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Entry Mode to Western Balkans: An Implementation in Albania and Kosovo

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 Mustafa Kemal Üniversitesi Sosyal Bilimler Enstitüsü Dergisi
Mustafa Kemal University Journal of Graduate School of Social Sciences
Yıl/Year: 2016  Cilt/Volume: 13  Sayı/Issue: 33, s. 258-275

ENTRY MODE TO WESTERN BALKANS: AN IMPLEMENTATION IN

ALBANIA AND KOSOVO MARKETS1

Emel KURSUNLUOGLU YARIMOGLU2

Yasar University, Faculty of Economics and Administrative Sciences
emel.kursunluoglu@yasar.edu.tr
Erhan GUR
Yasar University, Graduate School of Social Sciences
gur.erhan@hotmail.com

Abstract
The aim of the research was to understand the characteristics of trade relations
between Turkey and Western Balkans, and reveal the most preferred entry modes between
Turkey and Western Balkans. The main entry modes examined in the study were: export,
foreign direct investment, joint venture, licensing, and franchising. One Turkish company, one
Albanian company, and one Kosovan company were included to the research in order to
analyze the trade relations between Turkey and Western Balkans. Convenience sampling
technique was used in selecting these companies which have already had trade relations.
Structured online interview technique was used as a data collection method, and two
employees from each company were interviewed online. Findings showed that the most
preferred entry mode between Turkey and Albania and Kosovo is exporting. Except exporting;
joint venture, franchising, and licensing agreements are preferred mostly.
Keywords: Entry strategy, Balkan markets, Turkey, International markets, Structured
online interview technique.

BATI BALKANLARA GİRİŞ ŞEKLİ: ARNAVUTLUK VE KOSOVA PAZARLARINDA

BİR UYGULAMA
Özet
Bu çalışmanın amacı, Türkiye ve Batı Balkanlar arasındaki ticaret ilişkilerinin
özelliklerini anlamak ve Türkiye ile Batı Balkan ülkeleri arasında en çok tercih edilen giriş
şekillerini tespit etmektir. Çalışmada incelenen başlıca giriş şekilleri şunlardır: ihracat,
doğrudan yabancı yatırım, ortak girişim, lisanslama ve franchising. Türkiye ve Batı Balkanlar
arasındaki ticaret ilişkilerini analiz etmek için Türkiye’den, Arnavutluk’tan ve Kosova’dan birer
firma araştırmaya dahil edilmiştir. Hâlihazırda ticaret ilişkileri bulunan bu firmaların seçiminde
kolayda örnekleme yöntemi kullanılmıştır. Veri toplama yöntemi olarak yapılandırılmış online
görüşme tekniği kullanılmıştır ve her firmadan iki çalışan ile online görüşme yapılmıştır.
Bulgulara göre; Türkiye ile Arnavutluk ve Kosova arasında en çok tercih edilen giriş şekli
ihracattır. İhracat dışında çoğunlukla ortak girişim, franchising ve lisans anlaşmaları tercih
edilmektedir.
Anahtar Kelimeler: Giriş stratejisi, Balkan pazarları, Türkiye, Uluslararası pazarlar,
Yapılandırılmış online görüşme tekniği.

1 This study is an extended version of a master project. Some parts of the study were presented in the
International Congress on Turkey and the Balkans in Sarajevo, 2015.
2 For further questions, please contact with the corresponding author: emel.kursunluoglu@yasar.edu.tr
 Entry Mode to Western Balkans: An Implementation in Albania and Kosovo Markets

