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Sweden Market Analysis

In: Business and Management

Submitted By LaTresha8806
Words 3546
Pages 15
Market Analysis

Bus 432/536 International and Global Marketing Management

February 23, 2012

Section 1: Introduction 4













Sweden has developed from a poor agricultural society into a prosperous and developed industrial country. They have promoted successfully a business and innovation friendly climate. Sweden is one of the world's most attractive countries for foreign investors and is open to nearly all foreign investment, (4). Sweden is a vast supporter of free trade and international movement of capital. Beginning early with expansion ventures and with great success moved into international markets, fared relatively well through the economic recession. Some of the big Swedish firms are multinational and are international household names, such as IKEA, Volvo, Saab, Ericsson, and H&M. Apart from offering a favorable business climate, a strong domestic market, an advanced high-tech sector, a qualified labor force, optimal management skills, it also offers the second lowest corporate tax rate in Europe. Although raw materials and heavy industry are still important elements of the Swedish industry the main competitive segment today is technical know-how. Sweden is one of the world leaders in investment in research and development (R&D).



A. Political Ideology
The Swedish government has reorganized its foreign direct investment policies by deviating from a intricate system of connected governmental and private restrictions into a more open and liberal establishment. Sweden’s political ideology toward foreign investments has been open and growing with North American and European investors. North American investors were few but have grown over the years. European countries have made more investments in Sweden than westerns countries. Overall it is an attractive market for foreign investment. (14) B. Political Stability There is a single legislative chamber of parliament with 349 members representing county councils/regions. National, local and regional elections are held every four years. The Prime Minister selects his Ministers. Government offices (Ministries) are small and policy focused, while 300 independent government agencies are in charge of implementation. Swedish government maintains policies that are open to foreign and domestic business ventures. Business is diverse, ranging from world class multinationals to mid-sized companies spanning a wide range of sectors and a dynamic small business community. The corporate environment is international, well reflecting the country’s strong traditions in export-oriented industries. You can expect a Swedish business partner to be technically oriented, scientifically curious and highly interested in innovation that is close to practice. Importantly, with this mindset Sweden is often a uniquely well-suited test market for new products. This is a fact that has been proven by technology companies as well as by fashion brands. C. Political Risk Presently there are no political risks that directly affect any company venturing into Sweden. Doing business in Sweden is straightforward, and unlike China and a Swedish partner is not needed to start a business in Sweden. With one of the lowest corporate income tax at 28%, (4), any political risk would have to be fairly extreme to deter foreign investors.

D. International Trade Barriers Sweden is a member of General Agreement on Tariffs and Trade (GATT), World Trade Organization (WTO) and European Union (EU). As they joined the EU in 1995, the efforts to meet the rigorous standards caused some economic strains. However, they have maintained having the most liberal foreign laws worldwide, (4). In the EU international trade works in this manner ,if goods are produced in any EU member state, import duties on entry into Sweden are not a liability. If goods have entered the EU from a non-member state, and had any necessary import duties paid on them, they can enter Sweden without any further import duties being levied.

E. Intellectual Property Rights International intellectual property rights (IIPRs) is rapidly changing over time. Developing countries are taking measures to significantly strengthening their IPRs regimes. Regional trading arrangements, (NAFTA,EU, various Eastern European and Middle Eastern nations), are now acknowledging issues of regulatory convergence, with meticulous stress on intellectual property rights. Introduction of the multilateral agreement on trade-related intellectual property rights, or TRIPs, within the World Trade Organization (WTO), are most important. (11) In 2008, International Intellectual property Alliance( IIPA ) recommended that Sweden be placed on a Watch List for its failure to reform its underlying legal and enforcement infrastructure so that the government and rights holders could begin to take effective action against some of the highest levels of “source” and P2P file-sharing piracy in the world. The bill was awaiting action in the Parliament. (12) Sweden had a general societal attitude that online piracy was an acceptable cultural phenomenon, which defeats local rights holder’s efforts to improve intellectual property protections for their works. Sweden should adopt the necessary amendments to its copyright law that would provide for injunctive relief and the right of information and devote greater resources to criminal enforcement. IIPA requested the following actions by the government of Sweden: • Adopt the copyright law amendments on injunctive relief against ISPs and a “right of information” to permit rights holders to obtain the identity of suspected infringers from ISPs in civil cases • Prosecute to the fullest extent the owners of ThePirateBay • Increase the prosecutorial and police manpower devoted to criminal Internet piracy enforcement • Commence a national criminal enforcement campaign to target source piracy and large scale Internet pirates • Ensure that rights holders may pursue the new civil remedies easily and quickly • Take an active role fostering ISP-rights holder discussions to effectively prevent protected content from being distributed without authorization over the Internet(12) In 2011, IIPA did not make a recommendation for Sweden. In 2008, IIPA recommended that Sweden be added to the Watch List for legislative and enforcement deficiencies in dealing with Internet piracy. In 2007, IIPA included Sweden in its Special Mention section for the same above-mentioned reasons, and recommended Sweden be placed on the Watch List in 2009. IIPA did not make a recommendation for Sweden in 2010 after it adopted copyright law amendments to deal with many of these issues. Sweden currently does not appear on any USTR list.(13)

