Business climate in Norway
Economic growth over the past twenty years has been substantial and Norway has become one of the richest countries in the world. Good access to natural resources has been essential to the growth of wealth in our country. Whereas hydropower formed thebasis for building Norwegian industry in the last century, the oil and gas industry has been a major driver of economic growth over the past twenty years. The petroleum industry has provided both a large income for the state and created a market for important segments of our mainland economy.!
The workforce, or human capital, is nevertheless our most important resource. Even though many business sectors have experienced at various times a shortage of manpower in the past ten years, industry in general has had good access to qualified labour. Proportionally more people are in employment in Norway than in most other industrial countries.
The period in which the petroleum sector has been the main economic engine will come to an end, and labour will become an increasingly more important input factor. Wealth creation in the Norwegian economy must be based on growth outside of the petroleum industry. In particular, the need for growth in other exposed business sectors will increasingly become apparent.
In Norway there are nearly no restrictions on starting a business. If you are at least 18 years old, not declared incapable and not under bankruptcy quarantine, you may establish an enterprise. You don’t have to live in Norway yourself; however, the enterprise must have a Norwegian address.
On the surface it seems uncomplicated to start your own business. Registration is achieved by submitting a single form to the authorities. But of course, there are a number of rules and regulations that affect both starting up and running your business. And it is your responsibility to know all aspects relevant to your business enterprise.
In Norway, stimulation of the entrepreneurial spirit is a policy of national priority. Whether it can be attributed to the industrial policies or not, will not be discussed here, but it is a fact – according to the Global Entrepreneurship Monitor (GEM) – that Norway is among the top entrepreneurial countries in Europe. The general interest in starting one’s own business is stimulated for instance by competitions for prospective entrepreneurs and even TV programmes on how to transform business ideas into successful enterprises.
In simple terms one may say that Norway’s economic policy is based on the following pillars:
– Stabilize and counteract unemployment and inflation.
– Stimulate industrial growth in all parts of the country.
– Influence the structure of industry.
– Influence the distribution of income.
Regions with little industry are subject to more lenient taxation than other areas, for instance in the form of differentiated payroll tax. Also, credit institutions have been established to provide support to the regional industrial sector as well as agriculture, fisheries and certain other industries. The purpose of these schemes is to promote innovation, maintain traditional industry or prevent the sudden disappearance of local industry.
In addition to their financial and credit policies, the central authorities have implemented an income policy which involves taking measures to influence the outcome of the wage, agricultural and fisheries settlement negotiations and more.
The distribution of income is achieved primarily through the regulation of and rates for income tax and social benefits, including the National Insurance Scheme.
Tax agreements for research and development expenditures, as well as state support for research have been implemented to promote the growth of new industry.
In 2004, approximately 317,000 companies were registered in Norway. Many of these are
About one third of Norwegian companies employ people other than the owner, and most of them are small. Well over half of these businesses employ between 1 and 4 persons and more than 9 out of 10 companies have fewer than 20 employees. In 2004, fewer than 1,600 Norwegian companies had 100 employees or more. These account for 1 % of all Norwegian companies, but represent more than 40 % of total employment. They are therefore very important.
The largest companies are found in the industrial sector, with nearly 500 companies in this sector employing more than 100 people. A large share of the
Many people in Norway would like to set up their own company. Every year, a number of new companies are established, and many companies also change ownership. In 2003, a total of 41,979 new companies were registered, of which 3,232 were changes of ownership.1 A number of these companies are based on creative concepts for how to tap into markets and opportunities, and they have potential for development. Approximately 3,900 of the companies that were registered in 2003 had at least one employee. The circulation of companies is high, with many companies closing each year. The total number of companies has therefore changed slightly over the last few years.
Unlike many other countries, the main part of Norwegian industry is located outside of the major metropolitan areas. Production was often established either close to an energy source, or at a location offering good transport links for the shipment of raw materials and/or finished goods. Commoditybased industries have declined as competition for resources has increased and as competing businesses have been established in many developing countries. Nevertheless, these business sectors have continued to develop, and many of them are profitable. A large proportion of the production is sold on the international market.