1. Introduction
The importance of finding new markets and entering new geographical
markets has been growing day by day. Market development and diversification
strategies have become the most important international marketing strategies for
expanding the business over the world. Market development strategy includes
entering new markets with existing products, and diversification strategy is related
to entering new markets with new products. To implement these strategies, new
international markets should be found. Firms use entry modes in order to enter new
international markets and start to operate in these markets.
There are different classifications of entry modes in the literature (Kumar and
Subramaniam, 1997; Anderson and Gatignon, 1986; Cengiz et al., 2007; Erramilli and
Rao, 1993; Marangoz, 2013). Export, foreign direct investment, joint venture,
licensing, and franchising entry modes were examined in the research. This study
aimed to understand the industrial insights regarding international trade relations
with Western Balkans, and reveal the most preferred entry modes between Turkey
and Western Balkans. Two countries of Western Balkans, Albania and Kosovo, were
chosen for the research.
In the study, firstly Balkan Markets were defined and the Western Balkans, as
a scope of the study, was introduced. Secondly, Albania and Kosovo markets and
their relations with Turkey were shown. Then, types of entry modes and entry mode
attempts in Albania and Kosovo were explained. The qualitative research was
conducted with structured online interview technique and the methodology was
clarified in the research methodology part. This study provides deeper insights
regarding international trade relations and entry mode preferences between Turkey
and Western Balkans.
2. Balkan Markets & Western Balkans
The definitions of Balkan markets may be differed in various studies since
there have been some different meanings in terms of geopolitical, economic, and
cultural (Ionescu, 2009). Generally, Balkan markets are formed by Greece, Bulgaria,
Romania, Albania and seven former Yugoslavia countries such as Slovenia, Croatia,
Bosnia and Herzegovina, Serbia, Montenegro, Kosovo, and Macedonia. In the
research of Regional Cooperation Council funded by the European Union (Balkan
Barometer, 2015); these Balkan countries such as Croatia, Serbia, Bosnia and
Herzegovina, Macedonia, Kosovo, Albania, and Montenegro are mentioned as
Southeast Europe (SEE). There have been some different country classifications in
Balkan area. Ionescu (2009) stated that European Union has segmented the Balkans
into three parts such as member states (Greece, Bulgaria, Romania, and Slovenia),
Western Balkans, and Union for the Mediterranean (for Eastern Mediterranean
countries).
IMF (2015) developed the regional aggregates in Europe. According to this
report (IMF, 2015); Balkan countries can be included to such regional aggregates:

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Emel KURSUNLUOGLU YARIMOGLU, Erhan GUR

Western Balkans (Albania, Bosnia and Herzegovina, Croatia, Kosovo, Macedonia,

Montenegro, Serbia), New Member States (Bulgaria, Romania, Slovenia), Central
Europe (Slovenia), Southeastern Europe (Bulgaria, Romania), Emerging Europe
(Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Macedonia,
Montenegro, Romania, Serbia, Slovenia), and Advanced European Union (Greece).
The Balkan countries taken from the report were shown in Table 1 below.
Table 1: Balkan Countries’ Regional Aggregates
Balkan Capital Western New Central South- Emerging Advanced
Countries City Balkans Member Europe Eastern Europe European
States Europe Union
Greece Athens - - - - - X
Bulgaria Sofia - X - X X -
Romania Bucharest - X - X X -
Slovenia Ljubljana - X X - X -
Croatia Zagreb X - - - X -
Albania Tirana X - - - X -
Kosovo Pristina X - - - X -
Serbia Belgrade X - - - X -
Macedonia Skopje X - - - X -
Montenegro Podgorica X - - - X -
Bosnia and Sarajevo X - - - X -
Herzegovina
Source: formed by the author from Country Coverage and Acronyms in IMF, 2015.
Slovenia joined the European Union (EU) in 2004, Bulgaria and Romania
joined the EU in 2007. Croatia became the last member of the EU. In the report (IMF,
2015), Croatia was not shown as a member of New Member States. However, it can
be also evaluated as a member of New Member States since it joined the EU in 2013.
Since Croatia became one of the members of the EU in 2013, Western Balkans
countries were evaluated as Albania, Bosnia and Herzegovina, Macedonia,
Montenegro, Serbia, and Kosovo (European Commission, 2014). European
Commission (2014) stated that Western Balkans’s largest trading partner was
European Union which accounted for over 75 % of the region's total trade in 2014.
However, Western Balkans’s share in total EU trade was too low, 1.1 % in 2014. The
shares of countries were as follows: Serbia 0.50 %, Bosnia and Herzegovina 0.20 %,
Macedonia 0.20 %, Albania 0.10 %, Montenegro 0.0 %, and Kosovo 0.0 %.
3. Albania & Kosovo Markets and the Relations with Turkey
Western Balkan countries, and so Albania and Kosovo, have close proximity
to the EU market, and also have significant lower labor costs than EU countries
(Redzepagic and Richet, 2008). Balkan Barometer (2015) showed the growth rates
and unemployment rates of Balkan countries between 2009 and 2014. According to
this report, the best average growth rates among Balkan Markets were seen in
Albania (2.4 %) and Kosovo (3.8 %). The worst average unemployment rate among

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 Entry Mode to Western Balkans: An Implementation in Albania and Kosovo Markets

