INTERNANTIONAL BUSINESS MANAGEMENT

ASSIGNMENT ON

COMPREHENSIVE ENVIRONMENT ANALYSIS OUTLINE

Textile and Apparel Industry based in Kiev, Ukraine venturing in Russia

SUBMITTED BY

Chandan C Kamath Register No: 101202101 Manipal Institute of Management

SELECTED Industry is Textile and Apparels Name: CEEKAY Apparels Place: Kiev, Capital City of Ukraine. Mission Statement: The companys mission is to be the consumers number one choice in apparel products by providing our valued customers with a range of the finest quality apparel, through commitment to innovation, customization, service and value. Also aiming to be the most favored brand internationally. Description of the Organization: CEEKAY Apparels is a clothing manufacturer based in Kiev who deals in wholesale & retail garments . Basically concentrating on private label CEEKAY which offers a wide range of garments with custom designs ladies, mens and children clothing with trendy styles as per market demand. CEEKAY Apparels is a also fashion forward Apparel industry such as club wear, sportswear, and street wear and also for the professional formal range is offered. Initially the firm is planning on entering and expanding in the market with a Russian partner to avoid serious problems like political obstacles and widespread corruption within the industry's business practices. Further developing the brand in Russia the firm planning invest in the department store format, which is relatively underdeveloped and as a number of buildings are unoccupied and could potentially be renovated and developed as department stores. The firm will also focus on brand development in the provincial regions where rents are significantly lower and markets less saturated than in Moscow, St Petersburg and other large cities.

Textile and Apparel Industry Why Textile Industry in Ukraine? Ukraine is considered a promising and growing market of textiles and apparel (light industry sector). The market size in this category is estimated at USD 2.8 billion. Major exporters of textile and apparel to Ukraine are China, Turkey, Russia, Germany, Italy and Poland. Ukraine is the most preferred place for outsourced fabrication. The benefits for starting a textile and apparel venture in Ukraine are: Low cost labor Well-educated workforce Proximity to the European markets

 Ukraines domestic market of nearly 45 million consumers The key competitive advantages in the apparel industry are price, quality, functionality and brand recognition. Also important is promotion, strong local recognition, as well as brand reputation of both local and international firms. The best import and sales potential is expected for comfortable casual wear clothing made of clean, light and soft fabrics, and organic fabric apparel. The textile and apparel market encompasses a diverse assortment of styles and quality levels in Ukraine. The apparel market is considered very campaign driven. Ukrainians are highly receptive to both marketing and advertising. The purchasing power of Ukrainian consumers is rising and an average Ukrainian consumer can afford to and is spending more on clothing and footwear than in past years. Ukrainians are choosing to purchase branded clothing in the mid-price range instead of the non-branded apparel sold through small traditional shops or open-air markets. Consumers are becoming increasingly fashion conscious and demanding higher quality and more sophisticated products. Shopping in boutiques of internationally recognized brands and designers is a way to confirm customers social status. Now days, Ukrainians are becoming more aware of international brands and more interested in following European and international fashion trends. Entering into international business one needs to do a thorough analysis of both the countries need to be conducted. As Ukraine and Russia are selected political, Economic& Financial, Cultural, Social analysis is conducted. Further as Kiev is selected regional analysis is done. Ukraine Ukraine lies in Central and Eastern Europe which is spread over an area of 603,628 km2. Ukraine is the second largest contiguous country after Russia in European Continent. It is a unitary state having 24 provinces called as oblasts and one autonomous Republic Crimea. Kiev and Sevastopol are the two cities which has special status. Ukraine is a home of diverse culture and heritage. Political Analysis Ukraine Constitutionally, Ukraine is a democratic, social, law-based republic. The people exercise power through elected state and local governments. The right to amend the constitution belongs solely to the people and may be exercised only through popular referenda. On July 16, 1990, the new parliament adopted the Declaration of State Sovereignty of Ukraine. The declaration established the principles of the selfdetermination of the Ukrainian nation, its democracy, political and economic independence, and the priority of Ukrainian law on the Ukrainian territory over Soviet law. Economic and Financial Analysis:

The Ukrainian economy is an emerging free market with 5.11% GDP growth rate in September 2011. Gross domestic product that fell sharply for the first 10 years of its independence from the Soviet Union and then experienced rapid growth from 2000 until 2008. With the dissolution of the Soviet system, the country moved from a planned economy to a market economy. The transition process was difficult for the majority of the population which plunged into poverty. Ukraine's economy contracted severely following the years after the Soviet dissolution. After the economic crisis in 2008 economy in Ukraine recovered after 2010 and with help of neighbouring country Russia which is by far the country's largest

trading partner and export market. Ukraine is subdivided into nine economical regions: Carpathian, Northwestern, Podillya, Capital, Central-Ukrainian, North-eastern, Black-Sea-Coastal, Trans-Dnieper, and Donetsk. These regions were redrawn from the three Soviet economical regions of the Ukrainian SSR: Donetsk-Trans Dnieper, South-western, and Southern. The nation has many of the components of a major European economy - rich farmlands, a well-developed industrial base, highly trained labour, and a good education system. However the government is committed to attracting foreign investment with most sectors fully open to foreign direct investment. However, the operating climate is affected by corruption at all levels of the system, and growing concerns over the rule of law. Ukraine acceded to the WTO in February 2008 and is currently negotiating a free trade agreement with the EU. The government is keen to move forward with privatization of state-owned companies in an effort to boost state revenues. Demographics of Ukraine: Analysis of Ukraine Demographics, health and social environment: According to the All-Ukrainian Population Census which took place on the 5th of December 2001, the population of Ukraine accounted for 48,457,000people. 32.5 million people or 67.2% of Ukraine population live in city environments. While the remaining population of 15.8 million or 32.8% of people lived in rural settings. Ukraine has one of the fastest growing epidemics in the world. According to UNAIDS about 1.63 percent of adults, or approximately 756,300 citizens, were estimated to be living with HIV/AIDS in 2007, up from 1.46 percent of the population in 2005, or 685,600 citizens. However, the government is trying its level best to reform its healthcare system by creating a network of national doctors and improving its medical emergency services. In addition to it has also introduced public healthcare system with health insurance. Cultural Analysis of Ukraine

Ukrainian culture includes a rich and diverse heritage culture of more than 110 ethnics which live in the country. Ukraine culture has a lot in common with Russian and Belarusian cultures. It is quite understandable as all three nations have their historical roots and origins from Kievan Rus, but during the 13th century they began developing as the individual nations they are now. History demonstrates that every nation tends to create legends and stories about its historical past.. Artisan textile arts play an important role in Ukrainian culture, [216] especially in Ukrainian wedding traditions. Ukrainian embroidery, weaving and lace-making are used in traditional folk dress and in traditional celebrations. Ukrainian embroidery varies depending on the region of origin and the designs have a long history of motifs, compositions, choice of colours and types of stitches. Use of colour is very important and has roots in Ukrainian folklore. Embroidery motifs found in different parts of Ukraine are preserved in the Rushnyk Museum in PereiaslavKhmelnytskyi. Ukrainian is considered to be the official language of Ukraine but majority of the populations are bilingual but they dont need any translators to communicate with each other. Ukraines culture went through centuries of change from one generation to the next, creating and preserving national culture which has lasted through these many centuries. At present it is experiencing a difficult period of transition to a democratic style of life following the collapse of Soviet Union. REGIONAL ANALYSIS Kiev or Kyiv is the capital and the largest city of Ukraine, located in the north central part of the country on the Dnieper River. Kiev is an important industrial, scientific, educational and cultural centre of Eastern Europe. It is home to many high-tech industries, higher education institutions and world-famous historical landmarks. The city has an extensive infrastructure and highly developed system of public transport, including the Kiev Metro. The City of Kiev has a unique legal status compared to the other administrative subdivisions of Ukraine. The most significant difference is that the city is functionally independent of the oblast (province) in which it sits. That is, it is subordinated directly to the national-level branches of the Government of Ukraine, skipping the provincial level authorities of Kiev Oblast. Additionally, the head of the local government (the mayor) is elected, rather than appointed, and the municipal government has greater latitude in local affairs that elsewhere in Ukraine. Traditionally the elected mayor also automatically became chair of Kiev City Council and head of the city's state administration (i.e. head of government). Currently, the legal status and the local government of Kiev is regulated by the special provisions of the Constitution of Ukraine as well as a combination of Ukrainian laws, namely the Law on the capital of Ukraine - Hero City Kiev, he Law on the local state administration and the Law on local self-governance in Ukraine.