Service sectors dominate the towns. Consultancy and other
Traditionally, Norwegian trade and industry has exported
Another important sector is
Despite the fact that a large share of exports relies on energy resources, Norway also exports consumer products and goods, most notably fish. Salmon represents nearly one third of fish exports. Denmark is the single largest buyer of Norwegian fish, where it is processed and sold on to the rest of the EU. Dried, salted cod (klippfisk) and dried fish are specialities that are mainly sold to Portugal, Brazil and Italy.
Over the last few years, the export of services has increased more than the export of goods. Some
Income from foreigners who travel to Norway is regarded as exports, whereas money spent by Norwegians during trips abroad are accounted for as imports. In 2003, foreigners spent about half as much in Norway as Norwegians spent abroad. Money spent by Norwegians abroad constituted approximately 11 % of our total imports.
As a small country, it has not been profitable to establish production of aeroplanes, cars and other goods in Norway that require
Norway has always been dependent on importing and exporting to secure wealth. Export of
A distinguishing feature of the Norwegian economy is the large share of public ownership in trade and industry. Measured in number of employees, the majority of this ownership is found within infrastructure, health and energy. In early 2003, the state owned approximately 43 % of those companies listed on the Oslo Stock Exchange by market capitalisation. At the end of 2004, the share of public ownership had been reduced to less than 37 %. The fact that the state still has a relatively high share of publically listed companies in Norway is mainly due to the ownership stakes in Statoil and Telenor.
The arguments behind public ownership have varied. Companies have become
Increase in ownership across national borders is a feature that the Norwegian economy shares with other OECD countries (the OECD is a forum in which industrialised countries from around the world discuss topics of interest, with an emphasis on aspects related to finance and commerce). Foreigners invest in Norwegian companies, and Norwegian owners invest in foreign companies. From
Around 60 % of inward investments over the last three years have originated from EU countries, and about two thirds of them originate from Denmark and Great Britain. Over the last few years, foreigners have mainly invested in the petroleum business, but also in commercial services and transport and communications. There is also a considerable amount of foreign ownership of Norwegian industry.
Technology Industry
The technology industry is one of Norway’s largest industry sectors. A significant part of the industry has evolved in the wake of activities within the shipping industry and the petroleum business. Internationally,Norway is a leading nation in areas such as ship building, advanced marine equipment and petroleum technology.
Number of employees: 110,000
Share of gross product in trade and industry: 5 %
Despite technologically advanced products, this industry is often characterised by
The ship building industry makes up an important part of the sector. Shipyards have a long tradition in Norway, and is still an important business in many communities, especially along the western coast of Norway. The shipyard group Aker Yards owns several shipyards. Norwegian shipyards mainly build small and
Another important part of the technology industry supplies oil platforms and other highly specialised equipment to the petroleum industry. The development in Norway’s supply industry has divided in two separate directions: Some companies supply complete solutions to oil companies – from completed platforms to pipelines, housing areas and security systems. This is in line with international trends. Other companies have specialised in just a few products or services. The largest company is Aker Kværner, which has its head office in Norway as well as operations in several countries. Solutions and products developed in Norway, by companies such as Kværner, Vetco Aibel and FMC Kongsberg Subsea, do increasingly well internationally.
We also find
Exports by the technology industry constitute around 9 % of our total exports, and nearly twice that when we disregard petroleum exports. An important feature of this business sector is that a significant share of the supplies is
Energy
Norway is one of the leading energy nations in Europe, supplying hydropower to the Nordic network and selling considerable volumes of gas throughout Europe. Tankers from the North Sea deliver oil across the globe.The activity surrounding our natural energy sources has laid the foundations for significant business sectors that include a variety of expertise companies and supply companies.
Number of employees: 44,000
Share of gross product in trade and industry: 31 %
The energy sector is dominated by oil and gas, which during the last 40 years has developed from practically nothing to become our largest business sector. Today, the wealth creation from oil and gas activities constitutes between 15 and 20 % of the total Norwegian wealth creation, or nearly twice as much as in traditional Norwegian industry. Oil and gas activities are located in the North Sea, the Norwegian Sea and the Barents Sea. The fields are situated deep into the oceans and developing them has required huge investments. Even though investment levels will probably decrease in the years to come, they still constitute about one fifth of total investments in Norway. The state collects large revenues from oil and gas, in the form of taxes, direct shares in oil and gas fields and dividends from Statoil and Hydro, in which the state is a major owner.
