Comparative Study on Business Strategy adopted by Russia and US

Submitted By:Navdeep Singh Yadav A-06 Q1107

Introduction
About Russia
With over 140 million consumers, a growing middle class, and almost unlimited infrastructure needs, Russia remains one of the most promising markets for U.S. exporters. Russia is the worlds 11th largest economy by nominal GDP, 6th largest by PPP and has the highest per capita GDP ($13,236) of the BRIC countries. It is an upper middle income country, with a highly educated workforce and sophisticated, discerning consumers.

 Russias economy is still recovering from the economic crisis that started in 2008, with GDP growth at 4.3% for 2011. Economists forecast real GDP growth of 3.3% 3.5% in 2012. Russia was the U.S.s 31st largest export market and the 14th largest exporter to the U.S. in 2011. Russia accounted for 1.16% of total U.S. trade, making it our 20th largest trading partner overall. U.S. exports to Russia were $8.3 billion, the highest since 2008, and a 39% increase from 2010.

 Russia was formally invited to join the WTO on December 16, 2011, and accession should be finalized by August 2012. This will liberalize trade with the rest of the world and create opportunities for U.S. exports and investments. For industrial and consumer goods, Russias average bound tariff rate will decline from almost 10% to under 8%. U.S. manufacturers and exporters will have more certain and predictable market access as a result of Russias commitment not to raise tariffs on any products above the negotiated rates.

 More liberal treatment for service exports and service providers. Stronger Commitments for Protection and enforcement of IPR. Rules-based treatment of Agricultural exports. Market access under country-specific tariff-rate quotas. Improved transparency in trade-related rule-making. More effective WTO dispute resolution mechanisms

 This is more than double the growth rate for overall U.S. exports worldwide which were up only 16%. Russian exports to the U.S. were $35 billion, up 21% from 2010. Russian sources list the countrys leading trade partners as: Netherlands, China, Germany, Italy, Ukraine and Turkey. U.S. accumulated investment in Russia is approximately $10 billion. According to Russian data, the U.S. is Russias 10th largest foreign investor.

Market Challenge
Russia is a geographically vast market, spanning nine time zones and encompassing over 17 million square miles. Seriously underdeveloped infrastructure poses logistical challenges, especially in accessing markets outside of major cities. An incomplete transition from central planning has led to an insufficiently integrated economy and disparities in wealth distribution, geographically and demographically.

 Conducting business may be impeded by: burdensome regulatory regimes; inadequate IPR protection and enforcement; extensive corruption and inadequate rule of law; inconsistent application of laws and regulations; lack of transparency; and the continued presence of large state-owned or controlled enterprises in strategic sectors of the economy.

 Recent reforms make it easier for companies to hire expatriate employees, but the Russian immigration and visa system requires time and patience for business travelers to obtain necessary permissions to do business in Russia. English is not widely spoken, although knowledge of the language is expanding, especially in the major cities.

Market Opportunities
Agricultural Equipment Apparel Automotive Parts and accessories Aviation Chemicals / Plastics Construction Consumer Electronics

Service

Equipment

 Electric Power Generation Equipment Energy Efficiency / Green build Medical Equipment Refinery Equipment Safety and Security Equipment Travel and Tourism to the U.S.

&

Transmission

Market Entry Strategy

Developing business in Russia is resource intensive, requiring serious commitments of time, personnel and capital. Conduct market research, such as with the U.S. Commercial Services Gold Key or International Partner Search services, to identify opportunities and potential Russian business partners. Conduct due diligence, such as with the U.S. Commercial Services International Company Profile service, to ascertain the reliability of business partners.

 Consult with U.S. companies already in the market, as well as with the U.S. Commercial Service and business organizations, such as the American Chamber of Commerce and U.S. - Russia Business Council. Communicate regularly with Russian business partners to ensure common understanding of expectations. Frequent travel to Russia is strongly recommended to establish and maintain relationships with partners and to understand changing market conditions. Maintain a long-term timeframe to implement plans and achieve positive results.

US Culture Overview
Official name United States of America Population 307,212,123 * Languages English, Spanish (spoken by a sizable minority) Currency US Dollar (USD) Capital city Washington, DC GDP purchasing power parity $14.29 trillion* GDP Per Capita - purchasing power parity $47,000*

 Individualism- The concept of individualism in the US plays a significant role in the lives of many Americans. American culture emphasizes individual initiative and personal achievement. Low context culture Generally speaking, those cultures described as low context tend to communicate meaning and information explicitly through words. Egalitarianism An important element of American culture is the concept of equality. Despite the many differences within American society, there is a collective understanding of the notion of equality that underlines many social relationships in the US.

