Croatia: Waste Management.

Essay by studentKUniversity, Master'sA+, August 2005

download word file, 12 pages 5.0


Our global business opportunity is based in the United States with a foreign direct investment in the country of Croatia. Our strategy for entering the Croatia market is in the form of a green-field investment, which involves our establishment of a wholly new operation in Croatia. Our present operation, Waste Management Inc. headquartered in Houston, TX, is the leading provider of waste and environmental services in North America.

We begin the Report, in section 1, addressing Croatia's geographic, economic, political, demographic and cultural factors. In section 2, we will define goals and objectives for the protection of the environment for all required functions and at all levels within the company. Croatia's legal, labor and corporate requirements will be taken into consideration, as well as the potential impact the company may have on the environment.

The main objective of this proposal is to improve quality of the environment, such as; collection, disposal and reuse of waste, enhance quality of air, water and soil, which all together will lead to improved human health and quality of life.


Geographical position:

Croatia with its spectacular landscapes, picturesque towns and villages and rich cultural heritage lies along the east coast of the Adriatic Sea and is part of the Baltic States. Its geography is diverse, with flat plains along the Hungarian border, and rocky coast lines on the Adriatic Sea. Croatia has wooded mountains, lakes, rolling hills.


5,835 km (main land 1,777 km, islands 4,058 km)


1185, of which 67 inhabitant


Total: 56,542 sq.

Land: 56,414 sq. km

Water: 128 sq. km


Zagreb (779,145 habitants), rest in other 20 counties


In the north and the east summers are hot and winters cold. In the south central region, they have dry summers and mild winter.



89.6% Croats, 4.5% Serbs, and 5.9% others

Life expectancy rate:

Average 75 years


Roman Catholic (87.8%), 4.4% Orthodox, 1.3% Muslims and other

Official language:

Croatian and other languages are spoken by less than 5% of the population


Long artistic, literacy and musical traditions. It has a diverse cuisine, ranging from seafood dishes, traditional specialties, and variety of wine


Republic of Croatia

Presidential/Parliamentary Democracy

President: Stjepan Mesic

Head of Government: Ivo Sanabar

Flag description:

Red, white and blue horizontal bands with Croatian coat of arms


GDP: 3.7%

Budget: revenues $14.14 billion, expenditures: $15.65 billion

Public debt: 41.7% of GDP

Unemployment: 13.8%


Chemical and plastics, machine tools, fabricated meta, electronics, steel and wood products, aluminum, paper, pig iron, construction materials, textiles, shipbuilding, petroleum and petroleum refining, food and beverages, tourism


Code: Kuna (HRK)

Exchange rate: One Kuna per 0.167 U.S. dollar

Potential Competitors:

Austria, Germany, Italy, Bosnia and Herzegovina, and Slovenia

Potential Markets for FDI:

Telecommunication, Energy, Medical Equipment, Port Infrastructure, Environmental Equipment, Tourism Infrastructure

Reference: (1, 2, 3)

Research and Analysis for Strategic Plan

The main factors considered are the economy and government. Research has been conducted on current environment, potential competitors and analysis on the prospective company.

The Republic of Croatia's first decade of independence was marked by turbulent economic and political developments. In contrast to the other transition countries, Croatia was not only faced with the challenge of transforming its economy into a functioning market economy but also had to overcome the difficulties stemming from the collapse of the Federal Republic of Yugoslavia, including the disappearance of a common market and years of war in Croatia and the neighboring countries (4).

Entering the new millennium and its second decade as an independent republic, Croatia experienced a recession triggered by economic transformation but recovered to currently enjoy robust economic growth.

In the year 2000, Croatia became a member of the WTO, CEFTO, and participated in NATO's Partnership for Peace program. In 2002 Croatia was welcomed into NATO. In 2003 Croatia, Albania, Macedonia and U.S. joined together to pledge their commitment to NATO (4).

