The intensification of the war in Ukraine has significantly worsened the business environment, giving rise to a daunting reality where enterprises can lose years of progress in a flash due to missile attacks, and other acts of violence. As a result, an increasing number of entrepreneurs are considering geographical diversification as a means to mitigate these risks and ensure survival during wartime.

Geographical diversification is a strategic approach used by businesses to expand their operations and customer base across different regions, countries, or continents. Under normal circumstances, this strategy allows companies to spread their risks, broaden their markets, access new customers, and tap into new opportunities that could increase their profitability. By operating in various geographical locations, for example, businesses can mitigate risks associated with factors such as economic downturns, natural disasters, political unrest, or market saturation in one area. If one region experiences economic downturn or political instability, businesses can still maintain stability through their operations in other areas. 

In wartime, diversification is particularly necessary. The impacts of war often lead to industries and regions becoming perilously volatile or even entirely inaccessible. Under such circumstances, a diversified business model allows companies to persist, maintaining operations and generating revenue from safer, more stable locations.

Recognizing this escalating demand, the Chamber of Commerce and Industry of Ukraine (CCIU), in partnership with the United Nations Development Programme in Ukraine (UNDP) recently launched an initiative to support Ukrainian enterprises in broadening their geographic reach and adapting new business models. Funded by the German government, the project is designed to spur economic growth, stimulate innovation, and bolster Ukrainian micro-, small and medium-sized enterprises.

Combining the best world practices with Ukrainian experience

The programme is uniquely positioned to leverage the resources and networks of its implementing partners, creating an effective platform for Ukrainian businesses. CCIU brings to the table its extensive network of 8,000 private businesses, providing a wide base of enterprises that the programme can readily access and support. Simultaneously, UNDP employs its global network that spans 170 countries and territories, offering a rich reservoir of best practices from around the world. UNDP, with its vast experience in promoting sustainable development and business practices, alongside Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), a federal enterprise renowned for supporting economic development globally, creates a formidable partnership. Their combined expertise and resources guarantee that the service is not only based on world-class best practices but is also tailored to meet the specific needs of Ukrainian businesses. This multi-faceted collaboration ensures the programme delivers effective, sustainable solutions that resonate with the real challenges and aspirations of businesses in Ukraine, even during trying times.

Innovative consulting service for Ukrainian businesses

The geographical diversification and business model adaptation service  provides a comprehensive suite of advisory support for Ukrainian companies looking to expand their operations nationwide. The initiative’s key objectives and areas of strategic support include:

Market research and analysis: The service provides businesses with critical market intelligence on consumer behaviour, demand patterns, and competitive landscapes in their target markets. This rich data pool facilitates informed decision-making and the crafting of effective market entry strategies.

Regulatory guidance: Companies venturing into new markets often face significant hurdles navigating unfamiliar regulatory frameworks. This service mitigates such challenges, assisting businesses in understanding and complying with local laws, regulations, and trade policies, thereby ensuring a smooth entry into new markets.

Business model adaptation: Understanding the need for businesses to tailor their models to the unique dynamics of new markets, the service offers expert guidance on modifying existing business models. It also aids in identifying potential partnerships and capitalizing on local market opportunities.

Networking and partnership building: The initiative serves as a networking platform, connecting Ukrainian businesses with potential international partners, investors, and collaborators. These connections can be invaluable for businesses to establish a strong presence in new markets.

Capacity building and skills development: Recognizing the importance of human capital, the service provides training programmes and workshops to enhance the skills and knowledge of entrepreneurs and their teams. This empowers businesses to confidently tackle the challenges that come with expansion.

War-impacted businesses find support in the newservice

The service's pilot launch has already exhibited several benefits for Ukrainian businesses and the national economy at large. For example, the UNDP's support for geographic diversification and business model adaptation for 18 Ukrainian enterprises enabled them to unlock new growth opportunities and access larger consumer markets. 

Among them is the bread manufacturer "Chaika," whose facilities were completely destroyed in a missile attack on Lyman, Donetsk region. Forced to start anew in western Ukraine, the owner, Vadym Andreev, with his 20 years of industry experience, faced the challenge of understanding the new market and reaching customers in an unfamiliar region.