Balkan markets was seen in Kosovo (37.7 %) and Albania’s average unemployment
rate was 14.8 % (Balkan Barometer, 2015).
According to the Ease of Doing Business Ranking (Doing Business Report,
2016); Turkey is the 55th, Kosovo is the 67th, and Albania is the 97th in total 189
companies in 2016. The situation in 2015 was as follows: Turkey was the 55th,
Albania was the 68th, and Kosovo was the 75th in total 189 companies (Doing
Business Report, 2015). It showed that the ranking of Albania has fallen down
dramatically in a year. On the contrary, Kosovo has succeeded to raise its easiness of
doing business with other countries in the same period.
Turkey gives high importance to Balkans since the developments in this
geography interest Turkey closely, Turkey has a different position in the area due to
the shared history, Balkan markets connect Turkey and European countries, and
Balkans are important markets for Turkey in terms of economic relations (Ozulker,
2008). Turkey has had an investment agreement with Albania since 1996. Free Trade
Agreement (FTA) between Turkey and Albania was signed in 2006 in Tirana and
entered into force in 2008. After this date, tariff and non-tariff trade barriers were
eliminated from the trade between countries (Ministry of Economy, 2015). Albania
has strategic importance for Turkey which supports Albania for European and Euro-
Atlantic institutions, and which invested in Albania over one billion Euros as the
second main trade partner of Albania (Ministry of Foreign Affairs, 2016a).
Turkey signed Free Trade Agreement (FTA) with Kosovo in 2013, and it
entered into force in 2014. The agreement will protect Kosovo manufacture sector
and eliminate customs tariffs for Turkish products (Ministry of Trade and Industry,
2013). Turkey has bilateral relations with Kosovo because of historical ties. Turkish
Embassy was established in Pristina in 2009, after Kosovo declared its independence
in 2008. In 2012, the trade volume between Turkey and Kosovo reached 206,5
million Euros; 96,6% came from the export activities to Kosovo, 3,4% came from the
import activities from Kosovo (Ministry of Foreign Affairs, 2016b).
4. Entry Modes
Entry modes can be classified into two parts such as equity based modes and
non-equity based modes (Kumar and Subramaniam, 1997). Non-equity based modes
consist of export and contractual agreements such as licensing and franchising
whereas equity based modes contain equity joint ventures (EJVs) and wholly owned
subsidiaries such as acquisition, and greenfield investment.
Entry modes also can be classified based on the degree of control such as
high, medium, and low control modes (Anderson and Gatignon, 1986: 5). Erramilli
and Rao (1993: 33) analyzed the small-sized to large-sized service firms’ entry mode
choices based on transaction-cost analysis (TCA) approach since many research have
focused on entry mode choices of manufacturing multinational companies. They
classified entry modes into two parts such as shared-control modes as contractual
transfer (licensing, franchising), and joint venture (partnership, consortium,

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Emel KURSUNLUOGLU YARIMOGLU, Erhan GUR

affiliate); and full-control mode as wholly owned operation (subsidiary, office,

branch, project office, representative office).
Another classification analyzes entry modes under three subtitles as export-
based entry modes, investment-based entry modes such as foreign direct
investment and joint venture, and contractual-based entry modes such as licensing
and franchising (Cengiz et al., 2007; Marangoz, 2013). In this study, this classification
as the mostly used classification in the literature was used. This study focused on
export, foreign direct investment, joint venture, licensing, and franchising entry
modes. These entry modes were explained below and the situations and examples
were shown from Western Balkans.
Export means physical distribution of goods from the home country to the
host country with or without an agent (Kumar and Subramaniam, 1997). If home
country uses an agent, it is called indirect export; if it does not use any agents, it is
called direct export. Export is seen as the first step of internationalization process
(Erkutlu and Eryigit, 2001). After exporting, which also includes infrequent foreign
marketing and frequent foreign marketing that are related to selling to foreign
countries, international marketing and global marketing steps occur in the
internationalization process (Yagci, 2013). Export is one of the most used entry
modes to international markets. Liargovas and Skandalis (2008) stated that many
countries seek to find ways in order to increase export activities which may be gained
by motivating existing exporting companies or pushing non-exporting companies to
start exporting.
Turkish relations with Albania and Kosovo, in terms of export and import,
were investigated for the first ten months of 2012 and 2013 years (BTSO, 2013; BTSO,
2014). According to the results in Table 2; it can be said that import from Kosovo
were less than import from Albania in 2013; on the contrary of that, export to Kosovo
is higher than export to Albania.
Table 2: Turkish Foreign Trade Relations with Albania and Kosovo
Export to Import from Export to Import from
Year
Albania Albania Kosovo Kosovo
2012 255.950 98.989 254.784 9.093
2012/10 207.283 70.582 208.685 7.288
2013/10 216.883 53.416 229.451 8.040
Source: combined from BTSO (2013) and BTSO (2014).
After showing Turkey’s foreign trade data with Albania and Kosovo, Izmir
city’s foreign trade capacity with these countries was also investigated. The reason
of investigation Izmir city’s trade capacity with Albania and Kosovo was that the
export company involved in the research part of this study was established in Izmir
city of Turkey, and this company’s products have been distributed to Albania and
Kosovo. The volume of foreign trade amount between Izmir and Albania reached
10.8 million dollars in 2013 (8.5 million dollars were related to export to Albania, and
2.3 million dollars were related to import from Albania) (EBSO, 2013a). The export

