Analysis: Impacts on Business
Analysis: Impacts on Business
Despite some substantial gains in recent years, direct investment flows into Romania remain far below the levels that the economy needs to promote economic growth. Successful global companies need to take into consideration a multitude of factors of which IT environment is not the least important. The lack of a nation wide information network makes it harder for international companies to establish efficient and lucrative local enterprises. International companies need to first establish themselves in Romania so that they are able to analyze the local IT situation and develop the most effective corporate strategy. Secondly, they need to come up with a strategy that communicates long-term commitment to the Romanian market and government. This often pays the way for successful access to information resources( local software and hardware industry).
The often lack of fundamental information technology resources and principles in Romania has kept at bay many foreign investors and companies. Romania lacks some of the most important information technology development entities such as:
1. freedom of information
2. natural persons protection
as to personal data processing
3. data protection and security
4. copyright law enforcement
in IT
5. IT credibility
6. consistency and integration
of the information systems
Among these principles, the copyright law seems to have the most pervasive effect on international companies' decision to invest in Romania. First, the high rates of software piracy in Romania – sometimes estimated at over 90% of software in use – decimate the possibility of accessing the local market of sotware products with Romanian language interface. However, it should be noted that piracy (at least in relative, if not absolute terms) is declining. The 1996 Copyright Law may have something to do with this as may the 1997 creation of a Romanian office of the anti-piracy Business Software Alliance, but so has growing market maturity and the force of competition.
At least in some business sectors, internatinal enterprises want access to the latest imported applications with adequate vendor support in order to keep ahead of, or just keep up with, competing enterprises. Piracy cannot offer this and the legal market for packages is therefore growing. Second, the low cost of locally-produced software makes imported software appear very costly. In part, Romanian software is cheap because local software wages are low. The pricing of local applications can be reduced further by firms willing to accept a 'loss leader' or to cross-subsidise from state-funded/state-related projects.
One firm's Romanian subsidiary,
for example, failed to sell a single package despite a substantial advertising
campaign. It then negotiated a special deal with the parent company allowing
charges to Romanian customers to be reduced by up to 75% from global prices.
This, and a more concerted
focus on personal contact rather
than general marketing, led to sales of their management information systems
to 14 Romanian businesses. Another example of a successful international
company operating in Romania is IBM. IBM is a major hardware player
and is perceived as having a major part to play in
the future of Romania's IT industry.
It has spread its presence throughout the country and now has a network
of some 70 representatives. Soon after the revolution, it began donating
computing equipment to different educational institutions. Its main state
sector reward to date was a $3.5m order placed in 1991 by the Ministry
of Education and Science. This involved the supply of PS/2s and networking
technology to a number of universities and polytechnics. (5)
