IN SERBIA

Overview Executive Summary SWOT Analysis Macro Analysis Micro Issues Entry Strategy Conclusion Work Cited

Executive Summary Why Serbia? Population: 7.5 million Investment Initiatives: - State grants in the range between €2,000 and €10,000 per every new job created and tax incentives now available Quality Human Resource - Skilled and productive labor force has proven to be one of Serbia’s major competitive advantages. Strategic Geographic Location - You can effectively serve your European and Middle Eastern customers thereby enhancing your business performance. Low operating cost - The tax system is highly conducive to investment featuring unique benefits. Population: 7.5 million GDP: $79.662 billion Real GDP/capita: $6,781 Real GDP growth: 6.1%

SWOT Analysis Strengths Weaknesses GDP per capita increased from $1,160 in 2000 to $7,054 in 2008 Only European country with free trade agreements with EU and Russia FDI increases every year (US Steel, Philip Morris, FIAT, Gazprom, Carlsberg, Lafarge) “Serbia is a great place to do business" Mr. Joseph Antoline, Executive Director of Finance for US Steel Serbia. Weaknesses 14% Unemployment vs EU average of 8% 11 billion trade deficit Devastating industry damages during NATO Bombings in 99 Only country in the region under UN sanctions in last 20 years (1992-1995)

SWOT Analysis part 2 Opportunities Threats Preparing to join EU; part of CEFTA and BSEC Low wages for well educated work force and favorable tax code Attracting FDI is set as a priority for the government of Serbia Excellent strategic location and reformed legal system Threats Political unrest with Kosovo Eastern Europe's economies have been hardest hit by the global recession Long term population decline Country’s debt to IMF and World Bank

Macro Analysis Geography Economic system Serbia is located between Central, Southern, and Eastern Europe Economic system The economic system in Serbia is based on a market economy Role of Government in the Economy The Chairman of the National Bank of Serbia is appointed by the president to oversee the economy of Serbia Current Political Conditions 2 mayor parties in Serbia are Democratic Party and Serbian Radical Party

Macro Analysis part 2 Foreign exchange rate Stability and performance Interest rates Reserve requirement rate: 2.50% Key interest rate: 12.00 % Discount rate : 8.50 % Foreign exchange rate 1 EUR = 93.28 Dinars 1 USD= 66.11 Dinars 1GBP= 108.18 dinars Stability and performance In recent years, Serbia has been among Europe's fastest growing economies. Over the past three years GDP growth averaged 6.8% with the forecast of 7% for the coming years. Foreign currency reserves have reached a record-high of $11.5 billion and public foreign debt has been cut down to merely 30% of GDP.

Macro Analysis part 3 Government policies toward finance industry No tariffs, or barriers to a foreign company starting a new bank, or foreign banking firm buying a smaller domestic banking firm Some banks are state owned Komercijalna Banka Some banks were privatize Vojvodjanska Banka Some banks were bought out by FDI Delta Bank by Intesa Saopaolo Main Trading Partners EU countries (around 53%) CEFTA countries (around 30%) CIS countries (around 10%)

Serbia in pictures

Micro Analysis Over 30 banks Competition: Banca Intesa Komercijalna Banka Raiffeisen bank Alpha Bank Vojvodjanska banka Citi Bank established office in Belgrade in 2006 The only other office Citi has in Southeast Europe is in Romania

Entry strategy Acquisition of an unrelated enterprise Foreign Direct Investment (FDI) - company from one country making a physical investment into building a factory or company in another country. It needs to buy at least 10% of the company it is investing in. Acquisition of an unrelated enterprise Acquire Metals Bank (110 locations)

Conclusion Serbia has up and coming economy FDI is the best route of investment for Citibank, because a joint venture, or licensing would take away from profits, without any obvious benefits. Serbia has potential to be a leader in the southeast Europe Great strategic location Serbia is the only country with a free trade agreement between the European Union and Russia.

Work Cited https://www.cia.gov/library/publications/the-world-factbook/fields/2092.html http://www.seebiz.eu/en/macro/inflation-in-serbia-dangerously-close-to-15%25,50813.html http://www.kamatica.com/ http://www.metals-banka.rs/index.php?lang=en http://www.nbs.rs/export/internet/english/ http://www.siepa.gov.rs/site/en/home/

Questions? Thank you