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 Entry Mode to Western Balkans: An Implementation in Albania and Kosovo Markets

activities from Izmir to Kosovo reached 5.27 million dollars in 2013, and it was stated
that there was no import activities from Kosovo in that year (EBSO, 2013b).
The top export and import countries of Albania were shown in Table 3 below.
According to this; Turkey is the fourth export country of Albania, and the fifth import
country of Albania.
Table 3: Top foreign trade countries of Albania
Top 5 export countries to Albania-2012 Amount (Millions $) Percent
1. Italy 1.005 51,1
2. Spain 181 9,2
3. Serbia 175 8,9
4. Turkey 124 6,3
5. Greece 87 4,4
Top 5 import countries from Albania-2012 Amount (Millions $) Percent
1. Italy 1.555 31,9
2. Greece 462 9,5
3. China 310 6,4
4. Germany 295 6
5. Turkey 280 5,8

Source: EBSO, 2013a.

It was stated in the report of BTSO (2013) that value-added tax and corporate
income tax were so high in Albania and there have been some taxes problems in
Albania. Besides this, banking system does not work properly in Albania and it occurs
some problems regarding cash receipts between companies. Also, it was stated in
the same report that some Albanian companies have been declaring the amount of
imported products less than the actual amount in order to pay less import taxes.
Moreover, informal import in the country has been causing unfair competition, and
this situation obstructs to sell Turkish products in Albania.
The top export and import countries of Kosovo were shown in Table 4 below.
According to the table; Turkey is the ninth export country of Kosovo, and the fifth
import country of Kosovo.
Table 4: Top foreign trade countries of Kosovo
Top 10 export countries to Kosovo-2012 Amount (1.000 €)
1. Italy 71.300
2. Albania 40.100
3. Macedonia 26.300
4. India 22.800
5. Montenegro 16.600
6. Switzerland 15.100

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Emel KURSUNLUOGLU YARIMOGLU, Erhan GUR

7. Germany 14.600
8. Serbia 14.200
9. Turkey 11.300
10. Austria 4.200
Top 10 import countries from Kosovo-2012 Amount (1.000 €)
1. Germany 299.600
2. Macedonia 288.500
3. Serbia 278.100
4. Italy 213.100
5. Turkey 200.100
6. China 159.900
7. Albania 109.500
8. Greece 109.000
9. Bosnia and Herzegovina 85.100
10. Croatia 72.300
Source: EBSO, 2013b
Greek exports in Balkans were at very large amounts, so Greece has become
the leading exporter of the region, and except exporting Greek firms also has
preferred to enter Balkan markets with foreign direct investment (Liargovas and
Skandalis, 2008). Foreign direct investment has an important role in the
development of emerging economies, hence it has to be managed very carefully
(Kaleshi and Solanki, 2010). Foreign direct investment inflows to Western Balkans
were usually taken place in the service sector such as banks, insurance, and
telecommunications industries (Redzepagic and Richet, 2008).
The attractiveness of the Western Balkans in terms of foreign direct
investments were examined, and the advantages and disadvantages of foreign direct
investments in Western Balkans region were shown in this research (Redzepagic and
Richet, 2008). The Advantages of foreign direct investment in the Western Balkans
were shown as follows: the EU aspirations, macroeconomic stability, reform speed,
growth, trade cooperation, and foreign investment and tax incentives. The
disadvantages of foreign direct investment in the Western Balkans were shown as
follows: stalled EU progress, trade barriers, problems of corruption and business
climate, slow implementation, external imbalances, and unhappiness.
It was stated that Albania started its economic reforms after 1990 (Kaleshi
and Solanki, 2010; Redzepagic and Richet, 2008). In 2004, Albania was the country
which has the lowest per-capita FDI performance in Western Balkans (Bitzenis and
Szamosi, 2009: 198). With the help of the privatization activities, foreign direct
investments in Albania started to increase after 2004 (Redzepagic and Richet, 2008).