Statoil and Hydro are the two largest producers on the Norwegian Continental Shelf. Another stateowned company, Petoro, owns the two largest shares in Norwegian oil and gas fields. Foreign companies have a relatively small share in the fields.
Even though oil and gas earn Norway considerable revenues, the number of people who work within this business sector is relatively low. Exploration, extraction and pipeline transport have never employed more than approximately 1 % of the Norwegian workforce.
Several companies have specialised in supplies to the petroleum industry and a large, knowledgebased and technologically advanced supply industry has been established. Other companies supply specialised services such as transport, seismic surveys, engineering solutions, testing and analysing services, safety and maintenance.
The power industry is another important industry within the energy sector. About 99 % of total electricity production comes from hydropower. How much power is produced is largely dependent on the inflow of water. Power cables to our neighbouring countries enable the importing and exporting of power. Hydropower will continue to be an important energy source, but in the years ahead it must be supplemented by energy from other sources such as wind power, bio energy, heat pumps and
Norway was one of the first countries in the world to introduce a liberalised power market in 1991. Most of the countrywide distribution network is owned and operated by Statnett. Municipalities and county authorities own most of the regional distribution network. In the regional distribution network, Hafslund Nett is the single largest company. Other large companies include SkagerrakNett, BKK Nett and Agder Energi Nett. The Norwegian Water Resources and Energy Directorate (NVE) monitors both efficiency and prices in the networks.
Power producers are also largely owned by the public sector. Statkraft owns almost one third of the production capacity, whereas municipalities and county authorities own slightly more than half of it. The remaining power plants are private. The regulatory framework is based on licensing rights and has a great influence on the ownership structure in the power sector. Any changes in these regulations could affect the future ownership structure.
The power market has gone through extensive internationalisation over the last few years. Many companies have merged or been purchased by larger companies. A large number of companies have also been transformed from municipal public enterprises into limited companies.
Number of employees: 29,000
Share of gross product in trade and industry: 2 %
The
New technology has made it possible to develop and increase production, without using any more electricity than 25 years ago. The companies can be classified into the metal industry, the chemical primary industry and the pulp and paper industry.
The metal industry accounts for about half of employment in the
companies to spend significant resources on product improvements.
The other main product group within the metal industry is the production of metals in which iron is a component (
The chemical raw material industry produces fertilizers and
The pulp and paper industry comprises companies that produce everything from chemical pulp to cardboard and paper. Wood is chopped into wood chips and then grounded to wood pulp. A chemical treatment is then applied, which compacts the pulp into paper. Norske Skog is one of the world’s largest producers of newsprint and magazine paper, with processing operations in many parts of the world. Much of the Norwegian production is located near the large forests in Trøndelag and Southeast Norway. The sector has gradually become more efficient, due to the fact that many companies have been closed down and production has been concentrated in larger and more modern facilities.
Construction, Building and Materials
Tree felling,producing wood materials and building houses have always been important activities in Norway.Mountains and valleys make the construction of roads, airports and power lines a demanding job.Norwegian construction enterprises solve these tasks and have developed advanced solutions.
Number of employees: 169,000
Share of gross product in trade and industry: 8 %
Norwegians, more than other Europeans, live in
We find construction and building companies all over the country, but employment locations vary. Employees in this business sector must be more prepared to commute than employees in other industries.
Schools, hospitals, culture centres, military defense installations and roads are ordered by the state, and private contractors conduct the actual construction. The authorities purchase approximately one third of everything produced by this business sector, thus making public investment plans important for the sector.
Most companies are small and often privately owned. However, the sector is continually changing, and several large construction and building groups have been established. Veidekke, Skanska, NCC Construction,
Wood is the most important building material and about half the timber that is felled is for the timber industry. The production of timber was industrialised more than 400 years ago. Along with mining, these are our two oldest industries. The woodworking industry is an important business sector, located near the largest forests in Southeast Norway and Central Norway.
Norwegian businesses have also developed specialised products made from wood, such as parquet, stairs, doors and windows. New technology has made it possible to utilise wood in new ways, such as using glulam beams for support in bridges and large buildings.
