2016 to a net sales plan of 9 mm euro, 82
customers, 3.000 outlets, 8 suppliers and 14 employees.

PESTEL Analysis of Austria

 Political factors

The Republic of is now a member of the European Union Austria is a parliamentary democracy.
It has a reliable legal system, high personal security and a low strike rate and high level of social
peace. Austria, but an enduring legacy of its decades of post-war neutrality can be seen in the
large number of international organisations that call its capital Vienna their home. These include
the Organisation for Security and Cooperation in Europe, the International Atomic Energy
Agency, and Opec, the Organisation of Petroleum Exporting Countries. Recent politcal
distability has caused confusion among investors and prspective effects on their business.
Nonetheless, Austria has remained a high performer on the World’s Bank’s global governance
indicators (WGI), ranking between 80 and 98.5 in all parameters. This represents a good
indicator for ORBICO Group to consider further investments in Austria.

 Economic Factors

As one of the most prosperous and stable EU Member States, Austria offers its investors ideal
conditions. The Austrian economic system can be characterized as a free market economy with a
strong social focus by also taking into account the weaker members of society. Austria also
features a tried and tested system of economic and social partnership, which has traditionally
played a strong and reconciliatory role in wage and price policies. Austria is a highly developed
industrialized country with an important service sector. The most important industries are food
and luxury commodities, mechanical engineering and steel construction, chemicals, and vehicle
manufacturing.

 Socio-cultural Factors

Austria is valued as a nation with a rich cultural heritage, a popular travel destination and
business partner, thanks to its broad spectrum of cultural offerings, marvelous landscape and a
dynamic and innovative economy. The selection of a business location is primarily based on the
prevailing economic conditions. However, top performance can only be delivered if the
Austrians feel at home in their working and living environment.

 Technological Factors

The level of industrial productivity in Austria is traditionally high. In recent years Austrian
industry has achieved disproportionately high productivity gains, which could compensate for
the growth in labor costs. The decisive reason for this is the highly motivated and qualified
employees in Austria’s labor force. According to the EU Commission, Austria ranks among the
top performers in the EU in terms of labor productivity per employee. With a value of 116,8 %
of the gross value added per person employed, the Austrian economy has once again
demonstrated its high level of competitiveness, surpassing industrial powerhouses such as
France, Germany, Italy and Great Britain.

 Environmental Factors

Austria is one of the leading countries in Europe in the field of environmental policy. This was
not only recognized by the OECD in its report on the environmental situation in its member
countries; the report of the EU Commission on the accession of Austria, Sweden and Finland
also clearly showed that environmental standards within the European Union were substantially
improved due to the accession of these three new Member States. In the fields of waste
management, chemicals or air pollution related to boiler installations, the standards in force in
Austria are very stringent by European comparison.

 Legal Factors

Austria offers excellent conditions for both foreign and domestic companies. Social services
such as a minimum income as well as social insurance and retirement benefits contribute to a
high level of social security. Legal and political stability is a fundamental pre-requisite
underlying the decision of a company to select a particular business location. Internationally
operating companies can rely on a high level of political and social stability in Austria.

Porter’s Five Forces Model in Austria’s Business Environment

 Threat of new entrants

 Threat of substitutes

 Bargaining power of customers

 Bargaining power of suppliers

 Competitive rivalry