Running Head: Country Risk Assessment
Our computer making company seeks to expand its operation by creating new business ventures in other countries. It has identified Russia as a potential business hub that may be viable for the business. This paper will give a brief introduction into the location and issues related to the country. It will also conduct a deep analysis of the cultural factors that influence business in the country. These cultural factors may include the business etiquette mechanisms employed in this country. The paper will also focus on the cultural mannerisms that are followed in the business world of this country. In addition, the paper will also make an in-depth analysis of the cultural findings that have been made. This will help in understanding the impact of these cultural issues on the economy of this country. In conclusion, the paper will analyze the viability of conducting business in Russia. By achieving its goal, the paper will have conducted a successful Country Risk Assessment.
Russia is a federal state located in Northern Asia and part of Eastern Europe. It is the largest country in the world occupying a ninth of the earth’s land. Russia borders many countries including, Norway, Latvia, Finland, Poland, Kazakhstan and many others. It also borders the Arctic and the PacificOceans and also the Baltic and BlackSeas (Spengler, 2005). It is a highly populated country having around 142 million people. Majority of these are Russians comprising eighty percent of the whole population. Others are Tatar, Ukrainian and people from other countries all over the world. It comprises of eighty-three federations, which combine to make the Russian Federation. The main economic booster for Russia is the large natural gas reserves. Russia has developed into an energy superpower worldwide. It gained independence in 1991 from the Union of Soviet Socialists Republics. The current head of state is President Dmitry Medvedev who took over from the current Prime Minister Vladimir Putin in 2008.
Component 1: Cultural Factor Areas
The Russian economy is one of the fastest growing economies in the world. The economic growth rate has been 7% and above for the recent years. This is considerable growth considering that world economies have been hit by crisis resulting in slow growth rates. In earlier years, the Russian economy was highly centralized meaning that the government largely controlled the economy (Rosefielde, 2007). This has changed through economic reforms that have led to the privatization of most industries though the government still has considerable control over the economy. The Russian economy has been driven by the natural gas and oil industries for many years. Exports in natural gas, oil and steel are the biggest earners in the country. In addition, Russia has revived the agricultural sector making it a large exporter of grains. The Russian government has been trying to reduce its dependency on exports by improving other industries like technology. This is the reason why our company is seeking to provide computers and other information technology accessories to this country. After the 2008-2009 economic crisis, the Russian economy is slowly rising giving an opportunity to investors to conduct business in the country.
In order to conduct successful business in Russia, it is important to understand mannerisms and business etiquette issues that are important to Russians. This study will help any person willing to do business in Russia have an easier experience. The first consideration that a person should make as they go to a business meeting in Russia is dressing. In this country, it is important to dress formally in a decent manner to business meetings including places of work. Russians are not afraid of spending a lot of money in clothes hence business meetings are characterized by expensive, well-made suits. Men usually dress in formal suits usually dark colored ones and tie. Women should also wear business suits usually skirts that cover the knee (Gettis, et al, 2007). For all people, shoes should be official and well polished. This appearance will create a good impression on the people you are going to meet. Jackets usually stay on during the meetings and it is advisable not to have hands in your pockets at formal meetings.
In Russia, a personal relationship is not necessary for business to occur between people. This makes it easy for strangers to make business acquaintances as long as the business is legal and viable. Making an appointment is necessary before going to someone’s office. It is important to make appointments early to prepare the other party. It is also necessary to confirm the appointment a day before the meeting to make sure that it is still in place. If you cancel the meeting, it is also necessary to inform the other party mostly through making a call. Punctuality is also important because lateness creates a negative perspective on the late party. On the other hand, the Russian party may be late to test your patience and see what kind of person you are. A person should react calmly and wait for their Russian counterpart to arrive. The first impression is usually very important in Russia and may determine your company’s fate in the business world. It is of absolute necessity to act in a formal but friendly manner. If tempers flare in the course of the meeting, the foreigner is expected to remain calm.
Business meetings tend to be long and slow. This is because Russians expect a full coverage of the issues being discussed. The official language is Russian though people also use other languages. It is necessary to be conversant in Russian or have a translator ready. This will make your business meeting easier. When the other party arrives, a firm handshake is acceptable between men (Sabath, 2004). For women, the handshake should be lighter. In Russia, there maybe many people in a meeting but it is always the most senior who makes the decisions. They may not talk much but they are observant and ardent listeners to what is going on. Respect to all the people in the meeting is of absolute important. The foreigner should not be seen as to be in hurry or rushing the meeting. This is mainly because patience is considered a great virtue in Russia.
In addition, most Russians will not compromise to the decisions that they have made. They like to walk out of meetings as winners so the other party should be careful on the deals that are being made. Patience should always be considered as a deal may have many results. Russians may give an offer and say it is the last offer but usually further negotiations change the outcome. There is always a chance for further negotiations and you should not be weary of time as they use delaying tactics. There are situations where Russians walk out of meetings or lose their temper to influence the outcome of the meeting. This should be taken in a calm, non-violent manner. There is always an exchange of business cards at the beginning of the meeting and a person should have them ready just incase. In choosing a gift for a business partner, office materials are the most adequate. For social meetings, some wines are acceptable. There is usually a document signed at the end of the meeting to highlight the issues that were discussed.
