The Cuban market: not a revolution, but an evolution

How two succeed in newly liberalized markets.

 

Context:

Entering a newly liberalized market is a great challenge for companies as the environment is new and untested.

Results:

On one side, to have success in newly liberalized markets (such as Cuba), firms must have a plan of action before resources are committed. Entrepreneurial orientation (EO) is associated with the successful exploration of resources and the creation of new niches. On another side, to maximize firm success firms must be able to objectively gauge their own entrepreneurial orientation adopting a marketing approach.

Relevance:

The paper will attempts to effectively measure the entrepreneurial orientation of US firms that have an interest in entering the Cuban market.

Reference:

White, G. & Vila, N. Entrepreneurial Orientation’s effect on marketing strategies and success: implications for US firms entering Cuba. Int Entrep Manag J (2017) 13: 501. https://link.springer.com/article/10.1007%2Fs11365-016-0407-6

 

Expert opinion Dick Assink

The results of this research are important for entrepreneurs and US firms that have an interest in entering the Cuban market. Cuba has a newly liberalized market and the lack of internal supply of products provides many opportunities for entrepreneurs. It is very important to know in detail what the actual results of this research are and how these results were derived. This research is addressed to firms in the USA but can also be interesting for others. Do take in mind that the USA has reasonable backlogs with regard to -for example, Europe, China and Canada.

Due to the political changes in Cuba the internal control systems of companies will be less effective the coming years, which makes the relevance of this article in my opinion relative for now. Changes in The Caribbean and especially in Cuba are not going as quickly as for instance in the former DDR and East-Europe. This is because for about sixty years Cuba has a sovereign country, it had a self-supporting, closed system, completely state controlled.

The internal strength of a company is defining the rate of success and in new liberalized markets (Cuba is at the moment not yet there in my opinion) a market survey is a must and they have to cooperate with local initiatives or for instance joint ventures.

 

 

Local entrepreneurs

In my opinion only foreign management will have a chance in the long run. There are enough well-educated citizens in Cuba, but due to the socialistic/communistic system nobody retains the same position for a long time in order to avoid corruption. The ministries -  including the elder public functionaries – will outline the policies; old or new. This means that local management changes every three to four years, resulting in difficulties for the local entrepreneurs. New laws have to be made to give locals more room to manoeuvre on the market. When the law-changes have full impact on the whole society local management could transcend foreign management, but those adaptations will not be in place anytime soon.

 

“The government does not know what to do. One answer is to encourage foreign investment, but the government insists on pulling investors into a goo of bureaucracy. Multiple ministries must sign off on every transaction; officials decide such matters as how many liters of diesel will be needed for delivery trucks; investors cannot freely send profits home. Between March 2014 and November 2016 Cuba attracted $1.3bn of foreign investment, less than a quarter of its target.

 Faced with a stalled economy and the threat of shortages, the government is trying harder to woo investors. It has agreed to let food companies, for example, repatriate some of their profits. But anything more daring seems a distant prospect. Entrepreneurs are waiting impatiently for a planned law on small- and medium-sized enterprises. That would allow them to incorporate and do other sorts of things that normal companies do. It will not be passed anytime soon, says Omar Everleny, a Cuban economist.”- The Economist 

 

Solution 

The only way to solve this problem is by being patient. At this moment the Cuban authorities feel the breath of the foreign grasshoppers in their neck. Take your time, but be on the watch with little offices. Be there when the big change is attained. Cuba was completely stand-alone during 60 years and minded its own matters, even cooperation with foreign researchers was forbidden. We have to believe now that everything is changing in short time. 80% of the people is convinced of this aspect; people expect heaven is coming very soon, but let us not get our hopes up, the deciders are still in the capital. The liberalisation of the Cuban market is not a revolution, it’s an evolution.

 

References:

https://www.economist.com/news/americas/21729803-communist-regime-can-no-longer-rely-generosity-its-allies-it-has-no-idea-what

https://www.youtube.com/watch?v=61g1RZW9Ku0

 

 

 Edited by Eline Ammeraal 

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