The paint industry, which is part of the chemical industry, comprises several large and small businesses. The largest is Jotun, an international company with productions all over the world. In addition to house paint, Jotun are
Other chemical materials, such as plastic, glass and stone, are also vital building materials. Norway has a multitude of businesses that supply everything including plastic tubes for water and drains, insulation materials, special tanks and other types of building products. The plastic industry also produces goods for use in everyday life, such as plastic bags, bottles, packaging, kitchen utensils, garden tools and sports equipment. Plastic has to a large extent replaced other materials in these areas.
Concrete is the most common supporting material in large buildings and construction works. Through developing concrete structures such as oil platforms, power pylons and dam installations, several specialised businesses have sprung up. The building material Leca is an example of a Norwegian invention that is used in ordinary house building.
Most of the traditional mining, which characterised many local communities, has now been phased out. Nevertheless, mining is a growing business sector, but now it is producing industrial minerals, natural stone, crushed stone, sand and gravel. Industrial minerals are used as fillers, for instance in
Food and Beverages
In Norway we export more food than we import. Ever since the Viking age, fish has been one of our most important export products, and today you will find both fresh and processed fish from Norway all over the world. Most Norwegian food is nevertheless based on raw agricultural materials.
Number of employees: 136,000
Share of gross product in trade and industry: 4 %
Most of the food we eat is processed by the food industry, which is Norway’s second largest industrial sector. Here we find some of the largest and most famous Norwegian companies, such as Gilde, Stabburet, Freia, Ringnes, Toro and TINE. The dairy industry processes colostra into consumer milk, cheese, yoghurt and ice cream. Norwegian meat is processed into chops, sausages and cooked meats. Pizza is produced using grain, cheese and meat. Chocolate contains large quantities of milk powder. Norwegian water is processed into beer, soft drinks and bottled water. The agricultural- based food industry is found all over the country.
Fish is processed less than raw agricultural materials, mainly because restaurants and food chains all over the world demand fresh fish. Another reason is the fact that tariff barriers in the EU and other countries often make it more profitable to process the fish outside Norway. About one third of the fish that is exported is fresh. The rest of the fish is processed in Norway, where fish processing is an important business sector in local communities along the coast. In Norway’s northernmost county, Finnmark, the fish processing industry is the second largest business sector, after public sector activities.
Apart from this, Norway does not export much food. The most important products are cheeses, oils and fats, fish feed, chocolate and
New international trade regulations from the World Trade Organisation (WTO) may mean that most countries can no longer protect their own food production with high tariff barriers. Lower tariffs could mean increased competition for the Norwegian agriculture and food industry, making it necessary to reduce costs and increase product development. This may benefit Norwegian consumers by means of lower food prices. The new trade regulations could also increase the possibilities for more export, especially with regards to processed fish.
Several of our largest food corporations have established significant operations in other countries. Through investments and acquisitions of food industry companies in the Nordic countries, central Europe and the Baltic countries, these groups have become international. In the same way that Norwegian companies own businesses abroad, large international companies own some Norwegian businesses. Still, most of the food industry is
Close to half the employees in the food sector work in the industry. The rest of them are farmers, fishermen or employed in fish farming. Food is produced more efficiently, and the number of farmers and fishermen keeps falling. There has only been a small reduction in the number of employees within the food industry. New sectors such as fish farming and the production of fish feed have been among the most rapidly growing food sectors over the last few years. Nevertheless, this growth has not made up for the reduced number of farmers and fishermen.
Media and Advertising
News, knowledge and entertainment comprise an important sector.New production and delivery methods have provided opportunities for growth, but they have also led to more competition between the various media.
Number of employees: 49,000
Share of gross product in trade and industry: 2 %
The business sector media and advertising comprises publishing, graphic industry, radio and TV production as well as advertisements and marketing.
The publishing and graphic industries have traditionally supplied printed matters such as books, newspapers, advertising and periodicals. Today, many of these products are supplied digitally. A large part of the sector produces newspapers, and Norwegians read more newspapers than any other nation in the world. Due to the downturn in the advertisement market and increased competition from other media, a significant amount of newspapers have developed into media houses with several different products. Over the last few years, the largest market agents, such as Schibsted and Orkla Media, have also expanded abroad. The publishing business is characterised by a few large publishing houses and many small ones that specialise in niche markets. The largest publishing houses are Aschehoug, the Gyldendal Group, Cappelen (Swedish) and the Egmont Group (Danish). Publishing houses have always owned the book clubs, but over the last few years several booksellers have also been taken over by the publishing houses. Aschehoug and Gyldendal have established the chains The Norli Group and Ark. Together, the four large publishing house groups have a share of more than 80 % of total Norwegian book sales. The Internet has gradually made it easier for customers to order books from abroad, and this poses a challenge to the Norwegian publishing houses.
