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Joint Venture: Setting up a Business in Finland Report (Assessment)

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Updated: Jul 19th, 2019

Finland sits in the European Union that it joined in 1995 and is continually attracting the international market (US commercial Service 2005, p. 12). Geographically, Finland has a 900 miles border between it and Russia.

In addition to its location, it is strategically placed in the growing market that is contributed greatly by its proximity to Russia, Scandinavia and the Baltic States, which have a market size of close to 80 million consumers (“Doing Business” 2005, p. 12).

As compared to other countries, there is a misplaced conception that Finland is a member of the large Scandinavian region but in contrary; Finland has its own specific monetary mark with the Finnish mark in it.

To be the highly coveted market in the European region it has the most developed industrial economy and it places it as the leading competitor in the telecom market (US commercial Service 2005, p. 12).

Economic factors

The economic factors that affect investment of a business in a region could be inflation rate, exchange rates, monetary supply policies and licensing policies that affect investment of companies in the region (Pajunen 2006, p. 1). The affected investors will look at the performance of other related companies in the region and determine if they will be able to establish themselves in the market.

In relation to this, Finland has the highest mixed market. The reason as to why it has been a perfect target for business venture is as a result of the country having currently attracted the largest size of international market (Pajunen 2006, p. 1).

The international market currently makes a third of the country’s GDP where companies from European region makes 60% of the total investment in the land (Pajunen 2006, p. 1). The other important aspect about Finland is the fact their trade policies are controlled by the European Union, thus they are not continuously fluctuating and this helps in increasing market reliability.

Financial statistics show that Finland has a lowest inflation rate that is at 1.2% as at 2010. There is also the lowest rate of unemployment that was also reported to be at around 8.1% according to the 2010 reports on the economic performance of the country.

The other important aspect is the fact the country currently has a labor force of close to 3 million workers making it a suitable place for investing since there is a readily available labor (Pajunen 2006, p. 1).

The country is capable of spending within its means since it has a revenue income of close to 66.6 billion dollars and it spends close to 65.3 billion dollars making it the best country since they can be able to budget for their expenses (Rouvinen 2001, p. 350).

The surplus in their revenue makes it have a stable rate of taxation. It has the lowest lending rates and the exchange rates of the currency are stable due to the low rate of inflation (Pajunen 2006, p. 1).

Legal factors

When looking at the legal factors that affect trade investment in Finland, they vary depending on the type of investment that the organization intends to venture in (Legal Environment Factors Affecting Business 2011, p. 1). Most of the legal factors are set out by Finland as a country and supported by the European Union, which it is a signatory.

Some of the regulations are import tariffs. These are the taxes that are levied on goods at the point of entry to Finland (“Legal Environment” 2011, p. 1).

The revenue paid on the goods depends on the original value of goods that are being imported. In most cases the importation tax rates range from 0-17% which is considered rather a considerable amount that most companies and investors can work with in the field of importation.

The other factor is the trade barriers. Trade barriers are meant to control trade relationship between Finland and other European countries and other non-European countries (Legal Environment Factors Affecting Business 2011, p. 1). Finland is reported to have introduced a different turnover tax with the value added tax by June of 1994 (Legal Environment Factors Affecting Business 2011, p. 1).

The review of the taxation criteria has seen most of goods and other commodities that were not previously subjected to taxation are nowadays being taxed at a lower tax rate. The country has the basic VAT rate at a very considerable rate of 22% which was reviewed from the old turnover (Legal Environment Factors Affecting Business 2011, p. 1).

They have special taxes placed for food stuffs that are taxed at 17%. In a different case, there are other special taxes for goods that are meant for entertainment, medicines, books, performances and sporting events, museums and other institutions that are taxed at a fairly low rate of 8%making the cost of living to be fairly low and considerate (Legal Environment Factors Affecting Business 2011, p. 1).