Economic and Financial analysis: As most capital cities, Kiev is a major administrative, cultural and scientific centre of the country. It is the largest city in Ukraine in terms of both population and area and enjoys the highest levels of business activity. Kiev's economy outstripped the rest of the country's, growing by an annual average of 11.5% and the city boasts large and diverse economic base and is not dependent on any single industry and/or company, its unemployment rate has historically been relatively low. Kiev is the undisputed centre of business and commerce of Ukraine and home to the country's largest companies, such as Naftogaz Ukrainy, Energorynok and Kyivstar.. In May 2011 Kiev authorities presented a 15-year development strategy which calls for attracting as much as EUR82 billion of foreign investment by 2025 to modernize the citys transport and utilities infrastructure and make it more attractive for tourist. Primary industries in Kiev include utilities i.e., electricity, gas and water supply (26% of total industrial output), manufacture of food, beverages and tobacco products

(22%),chemical (17%), mechanical engineering (13%) and manufacture of paper and paper products, including publishing, printing and reproduction of recorded media (11%).

Demographics of Kiev: According to the All-Ukrainian Census, the population of Kiev in 2001 was 2,611,300. The historic changes in population are shown in the side table. According to the census men accounted for 1,219,000 persons, or 46.7%, and women for 1,393,000 persons, or 53.3%. Same study reveals that more than 130 nationalities and ethnic groups reside within the territory of Kiev. Both Russian and Ukrainian languages are spoken, with Russian being more widely used in the city centre despite the fact that Ukrainian is claimed as their native language by almost three times as many residents as those who claim Russians. Modern Kiev is a mix of the old and the new, seen in everything from the architecture to the stores and to the people themselves. Cultural Analysis: Kiev was the historic cultural centre of the East Slavic civilization and a major cradle for the Christianization for Rus', Kiev retained through centuries its cultural importance and even at times of relative decay, it remained the centre of the Eastern Orthodox Christianity of the primary importance. Its sacred sites, which include the Kiev Pechersk Lavra (the Monastery of the Caves) and the Saint Sophia

Cathedral are probably the most famous, attracted pilgrims for centuries and now recognized as a UNESCO World Heritage Site remain the primary religious centers as well as the major tourist attraction.

Need Assessment of Textile And Apparel Industry in Russia: The Russian clothing retail market is forecast to grow by 3-5% in 2011 and by about 6% per annum during 2012-13. Growth is spurring investment by foreign brands, which in recent years have come to dominate the market in Russia. Six of the world's ten largest apparel retailers - namely C&A Europe, Fast Retailing, Gap, H&M (Hennes & Mauritz), Inditex and Next - have entered the Russian clothing market and found success. Textile and Apparel sector is forecasted to grow at double digit growth rates until at least 2013. Russian men have become more selective in their clothing choices and are demanding higher quality products. Such demand grew when the economic situation in the country improved during 2000-08, and has grown again since. Also promising is the children's clothing sector. The average amount of money spent on children's clothing in Russia has grown significantly since 2008, and the market is expected to grow by 10% per annum until 2013. While some companies are expanding into Russia through franchise agreements, a number of brands are entering the market independently. the Russian government has formed a Strategy for Development of Light Industry of Russia until 2020. Under the strategy, there are plans to modernise existing production facilities with a view to improving the quality of domestic manufacturing. The authorities hope, perhaps optimistically, that more than half of the clothing sold in Russia will be produced within the country by 2020. The Russian market is has become more open as the country has joined the World Trade Organization (WTO), which is the right time for international brands to look at the potential of expanding into the Russian market.

Reference: 1. Ukraine Country Profilehttp://news.bbc.co.uk/2/hi/europe/country_profiles/1102303.stm 2. Textile Industry http://www.marketresearch.com/Textiles-Intelligence-v2646/Profile-Textile-Clothing-Ukraine-1320877/ 3. Textile and Apparel Market overview http://www.globaltrade.net/f/market-research/text/Ukraine/Textiles-Apparel-Leather-FootwearAccessories-Textile-and-Apparel-Market-Overview.html 4. Ukraine Competiveness report 2008- World Economic Forum 5. Ukraine Economy http://www.economy-ukraine.com.ua/?p=272