A company's brand image and its strengths in the local market can be used to leverage its global strategy". When an organization like Volvo competes in the International market, it can use its power in the industry to its advantage because of its improved negotiating power among the suppliers, creditors, distributors and other stakeholder groups.
When a multinational company from UK enters the Russian market, the factors that have to be taken into account in the macro environment are discussed in this essay. PEST analysis which provides a comprehensive idea about the various environmental factors has to be used. Hence, this essay focuses on the different factors from the external environment that have to be evaluated in order to create a strategy for exploiting the Russian markets. Though the company is successful in the various countries, the factors that influence the business environment in specific to Russia have to be focused. Hence, this report is presented for the perusal of the Board of Directors.
1. Transition economy: Russia is changing dynamically in every aspect of operations. Because of the opening of the economy, there are a huge number of opportunities created. It can be noted that Russian economy is in a boom and the global recession has not had a very disturbing effect on the economic growth of the country.
Market implication - When new sectors are opened up and there is a huge increase in the demand for heavy vehicles and construction vehicles. The basic factor for the business development which is the demand for products is created.
Strategic implication - Entering into the markets in Russia can benefit the stakeholders of the company.
2. Local government role - A reform introduced by the president of Russia stipulates that the regional heads are to be appointed based on the key success factors such as economic growth of the region, social stability and political loyalty. Hence, there is a competition among various regions to attract investment. The regions are creating Investment Promotional Agencies. Many Russian regions maintain websites in other languages and participate in international exhibitions to welcome investors.
Market implication - these moves by the government shows that the Russian government is committed to boost foreign investment.
Strategic implication - This will help in a more favorable climate and the business community can expect more reforms in the coming future which will be helpful in establishing business in the country.
3. Political stability - Russia is a former super power, trying very hard to maintain its global dominance. The economy is in the transition and there are a number of pitfalls in the administration. Foreign companies often complain that there are numerous administrative procedures and bureaucratic hurdles to start business, but the country has a stable political climate and the commitment to reform process has been confirmed strongly by the government measures.
Strategic implication: though there is a politically stable climate, it is necessary to note that because of the war climate with Georgia, foreign investors were concerned and the stock markets were affected. Hence, the company has to keep in mind the political factors that may lead to economic downturns as stated here.
4. Government procedures: Often it is annoying for the international investors about the need for