2. Russian Proverbs about
Work
“Work tastes bitter, but bread tastes sweet.”
“To the person who gets up early, God shall give
everything.”
“To live without work means to blacken the sky with
smoke.”
Meaning: an idle life is a life wasted
3. Motivation
Before: Companies not meeting payroll, lack of training, poor working conditions
In a research by Davidson and Linz found that:
Organizational Commitment stronger among managers than workers
Managers erroneously believe workers value their praises
Low expectations on receiving a reward they desire
Financial Compensation and Friendliness of Workers top ranked motivators
by workers
Younger people placed more importance on opportunity to develop skills and
abilities, getting a promotion, and accomplishing something worthwhile. They
placed less importance on pay, security on the job, and respect from co-
workers.
However, pay at the top for both
5. Planning
Spontaneous and Intuitive approach: creative and
rapid results
Plans are made but often times not followed
Planning done by the upper positions then vertically
communicated downward
Entrepreneurs lack succession plans, not looking to
expand their businesses discourages investors
Change aversion and view of the future as uncertain
are obstacles for management planning
6. Four Common Organization Designs in
Bureaucratic Organization
Russia
Strict administrative hierarchy separating the identity and responsibilities of
employees through where they sit in the hierarchy
Upward mobility is difficult
Information is not shared with employees
Power Organization
Manager or owner is the undoubted leader with final say
Top managers are appointed to serve as link to employees
Employees can take part in decision making though
Person-oriented Organization
Employees maintain high level of personal responsibility and independence
(flexible schedules and access to information)
Work is co-coordinated by supervisors (more egalitarian)
Because of its independent and egalitarian culture, employees must
compromise
Problem-oriented Organization
Employees are given specific task-oriented responsibilities and are strictly
controlled through reporting
Decisions are made collectively though, and information is shared
7.
Controls
During the Soviet Union, companies lacked transparency because of
double ethical standards, murky procedures, and unclear goals
Many companies still lack transparency because of a lack of
information distribution between employees
Accounting practices can lead to transparency issues as well
Profit and loss accounts are not foreseen and are booked without details
There have been improvements to Russian Business controls though
Companies must file taxes every quarter, receive multiple signatures for
documents, and careful accounting must be practiced because tax
authorities are beginning to crackdown
Between 2001 and 2004, entry regulation (registration and licensing) and
regulations with existing businesses (inspections) were simplified, which
has encouraged businesses to be legally regulated
Businesses have began to implement the control method
They set specific company goals
They are more transparent
Their employees are empowered, and therefore, feel more obliged to conduct
proper business methods
8. Quality
Russian Companies have began to implement western quality control
methods such as TQM
TQM has been difficult to implement though
The concepts of customer focus, continuous improvement, process
approach, quality management, employee involvement, and social
responsibility are alien
Key issues that have to be addressed are a change in philosophy, a
lack of knowledge, a resistance to change, and a lack of senior
management support
Russian companies have also implemented BS EN ISO
9001:2000, benchmarking, and self-assessment strategies
1,710 Russian companies achieved BS EN ISO 9001:2000
certification
However, many did so for marketing purposes, not actual quality
improvement purposes
Yet, the future does look promising, as a true quality philosophy is
beginning to embed itself in Russian culture and is supported by the
state
9. Competition
Since the Soviet Union, many
reforms have been made to improve
competition
Price Controls have been lifted on more
than 90% of wholesale and retail goods
State-owned enterprises have been
privatized leading to the GDP from the
private sector increasing drastically
Legislation has been passed to improve
competition
Innovative companies can receive
funding from the government
However, due to the difficult
transition that Russia has
faced, competition is still greatly
inhibited
10. Practices Inhibiting Competition according to the
IMF:
Horizontal dominance in regional markets (high seller and buyer concentration)
Four-firm concentration is equal to the United States at 60 %, but the average
market share for them is greater than 95%
Exclusive buyer-seller relationships