Radio and TV have also been affected by digital technology. The number of broadcasters has multiplied, as broadcasts and other information can be transmitted in new ways, and many distribution networks, such as the telecommunications network, can also be used for broadcasting. Competition to attract viewers and listeners has become considerably fiercer.
NRK, TV2 and TVNorge are the largest TV companies. In addition, there are a number of smaller production companies that make films and TV programmes for the TV companies. NRK Radio, P4 and Kanal 24 are the largest radio companies. Norkring is the largest distributor of radio and TV signals, and owns most of the radio and TV transmitters.
The advertising business is often described as one of the most creative sectors in the Norwegian economy, and it is an important link between the advertisers and the media. The services vary from large campaigns based on market research and analyses, to simpler production of brochures and other advertising material. Many of the large agencies offer both design and PR services. Advertising sales amount to large sums each year. About half of the advertisements are placed in newspapers, and one fourth is broadcast on TV. The sale of advertisements on TV and the Internet has increased the most.
The advertisement business is characterised by a few agencies that offer very comprehensive services, such as DDB Oslo AS, Dinamo Reklamebyrå, Bates Red Cell AS and McCann AS. Most of the large agencies have foreign owners and the large campaigns are often internationalised. At the same time there is an increasing tendency for smaller agencies and sole traders to form networks and groups for single projects, dissolving them when the project has been completed. The small and
Furniture, Fabrics and Consumer Goods
Most consumer goods sold in Norway are imported. Furniture, furnishing products and sports equipment are partial exceptions. Even if the Norwegian consumer goods industry is small in terms of annual turnover and number of employees, the sectors also consist of some brands that are doing very well internationally.The furniture industry in particular has experienced an increase in exports.
Number of employees: 23,000
Share of gross product in trade and industry: 1 %
The Norwegian furniture and furnishing industry comprises companies that produce all types of furniture and furnishings. Production covers about 50 % of the demand in the Norwegian market, which demonstrates the variety of products on offer.
The furniture and furnishings industry has developed from typical handicraft businesses into a modern industry. In order to counter competition from other countries, the sector is focusing on product development, quality and good design.
Structural changes in the furniture industry are creating fewer yet larger companies. The largest furniture producers are located in the areas of Møre og Romsdal and Sogn og Fjordane, but furniture companies are found all over the country. Traditionally, the furniture industry has sold its products in Norway, but lately we have seen considerable exports of brands, for example office chairs from Håg. The company has received a number of awards. Today, Håg is a leading supplier of office chairs in the Nordic countries and it is one of the 10 largest suppliers in Europe.
Over the last 10 years, the Norwegian furniture industry has experienced a formidable growth in exports. Sweden and Germany are the largest markets, whereas imports from
Outdoor life is important to Norwegians and several companies have specialised in sports equipment that has been adapted to demanding customers. Several companies are developing products for mountain climbing and polar expeditions. Wellknown Norwegian producers include Madshus and Åsnes (skis), Swix (ski wax, ski poles), Sølvkroken (fishing equipment), Mustad (fishing hooks) and Hamax (sledges and cycling helmets).
Today, Norwegian producers of clothes and fabrics constitute a small sector made up of many small and a few larger companies. The fabric and readymade clothing industry comprises companies with an extensive range of raw materials, production processes and products. They supply everything from clothes and shoes to knitting yarn, upholstery and fishing equipment. Important Norwegian companies include Ricco Vero, Dale, Helly Hansen and Alfa Skofabrikk. Production is
Cosmetic and chemical commodities are also produced in Norway, for instance soap, detergents and pharmaceutical products. The largest producer is Lilleborg, which is part of the Orkla Group. Lilleborg sells well known washing powders such as Omo and Blenda and the detergent Jif. Most of the medical remedies that are used in Norway are imported from abroad, but there are also a handful of Norwegian producers. Amersham Health is the largest of these, producing pharmaceutical raw materials and products. These businesses have gradually increased their export in relation to the production. Amersham supplies products to more than 120 countries all over the world.