Another legal requirement is the importation requirements and documentations. The country has put up regulations that require some goods to be accompanied by special documents to make sure that their quality and safety can be authenticated (Organization for Economic Co-operation and Development 1960, p. 1).

These mostly apply on consumable goods and other goods that have a direct consumption by the consumers.

Other legal dispensations are a temporally entry that allows a free entry of some goods but only for a short duration (Organization for Economic Co-operation and Development 1960, p. 1).

The other regulation is including special labeling and marking of goods for some products (Organization for Economic Co-operation and Development 1960, p. 1). The labeling shows the manufacturer and the chemical composition of some of the products; hence, in case of any further explanation they can be contacted.

Hofstede Framework for Cultural Issues in Finland

A number of theorists argue that culture is a civilization or the refinement of the mind and it results from factors such as refinement, education, art and the literature that is available for the society (Ailon 2008, p. 885).

According to Hofstede, he refers to culture as mind software; meaning that it is based on the mind and it dictates the way a group of people behave or conceptualize the world (Hofstede 2005, p. 214).

Culture is adopted but one is not born with it hence, it is not in the genes of the individuals. As stated earlier, culture is shared by people who have a similar social contact or rather are living in the same region (Ailon 2008, p. 885). Also, culture can be adopted according to their social class that individuals belong to.

According to Hofstede, it is important to distinguish culture from human nature and individual’s personality (Hofstede 2005, p. 214). While venturing into the Finnish market, it is important to understand that culture can manifest itself in different ways that includes values, rituals, heroes and symbols (Hofstede 2005, p. 214).

When venturing into a particular country, it is important to understand all cultural symbols that are used by the natives as well as understand their meaning (Higgs n.d, p.1). Understanding culture will help in coming up with less offensive symbols.

There are some words that are used by Finland natives that have a cultural history into them hence; carrying out such a research is important to the success of a newly venturing company into the country (Hofstede 2005, p. 214). In the case of heroes, the investing company should be sensitive to associate with the type of heroes that are recognized by the society that is targeted by the company (Higgs n.d, p.1).

Rituals are other components of culture; the companies that are coming into Finland should have done research to establish etiquettes and organizational cultures that are in line with the culture of the natives (Ailon 2008, p. 885).

What and/or if the Government Has Done to Promote Foreign Direct Investment (FDI)

The Finnish government has put in great effort in encouraging foreign direct investment. To attain this, the government has removed regulatory limitations that depend on the acquisition (US commercial Service 2005, p. 12).

There are no controls on the mergers and this has been the rules to make sure that the European market is highly infiltrated (Rouvinen 2001, p. 1). The other effort that the country has made is to ensure that there is proportional competition from privately owned corporations and the government owned organizations (US commercial Service 2005, p. 22).

However, there are regulations that require all foreign owners of companies venturing into the Finnish market to provide to the government for processing of taxes (Rouvinen 2001, p. 1).

In conclusion, the Finnish government has created the best conditions for starting business ventures. The economic stability acts as the barometer to tell how the country is ready for foreign investments.


Ailon G 2008, ‘Mirror, mirror on the wall: Culture’s Consequences in a value test of its own design’, The Academy of Management Review , vol. 33, no 4, pp. 885-904.

Higgs, M n.d, Overcoming the problems of cultural differences to establish success for international management teams. Web.

Hofstede, G 2005, Cultures and organizations: software of the mind, McGraw-Hill, New York, NY.

Legal Environment Factors Affecting Business 2011. Web.

Organization for Economic Co-operation and Development 1960, ‘regulatory reform in finland: Enhancing market openness through regulatory reform’, vol 2, pp. 34- 45.

Pajunen, A 2006, . Web.

Rouvinen, P 2001, ‘Finland on top of the Competitiveness Game? The Finnish economic and society 4/2001’, ETLA and EVA , pp. 345-356.

US commercial Service 2005, ‘Doing Business In Finland: A Country Commercial for US companies’, pp. 2-30.

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