Strategic Responses to the Global Financial and Economic Crisis in Central and Eastern Europe – The Foreign Multinational Company Perspective

Abstract

Purpose – This paper contributes to the discussion of the effects of the global financial and economic crisis of 2008–2009 (GFEC) on strategies of multinational companies (MNC) in the unique regional context of Central and Eastern Europe (CEE). Methodology/approach – The considerations are based on secondary data and accessible studies dealing with corporate responses to the recent economic downturn. Findings – The author argues that the business model which guided the expansion into CEE still remains valid. The huge market potential did not disappear and the advantages stemming from a skilled workforce and favourable resource situation were not eliminated by the crisis. What markedly changed is the perception of risk of doing business in CEE. As a consequence, foreign investors follow a more cautious and selective approach in their regional strategy. Regional players will try to stay in CEE and benefit from the exit of weaker competitors. Multi-tier brand strategies and affordability initiatives will gain in importance. Research limitations/implications – As this is a discussion paper further research is necessary to validate the propositions. Practical implications – An external shock such as the recent crisis forces management to conduct a comprehensive review of the pillars of their strategy. This paper offers a guideline for review of a regional strategy. Originality/value of paper – The paper provides a comprehensive review of the business model for CEE in the light of the recent global crisis and highlights probable strategic responses of foreign MNCs.