Strategies for Companies Doing Business in Russia


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Table of contents:
- Management Strategies
- Expats in Russia
- Strategies for Engaging Clients
- Special Offer

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Strategies for Companies Doing Business in Russia

  1. 1. BRIC Country Series: Russia Strategies for Companies Doing Business in Russia 1 © 2013 ITAP International, Inc. All Rights Reserved. 1
  2. 2. Table of Contents Management Strategies Expats in Russia Strategies for Engaging Clients Special Offer 2 © 2013 ITAP International, Inc. All Rights Reserved. 2
  3. 3. Management Strategies 1. Currently, the most important business issues for managers ( ti (natives and expats) i R d t ) in Russia are: i • • • Finding highly qualified staff that has good knowledge of foreign languages and was educated in the West. Obtaining financing. Coping with corruption: – – – – • • ensuring that intellectual p p y is not stolen. g property taking an appropriate level of risk. taking onto account an unreliable legal system. controlling y g your business despite the immense size of the p country and the system. Finding the right partners (trustworthy and professional). Understanding and adapting to the Russian mentality (for expats). 3 © 2013 ITAP International, Inc. All Rights Reserved. 3
  4. 4. Management Strategies 2. Effective l d hi i R 2 Eff ti leadership in Russia includes the following i i l d th f ll i behaviors: • • • • Speak the Russian language, have respect for Russian p g g , p history and culture. Be strict (adopt an authoritarian management style) but “generous,” do not show weakness. g , Bring valuable know-how from the West to Russia. Work long business hours. 4 © 2013 ITAP International, Inc. All Rights Reserved. 4
  5. 5. For Your Information Information… Business i not conducted d i th f ll i ti B i is t d t d during the following times and or occasions: • • • • • • • New Year's Day, Orthodox Christmas, “Old” New Year: 31 y, , Dec. - 10 Jan. Defender of the Motherland Day - 23 February Woman s Woman’s Day – 8 March Labor Day – 1 May Victory Day – 9 May Russia D – 12 J R i Day June Unity Day – 4 November 5 © 2013 ITAP International, Inc. All Rights Reserved. 5
  6. 6. Motivating Employees • R Russians value th chance t d i l the h to demonstrate their t t th i talents. • To build team spirit, companies provide opportunities spirit for employees to put on a talent show with cultural programs that include humor and music. Talent shows contribute to the group’s feeling of cohesion cohesion. • Recognition for individual performance is not p particularly valued, because it can undermine group y , g p solidarity. 6 © 2013 ITAP International, Inc. All Rights Reserved. 6
  7. 7. Expats in Russia 1. Wh t 1 What are the most important issues for expat th ti t ti f t managers in Russia to get right? • • • • • • Speak the Russian language, understand the Russian mentality, and show respect for Russian history and culture. Build warm personal relationships with business partners. Be aware of each region’s importance (parts of Russia besides Moscow and St. Petersburg). Understand the structure of the state machine; know the rules of the game (re: bureaucracy, corruption). Stay l St clear of criminal organizations or criminal market areas. f i i l i ti i i l k t Establish strong ties to influential persons in order to be protected from corporate raiders. 7 © 2013 ITAP International, Inc. All Rights Reserved. 7
  8. 8. Expats in Russia 2. How are expat managers t i ll perceived? 2 H t typically i d? • • • Russians tend to be very hospitable and communicative. They very much respect expats and are likely to show new expats around town. At work, expats are perceived as knowledgeable and experienced newcomers bringing fresh ideas from the West. Some Russians, however, have worked with arrogant expats. Arrogant expat managers are not appreciated by Russian employees. As high earners (they are perceived to receive good compensation packages); sometimes this is viewed as unfair. 8 © 2013 ITAP International, Inc. All Rights Reserved. 8
  9. 9. Expats in Russia 3. 3 If an expat doesn’t show knowledge of and interest in the td ’t h k l d f di t t i th Russian culture, mentality and traditions, he or she could be perceived by Russian nationals as arrogant and insensitive. 4. 4 If an expat doesn’t look serious, d td ’t l k i does not appear t be t to b concentrating, or is not prepared at first meetings/encounters, he or she can be perceived by Russian nationals as unprofessional. unprofessional 5. Smiling is generally reserved for something the Russians find amusing; it is not appropriate for everyday greetings of coworkers and other employees. (Smiling is also reserved only employees for greeting close friends.) 9 © 2013 ITAP International, Inc. All Rights Reserved. 9
