Business case: Startup of a manufacturing enterprise in Turkey

Business case: Startup of a manufacturing enterprise in Turkey

A leading global manufacturer of chemicals with operations in eight countries on three continents was undergoing a period of rapid expansion in terms of product numbers, production volume and countries. The company with key markets such as Europe and Northern America, considered entering the Turkish market, as well.

The recession in Europe had caused them to change their strategy and decide to grow in a market outside of Euro. Due to the developments in the Turkish chemical industry, Turkey was considered a good location to start with. There were about 314 companies with foreign investment in the Turkish chemical industry – a sector that has a share of 13 percent of total foreign capital in Turkey.

The company observing the improvements in the Turkish market decided that their presence in this market could bring them considerable advantages.

There were a variety of options that related to cost, risk and the degree of control to be exercised over them. After evaluating those options we came to the conclusion that establishing a company, a new plant would be a good choice for the company’s growth strategy and gateway for other markets near Turkey as well.

Through a mutual contact the company was directed to S4U (S4U Business Management Consultancy and Foreign Trade Ltd. Şti.) to evaluate the available options and suggest and implement the agreed solution. Although, a well-established company would be expected to have enough experience in establishing a new plant abroad, every country has its own cultural, political, economical, labor, technological, juridical and fiscal factors. They were experienced and knew that in such case a local support was inevitable.

After starting with the project we had to outline the complex range of issues like market conditions, investment approvals, human resources, industry-specific incentives, corporate taxes, competition, import-export tariffs.

The company needed to get accurate and update market information; customers and competition to be able to find their competitive edge in Turkey. We supported them with competitive intelligence and the market trends.

The next step was focusing on the market penetration strategy: The company needed to have a perspective along with a clear-cut marketing plan including the penetration strategy and the tactics. The sector specialist in our team drew out a yearly plan with quarterly forecasts.

Communication including relationship with the customer is the key for success in Turkey. We helped the company with the correct feedback to support their communication strategy.

For the facility, the options were be buying or leasing.

First, we focused on the option of leasing and started negotiating with an executive of a bank. We had some options for the location of the plant establishment as well. The most important point was it should be near locations with satisfactory transportation facilities and customers. İzmir and İstanbul were evaluated to be the best two options.

Taking regional incentives into consideration was not a good option for this project, as the advantage would be diminished when compared with the transport and logistics costs. While our negotiations for leasing of a facility were going on, we received good news from our real-estate partners that there was a plant for sale on a convenient location for a very good price. We compared the options and the company decided to buy the facility.

For the startup the team players that were responsible for tax and finance, legal issues, marketing, facility set-up, business processes and process transfer started working together with the project manager coordinating the concerned staff of the company.

Use of technology made it possible to have meetings via internet and share documentation and communicate in English and Dutch.

Meanwhile we started with the recruitment of local staff. Some of them we easily found through our wide network and some of them through the HR agencies.

Finally, project risks were identified, assessed and managed.  We formally closed each activity of the work-stream with a fulfillment of our accomplishment.

At this stage, we continue to provide after care services and will pursue until the company has applied the marketing penetration strategy and proceed further in a smooth manner.

Semiha Ünal
Business Consultant

WEB PAGE