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 Entry Mode to Western Balkans: An Implementation in Albania and Kosovo Markets

In 2007, according to the foreign capital stock by country of origin, the main
investor of Albania was Greece (54 %), the second country was Turkey (12 %), and
the third country was Italy (11 %) (Kaleshi and Solanki, 2010: 14). Redzepagic and
Richet (2008) agreed with this argument, and said that Italy and Greece were the
primary countries in FDI inflows to Albania, and these countries also were leading
export and import trade partners of Albania. Foreign direct investments in Albania
continued to raise between 2008 and 2010 despite the global economic crisis (KPMG,
2012). FDI inflows in Albania were concentrated in the main districts of country such
as Tirana, the capital city, and Durres, the main cargo port city (Redzepagic and
Richet, 2008).
In the literature, there were not many studies regarding FDI inflows to
Kosovo. However, Xhemajli and Kalac (2015) mentioned about FDI inflows to Kosovo
basically. According to them, FDI inflows to Kosovo started after the year 2000, and
the huge investments were made between 2007 and 2008, after 2008 FDI inflows
decreased due to the global crisis, and around 2010 it started to increase again. They
also mentioned the main investors of Kosovo which were as follows Germany,
England, Slovenia, Austria, Switzerland, Netherlands, Turkey, and Albania.
According to the report of EBSO (2013b); there were many successful Turkish
investments in Kosovo in many industries such as insurance, food, banking, health
care, and infrastructure projects in airport, highway, and electricity distribution.
Also, net present value of Turkish investments reached 335,4 million dollars in 2013
and there were around three-hundreds Turkish companies in Kosovo.
Except foreign direct investment, another investment-based entry mode is
joint venture. Joint venture enables to generate a new entity by combining two or
more firms. It provides sharing and controlling the joint ownership (Kumar and
Subramaniam, 1997). In Albania, there are no limits and restrictions in creating joint
ventures with foreign companies, and also any special authorizations and presence
of local partners are not required for foreign companies to establish a joint venture
in Albania (Shuke, 2015). There are less joint ventures in Kosovo compared to the
other Balkan countries. Some examples can be given such as the US Bechtel and its
Turkish joint venture partner Enka completed the highway in Kosovo (Reina, 2012),
and German joint venture J.v.G. Jaha Energy manufactured solar module in Kosovo
(Meyers, 2015).
Licensing is a contractual-based entry mode. Bradley (1999) mentioned that
licensing agreements can be preferred when host country government restricts
import and foreign direct investment activities in the host country, host country
market is not big enough, and home country is superior in rapid technological change
(Akyol, 2008). Licensing requires two sides as licensor who gives a licensing privilege
from home country and licencee who takes a licensing privilege for host country.
There are not any restrictions on the establishment of a business entity by a
foreign licensor or a joint venture in Albania and moreover Albanian law accepts
several forms of licensing agreements such as patent, technology transfer, know-

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Emel KURSUNLUOGLU YARIMOGLU, Erhan GUR

how, trademark or service mark licensing, industrial designs, and software,

copyright, character licensing (Gjika and Beqiri, 2010). In Kosovo, there are some
licensing agreements in many industries such as telecommunications, energy, and
mining (Uberti, 2014). It was also stated that there was a problem about licensing
agencies in Kosovo since they decide which firms will enter to the market, and so
decrease the efficiency of the sector (Uberti, 2014).
Another contractual-based entry mode is franchising, which is a method of
distribution and entry mode. Franchising includes two sides, as licensing, such as
franchisor who gives the rights of property in the home country and franchisee who
takes the rights of property in the host country. Franchising arose in the United
States around 1900 and it has evolved from a distribution method to an industry
since 1950s (Walker and Etzel, 1973). The most notable example of US franchising
industry's growth is McDonald's Corporation, whose franchising units increased 758
% in ten years (1961-1971) (Hackett, 1976). The international US franchising have
been mostly seen in fast food industry i.e., McDonalds, Burger King, Kentucky Fried
Chicken, car rental industry i.e., Avis and Hertz, and real estate industry i.e., Remax
(Orel, 2010: 95). However, Lynch (2012) emphasized that Albania and Kosovo are the
only countries in Western Balkans which do not have restaurants of McDonald’s,
which is a leading US franchisor. It showed that franchising systems in Albania and
Kosovo have not been well developed enough to serve large scale global and
international companies.
5. Research Methodology
The aim of the research was twofold. The first aim was about understanding
the characteristics of trade relations between Turkey and Western Balkans, and so
gaining some insights regarding the international marketing activities between
Turkey and Western Balkans. The second aim was related to investigate the most
preferred entry modes between Turkey and Western Balkans. The scope of the
research consisted of only two countries from Western Balkans; Albania and Kosovo.
The other countries in Western Balkans were not included to the research. According
to this framework, the research questions were developed as follows:
RQ1: What are the characteristics of trade between Turkey and Albania &
Kosovo?
RQ2: Which entry mode is preferred mostly by the companies?
Structured interview technique, as one of the techniques of qualitative
research method such as focus group and in-depth interview, was used in the
research. Data was collected via online interview technique. Online data collection
methods are increasingly used in qualitative research nowadays (Reppel et al., 2006:
243). Online interview technique is much more convenient and efficient than
traditional interview technique, and also it solves the problems such as travel costs
and duration of the research (Parasuraman and Zinkhan, 2002: 293). To conduct an
interview with participants living in different countries is possible thanks to online

