Dental Equipment, Supplies, and Services in Bulgaria: A Strategic Reference, 2007
ICON Group International, July 2007, Pages: 209
How to Strategically Evaluate Bulgaria
Perhaps the most efficient way of evaluating Bulgaria is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to dental equipment, supplies, and services are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).
Latent Demand and Accessibility in Bulgaria
This report provides a detailed overview of factors driving latent demand and accessibility for dental equipment, supplies, and services in Bulgaria. Latent demand is largely driven by economic fundamentals specific to dental equipment, supplies, and services. This topic is discussed in Chapter 2 using work carried out in Bulgaria on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for dental equipment, supplies, and services in Bulgaria. I use the term “micro” since the discussion is focused specifically on dental equipment, supplies, and services.
Chapter 3 is also a stand-alone report that I have authored. It covers proxy pro-forma financial indicators of firms operating in Bulgaria. I use the word “proxy” because the provided figures only cover a “what if” scenario, based on actual operating results for firms in Bulgaria. The numbers are only indicative of an average firm whose primary activity is in Bulgaria. It covers a vertical analysis of the maximum likelihood balance sheet, income statement, and financial ratios of firms operating in Bulgaria. It does so for a particular Standard Industrial Classification (SIC) code. That code covers “dental equipment and supplies”, as defined in Chapter 3. Again, while “dental equipment and supplies” does not exactly equate to “dental equipment, supplies, and services”, it nevertheless gives an indicator of how Bulgaria compares to other countries for a proxy adjacent category along various dimensions.
Chapter 4 deals with macro-accessibility and covers factors that go beyond dental equipment, supplies, and services. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Bulgaria:
Openness to Trade in Bulgaria
Openness to Direct Investment in Bulgaria
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in the Chapter 4, which is a general overview of investment and business conditions in Bulgaria. Chapter 4 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Bulgaria. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.
1 INTRODUCTION & METHODOLOGY 1
1.1 What Does This Report Cover? 1
1.2 How to Strategically Evaluate Bulgaria 1
1.3 Latent Demand and Accessibility in Bulgaria 3
2 DENTAL EQUIPMENT, SUPPLIES, AND SERVICES IN BULGARIA 5
2.1 Latent Demand and Accessibility: Background 5
2.2 Latent Demand: Market Composition 5
2.3 Accessibility: The Structure of Competition 5
2.4 Latent Demand: Target Buyers 6
2.5 Latent Demand: Market Data 6
2.6 Market Issues and Obstacles 6
2.6.1 Import Climate 6
2.6.2 Value Added Tax 6
2.6.3 Registration and Certification 7
2.7 Accessibility: Market Entry 7
2.7.1 Best Prospects 7
2.7.2 Financing 7
2.8 Key Contact 7
3 FINANCIAL INDICATORS: DENTAL EQUIPMENT AND SUPPLIES 8
3.1 Overview 8
3.1.1 Financial Returns and Gaps in Bulgaria 9
3.1.2 Labor Productivity Gaps in Bulgaria 12
3.1.3 Limitations and Extensions 12
3.2 Financial Returns in Bulgaria: Asset Structure Ratios 13
3.2.1 Overview 13
3.2.2 Assets - Definitions of Terms 13
3.2.3 Asset Structure: Outlook 16
3.2.4 Large Variances: Assets 17
3.2.5 Key Percentiles and Rankings 20
3.3 Financial Returns in Bulgaria: Liability Structure Ratios 35
3.3.1 Overview 35
3.3.2 Liabilities and Equity - Definitions of Terms 35
3.3.3 Liability Structure: Outlook 37
3.3.4 Large Variances: Liabilities 38
3.3.5 Key Percentiles and Rankings 41
3.4 Financial Returns in Bulgaria: Income Structure Ratios 54
3.4.1 Overview 54
3.4.2 Income Statements - Definitions of Terms 54
3.4.3 Income Structure: Outlook 56
3.4.4 Large Variances: Income 57
3.4.5 Key Percentiles and Rankings 60
