Continental in Ukraine

Continental, a worldwide operating automotive industry supplier with leading position in the European tire market, was trying to take advantage of the high future growth potential in Eastern Europe. Eastern European markets were developing faster than other markets. The infrastructure was improving as well as the average income of the population, fueling the demand for high-quality cars and subsequently also for high-quality western tires. Ukraine was one of the largest and most promising markets and therefore of top priority for the company. Nevertheless, Continental had been struggling with the Ukrainian market for more than 15 years. Due to a challenging and still developing market system that was characterized by corruption, political instability, absence of law enforcement, lacking payment morale, complex import procedures and a large shadow economy, the company did not manage to establish a real local presence. So far, Continental was serving the market only indirectly through importers and did not have any influence on how importers brought the tires into the market, nor on how and at which prices they were selling them. The decision to be taken was whether to take a more direct approach -i.e. through establishing a sales organization in the country- in order to better develop the market, have more control over the value chain and reach the growth targets set by the headquarter. Furthermore, the underlying question was whether geopolitical decisions would soon bring changes to the micro and macro environment in the country.