  10. 10. Expats in Russia 6. 6 If an expat d t doesn’t wear something expensive or something that ’t thi i thi th t demonstrates success (such as an expensive watch) or does not let others know of significant achievements (such as a degree from a prestigious school) he or she can be perceived school), by Russian nationals as not successful, or not a decision maker. 7. If an expat doesn’t show short-term flexibility regarding meetings or appointments, he or she can be perceived by Russian appointments nationals as difficult to do business with / as not dynamic / as disinterested. 8. 8 If an expat is not friendly and does not show a certain personal interest in his/her colleagues, he or she can be perceived by Russian nationals as untrustworthy and as a difficult business partner. partner 10 © 2013 ITAP International, Inc. All Rights Reserved. 10
  11. 11. Expats in Russia 9. Some actions and b h i 9 S ti d behaviors are appropriate f i t for Russian nationals, yet should not be adopted by expats who are not completely fluent in Russian p p y practices and culture. Here are a few examples: – Criticizing the government in public and the media: • • • • making jokes about the government government, criticizing Russian administration or infrastructure talking about the Stalinist era critically discussing Russia’s role in wars – Being involved in any corruption or bribery even if your business demands it (there are always ways to avoid corruption). 11 © 2013 ITAP International, Inc. All Rights Reserved. 11
  12. 12. Client and Business Strategies How can vendors b effective at b ildi rapport with H d be ff ti t building t ith potential clients in Russia? • • • • • Identify and select the right partner. y g p Assure your Russian partners that you are present in other locations beside Moscow or St. Petersburg. Don t Don't assume that business practices in the home country can be automatically transferred and used in Russia. Recognize that trying to do business in Russia over the telephone is generally ineffective for two reasons: Russians prefer face-toface to face communications and the telecommunications system is unreliable. Be patient and understand that negotiations with Russian partners is a long process that will take time. 12 © 2013 ITAP International, Inc. All Rights Reserved. 12
  13. 13. Client and Business Strategies What h ld Wh t should vendors d when visiting a prospect or a d do h i iti t client? • • • • Shake hands with male Russians; greet female Russians without shaking hands. Engage in small talk during meetings and invite a potential client to a restaurant, concert or other event in the evening. Use counterparts’ first name and second name (for example Igor Vladimirovich or Alena Nikolajevna) or Mr. Ivanov, Mrs. Ivanova. The Anglo-American naming conventions are seldom used in Russia or are used just between colleagues who have worked together for a long time and know each other very well. Have a proper business card in Russian and English to share with one’s Russian counterparts. Follow up calls and meetings help develop mutual trust and good interpersonal relations. 13 © 2013 ITAP International, Inc. All Rights Reserved. 13
  14. 14. Client and Business Strategies What h ld Wh t should vendors avoid doing? d id d i ? • • • • • • • • • Do not start a meeting going right into a discussion of business. Engage in some small talk. Do not expect to get a contract signed in a short period of time time. Do not bring a bottle of vodka as a gift. Do not say that all you know about Russia is that it is always freezing cold and that there are bears on the streets. Do not be insolent / arrogant; do not consider yourself to be superior to the Russians. Do not reject an invitation to dinner or lunch. Vendors should not overpromise. Focus on both technical details and on developing a personal relationship relationship. Do not apply success formulas of the home markets to Russia without any adaptation. Do not expect quick wins. 14 © 2013 ITAP International, Inc. All Rights Reserved. 14
  15. 15. Client and Business Strategies The most important things to keep in mind when negotiating with prospects or clients from Russia… • • • • Find an international agency with experience in the Russian market for domestic and cross border tax and legal advice advice. Find an experienced local partner to tap the Russian market. Keep in mind that the level of corruption is high in Russia; be careful when choosing partners and clients. Russians see business negotiations as win-lose. They are not likely to strive for win-win scenarios. They view compromise as a sign of weakness and will continue to negotiate even after concessions are offered. They take their time and sometimes use stalling tactics to wear down their potential business partners. 15 © 2013 ITAP International, Inc. All Rights Reserved. 15