Working practices in the United States

In the US, punctuality is an essential part of business etiquette and as such, scheduled appointments or meetings must be attended on time. Americans perceive lateness as a sign of disrespect. Therefore, in situations where you know you will be late, a call should be made to inform your American colleagues of your delay.

Structure and hierarchy in American companies

In a country famous for its individualism and diversity, the organization and structure of companies within the US may differ according to the industry, region or company history. However, you will generally find that office hierarchy within an Doing Business in the USA Communicaid Group Ltd. 2009 American company is extremely important. Therefore, it is advised to learn the rank and titles of all members of the organization. Negotiations and final decisions in the US are frequently made by one person who has chief authority. Team negotiations are rarely carried out in American companies. In accordance with American business culture, the hierarchical chain of command often supersedes personal relationships.

Working

relationships

in

the

US

Personal competence, professionalism, and accountability for individual performance are highly valued in American business culture. As a result, managers are only approached for help in essential situations. These concepts also contribute to the highly competitive work ethic often experienced in the US. Developing personal relationships are not as significant in US business culture as they are in some Asian countries. In the United States, the overall goal of business is to secure the best deal, therefore forming company relationships are of greater value.

Business practices in the United States

It is customary to begin and end business meetings with a brief but firm handshake. Maintaining direct eye contact during this initial greeting and whenever in conversation is also essential, as it demonstrates to your American colleagues your interest and sincerity. The exchanging of business cards is a casual affair in the US and as such demands no clear ritual or set of rules. Americans regard business cards as a resource for future information. During negotiations, it is important to remember that the aim of most business discussions in the US is to arrive at a signed contract. Americans consider negotiations as problem-solving situations based on mutual benefit and personal strengths.

 Therefore, emphasis is placed on ones financial position and power. When doing business in the US, you will be expected to adhere to rules and guidelines that your US business counterparts must also follow. Company policy and business procedures such as legally binding contracts, are aspects of American business culture that require strict compliancy.

Big Players
The global players are characterized first by their signicante competitive position achieved among the leaders of respective global economic factors. These companies have both the potential to strongly influence the situation within their global industries and vision to plan and realize the strategies of global expansion.

Lukoil
Lukoil was one of the first Russian company embark on globalization process and today most advanced among Russian MNCs. Foreign Exploration Production rigors Control on full value chain(refining and marketing of oil products to end consumers)

 Two Principal Directions: Active development of oil and gas exploration and production in its traditional post-Soviet zone, and in oil regions of Middle East, Africa and Latin America. Increasing processing and marketing assets in the strategic regions of oil and petroleum product sales, primarily in Europe and the US.

Gazprom
It is the second largest Russian MNC by foreign assets. Entry in new markets Ensuring security of supplies to consumers Diversification of business activities Active development of hydrocarbon resource in foreign countries Acquisition

Severstal
Largest steel producer in Russia Foreign Direct Investment Foreign production M&A

United Company RUSAL

Largest global producer in Aluminum industry Created as a merger of Rusal and Sual Foreign Expansion Production Technology Acquisition

Norilsk Nickel
Fifth largest MNC Metal Mining Search, Exploration and Development of world class mineral resource deposit

Wal-Mart
Wal-Mart stresses mainly on their Everyday Low prices (EDLP) pricing philosophy In which they price items at a low price every day that builds & maintains customers trust in their pricing. Since they employ both the clicks and bricks and bricks and mortar methods to market their products, consumers get to choose their products either the traditional way or online anytime of the day.

 Though Wal-Mart has not advertised in Advertising, as many of its competitors do, the trust people have built on the Wal-Mart brand has taken them far from their competitors. B2B Single firm network Business Model B2C E-Tailer Business Model

Amazone.com
Multinational E-commerce Company World largest online supplier Technology Multi level sale strategy Lobbying M&A

Conclusion
An overview of the scale and development trends of Russia and US companies today shows that they are becoming an increasingly significant force in the rapidly changing field of global competition. After 2001 Russian MNCs foreign production not slowing down. In both countries companies are following a trajectory of development which is quite different from the typical for multinational from developing countries.