Contracts are difficult to enforce, so trust through continued service is necessary
Mergers and acquisitions occur not expansion of industry
Interregional barriers to trade and investment
Duties on the sale of alcohol, regional pricing differs, registration of workers from
different oblasts is required, and taxes/credit preferences are given to local
businesses
High barriers to entry
Lack of access to funding through long term, inexpensive loans
Difficulty obtaining real estate due to inability to privatize land and pre-existing
monopolies on commercial real estate
Corrupt business licensing, registration, and inspections through overcharging
Organized crime must receive a cut of the profits (often around 5 %)
11. Negative Effects of Lack of
Competition and How to Increase It
Negative Effects of Competition
Consumers face high prices, reduced output, diminished product
and service quality
Diminished incentives for companies to incur transactions between
regions
Decreases the amount of foreign investment
Lack of the great benefit of capitalism, which is innovation
Most importantly, small to mid-sized firms have a lot of difficulty
entering and succeeding in industries
Unless competition improves, the desire to conduct business in
Russia will remain minimal
On a positive note, Russia is transitioning and identifying the
necessary systematic reforms is fairly simple
12. Marketing Strategy
Desire to see a
Russian perception of brands performance, something
Local brand loyalty - intriguing, spirited
cheaper Ideally featuring elements of
Healthy and habitual acting while combining image and
International brands - product qualities
higher quality and more Real differences between neighboring
expensive regions in Russia may in fact be
Rely on local suppliers greater than differences between
who have well-developed neighboring European countries
service networks, available Not just one nation-wide plan, but
spare parts, and shorter several business plans or a
delivery times multifaceted plan to reflect the
Thus, they are able to unique aspects and demands of
secure lower prices different regions
Best marketing strategies are those
that balance both media and trade
promotions tactics
13.
14. Marketing
Russia is not a “country”; no unified marketing concept applies
ELEVEN TIME ZONES, dozens of nationalities/ethnicities and languages, a
huge quilt of mores, religions, buying habits, per-capita incomes, distribution
infrastructures
Marketing based in statistics and quantitative data
Russian markets are so dynamic that selling points that work today may
become out of place tomorrow
No reliable national statistics
Official data may be wildly inaccurate
Draconian taxes and organized crime have led to widespread under-
reporting
Usually a qualitative process based on experience and intuition
16. Corporate Culture
Dangerous to ever generalize about Russia
Good quality relationships should not be underestimated
The state has always been seen as an organ of oppression
and repression
Laws and statutes are therefore seen as the 'enemy'
The laws are being rewritten constantly –
unenforceable
Most agreements have to be made on a trust basis
Networking and extended interpersonal allegiances
are essential
One strong central figure -with little or no consultation with anyone
Too much consultation from a senior manager could be seen
as a sign of weakness and a lack of decisiveness
Companies tend to have a short-term view of business activities
Open debate in meetings are not usual or welcome
Russians tend to dress as well as their salaries will allow
17. Tips for Doing Business
in Russia
Tip 1: Take time to build relationships
Tip 2: Contracts are only as valid as a combination
of your ability to enforce the law and the importance
placed upon the relationship
Tip 3: Middle managers cannot make decisions
Tip 4: Go straight to the top if possible
Tip 5: Managers manage- give precise and detailed
instructions
18. Continued…
Tip 6: Meetings disseminate information or give
direct instruction
Tip 7: Smaller, more informal meetings often occur
behind closed doors
Tip 8: Keep the team together if possible
Tip 9: Russians like to think in silence before
answering a question
Tip 10: Dress smartly and try to look important
Tip 11: Do not underestimate the importance of
entertaining
Tip for women: Women play little part in business at
the senior levels
19. References
Goreskaya, N. (2009). Changes to russian
competition legislation. Baker &
McKenzie, Retrieved from
http://www.bakermckenzie.com/RROperatin
gRussianCompetitionLaw09/
Broadman, H. (2001, June). Competition
and business entry in russia. Finance &
development, 38(2), Retrieved from
http://www.imf.org/external/pubs/ft/fandd/20
01/06/broadman.htm
Frost, R. (2011). Russia's premier vladimir
putin underlines importance of iso
international standards. ISO, Retrieved from
http://www.iso.org/iso/home/news_index/ne
ws_archive/news.htm?refid=Ref1439