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data collection methods. The structured interview form was prepared by the
researchers within the scope of the aims of research, and used for collecting data.
The instrument was shown below in Table 5. According to the structured interview
form, the first five questions were asked to get answers about the first research
question, and the last three questions were asked for the second research question.
Table 5: Structured Interview Form
A. General questions about the company and interviewee:
Sector: Establishment year: City:
Company Type I: Manufacturer Distributor
Company Type II: Exporter Importer
Size of the company: Small-scaled Medium-scaled Large-scaled SMEs
The year starting to export/import:
Intermediaries between companies:
Export/Import countries:
Interviewee’s position & gender & age:
B. Turkey & Balkans:
1) Do Turkish companies want to enter to Western Balkans? Why?
2) Do Western Balkan companies want to enter to Turkey? Why?
3) Which barriers are there in your trade transactions with Turkey/Western Balkans?
4) What are the commercial incentives provided by Turkey and your own country?
5) Are you satisfied with Turkish/Western Balkan firms that you are working with?
6) What is the most appropriate entry mode to Turkey? Why?
7) What is the most appropriate entry mode to Western Balkans? Why?
8) Are there any activities that you have planned for short, medium, or long-term with
Turkey/Western Balkans except current international activities?
Two Balkan countries, Albania and Kosovo, were included in the research to
represent Western Balkans. One company, which is already the business partner of
Turkey, from each country was selected for the sample. Convenience sampling
technique was used in selecting these companies which have already had trade
relations with Turkish company. One company from Turkey, one company from
Albania, and one company from Kosovo were selected for the research. The
interviews were performed with two interviewees from each company. There was
no need to interview another third person since the two interviewees’ answers were
nearly same. For this reason, it was enough to interview with two people from each
company. The interviews were conducted in May, 2015. The all six interviews were
recorded on audio and video. The duration of each interview was approximately sixty
minutes.
Data was analyzed by the researchers separately, then the results were
compared with each other for gaining the reliability of the research. According to
this comparison, all questions were understood in the same manner by the
researchers. The research is also valid due to it contains a company from Turkey, and
two companies from Western Balkans which have had international trade relations
already with the Turkish company.

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6. Findings
The profiles of the companies and the interviewees participated in the
research were shown in Table 6 below. The interviewees, who are all men and aged
between 25-45 years old, were coded as: T1 showed the first interviewee from
Turkey, T2 showed the second interviewee from Turkey, A1 showed the first
interviewee from Albania, A2 showed the second interviewee from Albania, K1
showed the first interviewee from Kosovo, K2 showed the second interviewee from
Kosovo.
Table 6: Profiles of the Companies and the Interviewees
Turkish company Albanian company Kosovan company
Industry Poultry Foods Frozen Foods Food and Beverages
Est. year 2006 2001 1992
City/Country Izmir Tirana Pristina
Type I Manufacturer Distributor Distributor
Type II Exporter Importer Importer
Size Large-scaled Large-scaled Large-scaled
Year starting 2006 No export activities. No export activities.
to export
Export Iraq, Libya, Africa, No export activities. No export activities.
countries Oman, Qatar, UAE,
Hong Kong, Russia,
TRNC, Albania, Kosovo.
Year starting 2006 2001 1992
to import
Import USA, Canada, Russia, Austria, Croatia, Italy, USA, Brazil, EU, Balkans,
countries Ukraine, India. Denmark, Turkey, Brazil. Vietnam, Turkey.
Intermediary No intermediaries No intermediaries No intermediaries
(Direct export) (Import from (Import from
manufacturer directly) manufacturer directly)
Position of T1: Manager of A1: Founder of K1: Manager of
Interviewee I Export Dept. the company Marketing Dept.
Position of T2: Export Specialist A2: Manager of K2: Sales Director
Interviewee II Import Dept.
The six interviewees all answered to the first question as Turkish companies
want to enter Western Balkan markets. This question also showed the attractions of
Western Balkan markets. The attractions of Western Balkan market were stated by
Turkish interviewees (T1-T2) as Balkan market is charming because of it is the gate
for Europe. It is geographically close to Turkey, and this creates a logistics advantage
for Turkey. Also, there are strong historical and cultural bonds between Balkans and
Turkey. Albanian interviewees (A1-A2) said that Turkish firms want to enter to the
Balkan market since it is a growing market, and there is a gap in the market. Turkish
firms have adequate resources in order to grow in the Balkan market. Kosovan
participant, K1, emphasized also historical bonds between Kosovo and Turkey and
geographical proximity between countries. Also he added “Turkish products are seen