The most important step towards eventual membership of the EU was taken in 2001 with the conclusion of the Stabilization and Association Agreement (SAA). The Implementation Plan under SAA allows Croatia's export goods to enter the EU member countries duty free. Croatia's government applied for membership of the EU in 2003 and became a candidate in 2004. Negotiations were scheduled in March 2005 (4).

Croatia's transformation into a modern state governed by the political values held in common throughout the European community of countries began quite late. A new balance of power resulted from the parliamentary elections held in January 2000 and the election of Stjepan Mesic as President in February of the same year. Prime Minister Ivo Sanadar now leads the government (2, 5).


Due in part to the absence of investment opportunities and the political uncertainties, the inflow of foreign direct investment into Croatia was relatively modest up to the end of the 1990's. The major political changes that subsequently occurred in the country, made Croatia considerably more attractive for foreign investors. Most of the FDI that has flown into Croatia has linked to privatization of a few relatively large state-owned enterprises, such as retail, financial services, telecommunication and production of petroleum products. By contrast, Greenfield investment in the Croatian economy has been practically nonexistence (5).

Foreign investors have long been waiting for the government to take measures to boost Croatia's attractiveness as an investment location. In this regard, the main focus is on improving the country's competitive position compared to other countries in the Central and Eastern Europe region. As Croatia's economic ties with EU grows closer and prospects of rapid EU accession improve, the country's attractiveness as an investment location increases, leading to a restructuring of investors' interest in terms of the main sector targeted by FDI (5).

Based on our research we have learned that waste is a priority environmental issue concerning Croatia. The existing waste management system, characterized by numerous landfills operating without proper preventive and protections measures and illegal dumpsites, fails in both technical and educational aspects. There is also concern over the number of landfills that are running out of space and the lack of availability of land area. Annual production of waste in Croatia reaches about 9 million tons. There are currently 126 large official landfills, the majority of which have been built without application of the basic protection measures. Waste disposal in Croatia is conducted in manner not satisfactory to the EU and therefore changes are required (5).

According to Ministry of environment, Croatia needs to invest $10 billion to solve its environmental problems. In July 2004, World Bank financed a coastal city pollution control project for $250 million. The project will upgrade the municipal sewage systems and wastewater treatment facilities at the coast (5). As of May 2005, EBRD signed 60 investments in Croatia and several of those projects are aimed at providing environmental developments are Dubrovnik Transport Development Project, Development of Wastewater Treatment Plant in Zagreb, and Sewerage Services improvement program in Rijeka. EBRD was established in 1991, with the intent to help build the economies in Central and Eastern Europe. EBRD will finance 35% of these projects and we will considers EBRD our financial source as well (7).

We will introduce Waste Management Inc. to Croatia. It is a Fortune 200 company which operates an unequalled network of service facilities throughout the United States, Canada, Mexico and Puerto Rico that serves nearly 21 million residential, industrial, municipal and commercial customers. Waste Management is the largest company in its industry. Total assets valued at $20.91 billion, include 289 state-of-the-art land disposal sites, 17 waste-to-energy plants, 85 landfill gas projects, 366 transfer stations, 429 collection operations, 25,000 collection and transfer vehicles, and 138 recycling plants. Waste Management Inc. is publicly traded company on the New York Stock Exchange (NYSE:WMI). According to 2004 annual report, total revenues were $12.52 billion, diluted earnings per share $1.60, with net income of $939 million (8).

The Waste Management Inc. will present a long-term plan (up to the year 2015) for addressing key issues, needs and problems experienced with waste management in Croatia. The objective is to move away from fragmented and uncoordinated waste management to integrated waste management. Such a holistic and integrated management approach extends over the entire waste cycle from cradle to grave, and covers the collection, transportation, treatment and final disposal of waste. It presents a plan for ensuring that the socio-economic development of Croatia, the health of its people and the quality of its environmental resources are no longer adversely affected by uncontrolled and uncoordinated waste management.

Attention will also be given to raising public awareness on waste management issues and promoting and delivering environmental education. Critical factors affecting the successful implementation of the strategy will be securing the necessary financial and human resources, and receiving the commitment, support and input of WM Inc. stakeholders. The final phase of the Waste Management Strategy process will entail the development of detailed action plan for implementation.