F. Labeling and Packaging Regulations As a member of EU, Sweden follows the general EU legislation on packaging and labeling. Health and interest are important aspects of EU regulation. In order to protect consumer health and interests, consumers access to complete information on the content and composition of products are the main objective of foodstuffs labeling, (1). Other information may provide details on a particular aspect of the product, such as its origin or production method. Some foodstuffs, such as genetically modified organisms, allergenic foods, foods intended for infants or even various beverages, are also subject to specific regulations. Foodstuff packaging have criteria for production they must adhere to avoid food contamination. Non-food products also must contain particular information, so that consumers are allowed to implement real choice and be safe in their decision. All pre-packed foodstuffs must be labeled in a way that gives the consumer sufficient and correct information. The prescribed labeling information should be in Swedish. Although other languages can be used for such information, it has to differ insignificantly from Swedish. The labeling should include description, ingredients list (in descending order of weight), net metric weight or volume, name of company, address or origin and best-before-date, (3). The label must be printed on the packaging or on a label stuck on the packaging. The food being imported must not contain prohibited additives, (3). Swedish National Food Administration is in charge of product approval, labeling, additives etc. for imported and domestic food products. EU legislation regulates that all products that may be dangerous to users, for example electrical goods, machinery, toys and personal protective equipment be CE-marked if they are sold in any of the 28 EU countries, (8). G. Price Control Under international trade law in a simple definition “dumping” means to export products from one country to another at a price below its normal value. The General Agreement of Tariff and Trade (GATT), now part of the World Trade Organization (WTO) agreements, allows member countries to take actions to counteract the effects of dumping once a proper determination of both dumping and injury is made. Is this one of issue that has existed since 1955. EU defends anti-dumping can only be imposed if contrary to community interest,(9). H. Restrictions on Promotional Activities Sweden has some of the most restrictive television policies among the industrialized nations. Specifically these restrictions are in relation to protecting children, (5). In contrast by any global benchmark, Sweden is a society where people have the right to exercise personal freedoms. The Swedish Radio and TV Authority is the national body responsible for all radio and television broadcasting. All television advertisements directed to children under 12 is banned under the Radio and Television Act 1996, (7). Moreover, all advertisements food, toys and all other products before or after children’s programs are banned. The Swedish control on advertising to children is widely supported by the Swedish people. It is also supported by Swedish consumer organizations. The rationale given by the Swedish government in relation to this ban is that children under the age of 12 cannot distinguish between advertising messages and program content. Hence, there is a greater chance that they could get influenced by any form of advertisements.


A. Income and Employment (GNP/GDP) 1. National Income and Product:

The Gross National Income (constant LCU) in Sweden was last reported at 3,365,118 (SEK million); current prices in 2010, according to a World Bank report released in 2011. The Gross National Income (GNI) per capita 358.8 (1000 SEK) The Gross Domestic Product (GDP Purchasing Power Parity): $379.4 billion US dollars (2011 est.) GDP (official exchange rate): $571.6 billion US dollars (2011 est.) 1

2. Per capita income or GDP per capita :

$40,600 (2011 est.)

