Management russian presentation

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Management russian presentation

  1. 1. Management in Russia
  2. 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. 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
  4. 4. What motivates Russian workers?
  5. 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. 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. 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. 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. 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. 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. 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. 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. 13. 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
  14. 14. Marketing StrategyLow-cost digital campaigns can impactsales in a big way
  15. 15. 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
  16. 16. Tips for Doing Business in RussiaTip 1: Take time to build relationshipsTip 2: Contracts are only as valid as a combinationof your ability to enforce the law and the importanceplaced upon the relationshipTip 3: Middle managers cannot make decisionsTip 4: Go straight to the top if possibleTip 5: Managers manage- give precise and detailedinstructions
  17. 17. Continued…Tip 6: Meetings disseminate information or givedirect instructionTip 7: Smaller, more informal meetings often occurbehind closed doorsTip 8: Keep the team together if possibleTip 9: Russians like to think in silence beforeanswering a questionTip 10: Dress smartly and try to look importantTip 11: Do not underestimate the importance ofentertainingTip for women: Women play little part in business atthe senior levels
  18. 18. 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). Russias 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

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