Strategic Plan.

To achieve the long-term objectives of the strategy, the company will enter Croatia as a Greenfield operation with the help of European Bank for Reconstruction and Development. WMI will focus on building waste collection operations, transfer stations, landfill disposal sites, recycling plants. We will primarily focus on building modern waste-to-energy facilities.

WM will face fierce competition from European waste management companies already doing business in Croatia, such as the A.S.A and Saubermach of Austria. These companies handle complete range of municipal and industrial services such as collection, transfer, and disposal of all waste, operation of landfills, clean-up of contaminated sites, treatment of hazardous waste, incinerations and street cleaning (9, 10). However their efforts have not been successful.

According to Company Law Act, foreign investors have the same rights, obligations and legal status within an enterprise as domestic investors. Therefore, first step would be to register with the Commercial Court, but prior registration, we will contact the Ministry of Justice to obtain an approval for the company name. We will name the company Waste Management of Croatia. Next, the registration will be sent to the Ministry along with the WM's last year's financial statements certified by a public notary. The company is considered a legal entity now and will proceed in acquiring property. The branch office as well as the plants will be located in Zagreb, Croatia. A domestic attorney will oversee the procedure of the company's establishment. An insurance company called Oversees Private Investment Corporation (OPIC) will insure us in case of any political violence, currency convertibility, and seizer of assets. It also insures against any exporting, licensing, leasing, and contracting transactions (6).

The company will register with the Tax Administration office. The taxation system gives equal status to all taxpayers, i.e. domestic and foreign persons and legal entities. Waste Management of Croatia will open a bank account in Croatia National Bank. According to Croatian Constitution, the company will have the benefit of transferring the profits as well as the invested capital. According to Investment Promotion Law, investments in a new company, such as ours, will contain zero corporate tax if we invest $10 million (HRK 60 million) for 10 years and create 75 new jobs. Therefore we will invest $7.5 million and EBRD will assist us by financing 35% or $3.5 million of the project. We will also be eligible to receive assistance from the government for employees that will need training in the amount of HRK 15,000 for each new employee (6).

Croatia has a highly educated and highly skilled work force, especially in language skills. We will fill all of the 75 positions with skilled and non-skilled employees. For the first year employees from the states will move to Croatia for adequate and ongoing training of staff. The training provided will be reviewed by the management to ensure that it remains appropriate to changing legislations and continue to cater for new staff and working arrangements (6). Employee will work 40 hours a week, from 8:30a.m. to 5:30p.m. and the salary will be decided between employer and employee.

As soon as operations start, Waste Management of Croatia will focus on developing products and services for waste management and the recycling and reuse of waste. The value chain for Waste Management of Croatia will cover steps from consultation, analysis and after-sales products and services. The steps in the value chain will begin with consultations with industries and businesses. Problem solving alternation will be developed and most promising solutions will be offered. Waste Management of Croatia will work with communities, officials and customers as well, to manage their waste streams identify environmental issues and tailor programs that will fit their budgets.

The next step will be to invest in measures such as collection trucks, collections and handling systems and treatment plants. This includes manufacturing and/or procurement of components and equipment, the assembly of plants and systems as well as the commissioning of plants. Croatia Waste Management will provide its citizens with value priced waste collection, transfer and disposal service. It will operate waste collection vehicles equipped with modern automated collection technology. The vehicles will offer value added services such as waste hauler, residential and commercial recycling, bulky item disposal, yard waste collection (8).

Communities outside of Zagreb will have the convenience of having their waste collected, consolidated, compacted and loaded into transport trailers until it is transferred to the landfills. This process utilizes the collection equipment by minimizing the transportation time and the efficient way of moving the moving waste to disposal facility (8).