Finance and Property
The finance industry, which is an important part of the capital market, offers services to private individuals, business and industry and municipalities. Services include loans, financing, insurances and other types of risk relief,payment services,personal portfolio management, consultancy and real estate services.
Number of employees: 66,000
Share of gross product in trade and industry: 8 %
Through its role as an investment broker, the finance industry is more important to the development of business and industry than what the employment and production figures would indicate. Finance institutions provide important expertise for the customers, and people from business and industry often name their main bank as an important consultant.
The finance industry is subject to special rules and public inspection. The rules and regulations have undergone extensive changes over the last few years. Trade with financial services has increased considerably, as has the level of international ownership. Combined with the use of new technology, this has led to changes in the industry.
The number of companies has been strongly reduced, and large groups have been established which offer more or less the entire range of financial services and real estate services. Some of the largest companies are financial groups, such as DnB NOR, Storebrand, Nordea and the Sparebank1 Group. Even though the same groups offer both banking and insurance services, these services are very different. Whereas the banks’ main products are financing and personal portfolio management, the insurance companies offer risk relief services. As the population becomes wealthier and the number of elderly people increases, there is a rising demand for insurance and saving schemes that will secure a pleasant retirement.
Today, many of the financial institutions’ services are supplied electronically, giving them scale advantages. However, market trust and knowledge about customers, local environments and markets are created by proximity, and the institutions therefore have an extensive office network.
Investment companies mainly take charge of equity. As opposed to banks, investment companies normally take high risks by having a relatively large share of ownership in just a few companies. They are often part of the controlling bodies of these companies. In addition to contributing capital, investment companies also add expertise. The investment companies also comprise companies that specialise in which phase of the company’s life span they choose to invest the capital (seed financing companies and venture companies). They can also specialise in relation to which sectors or geographical areas they focus on.
Whereas the number of employees in the banking and insurance sector has decreased, more and more people are working in companies that offer financial help through stock broking, stock exchange organisation and leasing.
Real estate services are expanding and, along with property management and operation of housing cooperatives, this sector employs the main part of the employees in the property business. Companies that offer property management and services related to running and maintaining properties have also grown considerably over the last few years. Increasing demand for real estate services is basically the result of how important a
Transportation Services
We are travelling more than ever; the freight of goods has become more efficient and the transport sectors have grown rapidly over the last few years. As a result of increased competition and new and improved products, transportation productivity has also increased substantially.The development has had a significant impact on industry, retail trade and travel
Number of employees: 146,000
Share of gross product in trade and industry: 7 %
Traditionally, the sea has been our most important mode of transport. The sea is still essential for goods transportation over long distances. When it comes to passenger traffic and goods transportation over shorter distances, road transport is significant, and air travel has become a part of daily life for most people. Norwegian companies are found within shipping, land transport and air transport.
For more than 150 years, Norway has been a great power in international shipping and Norwegian shipping companies control one of the world’s largest merchant fleets, which represents nearly 10 % of the world’s total loading capacity. The shipping companies focus heavily on oil tankers, chemical tankers and freight of compressed liquid gas. Norwegian shipping companies control a large part of the world’s dry bulk ships, i.e. ships which transport grains, coal, ore or other loads in bulk. Norwegian shipping companies also have one of the largest offshore fleets in the world. Significant Norwegian companies include Color Line, Farstad Shipping, Leif Høegh & Co, Torvald Klaveness & Co, Knutsen OAS, Odfjell, Fred Olsen & Co, Anders Wilhelmsen and Wilh. Wilhelmsen.
A wide range of businesses have sprung up around the shipping companies in fields such as ship classification, ship building, marine equipment, ship broking and charter broking, ship financing and insurance. This variety provides the companies with mutual benefits. There are very few countries in which the maritime sector means so much to the wealth creation and export as it does in Norway.
More than most other sectors, international shipping is characterised by global competition. More than 90 % of Norwegian shipping takes place between foreign ports. Nevertheless, shipping is important both to the transport activities in Norway and to the transport of export products. Several companies in the
Freight traffic over large distances often requires close cooperation between various companies and transport methods, such as ships, trains and road transport. The companies offer a wide range of products, from transport of small packages to large containers. Large companies are Linjegods, DFDS/Tollpost, DHL and Posten/Nor Cargo.
