City features

Lviv is the biggest city of Western Ukraine ( 850’000 inhabitants), located 60 km from the border with European Union. Historically, Lviv has favorable environment for trade and finance sectors, tourism and supplementary services. The locals adore sport, first of all football, and support two strong city teams FC Karpaty and FC Lviv.

Economic up cycle of Lviv City is resulting not only from EURO Championship, but also from foreign investment – driven by favorable business-oriented attitude of local authorities.
Within the near future Lviv will be connected with Europe via new air, railway routes as it modernizes airport and narrow-gauge express railway. Automobile trips will be also streamlined due to new roads and new customs points on the border crossing with Poland.

Funding

State Program on Preparation to EURO 2012 anticipates spending of €11.5 bln, including €8.5 bln from investors. The vast majority to be spend for transport infrastructure, hotels and stadiums.
Preparations in Lviv Region are budgeted around €1.2 bln and to be split as follows: government (19%), region administration (17%) and investors (64%).

Prior to the Championship Lviv City will built new 34’000-seat stadium (€60 mln), reconstruct five football training bases (€17 mln), airport (€70 mln) and automobile roads (€240 mln), renew city transport (€115 mln), build and renovate more than 50 hotels and hostels (€275 mln), improve public facilities and touristic attractiveness (€70 mln) as well as invest in further medical facilities (€14 mln).

Institutional Environment

EURO 2012 is a subject of national proud in Ukraine and especially in Lviv region. Demonstrating a superior organization and execution of the event is considered as a precondition for subsequent EU accession.
State and local authorities are determined to offer the most favorable treatment for foreign businesses. The government is committed to secure transparent funds distribution. Investors and unique goods suppliers for EURO 2012 are provided with extra incentives.
The organization of the Championship by itself includes measures, which foster business and touristic info dissemination, enabling better public control.
Notably, that EBRD, WorldBank and European Investment Bank play an important role in financing of EURO 2012.

Sales Algorythm

Once you think your product can be marketed in context of EURO 2012 in Lviv, please contemplate the following steps to undertake:
• Collect country(city) info as well as analytics, related to the market of your interest
• Develop your marketing tactics based on local nuances
• Meet local authorities within the delegation or individually, as well as private matchmakers
• Establish contacts with prospect clients/partners
• Conduct negotiation taking into account Ukrainian business culture
• Sign agreements and execute accordingly

Cost of doing business becomes ridiculously small.

Will you believe that there is a country in the middle of Europe where 150 bucks is ordinary monthly salary? As a matter of fact, in Ukraine currency devaluation and unemployment caused the reduction of salaries by up to 70% in terms of Euro. Similar situation with other operating expenses like office rent, telecommunication and information services as well as insurance. Materials and component parts in many cases cost twice less than just a year ago again in terms of Euro.

Export Rules.

Supply managers from all over the world have new challenges as Ukrainian exporters are now able to offer minimal prices in Dollar and Euro. New times force Ukrainian companies actively seek client abroad and propose them favorable terms of pricing and delivery. Some foreign company are already establish factories at Western borders of Ukraine with the purpose to sell the production to the customers in Europe.

Domestic Competition disappears.

Since 2005 markets have been growing and competition were getting tough. But when economic turmoil began local players found themselves overloaded with expensive debts and not able to manage changes. Many of them disappeared, frozen activities, reduced product lines. Nowadays Ukrainian firms are limited in resources to invest in new products, enter new market and compete with more powerful competitors from abroad.

Speculative investments flourish.

Today, you can easily acquire commercial and residential real estate, land and fixed assets for 30-50% of their last year price. Companies with aggressive investment strategy are able to select the most attractive objects and dictate the conditions to the sellers. The excessive proposition makes many assets underestimated. Investors with long-term plan has also an opportunity to buy businesses or stakes in companies for as little as 10-20% of their last year value.

Business Tourism and Business Services have never been more affordable.

Due to currency devaluation Ukraine becomes a paradise for business travelers in terms of pricing. Hotel prices were reduced by 30% in Euros, apartment rent fall by 50%, average bill in restaurant is 50-60% smaller than a year ago. If you contemplate Ukraine as a potential destination for you business, it is a right time to visit it as well as order services from local researchers, translators and lawyers.

In despite of economic boom in Ukraine during 2004-2008, the vast majority of markets are still far from saturation. The competition is much more fragmented comparing with countries to the West. Many local players, dependant on lending, were knocked out by economic turmoil. Management culture as well as service level in Ukraine do not meet European standards. Thus, foreign firms with midterm and longterm strategies can take advantage by positioning themselves in Ukraine these days.

Market saturation

Ukraine consumes 2-5 times less products and services per capita comparing to European countries. There are quite perspective markets in Ukraine, which due to different reasons, remains untouched by competition.
One can hardly name “competition” situation on the most of Ukrainian markets. Companies do not see their rivals. When planning or developing products, they can afford not to take their competitors into account.
That becomes especially obvious outside Kiev City. Specifically regions are missing wide retail networks with modern goods and services. Such things as customized software, brokerage services, broadband Internet, logistic premises, modern hotels are in deficit countrywide.

Concentration Level

Immature Ukrainian markets are characterized by high level of fragmentation. This, however, may be different in one given region, where one company controls everything.
The barriers for entering the markets are rather low. There are no big fishes, impacting your pricing policy and overall strategy, except mobile phone sector and few state-owned sectors.
Ukraine provides many niches, which can be taken up and secure long-term sustainable earnings. On the other hand, there is a good opportunity for big foreign players to become a big fish by bringing effective and efficient technologies and management approaches to the markets.

Share of foreign capital

There is no transparency of books in Ukraine. Companies, except those from financial field, usually do not comprehend the advantages of shareholding form of ownership. That’s why big joint-stock corporations unhurriedly come to Ukraine. Simultaneously, smaller nimble firms from Germany, UK, Poland are finding application to their better technologies and systems. If we look at PR agencies, Health Care Organizations, Hotels, Parcel Delivery Agencies, we will discover that foreign capital constitute less than 15% of overall capital in sector. That means that Ukraine unlike, say, Baltic States, is far from being the battlefield of foreign business monsters.

Management and Service Standards

Amazingly, how little Ukrainian managers know about business. Like in communism era they are good at knowing their product, but lack knowledge of strategy, motivational systems, project management, measurement and finance. Quick, emotional, living today, very ineffective and vulnerable to changes they are an easy meat for foreign well-organized companies. Lack of planning and excessive ambitions made many of them today stuck overloaded with loans and helpless.
Customer satisfaction was not at all a priority of Ukrainian firms. No trainings for front-offices, primitive IT, absence of loyalty programs, all this restrains their further development. In such a way service level will be the first differentiation point for foreign firms to gain Ukrainian customers.