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as much more qualified products, and have lower prices and transportation costs”.
K2 said that “Turkish companies know the characteristics of Balkan market very well,
and Balkan companies trust Turkish companies’ products. The influence comes from
the past, Turkey has similar culture and habits with Balkans. Also, there are skilled
and low cost labor in Balkans”.
The six interviewees all answered to the second question as Western Balkan
companies want to enter to Turkish market. The reasons were such as: T1 said that
Balkan companies perceive Turkey as a growing country and they want to get benefit
from Turkish companies’ technological and commercial experiences. T2 said that
Turkey has logistics advantage, and also the level of consumption in Turkey is higher
than Balkans since Turkish market is a very huge market. Albanian interviewees
emphasized the size of Turkish market. A1 said that the population in Turkey is very
big, and correspondingly the level of consumption is high. Entering and serving a big
market like Turkey ensures experience to Balkan firms. A2 said that Turkish market
is too big, and so Balkan firms want to enter to this market. K1 said that entering
Turkey is a possibility to increase profit for Balkan companies, but there is still a fear
that Turkish Market is too big and it is really challenging for a small company to be
able to establish itself in Turkey and also gain profit. K2 said that Balkan companies
want to enter to Turkey in order to gain more profit and international brand
reputation. And he added that “Balkan countries don’t want to enter Turkish market
yet as the market is too big and Balkan companies are not yet ready to meet
demands”.
The barriers that restrict trade between Turkey and Western Balkans were
asked to the interviewees in the third question. The answers were shown in direct
quotation below to be able to emphasize the insights of interviewees. T1 said that
“There are bureaucratic barriers in the market. Competitors from USA and Brazil are
very strong and this affects Turkey negatively. Even if it is said that there have been
historical bonds between Turkey and Balkans, Turkish and Balkani people don’t know
these historical and cultural bonds enough”. T2 said that “In export activities, there
were some bureaucratic barriers of Balkan countries in order to protect their national
producers. Besides this, other international producers had lower prices and it resulted
in strong competition in the market. This strong competition led us to decrease our
prices”. A1 said that “In the past, there were bureaucratic and political barriers.
Nowadays, high taxes and quotas in some products are the biggest trade barriers”.
A2 said that “There are high taxes in some products. It is forbidden to transport the
products through highway from Turkey to Balkans, so it results in high transportation
costs”. K1 said that “The products came from Turkey are transported through sea. It
increases transportation cost and time”. K2 said that “There are strong competition
and strong multinational competitors in the market. In order to compete with them,
we should sell the products in the same quality but in lower prices which is impossible
because of high export and logistics costs”.