3.5 Financial Returns in Bulgaria: Profitability Ratios 73
3.5.1 Overview 73
3.5.2 Ratios - Definitions of Terms 73
3.5.3 Ratio Structure: Outlook 75
3.5.4 Large Variances: Ratios 76
3.5.5 Key Percentiles and Rankings 79
3.6 Productivity in Bulgaria: Asset-Labor Ratios 94
3.6.1 Overview 94
3.6.2 Asset to Labor: Outlook 95
3.6.3 Asset to Labor: International Gaps 96
3.6.4 Key Percentiles and Rankings 99
3.7 Productivity in Bulgaria: Liability-Labor Ratios 114
3.7.1 Overview 114
3.7.2 Liability to Labor: Outlook 115
3.7.3 Liability and Equity to Labor: International Gaps 116
3.7.4 Key Percentiles and Rankings 119
3.8 Productivity in Bulgaria: Income-Labor Ratios 132
3.8.1 Overview 132
3.8.2 Income to Labor: Outlook 132
3.8.3 Income to Labor: Gaps 133
3.8.4 Key Percentiles and Rankings 136
4 MACRO-ACCESSIBILITY IN BULGARIA 149
4.1 Executive Summary 149
4.2 Political Risks 149
4.2.1 Economic Relationship with the United States 149
4.2.2 The Political System 150
4.3 Marketing Strategies 150
4.3.1 Creating a Sales Office 150
4.3.2 Creating a Joint Venture 151
4.3.3 Agents and Distributors 152
4.3.4 Hiring Local Counsel 152
4.3.5 Checking Bona Fides 153
4.3.6 Distribution Channel Options 153
4.3.7 Franchising Activities 154
4.3.8 Direct Marketing Options 155
4.3.9 Selling Strategies 155
4.3.10 Product Pricing 156
4.3.11 Licensing Options 156
4.3.12 Advertising and Trade Promotion 157
4.3.13 Trade Promotion 159
4.3.14 Government Procurement 159
4.4 Import and Export Regulation Risks 160
4.4.1 Adherence to Free Trade Agreements 160
4.4.2 Trade Barrier Risks 161
4.4.3 Restrictions on Imports 162
4.4.4 Controls on Exports 162
4.4.5 Trade in Arms and Dual-Use Goods and Technologies 162
4.4.6 U.S. Exports of Sensitive Technology to Bulgaria 163
4.4.7 Import Tariffs and License Requirements 163
4.4.8 Customs Regulations and Contact Information 164
4.4.9 Entering Temporary Imports 165
4.4.10 Additional Trade Issues 165
4.4.11 Labeling Issues 166
4.4.12 Warranty and Non-Warranty Repairs 166
4.4.13 Free Trade Zone Options 166
4.5 Investment Climate 167
4.5.1 Openness to Foreign Investment 167
4.5.2 Common Forms of Investment 168
4.5.3 Barriers to Direct Investment 168
4.5.4 Privatization 169
4.5.5 Concessions 169
4.5.6 Conversion and Transfer Policies 170
4.5.7 Expropriation and Compensation 170
4.5.8 Dispute Settlement 170
4.5.9 Performance Requirements and Incentives 173
4.5.10 Right to Private Ownership and Establishment 173
4.5.11 Intellectual Property Risks 173
4.5.12 Transparency of the Regulatory System 176
4.5.13 Capital Market Risks 177
4.5.14 Political Violence 178
4.5.15 Corruption 178
4.5.16 Bilateral Investment Agreements 179
4.5.17 OPIC and Other Investment Insurance 179
4.5.18 Labor 179
4.5.19 Free Trade Zones and Free Ports 180
4.6 Trade and Project Financing 181
4.6.1 The Banking System 181
4.6.2 Foreign Exchange Control Risks 181
4.6.3 General Financing Availability 181
4.6.4 Availability of GSM Credit Guarantees 181
4.6.5 Financing Export Strategies 182
4.6.6 Financing from International Financial Institutions 182
4.6.7 Types of Available Export Financing and Insurance 183
4.6.8 Banks with Correspondent Banking Arrangements 183
4.7 Travel Risks 183
4.7.1 Local Business Practices 183
4.7.2 Travel Issues 184
4.7.3 Work Week 185
4.7.4 Infrastructure for Conducting Business 185
4.7.5 Temporary Entry of Business Equipment and Materials 186
4.7.6 Country Data 186
4.8 Key Contacts 186
4.8.1 U.S. Government Contacts 186
4.8.2 Trade and Industry Associations 190
4.8.3 Bulgarian Government Contacts 191
4.8.4 Major State Enterprises 194
4.8.5 U.S.-based Financial Institutions in Bulgaria 195
4.8.6 International Financial Institutions 196
4.8.7 Bulgarian Business Publications 197
4.8.8 Important Web Sites about Bulgaria 198
4.8.9 Bulgaria on the Internet 199
5 DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS 200
5.1 Disclaimers & Safe Harbor 200
5.2 Icon Group International, Inc. User Agreement Provisions 201
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