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Air traffic, which has grown rapidly over the last few decades, will probably continue to grow. At the same time, the market is characterised by fierce competition, and the prices are so low that the companies could easily lose money. This has resulted in mergers, and a vast number of
Telecommunications, EDP and Postal Services
The use of information and communication services has grown strongly in the last decade, and today it is an important part of nearly all trade and industry in Norway. ICT suppliers now constitute a
Number of employees: 78,000
Share of gross product in trade and industry: 5 %
The framework for telecommunication and postal services has changed considerably over the last few years. The monopoly of state owned companies has been lifted, thus opening the market for other agents. The development in the telecommunications market gained speed at the end of the 1990s, whereas the liberalisation of the postal market has been more gradual.
Technological changes have provided new opportunities for transferring and processing electronic data, as well as new areas of application for information technology. Services that were previously carried out manually are now performed automatically. Employment figures for both the telecommunication and postal services have therefore fallen. At the same time, many new agents have started up and new products and services have been created.
The telecommunication market is characterised by a few large and many small companies. Telenor is the largest market agent in Norway and the company’s international activities are significant. The challengers have gradually become more competitive, with NetCom as the strongest competitor in the mobile telephone market. Both companies have their own mobile telephone networks. In addition, a number of service suppliers have sprung up, reselling services through Telenor and NetCom’s networks.
The diverse information and communication services cooperate closely. The development of IP telephony is an interesting example of how the markets for landlines and data communication are fusing together. Since 2000, the development of the broadband network has been based on the fact that new technology makes it possible to transfer large amounts of data via the telephone network. Today, there are more than 115 active registered broadband suppliers, such as Telenor, UPC, NextGenTel and Tele2. Over the next few years, opportunities will probably arise for fusing the mobile telephony and data communication networks.
Technological developments make the division between telecommunication, broadcasting and ICT services less
In business and industry, the use of telecommunication, data processing and postal services is important both to the development and design of new products and services. The companies’ internal systems and communication are becoming digitalised, and buying and selling products and services are increasingly carried out electronically. In the public sector, more and more services are digitalised. Many small and
Several new companies have received international attention within the software field. One of them is Opera Software, which develops browsers e.g. for advanced mobile telephones. Another company is FAST Search & Transfer, which develops search engines as an alternative to conventional databases. Fronter supplies platforms to schools and universities for electronic interaction between the school and the pupil/student.
Changes in the postal services are not as comprehensive as in the telecommunication market, but new technology has also generated new opportunities. A large part of the central mail sorting has already been automated. At the same time, Posten has allowed significant clients, for instance the finance industry, to sort their own letters, thus saving money on postage. Posten also has a large need for adjusting their services to competition from the Internet and
Holiday and Leisure
The adventure industry is considered to be one of the fastest growing industries in the world. Increasing affluence has led to an increase in the holiday and leisure market.People spend more time on their leisure activities and tourists are seeking more entertainment, often in an active way.
Number of employees: 83,000
Share of gross product in trade and industry: 4 %
We demand a total product or an adventure for our holidays and leisure, composed of many products and services from the hotel and restaurant sector, entertainment industry, culture, sports and other leisure activities. In addition, there are travel agencies
and companies who deal with marketing, product development and sell Norwegian travel products. Tourist attractions such as the Holmenkollen ski jump, the Trollstigen mountain road, the Fløybanen cableway, the Norgesparken Tusenfryd theme park and North Cape are important driving forces in the holiday and leisure market.
Some companies are characterised by significant fluctuations in demand during the year. This is particularly noticeable in regional Norway, which is highly dependant on the holiday and leisure industry. The adventure industry is facing significant and increasing competition from abroad. Norwegian price levels are high in relation to many other countries and this makes it difficult to attract both Norwegian and foreign tourists. Norwegians represent 70 % of overnight lodgings at Norwegian hotels. The exchange rate of the Norwegian krone and other measures that contribute to lowering prices are therefore imperative to these sectors.
