Main players in RussiaAccording to RT (2013) the top Other types of successful companies: Russian companies are (the list of Yandex (search engine) companies is not complete) Mail.ru (diversified internet services Gazprom (gas producer) company) Gazpromneft (energy producer) Utkonos (e-commerce company) Rosneft (oil producer) AnywayAnyday (online airline tickets) TNK-BP (oil producer) Vkontakte (social network) Lukoil (energy producer) RBK (online media group) Novatek (gas producer) In Touch Insurance (insurance company) Surgutneftegas (oil producer) Kaspersky Lab (IT security vendor) NLMK (steel producer) VTB24 (bank) MMK (steel producer) Magnit (retail) Evraz (steel producer) X5 Retail Group (retail) Severstal (steel producer) Alfa Group Consortium (investment group) Mechel (steel producer) TKS (bank) (Starkell, N.,2013)
Russia’s competitiveness Russian exports to the EU, 2010 Russia is improving its investment Machinery and climate transport “Russian government pursues a 1% equipment policy aiming at the improvement of investment climate. In the recent 3% Mineral fuels Doing Business rating Russia grew 10% by sixth positions and the goal is to be in the first twenty countries by 2018” Adomanis, M (2013). 8% There is a low level of competition 3% Crude materials in many areas, which is a fantastic opportunity for businesses Strengths and weaknesses of doing business in Russia will be Other 75% discussed in the next three slides manufactured goods As it can be seen from the pie chart (Eurostat, 2011), the EU is interested Chemicals in Russia as a mineral fuels supplier. However, it is believed that the situation will change in the next ten years
Interviews and discussions All information from the next slides summarize interviews and discussions with citizens of Russia, Poland, Latvia, Lithuania, Estonia, Belarus, Moldova, Ro mania and Ukraine. Most of these people are entrepreneurs, students and people who work in well-known companies. Their ages are between 20-30 years old. The focus industries of this presentation are in the area of logistics, agriculture and entrepreneurship (see next slides) All companies related to the financial, IT, logistics, e- commerce, investment industries, etc. will emerge. The strong get stronger and the weak weaker. The majority of « strong » companies will emerge. However, it is important for EE citizens to accept that it is difficult to compete with Asia, WE and USA in many industries The most wanted profession in 2022 will be related to on-line businesses.
Results of interviews and discussionsEXTERNAL ENVIRONMENT INDUSTRY ENVIRONMENT Weaknesses: Opportunities: Corruption Language (almost all students study one or two foreign languages in schools Drugs and universities) Demographical issues (immigration) Mentality (Russians are happy to Reputation cooperate with foreigners) Poor recycling Demand and supply are not met Poor use of alternative enegry Low level of competition in many areas Culture (imitation of WE’s and USA’s Many businesses are not customer worst consequences of democracy and oriented core values) Low salaries Not attractive to tourists (low level of High motivation infrastructure and services) Weaknesses in legislation Weaknesses: Climate History of relations between EE and Russia Opportunities will be discussed in slide 6 Low level of cooperation between EE and Russia Some business areas are dependent on government decisions Strong foreign competitors
Author’s vision for future industriesImportance of Russia for EE 3 main options for development: Russia can improve the WTO communication between Asia and BRICS Europe (logistics) Since the population is rising in many CIS and Customs Union of countries, Russia can supply food to Belarus, Kazakhstan, and Russia other countries (agriculture) EU (close location, common borders) Since it is difficult to compete with USA, WE and Asian Huge markets, low competition, low taxes countries, entrepreneurs should be Natural Resources promoted. Young, ambitious and patriotic entrepreneurs will be able to Government support for import/export activities improve the situation in EE (entrepreneurship) Russia is interested in import of consumer goods Future companies will be much smaller Cheap labor cost (e.g. $1000 is a good salary for “office jobs”) than today. Possibly, in future small companies won’t have an Emerged markets office, due to advanced on-line High education level of many individuals technologies.
First option - Logistics Low level of logistics (there are huge opportunities for developing the industry; logistics develop other businesses) Domestic and regional logistics Companies like DHL, UPS, FEDex are not operating as efficiently as in WE There are problems with payment (Russians prefer cash on delivery, therefore logistics are able to develop online payments, e.g. PayPal) Online opportunities Undiscovered markets in many regions and cities International logistics (between Russia and other countries) Poor efficiency Rail (a new rail system will be built between China and EE through Russia) Poor packaging and insurance services International trade is rising
Second option - Agriculture There is a high level of importation e.g. Russian companies purchase potatoes from Poland and fruit from Israel Manure storage destroys agriculture In the majority of places not recycled Purchase of foreign fertilizer Polluted ground water, air and soil Very poor domestic agricultural yields This is a huge opportunity to implement best agricultural technologies and practices Russia could easily export food in future
Third option - Entrepreneurship Entrepreneurs Entrepreneurs in the future The size of future companies will be It is assumed that the majority of EE citizens much smaller than today, due to cost have realized what happened with their efficiency, technology and countries. software, level of They understand that many businesses are education, outsourcing, etc. managed by multinational enterprises (MNE) with the country of origin far away It is believed that a company with 30 from EE employees will be considered a huge company. Entrepreneurs think better/faster than MNE’s Higher leverage factor: entrepreneurs in Each MNE was a start up in the past the future will issue more bonds, attract more investors and partners than they do today. Additionally, IPO will be Entrepreneurs take loans, they are cost considered as a normal business process. efficient, they would rather outsource activities than employ more personnel All companies will use modern communications Entrepreneurs are often self educated and (Twitter, Facebook, LinkedIn, Skype, Vib dynamic people er, etc.) instead of private meetings
Conclusion References RT (2013). Top Russian companies. Available: www.rt.com. Last accessed Three ideas of improvement of the situation in 13 Feb 2013. all EE countries through cooperation with Starkell, N. (2013). 30 top Russian Russia have been considered. These three Internet companies according to Forbes options – logistics, agriculture and Russia. Available: http://goaleurope.com/2012/03/08/r entrepreneurship will develop all other ussia-internet-eastern-europe-30-top- industries and the society of each EE country. russian-internet-companies-according- to-forbes-russia/. Last accessed 20 Feb 2013. The current situation in Russia was discussed. These ideas were based on primary Adomanis, M. (2013). A Further research, statistics and other sources of Clarification on Russian Capital Flight from Alexander Ivlev, Managing secondary research. Partner for Ernst and Young Russia. Available: http://www.forbes.com/sites/markad omanis/2013/01/03/a-further- clarification-on-russian-capital-flight- from-alexander-ivlev-managing- partner-for-ernst-and-young-russia/ . Last accessed 21 Feb 2013 Eurostat. (2011). Russia-EU - basic statistical indicators. Available: http://epp.eurostat.ec.europa.eu/statis tics_explained/index.php/Russia-EU_- _basic_statistical_indicators . Last accessed 22 Feb 2013.