Country comparison to the world: 20 2

3. Regional Economic Membership:

A member of the European Union since 1995, Sweden, along with 19 other countries, signed the convention founding the Organization for Economic Co-Operation and Development on 14 December, 1960. 3

4. Economic Reforms/ Privatization:

A harsh recession in the early 1990s forced Sweden to undertake some very un-Swedish economic reforms. First, stricter laws enforcing competition were passed -- and enforced. Second, deregulation of formerly highly regulated sectors, such as retail and banking, allowed these sectors to flourish. Finally, Sweden's entry into the EU resulted in lower trade barriers and increased competition from abroad. 4 One of the ways Sweden stimulates growth and raises revenue is through the sale of public assets. The government set a goal of selling some $31 billion in state assets between 2007 and 2010. Major sales have included selling V&S (Vin & Sprit AB) to French Pernod Ricard for some $8.3 billion, and the Swedish OMX stock exchange to Borse Dubai/Nasdaq for $318 million. Additionally, the government sold most of its 946 apoteket (pharmacy) stores and eliminated its monopoly on pharmacies. The government has also approved the sale of Svensk Bilprovning (the Swedish Motor Vehicle Inspection Company). 5 Privatization of the education system: the free Swedish schools model introduced in 1990s allowed new schools to be set up independent of government control. The organizations are now running schools funded with public money through a voucher system. 6

B. Monetary 1. Inflation rate:

2.5% (2011) 7

2. Foreign Exchange Rate

a. National Monetary System Administered by the Central Bank

The policy of Riksbank, Sweden’s Central Bank is guided by inflation targeting to keep the Consumer Price Index (CPI) at or around 2% on an annual basis. To meet the monetary policy target, the Central Bank recently raised the main steering rate to 2%. 6 As Sweden’s central bank, the Riksbank has been part of the ESCB since its inception in 1998. The ESCB comprises of the European Central Bank (ECB) and the national central banks of all EU Member States.8The primary goal of the Eurosystem as set forth by the Maastricht Treaty is to “maintain price stability” (Article 105.1). The treaty further instructs the Eurosystem to “support the general economic policies” (Article 105.1) in the euro area without prejudice to the goal of price stability. Thus, the treaty makes it clear that any other objectives are secondary to that of price stability. 8

b. Exchange Rate Trends

The monetary unit in Sweden is the krona (plural “kronor”) and equals 100 öre. Bank notes are printed in values of 20, 50, 100, 500 and 1,000 kronor; coins: 1, 5 and 10 kronor. There is no limit on the amount of Swedish and foreign currency taken into Sweden. Sweden has yet to ratify the Euro treaty. 9 Therefore Sweden, is not in the Euro-zone.

Sweden’s current exchange rates as of February 21st 2012:

|1 SEK = 0.1501 USD |
|1 USD = 6.6637 SEK |

Swedish Kronor vs. American dollar 10

|1 SEK = 0.1135 EUR |
|1 USD = 8.81092 SEK |

Swedish Kronor vs Eurp
Swedish Kronor vs. Euro 10


A. Cultural Analysis The culture of Sweden combines the cultures of many other different nations. The man language of Sweden is Swedish followed by English as their second language, which is also a requirement in the school systems. The Swedish language is derived from the German language and has incorporated elements of German, French, English and Finnish. Like most languages, there a different regional variations of pronunciation. As a result of immigration, there is a pluralism of religion. Eighty-five percent of the people of Sweden belong to the Church of Sweden. Freedom of religion is heavily practiced in Sweden. There are an estimated 250,000 Muslims, 166,000 Roman Catholics and a great amount of other religious movements. Education is a very important factor to the people of Sweden. Children are required to be educated up until upper secondary school. After completion of upper secondary school one in three students begin some form of higher education. Approximately half of those students are women. They usually attend universities and colleges which are state-funded but locally administered. There is also free tuition, loans and grants for students without regard to social class to make higher learning available. Traditional families in Sweden are predominantly nuclear rather than extended. The two-parent household is the norm, but the rate of the single-parent household is high. One-person households are also very common in Sweden especially among young adults in urban areas and among the elderly. Women are the main providers of social support for the young and the aged in their families. The idea of the patriarchal family structure has declined. In Sweden, the distribution of income is one of the most equal in the industrialized world. The most notable distinction of classes is that of the Swedes and the immigrants. This division is noticeable in housing as certain suburbs of major cities have become known as the immigrant domains and characterized by disorder and danger (Countries and Their Cultures). B. Purchasing Behavior The people of Sweden are not afraid to try new things when it comes to their purchases. Swedes are actually more concerned with finding products at a cheaper price than being loyal to their local companies. Some native people will actually go “cross-border” shopping looking for better prices and to avoid high taxes. They travel to places such as Germany or Denmark to find products that are better priced. Swedes are looking for a bargain rather than loyalty (Association for Consumer Research). C. Consumption and Expenditure Patterns The consumer spending patterns are dependent upon such factors such as changes in income level and distribution, family structure, tastes, prices, and expectations. In Sweden, food, housing, and clothing purchases (absolute necessities) make up for more than half of the consumption capacity of households. On the individual level, consumption patterns vary depending on the income level and the number of dependents as well as on what each person defines as priorities and necessities. Because of unfavorable economic conditions mostly from high inflation, soaring unemployment rates, and declining purchasing power of households, families in Sweden will become more selective in their spending behavior (Kaynak).


