1. Central Europe Emma Jane Riddle, 2011

2. Overview Statistics: population and GDP The Communist period After Communism, What? Business culture in Poland and the Czech Republic

3. Population (Millions) – 2011 Estimates U. S. Population = 313.2 Million

4. Gross Domestic Product 2010 Estimates U. S. GDP = $14.7 Trillion = $14,700 Billion

5. GDP Per Capita 2010 Estimates U. S. GDP Per Capita = $47,200

6. The Soviet Bloc: 1945-1989 Eastern Europe The Soviet Union (now 15 countries) Bulgaria Romania Central Europe Czechoslovakia (now Slovakia and the Czech Republic) Hungary Poland East Germany

7. Other Communist Countries in Europe Albania – allied with China Yugoslavia, including present-day: –Bosnia –Croatia –Kosovo –Macedonia –Montenegro –Serbia –Slovenia

8. Communism in a Nutshell Command economy: the government owns and manages the means of production and distribution –The Soviet Union planned production and allocated resources for the entire Soviet bloc, except Romania. Basic goods, including food, were scarce. –Black market and barter economy People were taught that capitalists exploited workers and private business was evil.

9. Communism in a Nutshell (2) Totalitarian governments –The government controlled every aspect of life. –Almost every organization was dominated by the Communist party. –Police state –Writers, artists, filmmakers, musicians, and media were supposed to promote "socialist realism" – Communist interpretation of events. –Religious groups were limited or prohibited.

10. Cultural Impact of Communism Work ethic –More employees than needed. –No reward for good work. –Those who protested against Communism lost their jobs or had to do menial jobs. Culture of dependency –Rent and food were subsidized. –Workplaces arranged vacations, camps for kids, and access to scarce goods.

11. Central European Culture Culture is a mixture of local and western European influences –Architecture, art, music, literature –Understanding of democracy –History of political dissent and resistance to foreign occupation There was serious resistance to Communism in Poland, Hungary, and Czechoslovakia Hungary and Poland left the Soviet bloc first.

12. After Communism, What? Democracy Prosperity –Market economy –EU membership –WTO membership –Euro currency (still in the future for some) Security: NATO membership These goals promoted political, economic, and cultural change.

13. The Challenge of Free Markets Foreign investment was often needed to replace obsolete equipment and facilities. Privatized firms employed fewer people. Enterprises devoted to military production often could not be made profitable and had to close. The distribution network in the Soviet bloc collapsed. The education system had to be overhauled.

14. Economic Growth in Central Europe Automobiles and parts Financial services Information technology Internet services Biotechnology Tourism Transportation, distribution

15. Higher Education Mixture of public and private universities Higher education in the European Union –Five-year Master’s degree program –Three-year Bachelor’s degree program –Two-year Master’s degree program –After completion of a Master’s degree, a doctorate can be completed in three years. European Credit Transfer System (ECTS)

16. Requirements to Join the EU Be a stable democracy, respecting human rights, the rule of law, and the rights of minorities. Have a functioning market economy that can compete in the EU. –Most state enterprises were privatized. Adopt EU laws, product standards, and regulations. The five central European countries joined the EU on January 1, 2004.

17. European Union (EU) Before 2004 Enlargement

18. European Union Today 27 member countries Croatia is scheduled to join in 2013 Candidate countries Turkey Macedonia Montenegro Iceland

19. Benefits of EU Membership Ability to export to markets in western Europe Citizens of an EU country can live and work in any EU country. Economic development aid from the EU

20. Requirements to Use the Euro Currency Stable consumer prices – low inflation Government budget deficit <= 3% of GDP National debt <= 60% of GDP Stable long-term interest rate Value of the national currency must be stable relative to the euro Slovenia and Slovakia use the euro

21. Recent Economic News In 2009, Poland was the only country in the EU to have growth in real GDP. Hungary had a financial crisis. –Real estate bubble, financed by loans that had to be paid back in euros –The Hungarian forint lost value, relative to the euro –Many people could not pay off their loans.

22. Requirements to Join NATO A democratic political system, based on a market economy Fair treatment of minority populations Commitment to resolving conflicts peacefully Ability and willingness to contribute to NATO military operations Commitment to democratic civil-military relations The five central European countries are NATO members.

23. Business Culture in Poland Design products for Poland. Do your homework. Poles are often shrewd negotiators. Be prepared to provide data. People are not impressed by "sales talk". Be prepared to make a long-term commitment. Take time to build relationships and gain trust. Be willing to "give something back" to the community.

24. Business Culture in Poland (2) Don't be afraid to ask questions about things that you don't understand. It's okay to ask sensitive questions, but be polite. If a question is important, keep asking until you get an answer. Local governments have a large role in business regulation. Some areas are more conducive to business than others.

25. Business Culture in Poland (3) Professional titles are used in Poland. Example: engineer Do not call older people by their first names until you are invited to do so. Business entertainment should be reciprocated. People may be less willing to share personal information than Americans are.

26. Managing Czech Employees Establish a good rapport with employees. Managers must be trustworthy and credible Younger Czech employees –Are eager to learn and often creative –Want work that is meaningful and appreciated –Want opportunities for professional development Some older Czechs lack motivation and are not accustomed to taking initiative

27. Managing Czech Employees (2) Czechs may be reluctant to tackle new responsibilities because –They tend to be perfectionists. –They don’t want to lose the respect of colleagues by making a mistake. Many Czechs do not like to take risks. –Responsibilities and work procedures should be clear. Source: Karin Genton-L’Epee, Prague Post, Jan. 6, 2005