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The fourth question was about the incentives. Turkish interviewees said that
there are no incentives provided by Western Balkan countries, however Turkish
government gives some incentives for export activities. Albanian and Kosovan
interviewees answered that there are not any incentives provided by the countries.
The fifth question was about the satisfaction level, and it showed that all
companies are satisfied from each other in their trade relations. Turkish interviewees
said that Western Balkan firms introduce and represent their Turkish brands in
Balkan market well. Albanian interviewees emphasized that the communication and
conflict management processes are operated very well with Turkish people because
of the cultural and historical bonds between two countries. Kosovan interviewees
said that Turkey is a reliable partner and has qualified products; hence they are
satisfied from this commercial relationship.
The sixth question was about the most appropriate entry mode to Turkish
market. Turkish people said that the most suitable entry mode to Turkish market is
export, and added that after gaining some information about the market with the
help of export activities, licensing or joint venture can be seen as the most suitable
entry modes. Albanian and Kosovan people said that they cannot tell anything before
discovering Turkish market very deeply. However, one Albanian interviewee (A2)
said that joint venture may be the best strategy, and one Kosovan interviewee (K2)
said that joint venture or franchising may be the suitable strategies to enter to
Turkish market.
The most appropriate entry mode to Western Balkan market was asked to the
interviewees in the seventh question. T1 and T2 said that direct export is the most
appropriate entry mode. T2 also added that “after gaining some market shares
through export, a local firm can be acquired or a joint venture agreement can be
signed”. Albanian interviewees said that the best strategy for entering Western
Balkan market is joint venture because of a foreign company may need to get help
from local Balkani firm which knows the rules, laws, and market better. Kosovan
interviewees expressed that direct export as the most appropriate entry mode.
The last question asked about the activities planned by the companies in
short, medium, and long-term. The opinions regarding the question were clarified.
T1 said that “We want to continue our export activities in short and medium terms.
If the trade capacity between two countries increases in medium-term, long-term
trade can be started. And joint venture agreements can be signed in terms of long-
term activities”. T2 said that “In order to increase our market share in Balkan market,
we want to continue our export activities. New investments with the right partners
can be developed in long-term. It is possible to increase market share with the help
of joint venture agreements. For instance, a factory can be established in Balkans
with a local Balkani investor who knows the market better than us”. Albanian
interviewees said that a new partnership with a Turkish company can be developed
in long-term. Joint venture or franchising agreements can be signed between two
countries. Kosovan interviewees said that only import activities have been organized

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recently for the short and medium terms. For the future, licensing or franchising
agreements can be signed with a Turkish company.
7. Conclusion
This study showed the insights regarding entry mode choices and trade
relations between Turkey and Western Balkans. According to the findings, both
Turkish markets and Western Balkan markets were seen as charming markets.
However, Balkan companies have some hesitations to enter Turkish market since it
is too big to serve. Balkan market is an emerging market, and Turkish market is more
mature. For this reason, Balkan firms abstain to enter Turkish market. Turkish firms
should help Balkan markets to develop themselves. Also they should encourage
Balkan markets in order to enter Turkish market.
It was found out that there were some trade barriers between Turkey and
Western Balkans. The problems occurred when doing business in Albania were
searched in a research (Bitzenis and Nito, 2005), and it showed that unfair
competition, lack of financial resources, problems related to public, and changes in
taxation were the most important problems.
It was found out that there were no incentives provided by Western Balkan
countries. However, it was found out that there were few incentives provided by
Turkey which were not adequate for the trade capacity. Shuke (2015) also stated
that there is no economic incentives for foreign direct investments in Albania.
Providing some governmental incentives in order to increase the trade capacity
between Turkey and Western Balkans is highly advised. Numerous numbers of
incentives should be provided in the near future in order to improve international
trade between Turkey and Western Balkans. Despite lack of incentives, it was also
found out in this research that the countries were very satisfied from each other in
their trade relations.
The interviewees were asked about entry modes to Western Balkans and
Turkey. Export was seen as the main entry mode by the interviewees both for
entering Western Balkans and Turkey. Only export activities are not enough for
developing international trade relations between Turkey and Western Balkans. Joint
venture was mostly emphasized as the second most suitable entry mode for entering
Western Balkans and Turkey. Local partner takes a growth opportunity while an
international partner takes a local know-how in joint venture agreements (Grönroos,
1999). However since joint venture is risky and expensive (Akat, 2004:159), it should
be analyzed before attempting the agreement whether joint venture is suitable for
the nature of market, industry, and companies which will sign a joint venture
agreement.
The most preferred entry modes in the long-term were asked to the
interviewees. It was stated that joint venture, franchising, and licensing were the
most preferred long-term entry modes. Turkish interviewees prefer joint venture in
long-term, Albanian interviewees preferred joint venture and franchising in long-

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term, Kosovan interviewees preferred licensing and franchising in long-term. No

interviewees mentioned foreign direct investment (FDI) in their future plans. It may
be because of Balkan economies which are in transition were less successful in FDI
than advanced transition countries such as Poland and Hungary (Slaveski and
Nedanovski, 2002).
8. Limitations & Future Research
The first limitation of this study was that the numbers of companies included
in the research were limited with two companies. In order to provide more rich and
enhanced information regarding Western Balkans, the number of companies in the
research should be increased. Another limitation of the study was regarding the
number of countries selected from Western Balkans. The research was limited with
two countries from Western Balkans. The other countries in Westerns Balkans
should be analyzed in future research to get insights about trade in Western Balkans.
Moreover, the other Balkan markets, except Western Balkans, such as emerging
country Romania and advanced country Greece should be included in further
research in order to understand the main trade characteristics of all Balkan
Peninsula.
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