The company will make the recycling process easier for people, whether at home or work. The objective of recycling is to save resources as well as reduce the environmental impact of waste by reducing the amount of waste disposed at landfills. To meet these objectives, waste separation at source is proposed, as the quality of recyclable materials is higher when separated at source. We will offer three different bins for different waste fractions. The residents will be able to mix recyclable paper, plastic and glass in one bin. Homeowners will use the other bin for grass, leaves, tree limbs and other yard waste. The organic waste will be recycled, which will help it divert from landfills, and will provide agricultural operations with fertilizer products. The last bin will contain all other wastes (8).

Croatia WM will provide clean, safe and dependable and same day emergency commercial collection service. The same easy recycling program will be available for businesses and industries. These commercial institutions will be given the latest innovative sorting technologies. A full secure shredding service will be provided to businesses. Documents will be hauled away in lockable containers within 24 hours of call. The paper documents will be shredded and converted to liquid paper pulp and recycled into new paper products (8).

Waste-to-energy facility in Zagreb will produce clean, renewable energy through the combustion of municipal solid waste in specially designed power plant equipped with the pollution control equipment to clean emissions. Operation of waste-to-energy plants avoid the release of methane that otherwise would be emitted when trash decomposes, and the release of CO2 that would be released from generating electricity from fossil fuels. The waste-to-energy plant will consume 1500 tons of trash each day and will generate more than 40,000 kilowatts of electrical energy for sale to the local electric utility company. This will supply electricity to 40,000 homes in Zagreb (8).

Landfills are necessary part of integrated municipal waste management systems, since there will always be a need to dispose of waste that cannot be economically reused or recycled or incinerated for energy recovery. The ten landfills in Zagreb will be built into or on top of the ground in which trash is isolated from the surrounding environment. The landfills will have state of the art technology, including advanced liners, leachate collection systems, and ground water monitoring and gas control equipment (8).


Ogilvy & Mather and Gray is a global advertising agency, with an office in Zagreb. The agency will be hired to oversee the promotion and advertising of the company. Two state-owned TV channels will run an advertisement of nine minutes per hour every hour. Additional ads will run on two private TV channels as well as in six national daily newspapers, magazines and billboards (6).

Risks and Benefits

We will face risks because changes in market prices and opportunities cannot be predicted. In developing countries such as Croatia the risk goes beyond ordinary market risk. We may have little trust in the reliability and fairness of property rights and government enforcement, and conversely, the citizens, politicians and government may have little confidence in the motives and staying power of our business. They may worry that we will reap most of the gains and will flee at the first sign of trouble (6).

Corruption is another major problem in Croatia. On the scale of 1 (highly corrupt) to 10 (no corruption), Croatia ranks 3.5. Corruption may deter a foreign investment. For a company to pay bribes is like paying taxes (6).

Low level of appropriate skills is one of the main barriers to investing in Croatia. Therefore we encourage high level of specialized training when basic skills are already available. We will bring new technology and production techniques, raise wages, improve management skills and quality control (6).

Croatia Waste Management is taking the form of a large project; therefore it will represent a sizable share of Croatia's total investment. So long as we have alternative potential sites for our investments, we have the bargaining power of the host country's government and we may be able to negotiate terms that are more favorable than those available to domestic investors (6).


In the direction towards modern methods of environmental protection and constant application of innovative technologies and permanent improvement knowledge, WM of Croatia will hold the leading position in waste management industry in less than three years. This means that Croatia is yet one step closer to achieving its goal of becoming a member of the EU in 2007.


1. CIA-The World Factbook-Croatia

Retrieved: August 17, 2005

2. Croatia (3/05)

Retrieved: August 17, 2005

3. Croatia

Retrieved: August 17, 2005

4. Croatia CCG FY 2004: Political Environment

Retrieved: August 17, 2005

5. U.S. Commercial Service Croatia: CCG -Doing Business in Croatia

Retrieved: August 17, 2005

6. CCG-Investment Climate Statement

Retrieved: August 17, 2005


Retrieved: August 17, 2005

8. Waste Management Inc.

Retrieved: August 17, 2005

9. A.S.A Group

Retrieved: august 17, 2005

10. Saubermacher

Retrieved: August 17, 2005