A. Current Population

The population of Sweden at the end of 2011 was 9,475,954. The population of Sweden between the ages of 0 to 14 is 15.7% with about 733,597 being male and 692,194 being female. There is 65.5% of the population that is between the ages of 15-64 years old with about 3,003,358 being male and 2,927,038 being female. There is also 18.8% of the population that is 65 years old and over with 753,293 being male and 950,171 being female. By 2020, the population of women aged 0-19 is expected to grow by 1,088,000. The population of women 20-64 is expected to grow by 2,693,000, while the population of women over the age of 65 is expected to grow by 1,096,000. The population of men age 0-19 is expected to grow by 1,146,000 by the year 2020. The population of men age 20-64 is expected to grow by 2,751,000 while the population of men over the age of 65 is expected to grow by 946,000 ("SCB: Population projection for Sweden).


1. "2012 Index of Economic Freedom." Sweden Economy: Facts, Data, & Analysis on Economic Freedom. Web. 23 Feb. 2012. .

2. "Adversting Restrictions." The Chartered Institute of Marketing. Web. 23 Feb. 2012. .

3. American Chamber of Commerce in Sweden. 14 Feb. 2007. Web. 23 Feb. 2012. .

4. "Countries and Their Cultures." Culture of Sweden. Web. 23 Feb. 2012. .

5. "Cross-Border Shopping In The Open European Market: 1 Litre Of Hard Liquor, 20 Litres Of Wine, 24 Litre Of Beer, 400 Cigarettes, Max. 30 Kilo!, Anders Bengtsson, Jacob Ostberg, Soren Askegaard." Association for Consumer Research. Web. 23 Feb. 2012. .

6. "Encyclopedia of the Nations." Foreign Investment. Web. 23 Feb. 2012. .

7. "EUROPA." Labelling, Presentation and Advertising of Foodstuffs. Web. 23 Feb. 2012. .

8. "EUROPA." Product Labelling and Packaging. Web. 23 Feb. 2012. .

9. "European System of Central Banks, ESCB." Startsida. Web. 23 Feb. 2012. . 10. Exchange Rates at RatesList. Web. 23 Feb. 2012. .

11. "The Global Guru." :: :: Articles :: Swedish Model: Exposed! Web. 23 Feb. 2012. .

12. "Header." Import Regulations. Web. 23 Feb. 2012. .


14. "IRIS 1996-9:11/19." Sweden : New Legislation on Radio and Television. Web. 23 Feb. 2012. .

15. Kaynak, Erdener. "A Comparative Analysis of the Domestic Retailing Systems of Canada and Sweden." 1985. Web. 23 Feb. 2012. .

16. Malmö, Richard Orange in. "Doubts Grow over the Success of Sweden's Free Schools Experiment." The Guardian. Guardian News and Media, 10 Sept. 2011. Web. 23 Feb. 2012. .

17. Maskus, Keith E. "The Role of Intellectual Property Rights in Encouraging Foreign Direct Investment and Technology Transfer." Web. 23 Feb. 2012. .

18. "National Accounts, Quarterly and Annual Estimates." - Statistics Sweden. Web. 23 Feb. 2012. .

19. "SCB: Population Projection for Sweden." Web. 23 Feb. 2012. .

20. "Sweden and the OECD." Document Moved. Web. 23 Feb. 2012. .

21. "Sweden: Economy." GlobalEDGE: Your Source for Global Business Knowledge. Web. 23 Feb. 2012. .


23. "Sweden OECD Reviews of Foreign Direct Investment: Sweden." OECD. Web. 23 Feb. 2012. .

24. "SWEDISH ANTI-DUMPING DUTIES." WTO. Web. 23 Feb. 2012. .

25. "Treatment of the “Community Interest” in EU Antidumping Investigations." 14 June 2005. Web. 23 Feb. 2012. .

26. Web. 23 Feb. 2012. . 27. Web. 23 Feb. 2012. .

28. Wolk, Sanna. "Compensation of Employed Inventors in Sweden." 2008. Web. 23 Feb. 2012. .…...

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