Growth Challenges in Small Manufacturing Ventures from Emerging Economies: The Evidence from Moldova

Abstract:     
To grow or not to grow? This is not a rhetorical question for Tamara Popa, the co-owner and Executive Director of VM-Plumcom Ltd. Clearly it is the former part of the question that is on Tamara’s agenda. The challenge thus is how to grow, a challenge that has been amplified for the last couple of years by the global economic crisis and recession, especially in the international markets VM-Plumcom Ltd. has been serving.

Since the time of the crisis in 2008, the revenue of the company dropped by 12% in 2009, with export sales dropping by 14% as compared to 2007. As the number of orders decreased during this period, VM-Plumcom Ltd. even stopped the production process in 2010 since the stock had piled up during the previous year. On top of the global economic crisis, VM-Plumcom Ltd. also experienced severe drought that heavily affected the yield of fruit and vegetables that are the company’s raw material.

Despite all this, Tamara strongly believes in a positive outlook for her business. The sales picked up in 2010 and reached the 2007 level. In a way this was due to the fact that two years ago VM-Plumcom Ltd. received organic certification that brought new, bigger business opportunities. Tamara has plans for the medium term to invest in and launch new products such as nut kernels; puree, juice, and nectar from peach, apricot and apples; dried vegetables; and frozen fruit and vegetables. To achieve these objectives, Tamara expects to invest over $3 million in new equipment and production capacity, and increase the number of permanent staff to between 100 and 150 employees over the next three years.

This is a case study about the emergence on an international new venture (INV) that is in the business of processing fruit and vegetables. It is also about how this INV from an emerging economy internationalizes rapidly and successfully into the EU market.

Number of Pages in PDF File: 12

Keywords: International new venture, international opportunity, business model, growth strategy, emerging economy, institutional voids

JEL Classification: M13, L21, O17

Accepted Paper Series