  16. 16. Client and Business Strategies What is Wh t i considered a conflict and h id d fli t d how are conflicts fli t handled? • • • • Conflict might arise for example if one part wants to cheat another or there is a battle for superiority or a larger piece of the business (profits). Conflicts are normally resolved nonverbally, such as in the course of playing a game. However, serious conflict often brings business partnerships to an end end. Formal apologies are not common; sometimes, speaking openly about the problem and offering options for possible solutions helps to resolve the conflict and avoids a “war” or battle between the parties. war In some cases it is advisable to find a legal partner and fight for rights. At other times, especially when trust is lost, it is better to end the business partnership. 16 © 2013 ITAP International, Inc. All Rights Reserved. 16
  17. 17. Client and Business Strategies The Th most effective things one can do to maintain a t ff ti thi d t i t i relationship (for the purpose of getting follow-on business) are: ) • • • Call or visit on a regular basis. Send New Year’s greeting cards (and possibly a gift like a good choice of wine whiskey or cognac high quality and expensive wine, cognac, chocolate, or some region-specific presents). The higher the manager/partner is in the hierarchy of the company, the more expensive the p p present should be. Invite the boss to a restaurant, concert or some other client event on a regular basis. 17 © 2013 ITAP International, Inc. All Rights Reserved. 17
  18. 18. Hofstede Scores for Russia • • • • • Individualism: 39 (Group Orientation) Power Distance: 93 (Hierarchical Orientation) Certainty: 95 (Need for Certainty) Achievement: 36 (Quality of Life Orientation) Time Orientation: 81 (Long-Term Orientation) The graph above provides a snapshot of the culturally based values in Russia The graph shows that Russians Russia. are group and long-term oriented, respect power differences, and have a strong Need for Certainty. They tend to work to live rather than live to work (Quality of Life Orientation). 18 © 2013 ITAP International, Inc. All Rights Reserved. 18
  19. 19. Cultural Disharmony Undermines y Workplace Creativity “Managing cultural friction not only Managing creates a more harmonious workplace, says professor Roy Y.J. Chua, but Y J Chua ensures that you reap the creative benefits of multiculturalism at its best.” SOURCE: Blanding, Michael, W ki K SOURCE Bl di Mi h l Working Knowledge, H l d Harvard B i d Business S h l 09 D 2013 R School, Dec Research & Id h Ideas 19 © 2013 ITAP International, Inc. All Rights Reserved. 19
  20. 20. Special Offer – ITAP’s GTPQ 1. 1 If you already suspect that there is a cultural misalignment l d t th t th i lt l i li t among and between team members… 2. If you want to examine the gaps in the work-related values within your t ithi team.. 3. To bridge gaps to motivate employees, work more effectively with colleagues, and engage clients more successfully… 4. If it would help focus the team by comparing your team’s culture with the culture of the 5 best teams in ITAP’s database… …ITAP s Global Team Process Questionnaire™ (GTPQ) ITAP’s identifies cultural misalignment as well as other areas that need work so you can focus on improving team performance. The GTPQ allows you to measure change/improvement over time. 20 © 2013 ITAP International, Inc. All Rights Reserved. 20
  21. 21. Measuring Cultural Disharmony ITAP measures human process interactions on teams which include: • Executive overviews • Both quantitative answers and qualitative insights • Automated diagnosis • Customized with questions that address your team goals… © 2013 ITAP International, Inc. All Rights Reserved. 21 21
  22. 22. Avoid Ambient Cultural Disharmony… PROMOTION: Buy 1, get 1 FREE (GTPQ team analysis) Buy 1 iteration of ITAP’s Global Team Process Questionnaire (GTPQ ) Questionnaire™ (GTPQ*) at $1000 and receive 1 iteration free and 1 hour of virtual debrief with each iteration. Email me ( and enter PROMOTION CODE R14GTPQ i the subject line. in th bj t li *GTPQ (Premium version) retails for $1,000/team plus debrief or delivery of interventions for the team @ $350/hour 22 © 2013 ITAP International, Inc. All Rights Reserved. 22
  23. 23. Questions? Please email or call me… Catherine Mercer Bing CEO, ITAP International, Inc. ITAP International, Inc. 353 Nassau Street, 1st Floor Princeton, NJ 08540 USA (W) 1 215 860 5640 1.215.860.5640 Remember! Put your PROMOTION CODE: R14GTPQ in the subject line of your email. …thank you… 23 © 2013 ITAP International, Inc. All Rights Reserved. 23