A hallmark of the adventure industry is that the customers increasingly collect information from the Internet. This means that businesses, areas and countries with a presence on the Internet could be the future winners in the battle for customers. There are many small and
The adventure industry has a great impact on the rest of society – especially in the regions. Even if the main part of the wealth creation takes place in cities and towns, the industry is most important in the regions, as it provides jobs and income in local
communities that have limited employment opportunities. There are already many connections between the travel industry, leisure activities and the primary industries. With regards to the large changes that are expected to take place in agriculture, this interaction will probably become even more important in the future. This could mean that the interest for developing and making use of cultivated landscapes and local food will increase.
In order to make products accessible, the adventure industry is dependent on
Distribution Services
Distribution services constitutes a significant part of the Norwegian economy. An increase in turnover has led to many
Number of employees: 331,000
Share of gross product in trade and industry: 12 %
The sector consists of several intermediaries such as agents, wholesalers and retailers. They all find themselves in a
Measured by number of employees, supermarkets, grocery shops and shops that sell clothing, shoes, lighting, kitchen equipment, electrical appliances, furniture, hardware and building products are the largest categories within the distribution services. Whereas the grocery shops and supermarkets have experienced a large growth over the last few years, the trade from specialised food shopshas decreased. This is probably due to the extensive structural changes and the fierce price competition, in which the largest food chains, and not the specialised shops, have been the leading actors. However, the downtrend for the specialised food
shops seems to be coming to an end.
The clothing industry has grown rapidly over the past few years. Despite prices having fallen by almost 30 % since 1998, actual turnover has risen due to an increase in the number of garments sold.
A structural change has taken place in the distribution services over the past few years, with the grocery business as the driving force. An important development trend is the mergers or close cooperation between companies. This mainly happens through voluntary chains, centrally governed branches or franchising. This is particularly obvious in the grocery sector, where four large groups together control a considerable market share. Development towards large scale operations in all parts of the chain gives the retailers more power at the expense of producers and wholesalers. Closer integration between wholesalers and shops has been an important means of increasing efficiency in trade.
Another development trend is the fact that people are moving from the regions to towns and cities. Many shops in the regions are closing down and shopping centres are located in proximity to where people live.
The typical Norwegian trading company mainly operates in the home market, although this has changed rapidly over the last few years. As the trading companies become larger and stronger, there is an increase in the establishment of trading groups across national borders. Large companies, such as the German grocery giant Lidl, are now establishing themselves in Norway. Correspondingly, the Norwegian companies Rema/Narvesen and Varner have opened shops in other countries. The trade is about to change from being a sector focusing on the national market to an international industry that is subject to fierce competition.
Consultancy Services
Businesses that supply legal, financial and strategic consultation have experienced significant growth over the last 20 years.Many large companies choose to buy advice from others, instead of basing themselves on their own consultancy units. It has also become more complicated to operate business activities and this had led to a heightened need for specialised consultancy services.
Number of employees: 72,000
Share of gross product in trade and industry: 4 %
Among the consultancy services, we find lawyers, accountants, auditors, tax advisors, market and opinion polls, business consultants, architects and technical consultants. The business sector also includes research and development carried out byindependent research institutes.
The large increase in demand for legal and strategic advice must be seen in connection with the international social development. Globalisation, the degree of legalisation of our daily lives and a growing tendency to make use of lawyers in the negotiation of and entrance into agreements has led to a greater market for consultancy services and in particular for legal advice. At the same time, the ability and willingness to pay for such products and services have increased in both the public and private sector, leading to an increased demand for legal assistance and other consultation services.
Furthermore, restructuring has taken place over the last few years, particularly within the legal sector. Nearly half of the members of the Norwegian Bar Association still work in companies with less than ten employees, but during the last five years a number of large mergers have led to the formation of some large companies.
Architecture and design are other sectors that have experienced growth in the last few years. These are areas in which Norway has gradually made its presence felt internationally. Norwegian companies, such as the architecture company Snøhetta, have won international prices, which have paved the way for growth outside Norway’s borders. Another example is the
There are also Norwegian international businesses with activities within technical consultancy services. The companies Det Norske Veritas and Nemco’s activities include technical tests and analyses for customers within the offshore and onshore industry, oil, gas and process industry all over the world.
Due to being very
In the future, we will probably also see a stronger internationalisation of ownership, more international partnerships and increased exports. Consultancy services are often part of international value chains.