Component 2: Analysis
The information given above shows the basic business etiquette issues that are followed in Russia. It has been noted that the Russians are people who use different tactics to achieve their desired results from business. In contrast to other countries, time is not always regarded as very important in this country. In fact, they use it as a weapon of delaying the final decision. This means that if a person wants to do business with them, they have to learn these tactics too. Russians value patience thus it has a huge impact on business dealings that are conducted in their presence. In general analysis, Russians are specific about certain things such as dressing and the conversations that they have when meeting a person for the first time. Russians usually expect a meeting to always end in their favor thus, it may be difficult to negotiate terms that are favorable to the other party (Chaney & Martin, 2008).
In setting-up a new venture in Russia, our company intends to maximize profits by selling computers and other IT accessories to companies and individuals in this country. Before we establish the business, our management needs to meet with business advisors from Russia to advise us on the best location for this venture. Moscow has been seen as the most probable base for the business. The people who will meet with the Russians have to understand the business etiquette issues discussed above. The outcome of the meetings with the Russians will determine if it is possible to do business here or not. In addition, our company needs to acquire the necessary documentation required for a person to invest here (Domsch, 2007).
There are requirements by the law that have to be met before doing business here. There are also issues dealing with acquiring office space that require the help of business people from Russia. In addition, we have to acquire new partners who can provide for the necessary equipment in order to conduct business. In Russia, it is necessary to have people who can connect you to powerful business executives who will help in setting-up a successful venture. All these issues require partnership with Russian business people who will help in the setting-up of the business. The cultural factors regarding business etiquette have a huge impact on the decision to do business here. The computer industry is a lucrative business but requires the company to know companies where to supply the products. In order to set-up business here and be profitable, our company is obligated to make business connections with high-ranking business people. The mechanisms used by the Russians have to be learnt and put into play. The impact of the cultural factors on business is foremost. This is because a company cannot conduct business here unless it understands the cultural issues that affect the society. In our case, it is important to understand the technological needs of the people and understand how we can provide the products in an acceptable way.
Component 3: Viability of our Business in Russia
The analysis given above shows that there are many requirements that should be met here. There are also advantages that are attractive to the company. First, Russia is a country that is developing its technology industry and therefore needs computers and their accessories in large quantities. This is a lucrative opportunity for our company. The company has always wanted to invest in other countries in order to maximize profits while providing quality products to its customers. Russia has different cities that are a business attraction to many companies. In all economies, quality goods supplied at a cheaper price always attract more customers. Our company has the ability to provide computers to needy customers at an affordable price. One of the main issues that have led to the conclusion that it is a viable venture is that most Russians speak English. Many companies want to invest in a foreign country but language becomes a barrier. Our company has the opportunity to conduct business in a country that uses an international language.
However, it is necessary to conduct a cost benefit analysis of setting-up a business in Russia. The cost of purchasing the required things should not exceed the profits that will be made. In the view of the above analysis of cultural factors affecting business, it is necessary to make Russian contacts that can help in solving some of the arising issues. In addition, the business will require employees from that country hence the importance of knowing business ethics that apply in Russia. Human resources will help our company in making the best decisions in terms of location and choice of customers. As there are no requirements of a personal relationship before making a business deal, it will be easy to find companies and people to engage in business with.
Considering the current rise in globalization, many countries are strengthening their Information Technology infrastructure. Russia as a growing economy is also doing the same thus creating business opportunities for a company like ours (Domsch, 2007). We are obligated to take-up the chance that we have to improve our business profit through expansion in countries like Russia. Our company is a worldwide brand and will be well received by the Russian people. From the feedback from our customers, there have been many requests for us to venture into this country. The cultural issues discussed above show that Russians are always ready for business as long as the deal is useful to them. Our company offers to relate with Russian companies that embrace IT as an important part of the world today. It is necessary to consider other business factors before venturing into the country. By venturing into Russia, our company will be accessing an integral part of our customers. This venture is a viable option that will ensure that our company incurs greater profit by enlarging our consumer base. In conclusion, I think that our company should conduct business in Russia.
Chaney, L. H., & Martin, J. S. (2008). Global Business Etiquette: A Guide to International Communication and Customs. Westport, CT: Praeger.
Domsch, M. (2007). Human Resource Management in Russia. Aldershot, UA.: Ashgate.
Gettis, S., Wieda, N., & Kaufman, A. (2007). Russian Phrases for Dummies: Your Handly Guide to Everyday Words and Expressions. Hoboken, N.J: Wiley Pub.
Rosefielde, S. (2007). The Russian Economy: From Lenin to Putin. Malden, Mass: Blackwell.
Sabath, A. M. (2004). International Business Etiquette: What You Need to Know to Conduct Business Abroad with Charm and Savvy. Lincoln, NE: Authors Choice Press.
Spengler, K. (2005). Russia: Fact finders. Mankato, Minn: Capstone Press.
Map of Russia